Scottish Rural Development Programme 2014-2020: Evaluation of Capital Grant Schemes – Main Report

3. New Entrants Capital Grant Scheme

Summary overview

The NECGS provided grants for people new to farming to make improvements to their agricultural business and to help promote sustainable development. The grant scheme was open to farmers and crofters who had been head of an agricultural business for a maximum of five years prior to applying for support.

The original NECGS EU and SG budget of £12 million was modified various times over the delivery period - the final budget was slightly higher at £12.4 million. Total expenditure of circa £12.8 million was achieved by December 2020, with additional expenditure covered by SG monies.

The NECGS continued to run beyond this date fully funded by SG. No additional budget was explicitly allocated for the scheme, rather additional expenditure incurred in 2020 and 2021 was absorbed into the portfolio – this amounted to a further circa £1 million in expenditure.

The NECGS was a popular grant scheme and demand for grant funding was strong. A total of 1,171 applications were received, with a large volume of applications submitted in the final year the scheme was open to new applications. The approval rate increased over time, and around three-quarters of all NECGS applications were approved (878 applications).

Additional data provided by SG for approved NECGS applications in 2018-2019 shows that the vast majority of approved projects were: in LFA (90%) – those rural areas characterised by least favourable production; from new entrant farmers (80%); from applicants classed as either a young farmer, or would be head of holding within five years, or both (91%).

The vast majority of projects supported in 2018-2019 were for three project types covering the: erection or improvement of agricultural buildings, and shelters for the temporary housing and sheltering of out-wintered livestock; provision or improvement of facilities for the organised feeding of out-wintered livestock, including permanently fixed troughs and feed barriers, and associated concrete bases; and planting of shelter belts and the provision of fences, hedges, walls, gates, or stock grids. The average grant award size was circa £15,000 and the average total project cost was circa £21,000. Around 60% of NECGS projects approved over this period were awarded a grant of £20,000 or less.

Further, the data for the same time period shows that the number of applications approved by the 16 area offices varied. Around half of applications approved in 2018-2019 were for projects in the Highlands and Islands, and a majority of approved applications were completed by males (71%).

Introduction

This chapter provides an overview of the NECGS and is based on a review of information and data provided by SG.

Overview of NECGS

The NECGS became operational in 2015 and closed early to new applications in August 2018 due to available EU and SG match-funding being fully committed.

The NECGS was part of a wider package of grant support available to new entrants - New Entrants and Young Farmers Start-Up Grants which supported new entrants into the industry. These two grant schemes were the subject of a separate evaluation (2022).

The NECGS provided grants for people new to farming to make improvements to their agricultural business and to help promote sustainable development. The grant funding could be used for capital projects (for example, the construction or upgrading of agricultural buildings) and to cover all aspects of the project. This included the cost of materials, transportation of materials, costs of contractors, and the farmer or crofters’ own labour.

Funding supported people new to farming carry out individual or collective investments that helped to reduce production costs, improve quality, preserve and improve the natural environment, and hygiene conditions and animal welfare standards.

The total amount of grant aid available to eligible farmers and crofters in any two-year period was:

• individuals: up to £25,000.
• groups: up to £125,000.

There were different intervention rates, as follows.

For individual new entrant farmers:

• less than 41 years old when they applied: up to 80% of eligible costs in a LFA and 60% if outside.
• aged 41 years or older when they applied: up to 60% inside a LFA and 40% outside.

For groups:

• including new entrant farmers aged less than 41 years old when they applied: 90% in a LFA and 80% outside.
• including new entrant farmers aged 41 years or older when they applied: 80% in a LFA and 60% outside.

Eligibility criteria

The NECGS was open to farmers and crofters who had been head of an agricultural business for a maximum of five years prior to applying for support from the scheme.

Application and appraisal process

A competitive application process was in place for the NECGS, and applications could be submitted at any time during the year. An indicative annual budget was set for the grant scheme.

The application form captured a range of information including:

• information about the applicant (for example, gender, age, size of holding).
• land details (for example, location code, LFA).
• extent of land.
• details of proposed work.
• objectives and business plan.
• proposed costs.
• other sources of funding.
• environmental impact considerations.
• supporting documentation (for example, at least two competitive quotations were required where the total cost of the work that an applicant was applying for grant aid on was £10,000 or less. At least three competitive quotations where the total cost was more than £10,000).

Each application was scored by the applicant’s area office against selection criteria.

Work could only start, or materials bought after the farmer or crofter had received formal communication from SG that the application had been approved and a contract had been signed and accepted by the farmer or crofter.

Payments

All approved work was to be completed and claim forms submitted within one year of the date the application was approved. Extensions could be requested.

Administrative checks were undertaken on all claims. Payments were made after:

• the approved work was completed.
• the farmer or crofter made an eligible claim for payment.
• if selected for inspection, RPID had checked the completed work.

Budget allocation

The original NECGS EU and SG budget of £12 million was modified various times over the delivery period – for example, it was reduced to £8 million and subsequently increased to circa £13 million due to stronger levels of demand than originally envisaged at the outset of this grant scheme.

The final budget for the NECGS was £12.4 million – relatively in line with what was set out at the very outset of the programme period.

Source: Scottish Government.

The NECGS continued to run once the EU budget was exhausted – this activity was fully funded by SG. No budget was explicitly allocated by SG for the NECGS in the past couple of years, rather additional expenditure incurred by the scheme in 2020 and 2021 was absorbed into the portfolio. As noted below, this amounted to a further circa £1 million.

Expenditure

Data provided by SG shows that total expenditure of circa £12.8 million was achieved by the NECGS utilising EU and SG funds by December 2020, Table 3.2. This is slightly more than the £12.4 million budget outlined in Table 3.1, with additional expenditure covered by SG monies.

Source: Scottish Government.

Additional national funds were used to fully fund some NECGS activity in 2020 (£759,785) and in 2021 (£319,546) – totalling £1,079,331.

Total expenditure on the NECGS was therefore circa £13.9 million as follows, Table 3.3.

Source: Scottish Government.

Applications submitted and approvals

A total of 1,171 applications were submitted for the NECGS, see Table 3.4. The number of applications submitted fluctuated over the four years of the scheme, and a relatively large proportion of applications were submitted in the final year it was open to new applications. The average number of applications submitted on an annual basis was 293.

The approval rate of applications increased over time. Three-quarters of all NECGS applications received (878) were approved, with the remainder either rejected or withdrawn (25%). The average number of applications approved on an annual basis was 220.

Approximately 80% of approved NECGS applications were for unique ‘businesses’, and approximately 80% of grant recipients received one grant.^[2]

Source: Scottish Government.

Circa £13.2 million of NECGS funding was approved, of which 42% was approved in its final year, see Table 3.5. The grant scheme closed early due to strong demand and the available funds were fully committed.

Source: Scottish Government.

Note: all data presented in this chapter from this point on is based on a separate dataset provided by SG for the NECGS and is for illustrative purposes only. This dataset relates to 2018-2019 and not for the whole delivery period. There were many data gaps, the number/value of approved projects does not match exactly with the data presented above, and it was not possible to provide wider analysis for the grant scheme’s delivery period as a whole. The 2018-2019 data may not be representative of the total population of grant recipients.

Projects authorised to proceed

Almost all NECGS applications approved in 2018-2019 became operational in the same year (99%), see Table 3.6. While projects were expected to complete within 12 months from date of approval, many applicants requested an extension to project delivery.^[3]

Source: Scottish Government.

N=433 (2018-2019 approved applications data).

Total project costs and grant award size

Tables 3.7 and 3.8 provide details of project costs and grant awards for the NECGS in 2018-2019.

Points to note from the data provided on NECGS applications approved in 2018-2019 includes that:

• circa £6.5 million was awarded to approved projects - this represents 72% of the total project costs in 2018.^[4]
• the average grant award size for NECGS projects was circa £15,000, and the average total project cost was around £21,000.
• around 60% of NECGS projects received a grant of £20,000 or less, and the remainder received a grant award greater than this amount (circa 40%).
• all awards were to individual new entrant farmers (that is, no constituted groups of new entrant farmers came forward for support). Payments were restricted to £25,000 for individuals in any two-year period.

Source: Scottish Government.

Total project costs: N=430 (2018-2019 approved applications data). Three entries’ total project costs not known. Grant award size: N=433 (2018-2019 approved applications data). Values rounded to nearest £10.

Source: Scottish Government.

Total project costs: N=430 (2018-2019 approved applications data). Three entries’ total project costs not known. Grant award size: N=433 (2018-2019 approved applications data). Values rounded to nearest £10.

Project type

NECGS supported a variety of projects, see Table 3.9.

Source: Scottish Government.

N=432 (2018-2019 approved applications data, one missing response).

* Data supressed as number less than five.

Multiple response question in application form where applicants could select more than one option and all that applied. Percentages may total more than 100% as a result.

The most common type of NECGS project supported in 2018-2019, based on options selected in the application form, was for the erection or improvement of agricultural buildings, and shelters for the temporary housing and sheltering of out-wintered livestock (38% of approved projects). This was followed by:

• provision or improvement of facilities for the organised feeding of out-wintered livestock, including permanently fixed troughs and feed barriers, and associated concrete bases (27% of approved projects).
• planting of shelter belts and the provision of fences, hedges, walls, gates, or stock grids (20% of approved projects).

Taken together, these project types represented the vast majority of projects implemented in that year.

Geography

All area offices approved applications for the NECGS in 2018-2019. Points to note from the data analysis include that:

• the number of applications approved by area office varied – from five or less to a high of 74 (Kirkwall).
• around half of NECGS applications approved in 2018 were from applicants located in the Highlands and Islands, see Table 3.10 - this region comprises almost two-thirds of all area offices.
• the average number of applications approved in 2018-2019 was 27.

Source: Scottish Government.

N=433 (2018-2019 approved applications data).

EKOS grouped the 16 area offices into relevant region of SRDP 2014-2020.

Application type

Some data on NECGS applications approved in 2018 by ‘application type’ was suppressed (number less than five). The main points to note from the data analysis include that:

• the vast majority of applications approved in 2018 were for projects in LFA (309, 90%) – those rural areas characterised by least favourable production conditions. The remainder were in Non Less Favoured Areas (NLFA) (43, 10%).
• the vast majority of applications approved were from young farmers (aged under 41 years) (345, 80%).
• the vast majority of NECGS grant recipients in 2018 were classed as either a young farmer, would be head of holding within five years, or both - overall (91%), by LFA (91%), and by NLFA (93%).

Gender of applicant

A majority of NECGS applications approved in 2018 were from male new entrant farmers (71%) – that is, the gender of the applicant. Around one-quarter of applications were completed by females, see Table 3.11.

Source: Scottish Government.

N=433 (2018-2019 approved applications data).

Project monitoring data

Monitoring information was sparse. With the exception of financial claim data and on-farm inspections on at least 5% of claims (as EC law required) no other monitoring data was available post project completion for the NECGS.