Scottish Spending Review 2011 and Draft Budget 2012-13

Chapter 11 Rural Affairs and the Environment

PORTFOLIO RESPONSIBILITIES

The Rural Affairs and Environment portfolio has responsibility for protecting the environment and for developing rural Scotland through working with rural industries and communities. It is a wide-ranging portfolio that includes the Scottish Government lead on climate change and covers agriculture, marine management and policy, aquaculture, forestry, rural development and environmental policy. Our overarching aim is to grow the rural economy through:

• community empowerment;
• improving rural connectivity;
• building up our world class food and drink industry; and
• supporting renewables, enhancing our natural resources, and tackling climate change.

SUPPORTING RECOVERY AND INCREASING SUSTAINABLE ECONOMIC GROWTH

The Scottish Government's Purpose is to focus on creating a more successful country with opportunities for all of Scotland to flourish. Delivering this Purpose in the face of significant cuts in public expenditure is an enormous challenge. Our strategy has been to prioritise economic growth in our spending decisions. These include more than doubling the food and drink industry budget; establishing a new Next Generation Digital Fund to enhance digital connectivity in rural areas; supporting community empowerment by creating provisions for a new land fund; maintaining and increasing resources for the Land Managers' Renewables Fund; and continuing to invest in the rural economy through the Scottish Rural Development Programme (SRDP) and the European Fisheries Fund (EFF). While we have had to make savings across the portfolio, and all of our public bodies will have to deliver efficiency savings, we have limited the impact in key areas such as our science and research capability, protected key programmes such as Zero Waste and LEADER, and prioritised food processing and marketing grants within the SRDP.

The Rural Affairs and Environment portfolio has a particular focus on rural Scotland and ensures that all those living and working in our rural areas contribute to a strong, cohesive Scottish economy. As set out in Scotland's Digital Future: A Strategy for Scotland ^[1], improving connectivity in our most rural and remote communities will play a critical role in driving rural economic growth and competitiveness, creating more and better jobs and opening up new opportunities for a different way of living and working that encourages strong and growing rural towns and villages and respects and protects our environment.

The portfolio also helps ensure that Scotland's rural resources can help meet the food, energy and environmental challenges of the future. It does this through providing support for rural industries and rural jobs and by delivering effective and proportionate environmental regulation to ensure that our natural resources are used and managed for current and future generations as a valuable asset supporting sustainable economic growth.

Scotland's successful farming, aquaculture, fishing and forestry businesses depend on the sound management of our natural assets and in turn underpin our tourism, recreation, food and drink industries. Our natural assets of air, water, soils and biodiversity are important public goods and make a vital contribution to sustainable economic growth.

This portfolio leads the government's work on emissions reduction, and works with all other government portfolios, which are charged with delivering on our climate change targets. It directly supports the development of a low carbon economy by encouraging woodland creation and working to mitigate the effect of agriculture on climate change. It also has a role in promoting the development of renewable energy on land and sea in order to assist with our move towards a low carbon economy. It leads on the delivery of the government's Zero Waste policy and works to change behaviour and secure long term emissions reductions.

OUR NATIONAL OUTCOMES

The policies, activities and expenditure of the Rural Affairs and Environment portfolio contribute to a number of our national outcomes, especially:

• We value and enjoy our built and natural environment and protect and enhance it for future generations.
• We live in a Scotland that is the most attractive place for doing business in Europe.
• We have strong, resilient and supportive communities where people take responsibility for their own actions and how they affect others.
• We reduce the local and global environmental impact of our consumption and production.

The Rural Affairs and Environment portfolio leads on making Scotland a place where we value and enjoy our built and natural environment and protect and enhance it for future generations by ensuring that our natural assets are well managed, accessible and in good condition. Through the work of the Forestry Commission and Scottish Natural Heritage (SNH) we aim to improve access to the outdoors, especially for those who face barriers to do so. The Government will implement the Marine (Scotland) Act 2010, which will ensure better marine planning and conservation in the future. It will continue to protect and enhance the environment through the Scottish Environment Protection Agency (SEPA) and SNH and provide funding for biodiversity and environmental projects through the SRDP.

The portfolio works towards ensuring that Scotland is the most attractive place for doingbusiness in Europe by ensuring that our agriculture, marine and forestry industries are competitive and innovative and that our rural areas are digitally connected and able to compete in the global economy. The government will continue to assist these industries through rural development and through the EFF. It also distributes a further £455 million of EU support annually to farmers.

It has an important role in ensuring that we have strong, resilient and supportive communities where people take responsibility for their own actions and how they affect others through investing in, and empowering, our rural communities to build a better future for themselves. The Government will continue to make financial support available to local action groups through the SRDP LEADER delivery mechanism for local decision-making on locally-driven projects. Within this programme, we provide specific support for women and young people. We will continue to support community projects, creating and preserving jobs across Scotland. The Government also sponsors the Scottish National Rural Network which encourages community interaction and showcases good development practice.

It is also vital in ensuring that we reduce the local and global environmental impact of ourconsumption and production through ensuring that our local environment is protected by our national environment agency and that our carbon emissions from land management activities are reduced through promoting renewable energy, sequestering carbon in soils and making better use of slurry and fertilisers. It will continue to promote waste as something that should be regarded as a resource rather than discarded, through the implementation of Scotland's first Zero Waste strategy with support from the Zero Waste Fund.

OUR ACHIEVEMENTS

In 2010-11 we paid £455 million in EU funding to over 20,000 producers through the Single Farm Payment and Scottish Beef Calf Schemes. Public subsidy plays a vital role in ensuring the continuity of food supply, environmental benefits and the delivery of wider public benefits. We paid 94 per cent of eligible Single Farm Payment claims by 31 December 2010, well ahead of the European deadline of 30 June 2011.

The Less Favoured Area Support Scheme (LFASS) is a funding mechanism under the SRDP, designed to compensate for the challenges faced by those farming in Scotland's most disadvantaged areas. Of Scotland's agriculture land, 85 per cent has EC Less Favoured Area status, and of this 98 per cent is classified as severely disadvantaged. Under the 2010 LFASS, we had paid £63 million to 11,422 farmers by 31 August 2011.

We are continuing to support rural communities and agriculture through the Rural Priorities element of the SRDP. Since the launch of Rural Priorities in 2008 we have awarded over £450 million to more than 6,000 projects across Scotland.

We have made enormous progress on the delivery of our national food and drink policy. Our work across the public sector has been significant. Scottish Enterprise and Highlands and Islands Enterprise support hundreds of food companies across the country. Food processing grants of some £30 million have safeguarded and created jobs, often in rural communities. The Scottish Funding Council have facilitated a multi-million pound collaboration package with universities. Working with Skills Development Scotland they have created the Scotland Food and Drink Skills Academy. Scottish Enterprise have put in place the Food Health and Innovation Service based at Aberdeen University. Our SRDP, EFF, LEADER and Climate Challenge Funds have also supported businesses and communities to deliver food and drink projects to an unprecedented level. We have delivered for the industry, but our ambition remains undimmed.

In 2010-11 we commissioned our Strategic Research programme for 2011-16 which aims to build a platform of knowledge that strengthens policy and contributes to sustainable economic growth. In 2011-12, we are investing £44.8 million in support of two major programmes on 'Environmental Change' and 'Food, Land and People'. A further £2.2 million has been provided to two strategic partnerships on Animal Science and Food and Drink Science. Investment of £6.6 million has been made in new, virtual Centres of Expertise on Climate Change, Animal Diseases and Water, which have been established to develop innovative approaches to these important policy areas. Our funding has helped attract over £20 million per annum of additional research funding to Scotland from other UK and European sources.

Basic broadband availability in Scotland is now over 99 per cent. This follows completion of the Broadband Reach Project in 2010, which provided over 2,400 broadband connections to predominantly rural areas using wireless and satellite. This is a major increase from only 43 per cent availability in 2001, when Scotland lagged behind the UK level of 63 per cent.

In partnership with BT, over 2010-11 we secured upgrades to 81 remote and rural telephone exchanges across Scotland for improved broadband connectivity.

In October 2010, we secured the Highlands and Islands region as one of the first areas of the UK to benefit from a share of £530 million of UK Government funding for broadband. This project will deliver next generation broadband to around 50 towns and communities geographically spread across the Highlands and Islands. The project entered procurement in June 2011 and delivery of connectivity improvements is expected to begin within 12-18 months.

To date, we have secured £68.8 million for Scotland from the UK Government for next generation broadband. We will continue to work with the UK Government to ensure that we get the best possible deal for Scotland.

We have published a first draft of Scotland's National Marine Plan covering 450,000 square kilometres of sea which will ensure that we are well placed to take advantage of the growth in marine renewables and offshore wind, creating opportunities for investment - potentially £7 billion by 2020.

We have continued to support the European Fisheries Fund programme and, to date, we have awarded grant funding of some £50 million to over 540 projects, which has generated £114.5 million of investment and supported up to 6,636 jobs in the fishing, aquaculture and fish processing industries.

Funding has:

• delivered a Fleet Resilience Grant Scheme, enabling the Scottish fishing fleet to dispose of vessels and restructure itself, becoming more economically viable;
• provided £15 million support to the fish processing sector, supporting the growth of our food and drink industry, making food available and affordable to all and ensuring that people understand more about the food they eat;
• helped develop Scotland's aquaculture industry to become the third largest producer of farmed Atlantic salmon in the world; and
• underpinned sustainable economic growth in rural and coastal communities by supporting direct and indirect jobs, for example in construction, and developing and sustaining new and existing markets.

We have continued to improve the efficiency and effectiveness of our risk based fisheries enforcement, which in turn is maintaining a culture of compliance across the industry and encouraging more sustainable fisheries. This has been achieved through the use of innovative practices such as the introduction of a ground breaking pilot in 2010 to tackle the hugely challenging problem of discards in the white fish fleet, resulting in the level of discards in the Scottish whitefish fleet falling by over a third since 2009. Since the Marine Stewardship Council (MSC) certification of North Sea haddock, the proportion of Scottish fisheries certified or under full assessment for MSC certification now exceeds 50 per cent by value, with Scotland now having five per cent of the global total of certified fisheries.

Scottish aquaculture has continued to thrive with figures to be published later this year expected to show a further increase in farmed Atlantic salmon production over the £400 million that the sector was worth in 2009. Meanwhile, mussel production increased by 50 per cent in volume and 56 per cent in value over the last three years and generated £6.7 million for the economy in 2010.

Scottish Natural Heritage (SNH) has made substantial efficiency savings and has completed a restructuring to reduce management costs. It has continued to provide expert advice to the Scottish Government and local authorities, focused on optimising the socio-economic benefits derived by the Scottish people from sustainable management of the nation's natural heritage.

SNH has contributed to a wide range of government objectives, including supporting tourism and stimulating rural economic development through the delivery of parts of the Scottish Rural Development Programme and by leveraging private and third sector investment in rural Scotland. Improvements have been made to the range of planning guidance available to developers and advice has been provided on habitat management to reduce the impact of extreme climatic events.

Scotland's international reputation continues to be enhanced through SNH activity in the continuing development of EU NATURA and Marine (Scotland) Act 2010 protected site networks; their work on species reintroductions; and their contribution to policy development and research at UK and EU levels.

The Loch Lomond and the Trossachs National Park and the Cairngorms National Park have continued to manage and protect the natural heritage, land and water resources in these special places, provided enhanced visitor experience in two of Scotland's premier sustainable tourism destinations, and contributed to the growth of the rural economy. The Scottish Government's strategic review of National Parks Authorities in 2008-09 recommended closer alignment and harmonisation between the two National Parks and good progress has been made in establishing collaborative working arrangements between the organisations and reducing running costs.

Our National Parks will continue to work collaboratively with communities and public, private and third sector organisations to conserve and enhance the environment, which is central to the aims of the National Parks and is integral to the sustainable development approaches needed to support communities and businesses to protect these special areas for future generations.

Our National Parks are national tourism assets and the sustainable approach to visitor management will continue to be developed to balance the needs of visitors, communities and conservation to deliver high quality destinations. As Scotland's largest designated landscapes, our National Parks will continue to play a role in mitigating and adapting to climate change.

The Scottish Environment Protection Agency (SEPA) took significant steps forward with the programme of organisational change on which it embarked two years ago. Highlights of the year include realising corporate changes and meeting key environmental targets, along with dealing with outside factors such as the severe winter weather and the Icelandic volcanic eruption. SEPA has reduced its staff complement by around 230 posts and through its transformational change programme this allowed SEPA to make almost 23 per cent savings.

At a time of continuing economic challenge and public sector reform, and in the context of the significant savings already achieved, SEPA has been identifying further opportunities to simplify and improve the way Scotland's environment is understood, protected and improved. SEPA's proposals for Better Environmental Regulation were well received by industry sectors and environmental organisations when consulted on last year. SEPA will be more sharply focused on core activities, delivering better, more customer-friendly regulation, and supporting sustainable economic growth (around 10,000 businesses have already benefited from waived or reduced SEPA charges, totalling almost £3 million).

SEPA's Step Change in Science programme for transforming its approach to science and strategy has delivered on some major milestones, including the establishment of a risk-based national environmental monitoring programme and the partnership that is developing a new portal for environmental information - 'Scotland's Environment Web'. SEPA has also announced its intention to move to a major new science facility in the central belt, part of its progress towards a two laboratory 'centre of excellence' model and complementing its new laboratory in Aberdeen which was opened in May 2010.

SEPA will continue to work effectively with government, local authorities and other partners to integrate efforts on flood risk management, climate change, land use planning and contributing to the further development of a recovering Scottish economy.

The Zero Waste Scotland programme has been set up to take Scotland towards its goal of being a Zero Waste Nation. Successes so far include:

• A total of £7 million has been invested in six anaerobic digestion (AD) and composting facilities through the large scale organics support programme delivered by Zero Waste Scotland. Collectively these projects will provide new annual processing capacity for up to 167,000 tonnes of organic waste, including food waste collected from homes and businesses. Funded projects include the largest AD facility in Scotland, a 75,000 tonnes per annum site developed by Scottish and Southern Energy at Barkip in Ayrshire. As well as recycling food waste into useful fertiliser or soil additive, anaerobic digestion also produces a biogas that can be used to generate energy.
• Zero Waste Scotland's business resource efficiency programme helped more than 800 Scottish businesses to reduce their waste and resource consumption in 2010. If taken forward, the recommendations could save an estimated £17 million to the businesses involved as well as cutting consumption by 28,000 tonnes and waste by 47,000 tonnes. Engagement through the Courtauld Commitment has led to reductions to packaging and food waste in Scotland amounting to 120,000 tonnes.

The Government is working in close partnership with local authorities and other responsible authorities such as Scottish Water to implement the Flood Risk Management (Scotland) Act 2009. This is the most significant change in half a century and leads to a risk-based approach to flood protection. As part of this work to protect the people and businesses of Scotland from the risk of flooding, the government published, in June 2011, Delivering Sustainable Flood Risk Management, a blueprint upon which SEPA, local authorities and Scottish Water and any other future responsible authorities will deliver their flood risk management responsibilities.

Other important milestones over the past four years include:

• the creation of a new flood forecasting service for Scotland;
• the launch of a new £8.6 million system to provide advance flood warnings to the public; and
• a national assessment of flood risk across the whole of Scotland carried out by SEPA with a public consultation on the results.

The Climate Change (Scotland) Act 2009 sets world leading targets of at least 42 per cent emissions cuts by 2020 and at least 80 per cent cuts by 2050, compared to 1990.

We are already more than halfway to achieving our target of reducing emissions by 42 per cent by 2020: Scotland's emissions have fallen by 27.6 per cent from 1990 (including international aviation and shipping figures and our participation in the EU emissions trading system). Low Carbon Scotland: Meeting the Emissions Reduction Targets 2010-2022, our first climate change Report on Proposals and Policies, published in March 2011, puts in place the annual markers and sets the strategic direction to take us to our 42 per cent target for 2020.

We are working with the UK Government and other forward-thinking countries seeking to persuade the EU to raise its 2020 targets for emissions cuts from 20 per cent to 30 per cent. The global low carbon economy is inevitable and many countries are already beginning to seize the opportunities despite the lack of international agreement. We have committed to plant 100 million trees by 2015 as part of an international initiative by The Climate Group to plant 1 billion trees as an endowment for Copenhagen. Scotland has less than 0.1 per cent of the global population, but has offered to meet 10 per cent of the target by planting four trees for each person in Scotland for each year to 2015. As well as our Maldives Partnership around marine energy, we announced international partnerships with the Inter-American Development Bank, the Global Carbon Capture and Storage Institute and work with Malawi at the UN Conference in Cancun in December 2010.

Our Public Engagement Strategy, published on 30 December 2010, shows how the Scottish Government will work with others to drive forward to the low carbon economy, and on 1 January 2011 a climate change duty on public bodies came into force. We are also working with the UK Government to implement the CRC Energy Efficiency Scheme (CRC). The CRC started in April 2010, with around 200 participants in Scotland, and will reduce emissions from large commercial and public sector organisations, including the Scottish Government, most local authorities and NHS Boards, banks and retailers.

Despite the economic downturn, confidence in the forestry sector remains high. The last five years have seen record levels of investment in excess of £250 million, supporting the 31,000 jobs and £670 million contribution to the economy that the sector currently generates. The Scottish Government's commitment to reduce our carbon emissions and tackle the effects of climate change has meant challenging targets for woodland creation, leading to creative ways to encourage new woodlands, including the introduction of the Carbon Code and the leasing of land from farmers by Forestry Commission Scotland (FCS). The national forest estate's contribution to Scotland's climate change and renewable energy commitments took a leap forward with the signing of agreements with industry partners to develop the wind and hydro energy potential of the forestry land managed on behalf of Scottish Ministers. It is estimated that some 2GW of additional wind and hydro capacity could be installed on the national forest estate by 2020. These agreements also bring leading edge payments to communities along with the ability to invest in the projects. The Central Scotland Green Network is a Scottish Government priority, led by FCS with the aim of changing the face of central Scotland, to make it a more attractive place to live in, to do business in and to visit; to help absorb carbon dioxide, and enhance biodiversity; and to promote active travel and healthier lifestyles. It builds on the work of the successful Woods In and Around Towns (WIAT) programme which has helped more than 610,000 people gain access to their local woodland. In addition, local communities now have the opportunity to lease parts of the national forest estate following the decision to enhance the National Forest Land Scheme.

MANAGING PRESSURES AND CUTS IN PUBLIC EXPENDITURE

The scale of the total reduction in the Scottish Government Budget for 2012-13 has required tough decisions. All of our public bodies, including the Scottish Government's own agencies, will have to make significant efficiency savings in both administration and programme budgets. Nevertheless, within this context, we have been able to: maintain our world class science and research base; increase investment in support of the food industry and supply chain development; invest in better rural connectivity; protect core parts of the SRDP such as LEADER; protect farm advice and veterinary surveillance services to remote and rural areas; protect our ambitious Zero Waste programme; make new provision for meeting EU environmental directives; increase investment in our National Parks; and embed and increase the value of our Land Managers Renewables Fund.

OUR PRIORITIES

Our priorities are to:

• increase further our commitment to Scotland's food and drink industry, more than doubling the ongoing budget for food industry support over the Spending Review period;
• empower communities through a range of measures, including the Climate Challenge Fund, the creation of a new land fund, and investment in renewables and rural broadband;
• invest to create the framework required for the sustainable economic development of Scotland's offshore wind and marine renewables sector;
• establish a Next Generation Digital Fund to support the roll-out of next generation broadband across Scotland, with a particular focus on rural and remote areas;
• provide financial support for our rural economy through payments to farmers, fishermen and land managers, so often the mainstay of fragile rural communities. We have sought to prioritise these areas of expenditure, which include elements of the Scotland Rural Development Programme (SRDP) and the European Fisheries Fund (EFF);
• invest through the EFF in order to deliver our commitment to assist with capital investment, increasing competitiveness in the aquaculture, fishing and fish processing industries, and to promote a resilient fleet structure - sectors that contribute significantly to the Scottish economy and that directly support many rural economies;
• work actively to reform the Common Fisheries Policy and the post-2014 European Marine and Fisheries Fund to: enable more sustainable fishing, which tackles discards; ensure the continued viability of the fishing industry; help conserve marine ecosystems; achieve economically viable, competitive and green aquaculture; help sustain vibrant fishing-dependent communities; and support cross-cutting priorities, which have real potential to generate savings and growth in coastal areas;
• continue the negotiations that began in 2011, between the European Commission, Member States and the European Parliament, on the EU budget for 2014-2020
  - including the budget for the Common Agricultural Policy (CAP) - and on the detailed rules for making CAP payments during that period. Scotland is well placed to influence these negotiations thanks to the Inquiry into Future Farm Support which we commissioned in 2009-10, chaired by Brian Pack OBE, and we are working closely with stakeholders. The Government's position on the future CAP is guided by the principles of fairness, flexibility and simplicity;
• maintain our investment in flood protection and our programme of work to implement the Flood Risk Management (Scotland) Act 2009. This is a major programme of work for the Government and responsible authorities such as individual local authorities and Scottish Water. These actions will provide reassurance to communities and businesses at risk of flooding and could save costs in the future. We will continue to invest in ensuring that we have clean air and water and the portfolio will spend £5.2 million on natural assets and flooding in 2012-13;
• develop our River Basin Management Plans further, recognising the multiple benefits that promotion of our water environment can have, for example supporting natural flood management, supporting biodiversity and protecting our soils; and
• aim to increase woodland planting to 10,000 hectares per year, recognising that forestry continues to be an area of major importance for climate change. The government will invest £65.5 million in the Forestry Commission and Forest Enterprise in 2012-13.

Spending plans for 2012-15 are set out below.

Table 11.01: Detailed Spending Plans (Level 2)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
EU Support and Related Services	139.7	116.4	105.4	103.3
Research, Analysis and Other Services	81.4	77.1	74.2	73.2
Marine and Fisheries	61.3	59.2	58.4	61.7
Environmental and Rural Services	169.6	193.2	190.0	192.8
Climate Change	17.6	19.5	19.5	19.4
Forestry Commission	45.2	42.4	41.3	41.4
Forest Enterprise	25.8	23.1	22.7	21.7
Total Level 2 *	540.6	530.9	511.5	513.5
of which:
DEL Resource	491.0	495.8	484.3	482.6
DEL Capital	49.6	35.1	27.2	30.9
AME	-	-	-	-

*Since the publication of the 2011-12 Draft Budget there have been some changes in responsibility within the portfolio. Moving towards the launch of the Crofting Commission on 1 April 2012, part of the work undertaken by the Crofters Commission has transferred to the Rural Payments and Inspections Directorate. Climate Change Policy Development and Implementation transferred from the former Finance and Sustainable Growth portfolio and a new Level 2 has been created to accommodate this budget along with the Sustainable Action Fund (previously within Environmental and Rural Services) and the Land Managers' Renewables Fund which has been created from other Level 3 budgets within the portfolio. Within Forestry Commission Scotland the capital lines under Forestry Commission and Forest Enterprise have been amalgamated under Forest Enterprise. Environmental and Rural Services includes budgets recently devolved from the UK Government for Animal Health and Welfare from 2012-13 onwards.

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
EU Support and Related Services	139.7	113.6	100.1	95.6
Research, Analysis and Other Services	81.4	75.2	70.5	67.7
Marine and Fisheries	61.3	57.8	55.5	57.1
Environmental and Rural Services	169.6	188.4	180.5	178.3
Climate Change	17.6	19.0	18.5	17.9
Forestry Commission	45.2	41.4	39.2	38.3
Forest Enterprise	25.8	22.5	21.6	20.1
Total Level 2	540.6	517.9	485.9	475.0
of which:
DEL Resource	491.0	483.7	460.1	446.4
DEL Capital	49.6	34.2	25.8	28.6
AME	-	-	-	-

EU Support and Related Services

Table 11.03: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Single Farm Payment Scheme *	434.0	434.0	434.0	434.0
Scottish Beef Calf Scheme	21.0	21.0	21.0	21.0
Business Development	43.8	43.8	36.8	42.5
Less Favoured Area Support Scheme	65.5	65.5	65.5	65.5
Agri Environment Measures	48.9	40.0	38.0	38.0
Forestry	4.3	3.5	2.7	2.4
Rural Enterprise	14.6	9.2	9.0	9.0
Rural Communities	6.5	5.0	4.0	4.0
LEADER	10.5	10.5	10.5	10.5
Technical Assistance	0.3	0.3	0.3	0.3
Crofting Assistance	0.7	0.7	0.7	0.7
Payments and Inspections Administration Costs	38.5	36.6	34.7	33.6
CAP Compliance Improvements	3.3	3.3	3.3	3.3
EU Income	(552.2)	(557.0)	(555.1)	(561.5)
Total	139.7	116.4	105.4	103.3
of which:
DEL Resource	109.3	97.3	89.5	88.1
DEL Capital	30.4	19.1	15.9	15.2
AME	-	-	-	-

* Includes Energy Crop Payments

What the budget does

The EU Support and Related Services budget provides support to the rural economy through the Common Agricultural Policy. Agriculture is an important element of the Scottish economy with a large number of people in rural areas directly employed in agricultural activities. The direct support measures (Single Farm Payment and the Scottish Beef Calf Scheme, £455 million in 2012-13) support over 20,000 producers, providing stability for farmers, enabling them to adapt to major changes, and leading to a sustainable agricultural sector. Funding is solely from the EU European Agricultural Guarantee Fund (EAGF).

The Scotland Rural Development Programme (SRDP) funding running over the period 2007 to 2013 comprises National Funds, National Modulation, Compulsory Modulation and funding from the European Agricultural Fund for Rural Development (EAFRD).

The total EU funding for the Programme period is €679 million. The National Funds component includes funding from the Forestry Commission Scotland (Woodland Grants) and the Environmental and Rural Services budget (Scottish Natural Heritage). The rate and level of draw down of EAFRD depends on the amount of National funds, the co-financing rate and the exchange rate.

Through the Payments and Inspections Administration Costs, we deliver regulatory functions in relation to national and international legislation. This includes carrying out inspections to enforce marketing standards for our eggs, fresh fruit and vegetables. We also provide expert scientific and technical advice and information services on agricultural crops and aspects of the environment.

The CAP Compliance Improvements budget funds projects to prepare for the new Common Agricultural Policy and to enable improved compliance with EU regulations relating to support and development measures e.g. by upgrading our mapping systems to meet new regulations.

In 2012-13 we will:

• distribute a further £434 million through the Single Farm Payment to approximately 20,000 farmers. We will continue to ensure the prompt and efficient payment of this vital support for Scotland's agriculture industry. In the longer term, we are clear that there is an ongoing need for some direct support to farmers in order to maintain both a productive agricultural sector in Scotland, and our capacity to respond to issues of food security; and
• continue to support rural communities and land managers under the Scotland Rural Development Programme with particular emphasis on increasing sustainable business activity and competitiveness in agriculture and forestry, improving the environment and the countryside, and enhancing the quality of life in rural areas.

Research Analysis and Other Services

Table 11.04: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Programmes of Research	62.7	58.7	56.7	55.7
Royal Botanic Garden Edinburgh	11.9	11.1	11.1	11.1
Contract Research Fund	5.3	5.9	5.0	5.0
Economic and Other Surveys	1.5	1.4	1.4	1.4
Total	81.4	77.1	74.2	73.2
of which:
DEL Resource	78.1	75.1	72.2	71.2
DEL Capital	3.3	2.0	2.0	2.0
AME	-	-	-	-

What the budget does

The Research Analysis and Other Services budget funds short and long-term scientific research to support the work of government and its advisory bodies in policy development and implementation; maintains a Scottish-based scientific capability of international standard at our Main Research Providers (MRPs) ^[2] adapting and evolving the infrastructure and skills base to meet future challenges.

In addition, the budget supports the Royal Botanic Garden Edinburgh's work on national and international plant biodiversity, and builds links and partnerships with other funders and providers of research including the UK Research Councils and the University sector.

In 2012-13 we will:

• continue to support five-year programmes of strategic research, 'Environmental Change' and 'Food, Land and People', at our MRPs;
• fund policy-facing Centres of Expertise in 'Climate Change', 'Water' and 'Animal Disease';
• target development of the Food and Drink and Animal Health sectors by supporting Strategic Partnerships with the university sector; and
• invest in collaborations and partnerships with other science funders, increasing the opportunities for our MRPs to access and bring additional sources of research income to Scotland from the UK and overseas.

Marine and Fisheries

Table 11.05: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Marine Scotland	55.9	54.3	53.5	52.5
EU Fisheries Grants	11.0	10.0	10.0	18.5
Fisheries Harbour Grants	0.4	0.4	0.4	0.4
EU Income	(6.0)	(5.5)	(5.5)	(9.7)
Total	61.3	59.2	58.4	61.7
of which:
DEL Resource	57.7	55.6	54.6	53.6
DEL Capital	3.6	3.6	3.8	8.1
AME	-	-	-	-

What the budget does

The Marine and Fisheries budget supports the sustainable use of Scotland's coasts and seas and freshwater fish populations. These natural resources are vitally important to sustainable economic growth and especially so in remote rural areas.

Marine Scotland is the key body with the job of managing the sea. The need for marine expertise and capability is growing with the new commitments on renewable energy and increased international requirements. We have increased resources and capacity dedicated to offshore energy, creating new licensing and planning teams with scientific support, but we recognise that these areas continue to develop and we will strengthen these areas further in the years ahead. In particular, within the Marine Scotland budget we are increasing the resources for renewables and seafish science activities. In addition to the established programme of work developed with Ministers since 2007, there

are substantial new manifesto commitments which Marine Scotland will contribute to delivering.

In 2012-13 we will:

• develop the National Marine Plan for Scotland and regional marine planning to ensure balanced use of the seas within a wider ecosystems approach;
• promote sustainable marine renewable developments;
• through Common Fisheries Policy reform, work towards radical reform of EU fisheries policy and discard-free fisheries;
• support expansion of exports of Scottish fish and continue efforts to secure Marine Stewardship Council sustainability for Scottish fish stock;
• increase the value of Scottish seafood through a new body focusing on the supply chain from net to plate;
• continue to support the sustainable development of the Scottish fisheries, aquaculture and fish processing industries through grants awarded through the European Fisheries Fund;
• improve the frameworks within which the aquaculture industry and recreational fisheries operate through the planned Aquaculture and Fisheries Bill; and
• work towards the Scottish Parliament taking responsibility for the management of the Crown Estate in Scotland so that resources generated in Scotland are used to support Scottish communities and the development of offshore renewables.

Environmental and Rural Services

Table 11.06: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Scottish Natural Heritage	60.7	57.8	55.2	53.0
National Park Authorities	12.4	13.1	12.9	12.9
Natural Resources	0.3	0.3	0.3	0.3
Scottish Environment Protection Agency	39.4	38.0	37.5	37.5
Zero Waste	26.4	26.4	26.4	26.4
Natural Assets and Flooding	5.7	5.2	5.3	5.7
Next Generation Digital Fund	0.0	8.0	12.0	15.0
Crofting Commission	5.2	4.0	1.0	2.5
Rural Cohesion	2.7	3.4	3.6	3.8
Agricultural and Horticultural Advice and Support	4.1	4.1	4.0	4.1
Veterinary Surveillance	5.2	5.2	5.2	5.2
Animal Health	1.3	20.0	18.9	18.2
Food Industry Support	2.0	4.5	4.5	5.0
Private Water	3.8	2.8	2.8	2.8
Drinking Water Quality Regulator	0.4	0.4	0.4	0.4
Total	169.6	193.2	190.0	192.8
of which:
DEL Resource	160.5	184.8	186.1	188.8
DEL Capital	9.1	8.4	3.9	4.0
AME	-	-	-	-

What the budget does

The Environmental and Rural Services budget primarily supports the commitment, set out in the National Outcomes, to value and enjoy our built and natural environment and protect it and enhance it for future generations. Funding will support Scottish Natural Heritage's work on delivering Scotland's biodiversity targets, fulfilling Scotland's contribution to the UN Convention on Biological Diversity (CBD), meeting Scotland's contribution to the promotion of access and helping to ensure that new developments take proportionate account of our valuable natural heritage. It also includes top priorities such as our budgets that support the food and drink industry and the empowerment of rural communities.

In 2012-13 we will:

• support Scottish Natural Heritage's work on providing advice on all of Scotland's natural environment and wildlife; delivering Scotland's biodiversity targets; the continued delivery of the requirement of relevant EC Directives; and helping to ensure that new developments take proportionate account of our valuable natural heritage;
• fund the National Park Authorities to enable them to consult on and publish new National Park Plans for 2012-17. The National Park Plans will be approved by Scottish Ministers and will set the direction and framework for those involved in managing the National Parks as well as setting clear targets and outcomes to which relevant public bodies and partners will commit to delivering;
• implement the Wildlife and Natural Environment (Scotland) Act 2011 to help deal with some of the most pressing issues in Scotland's countryside in order to maximise the associated environmental and economic benefits, while minimising irresponsible or damaging practice. The Act updates wildlife and natural environment legislation in relation to a number of areas including: game law; deer; invasive non-native species; species management; snaring; wildlife crime and the enforcement thereof; and muirburn;
• work with partners to implement the Land Use Strategy in order to achieve a more integrated approach to land use, maintaining the future capacity of Scotland's land. The Land Use Strategy action plan sets out how the proposals of the strategy will be taken forward. This action plan will be maintained in the light of progress, stakeholder feedback and other developments. The Government will also provide an annual progress statement;
• enable the Scottish Environment Protection Agency (SEPA) to carry out its regulatory functions and to continue to safeguard Scotland's environment and human health. SEPA's spending is largely determined by the need to implement and enforce regulatory regimes required by national and EU legislation. SEPA will continue to monitor the quality of Scotland's environment and to implement the Water Environment and Water Services (Scotland) Act 2003. SEPA is also responsible for supporting the implementation of the Flood Risk Management (Scotland) Act 2009 and provision is included to support the continued development of the Floodline system and the Scottish Flood Forecasting Service. Since 2009, SEPA has embarked on a significant programme of transformational change. The biggest element of the change proposals is Better Regulation. SEPA plays a lead role and will continue to support government in delivering a more risk-based, targeted and proportionate form of regulation and associated scrutiny;
• support through the Zero Waste budget a number of programmes including: work to develop markets for recyclate use, waste prevention and minimisation; reuse and recycling awareness; support for community recycling groups; and support for local authorities to achieve municipal waste targets in 2011 and beyond. In addition, the budget funds Keep Scotland Beautiful, which carries out anti-litter and anti-fly tipping campaigns and promotes environmental education;
• support our actions to protect the land, air and water environment, and to protect communities from pollution, flooding, noise and nuisance through the Sustainable Action Fund (within the Climate Change Level 2) and the Natural Assets and Flooding budgets. The funding provided for Natural Assets and Flooding supports initiatives on flood risk management and research to assist policy development in these areas. Resources are also provided for air quality support measures which are designed to improve air quality in hot spot areas in relevant local authorities. In addition, funding for noise supports the costs of ongoing mapping and action planning required under the EU Environmental Noise Directive;
• establish a Next Generation Digital Fund, as part of the Scottish Futures Fund, to accelerate the roll out of superfast broadband across Scotland, with a particular focus on rural areas. The fund will seek to optimise public sector investment in broadband infrastructure and leverage maximum levels of private sector investment to improve broadband coverage in Scotland. We will develop a roll-out strategy with funding proposals by the end of March 2012. (Responsibility for the fund rests with the Infrastructure and Capital Investment portfolio; however, as much of the investment will be targeted in rural areas, the spending plans for the Next Generation Digital Fund are shown in this portfolio chapter);
• continue to implement the provisions in the Crofting Reform (Scotland) Act 2010. The Act aims to make crofting fit for the 21st century, so that it can make an ongoing contribution to the development of a thriving rural Scotland. In particular, a new Crofting Commission, with a majority of members elected by crofters themselves, will replace the Crofters Commission in 2012;
• ensure that farm and other land management businesses have access to expert advice and support on a wide range of issues. In 2012-13 we will ensure these services are focused on the key priorities of climate change, sustainability, and overall business performance;
• deliver continuing improvements in the health and welfare of Scotland's livestock, working with industry partners on a new animal health strategy that fits the distinctive circumstances of our livestock sector, including the industry-led programme to control bovine viral diarrhoea. The animal health budget for the Spending Review now includes the budgets devolved from Westminster that cover the activities of the Animal Health and Veterinary Laboratories Agency as well as our contribution to the British Cattle Movement Database;
• continue to invest in Scotland's food and drink industry, increasing this budget by 150 per cent over the Spending Review period, supporting effective and efficient supply chains and collaborative ventures and working with stakeholders to ensure that sales of Scotland's food and drink continue to grow;
• continue our investment in rural cohesion, including the creation of a new Scottish land fund to support community land purchase;
• ensure that the Private Water budget supports actions to sustain and improve the health of the people of Scotland through good safe drinking water. Provision is made to protect the quality of private drinking water supplies through the preparation of information and advice aimed at improving public understanding of how to protect and maintain such supplies. This is supported by the Private Water Supply Grant Scheme, which provides financial assistance to users of private water supplies towards the upgrade of these supplies; and
• support the Drinking Water Quality Regulator for Scotland (DWQR) in carrying out its duties under the Water Industry (Scotland) Act 2002.

Climate Change

Table 11.07: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Climate Change Policy Development and Implementation	1.2	1.2	1.2	1.1
Sustainable Action Fund	14.0	15.3	15.3	15.3
Land Managers' Renewables Fund	2.4	3.0	3.0	3.0
Total	17.6	19.5	19.5	19.4
of which:
DEL Resource	17.6	19.5	19.5	19.4
DEL Capital	-	-	-	-
AME	-	-	-	-

What the budget does

The Climate Change budget supports the development and implementation of the government's climate change policy and provides resources for both the Sustainable Action Fund and the Land Managers' Renewables Fund.

In 2012-13 we will:

• contribute to funding for the Committee on Climate Change, support both improvement work on the Greenhouse Gas Inventory and outreach work with the Intergovernmental Panel on Climate Change, and fund other costs associated with implementing the requirements of the Climate Change (Scotland) Act 2010. We will also support engagement with the business community, including a contribution to the work of the Mayday Network;
• continue the work of the Sustainable Action Fund (SAF), driving progress towards sustainability outcomes, of which climate change action is a crucial aspect. The SAF includes the flagship Climate Challenge Fund, and we will build on its success in empowering communities to come forward with their own solutions to make a significant reduction in their carbon emissions. The SAF will also support implementation of the climate change Public Engagement Strategy and the continuing development of guidance on the Public Bodies Duties provisions of the Climate Change (Scotland) Act 2010; and
• continue to offer and increase the funding for the Land Managers' Renewables Fund which was established in 2011-12 to address the costs associated with the pre-planning stage of renewable energy projects for farmers and land managers. The Fund will facilitate the development of renewables on farm and support the aims of the Renewables Routemap and the future Agri-Renewables Strategy;

Forestry Commission

Table 11.08: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Woodland Grants	36.0	36.0	36.0	36.0
Policy, Regulation and Administration	5.1	5.1	5.1	5.1
Programme Costs	22.0	21.0	19.9	20.0
Depreciation	0.1	0.1	0.1	0.1
EU Income	(18.0)	(19.8)	(19.8)	(19.8)
Total	45.2	42.4	41.3	41.4
of which:
DEL Resource	45.2	42.4	41.3	41.4
DEL Capital	-	-	-	-
AME	-	-	-	-

What the budget does

Forestry Commission Scotland works to increase the contribution of Scotland's forests to health and wellbeing, the Scottish economy and environmental sustainability. It does this by regulating and supporting the private forestry sector, sustainably managing the Scottish Ministers' national forest estate, promoting the expansion and sustainable management of Scotland's woodlands, increasing the contribution of woodlands to the quality of our towns and cities through the Woodlands In And Around Towns initiative, and supporting projects that reduce the impact of timber transport operations. Climate change will continue to be an area of major importance for forestry, with the aim of increasing woodland planting to 10,000 hectares per year. Along with Scottish Natural Heritage, Forestry Commission Scotland is a lead partner for the Central Scotland Green Network;

In 2012-13, we will:

• continue support for woodland expansion, drawing on the work of the Woodland Expansion Advisory Group to identify which types of land are best for tree planting;
• promote predictable and stable timber supplies to help the Scottish economy;
• invest in research on timber product development and use of timber in construction;
• use woodland access to help improve physical and mental health in Scotland;
• champion the Central Scotland Green Network and catalyse action on the ground;
• stimulate management of native and ancient woods using information from the Native Woodland Survey of Scotland;
• work with other portfolios to further promote the development of biomass for heat;
• provide information to help forest managers consider how best to adapt to climate change when planning future management of forests;
• enhance pest/pathogen vigilance and rapid response capacity; and
• promote landscape-scale restoration exemplar projects to contribute to the National Ecological Network.

Forest Enterprise

Table 11.09: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Operating Costs	22.6	21.1	21.1	20.1
Land Purchases and Woodland Creation	10.0	10.0	10.0	10.0
Capital Expenditure	3.2	2.0	1.6	1.6
Land Sales	(10.0)	(10.0)	(10.0)	(10.0)
Total	25.8	23.1	22.7	21.7
of which:
DEL Resource	22.6	21.1	21.1	20.1
DEL Capital	3.2	2.0	1.6	1.6
AME	-	-	-	-

What the budget does

The Forest Enterprise Scotland budget supports the sustainable management of the national forest estate, maintains effective planning and consultation systems, maximises the value to the Scottish Economy of the estate's timber resource, other forest products and estate assets, uses the estate to conserve and enhance biological diversity cultural heritage and landscape quality, and increases the opportunities for all to visit, enjoy and learn from the estate.

In 2012-13, we will:

• advance the next phase of renewables developments on the national forest estate in support of the Scottish Government's renewable energy targets;
• sustain at least three million cubic metres of timber production on the national forest estate through the economic downturn;
• implement an integrated skills programme for the jobless;
• create over 1,000 hectares of new woodlands each year on the national forest estate;
• fully open the Short Term Leasing Scheme for productive woodland creation; and
• invest in the upgrading of visitor facilities critical to the rural tourism economy.