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

6. Stakeholder Views and Insights

Introduction

This chapter presents the main themes that emerged from the interviews undertaken with Scottish Government internal and external partners and stakeholders.

A total of 29 interviews were undertaken with representatives from:

• SG including policy development representatives and area office staff.
• other individuals, bodies, and organisations, including Landworkers’ Alliance in Scotland, National Farmers Union Scotland, Scottish Agricultural College, Scottish Agricultural Organisation Society, Scotland Food and Drink, and self-employed small holders.

In reviewing the themes described further below, it is important to note that stakeholders interviewed as part of the evaluation:

• have been involved in the capital grant scheme or schemes to varying degrees and have varying degrees of knowledge and understanding of the schemes as a result, or;
• have only been involved more recently in discussions about replacement grant support.

Many of the messages are cross-cutting and are relevant to all three capital grant schemes. We draw out unique points for individual capital grant schemes were appropriate.

A clear rationale for the capital grant schemes

The main stakeholder feedback on the original (and continuing rationale) for supporting farmers and crofters, including through the three capital grant schemes was that the schemes were designed to help:

• ensure that people can live and work sustainably on Scotland’s land –retaining/attracting people to live and work on the land in remote and rural communities.
• support more local food production.

Wider stakeholder feedback centred on the range of challenges faced by new entrants to the agricultural sector as well as those faced by small farmers and crofters, including:

• access to capital (lack of resources) to purchase inputs and the cost of equipment can be prohibitive for new entrants and small farmers and crofters (for example, capital and credit constraints among other market failures).
• crofting exists in areas where agricultural production and investment costs are traditionally high.
• the high average age of farmers and crofters – challenges arising from a growing ageing workforce.
• the lack of new entrants to the sector - for example, not considered an attractive career choice, long working hours.
• access to land barriers for new entrants to get a foothold in the sector (for example, land prices, land availability, as well as wider issues relating to quality of land) and wider structural constraints (for example, around economic viability and profitability).
• a rapidly changing industry.

Further, the important contribution, role, and value of farming and crofting to the Scottish economy was emphasised – including within fragile regions and rural communities.

Stakeholders said that the NECGS was an important component of the wider offer available from SG for new entrants (for example, alongside the Young Farmers and New Entrants Start-Up Grant Schemes). These grant schemes provided a pipeline of potential applicants to the NECGS as a result.

Feedback was that this package of support was critical to attracting and supporting new and young entrants into farming. Helping to open up farming to a new generation – those who were starting an agricultural business for the first time or taking over control of an existing business.

Stakeholders felt that the NECGS provided access to capital funding to help new entrants:

• make improvements to their agricultural business.
• promote sustainable development.
• sustain the economic basis of farming.
• retain people in farming in rural communities

Similarly, stakeholders commented that the intent of the SFGS and CAGS were to provide access to capital funding to help farmers and crofters make improvements to help sustain their businesses – thereby supporting people to live and work on the land in remote and rural communities and supporting more local food production.

Stakeholders also acknowledged SG’s long history of investing in crofting to improve its economic condition. Not least in recognition of the particular challenges crofters face. Stakeholders said that many crofters often have a small parcel of land, the quality of land can also be poor, and crofters can face increased costs of doing business (for example, higher transportation costs due to geographic location of the croft).

A delayed start for some schemes

With the exception of CAGS which was supported through the SRDP 2007-2013, stakeholders said that many other SRDP 2014-2020 schemes, including the NECGS and SFGS, experienced a delay being launched. In part this was due to the SRDP 2014-2020 only being formally approved in May 2015 – and this then had a knock-on effect on expenditure in the initial stages of the Programme.

Views on the application and appraisal process

Most stakeholders said that the application and appraisal process (as well as the procedural guidance and claims process) for the NECGS and SFGS were based on the long-established processes and procedures which were in place for CAGS.

The general consensus was that this was a pragmatic and sensible approach given that CAGS had been in existence for many years, and the existing process was felt to have worked relatively well in practice. Not reinventing the wheel was also considered appropriate as SG was said to have been under pressure at the outset to get the NECGS and SFGS off the ground quickly, to invite applications, and to begin making committing expenditure.

An alternative viewpoint expressed was that planning and development time for both NECGS and SFGS felt somewhat rushed.

A wider point raised is that the NECGS ensured a commitment to farming/crofting as applicants had to have a business plan, etc.

Where issues and challenges were identified these are considered further below.

Stakeholders said that many farmers and crofters rely on agents to complete application forms on their behalf. This view is supported by the grant recipients survey. Stakeholders reported that various factors are said to be at play, including:

• that farmers and crofters use agents for other things, and it is just the way it has always been.
• a fear of getting something wrong in the application and costing the farmer or crofter money as a result.
• a lack of confidence in completing the necessary paperwork and the resulting reassurance that an agent provides to the farmer or crofter.
• a lack of understanding of the grant schemes, rules, eligibility criteria and application processes.

In this regard, some stakeholders consider the application process to be complex and therefore can act as a barrier to some farmers and crofters from applying for grant funding in the first place – not a level playing field. Feedback from the grant recipient survey supports the stakeholder feedback – farmers and crofters felt that the application process could be simplified and streamlined.

Stakeholders said that the application process may be a particular barrier for those farmers and crofters who:

• cannot afford to pay for an agent to complete application forms.
• are looking for a relatively small amount of grant funding, where the cost of paying for an agent outweighs the relative value of the grant award.
• need hand-holding support and guidance from area offices.

Some RPID staff commented on the quality of applications received for the capital grant schemes. The main point raised was that the level of detail and quality of applications could vary depending on whether the application was completed by the farmer/crofter or by an agent. With the latter said to be more knowledgeable and experienced of different funders’ application processes, expectations, and requirements.

Stakeholder suggestions for improving the application and payments process include that SG could continue to consider ways to streamline processes and strip out any unnecessary bureaucracy or complexity. The suggestions made by stakeholders were echoed in the grant recipient survey, and include:

• considering whether a one-size-fits all approach regardless of the size of grant request acts as a barrier.
• reviewing the range of questions asked within the application form, and to consider how the information collected is used.
• exploring the possibility of introducing standard costs as this would do away with the need for quotes. Currently applicants need to provide at least two competitive quotes when the project cost is less than £10,000 and three when the total cost exceeds £10,000. This can be particularly challenging for remote, island and rural areas where there may be only one local supplier. Fewer quotes can be accepted if there are specific difficulties on a case by case basis.
• offering advanced payments such as providing a percentage of the grant to the applicant in advance of the work being carried out (to support cash flow), with the remainder paid to the applicant on completion - interim payments are made where possible if an applicant claims for a discrete part of the project where the costs have been incurred. Stakeholders felt that some changes could help make the application and payments process more accessible and user-friendly to applicants.

Some stakeholders also felt that removing any unnecessary bureaucracy from the grant scheme processes could have the added benefit of improving the efficiency of area offices – by making processes less labour intensive and reducing administrative efforts. It was suggested that the shift to an online application process could help address this issue.

Some stakeholders also mentioned the current IT system used for the grant schemes – APEX – generally perceived to be clunky and cumbersome – at least in the beginning. Further the delay in the IT system being introduced meant that it was not up and running at the beginning of the programming period. The paper-based application process therefore resulted in significant manual data entry, including retrospectively which has never been completed due to resource constraints in area offices.

Demand for grant support

Stakeholders confirmed that the NECGS was very popular, over-subscribed, and the scheme closed early as a result. Where there were differences in opinion among stakeholders this related to the inherent challenges in defining what is meant by a ‘new entrant’ (this is considered further below).

On the other hand, stakeholders said that the SFGS supported far fewer farmers than was anticipated at the outset. Indeed, most of the area office staff interviewed as part of this evaluation also confirmed that uptake of the SFGS was poor, and they typically supported only a small handful of projects. The SFGS also closed early, and the main contributory factor was considered to be scheme design issues relating to the eligibility criteria (also considered further below).

The general consensus among stakeholders, including area offices that deal with CAGS, was that demand for grant support continues to be strong. Stakeholders highlighted the relative importance of this grant scheme in the Highlands and Islands region - agricultural production and investment costs are traditionally high in these areas, and the grant scheme supports fragile rural communities thereby helping to secure the future of crofting and maintaining populations in rural communities.

Issues with eligibility criteria

Where issues with eligibility criteria were raised by stakeholders, this is considered below.

NECGS

The general feedback from stakeholders was that most approved applications for the NECGS were from those who had taken over control of an existing business and not from those who were starting an agricultural business for the first time.

Stakeholders reflected on the other SG grant schemes aimed at new entrants, including:

• the New Entrants Start Up Grant Scheme which was aimed at those who started their agricultural business in the last 12 months (and therefore fell into the category of starting an agricultural business for the first time).
• the Young Farmers Start Up Grant Scheme which was aimed at those who were starting an agricultural business for the first time or who were taking over an existing agricultural business – stakeholders commented that the appraisal process gave greater weight to those setting up for the first time.

The point raised by stakeholders was that many applicants to the NECGS appeared to have had restructured long-established (often large) farming businesses or changed partnership arrangements to become eligible for grant support.

While some felt that this was not a significant issue or concern – and put forward a succession planning argument – others felt that the NECGS had possibly missed the mark in terms of supporting its intended audience.

SFGS

The general consensus among stakeholders, including area office staff, was that the inclusion of the income test to be financially eligible for support from the SFGS resulted in a significant proportion of ineligible applications – therefore raising questions around intended versus actual audience or end beneficiaries. It was also said to have potentially put others off from applying for grant support from the scheme in the first place.

Stakeholders understood the original thinking and rationale for the inclusion of the income test as part of the eligibility criteria. This was considered necessary to exclude “hobbyists” and those who may have had financial means to undertake the capital project in the absence of grant support, and to help target the funding more effectively at small farmers who needed it the most.

However, issues raised by stakeholders included that:

• many farmers and crofters (and partners if application was for a couple) have other jobs to supplement their income from farming or crofting – this meant that total gross income for individuals/couples made many applicants ineligible.
• some applicants were reluctant to provide the supporting evidence required to show total gross income (for example, payslips, etc).
• the income test was unique to the SFGS and was not applied to other capital grant schemes - and was therefore an anomaly.

CAGS

Under CAGS there are some crofters not eligible for grant support as they are not formally registered as a croft on the Crofting Register, maintained by the Registers of Scotland. Stakeholders said that this group of crofters miss out on CAGS because they decide to not go through the crofting registration process.

The number of unregistered crofts in Scotland is not readily available but we do know there are 33,000 people living in crofting households, and over 20,000 crofts entered on the Crofting Commission’s Register of Crofts (ROC) of which 9,880 are registered crofts on the Register of Crofts^[13]. In addition, stakeholders noted that smallholders growing and producing in the crofting counties - not previously considered to be crofting land - are also missing out on capital grant support.

Grant thresholds and types of things supported

The general consensus among stakeholders was that the grant thresholds (that is, maximum grant available to an individual applicant limited to £25,000 in a rolling two-year period, and £125,000 for a group applicant) was about right – albeit they caveated their response in some way.

On the plus side, stakeholders welcomed the fact that:

• the threshold allowed both small and large projects to be supported.
• some types of capital expenditure (for example, agricultural buildings) can be expensive, and so the maximum limit is broadly appropriate.
• the grant schemes were relatively flexible in terms of the wide range of things that could be supported (for example, sheds, fencing, drainage) – albeit some commented that there had been limited demand for grant support to establish constituted common grazings committees.

However, wider points raised about grant thresholds included that:

• the maximum grant limit has remained static for many years now, and consideration could be given to reviewing the threshold to take account of rising inflation.
• there will always be a balance to be struck between whether it is better to support fewer but larger scale capital projects or to support a large number of smaller projects – and ultimately this depends on the purpose of the grant schemes and the outcome they are trying to achieve. When financial resources are reducing then it may become more important to take a more strategic and targeted approach.

Impact of the capital grant schemes

Stakeholders were not able to evidence impact of the grant schemes. While stakeholders said that the schemes had supported the right kind of activities, it was more difficult to evidence the ultimate impact on the business.

The main points raised by stakeholders included that:

• post project monitoring was fairly limited and did not go far enough.
• the sample of post project inspections was small, in particular for CAGS which supports a high volume of applications each year.
• there could be greater post project monitoring and inspections in general and for agricultural buildings more specifically – a suggestion made was for a longer period of grant condition for such projects, albeit it should be noted that the period was agreed by the Cabinet Secretary at the start of the programming period.
• the impact achieved through the SFGS was negatively affected by the eligibility criteria issues described earlier.

That being said, stakeholders pointed to the critical nature of the support, in particular CAGS, and on the impact that capital investment in sheds and fencing, for example, can potentially have on the business. Some specific examples provided include:

• the ability to bring stock inside to lamb and equipment out the sea winds is transformational in how long the equipment lasts and the saving of time and reduced mortality in livestock.
• ability to replace fencing is critical given the climate and adverse weather conditions in remote rural communities.
• more local produce now being sold in local shops and supermarkets.

Future focus of support

Stakeholders felt that the original rationale for the grant scheme remains valid.

Budgets across the public sector are under unprecedented levels of pressure and it seems highly unlikely in such an environment that more resources will be made available for any replacement grant schemes. SG indicated that it is likely to be constrained in providing capital grant support in the future – as such there is more likely to be a focus on revenue support going forward.

A suggestion made by external stakeholders was the use of soft loans (that is, a loan with no interest or a below-market rate of interest), could help farmers and crofters purchase equipment and machinery, for example, and that this could help SG get a better return on its investment while helping farmers secure equipment at favourable rates.