 We welcome to the first meeting of the Rural Affairs and Islands Committee in 2024 and welcome to the meeting Emma Harper MSP, who is substituting for Karen Adam this morning. Before we begin, I remind everyone using electronic devices to please switch them to silent. Our first item of business today is consideration of the 2024-25 Scottish budget and I welcome Marie Guge with the Cabinet Secretary for Rural Affairs, Ilyns, rural affairs, land reform in Ilyns, and our officials, George Burgess, the director of agriculture and rural economy, Erika Clarkson, the head of island policy and Karen Moorlie, head of finance in agriculture and rural economy. I invite, I'll beg a panel, I've also got David Sonorlie, who is the director of marine from the Scottish Government. I'd like to invite the cabinet secretary to make an opening statement. Thanks very much, convener, and to the committee members also for inviting me to address the committee today. When I attended the pre-budget session in September, I set out the priorities of my portfolio. I'm pleased to come back to outline how the 24-25 Scottish budget, which had been presented by the Deputy First Minister to Parliament in December, will help to deliver on those priorities within the wider context of this Government's priorities. This budget is, of course, set in very turbulent circumstances. The global level, the impacts of inflation, we've seen war in Ukraine, and the after-effects of the pandemic, of course, continue to create instability. In the UK, the combined effects of Brexit and some of the disastrous Westminster policies mean that we're uniquely vulnerable to these internal shocks. Those Brexit impacts continue to harm Scotland's rural and island businesses and communities and create new challenges every year for the rural affairs land reform and islands portfolio to respond to. Against that background, the decisions that we've taken in this budget are driven by our values and prioritise our three missions. We have chosen a progressive path to invest in our people, our economy and our public services. Now, where we can, we've taken action to prioritise support to the most vulnerable in our communities, to attract investment and to support a growing sustainable economy and address the nature and climate emergencies. My priorities within that are clear. The budgets allocated to my portfolio will continue to make a vital difference to our rural, coastal and islands economy. As I did in the last financial year, I will prioritise the direct cash injection of over £600 million that my portfolio makes into the economy for rural, agriculture, marine and island communities. The Scottish Government is now providing the most generous package of direct support for farmers and crofters anywhere in the UK. We are also committed to getting money to people and businesses as early as we can every year to help them meet on-going inflationary and cost-of-living pressures. In 2023, the first tranche of direct payments were made in September, earlier than the previous year, and exceeded forecasts by paying nearly £300 million in basic payments in the first three weeks. We will continue our critical work with the agricultural sector to co-develop and deliver on the agricultural vision, investing to help Scotland to become that global leader in sustainable and regenerative agriculture. We have also committed to delivering agri-environment investment as part of an overall budget of around £30 million to support biodiversity. My portfolio has expanded to include responsibility for peatland and forestry and we are maintaining our record world-leading investment in peatland and investment in you with land-creation planting will continue to contribute to our climate change targets and net zero ambitions. By maintaining the £14 million for marine fund Scotland, we acknowledge the vital role that our seas play in supporting the economy and coastal communities through fishing and aquaculture as well as supporting that activity to improve and restore the marine environment. Our commitment to supporting the ambitions for our islands also remains strong with an investment of £6.7 million and that is an increase from the resource and capital spending review that was published in May of 2022 with £4.3 million now allocated in capital. Members of the committee have rightly taken a keen interest in the ring fence money due to return to the portfolio. I therefore welcome the return of the first tranche of £15 million of this funding in the £24.25 budget. In the draft budget, this funding is allocated as resource funding but it is capital priorities across the portfolio where the greatest need exists. Therefore, I am glad to have received the Deputy First Minister's agreement in recent days that the portfolio will instead receive that £15 million as capital funding. It will fund vital unfunded capital priorities within the portfolio which will provide that really vital support to our rural communities including agri-environment climate scheme, agricultural transformation fund and crofting grants. The Government will do what we can with all that we have to support our priorities in rural industries and sectors through this and other portfolios but the biggest challenge we face is the on-going failure of the UK Government to at least match fund pre-Brexit levels of funding from the EU nor to provide that multi-annual funding framework which would allow us to take a longer term view to some investments. Of course, we have no sense of what the funding future holds from the current or any future Westminster Government. I know that, of course, she will want to scrutinise carefully our budget plans but I would ask again that the committee might resolve to work with Government to support our efforts to secure the future rural funding certainty that Scotland needs and which we very much deserve. You have tried to put a positive slant on that but this is a disaster. You sit round the cabinet and lobby I presume for funding for the agriculture sector but you failed. We have a 9.3 per cent reduction in the agri budget which is the biggest reduction of any portfolios which is astounding given that agriculture is expected to deliver on biodiversity loss and climate change. Where has it all gone wrong? I would disagree with you in a certain respect, convener. I do not think that there is much about putting a positive spin on things. The fact is that we have had one of the worst settlements that we have seen since devolution. We have seen the capital funding that we receive while when we were members of the EU we would receive a mixture of resource and capital funding. Now we are only getting replacement funding through as resource so our capital resource has been falling. As a whole we are seeing our capital resource fall by around 10 per cent and what we have seen in terms of the overall settlement to the Scottish Government is a real term cut into the budget of 1.2 per cent. I do not think that you will find any cabinet secretary appearing in front of a committee giving evidence on their budget and ultimately being happy about the settlement that we have got. I do not think that the Scottish Government is a whole. It is a very difficult settlement. We have all had to take difficult decisions and make very difficult choices within that, which is why I am here to answer and address the committee today. One thing that I am pleased that we have been able to do is protect that funding where I think it is needed most. When you look at the direct payments that we have, the funding that goes directly to our farmers, our crofters and our land managers, we have been able to protect those levels of funding and I know that that cash injection is so vital for our rural communities as well. I think that if you look at our wider investments across the piece where in some areas that funding has increased, when you look at the funding that we are providing in terms of our food and drink industry, what we are providing in terms of community-led local development, all these different areas where we have kept and maintained vital funding streams, I think that all of that shows where our priorities have been and how we are still continuing to invest in our rural coastal and island communities and also maintaining important funds, as I mentioned in my opening remarks there, such as the Marine Fund Scotland. I do not see anywhere in the agriculture budget where there has been an increase, it is a decrease right across the board, there is nothing increased. My understanding is that £620 million came from the UK Government ring-fence money, of which there are about £595 million plus £25.7 million but money. The Scottish Government topped that up, given a total budget of around £680 million. Has the UK Government contribution, which is ring-fence, decreased? What do you mean in terms of the funding that they have provided us on the basis of last year? It has been at the same level as last year. So we have had that at the same level of funding for the last five years? No, we have not had the same level of funding from the last five years, it was the same as the previous year but I believe in the year before that it was actually less, but I do not know, Karen, if you have further information on that. Ring-fence funding from Treasury was for a three-year settlement figure in 24-25 is the last of the years and the total for that was £620 million. Of the £620 million, that is ring-fenced. Has that budget decreased this year? So, when the Scottish Government hasn't decreased, so any reduction in the budget as a result of the Scottish Government putting less into the agri-pot, is that right? It would be less. But you are right in terms of the UK Government has provided the same level of funding last financial year and this financial year. So when we see real-term cuts of 18.3 per cent in pillar 1, 41 per cent to reduction in agriculture transformation fund, 22.7 per cent business development and so on, that all, as a result of the Scottish Government, can contribute less to the agricultural pot, not the UK Government's agricultural settlement being reduced. By keeping the same level though, that is a real-terms cut. How, what percentage is that? Did you say it was 1.4 per cent real-terms? Well, the overall settlement to the Scottish Government, the real-terms cut is 1.2 per cent. Okay, what's the real-terms cut? And the budget that the UK Government provides? So what's the real-terms cut and the £620 million that the UK Government provides? Well, I'm not going to try and do the maths in my head, but if it's flat in cash terms, if we apply RPI or CPI to that, that would give you the real-terms cut. Yeah, but what I'm trying to work out is that the cut to the budget in real terms is 9.3 per cent, but most of that cut comes from the top-up, if you like, that the Scottish Government has made in the past, not a reduction in the UK budget. Is that correct? Well, again, ultimately, what we are getting from the UK Government equates to a real-terms cut to our budget. The vast majority of our budget used to be, obviously, come from when we were members of the EU, so we are largely dependent on that as making up the vast majority of our funding. So, of course, that has a wider impact, as well as our own funding. It comes back to my opening comments and where we were at the start in relation to settlements right across the piece where we are facing very difficult budget choices, and difficult decisions have to be made. But all of that is exacerbated by the fact that we have the lack of clarity and no certainty on what we are receiving in future, as well as the fact that we are receiving a flat settlement from the UK Government. We are looking at this budget, not future budgets. We will probably deal with that when we look at the agriculture bill. What I was trying to work out is that we have seen a dramatic cut in the agriculture budget, but that has all come from—or the majority of that has come from—the Scottish Government's priorities, not a dramatic cut in the UK budget, which has been the same for the past three years. Apart from the £27 million increase in the bill after the bill review, that was a point that I was trying to make. Maybe that's something you can come back to us with. What I'm interested in is that the pillar one payments are really important because of the support of beef and sheep, fruit and veg producers. There has been a 18.3 per cent cut in that and it's suggested that it's reflecting forecast demands. Can you explain exactly what the reduction relating to reflecting forecast demand actually means? I'd be happy to outline that. As you say, the other pillar one funds exactly as you've said. We have the voluntary coupled support, so we have the beef scheme and the sheep scheme within that. We also have the fruit and veg aid scheme within that as well. I want to be absolutely clear that those budgets remain unchanged. They have not been cut, so we have £48 million, which is allocated to the voluntary coupled support, and £2.7 million, which relates to the fruit and veg aid scheme. The element of that budget that has been reduced is what previously had been the common market organisation. That budget line covered a number of different things, so we had the school milk scheme as part of that. It looked at public intervention and private storage age schemes. To give you an example of those two schemes that I've mentioned within that CMO budget line, first of all, the school milk was a budget that we transferred to education, but that is now funded directly by education and local authorities. I think that we charged that to them. We have only used once the private storage age scheme, and that was in relation to pig meat during Covid. That's not pillar one payments. This is other pillar one payments. That's where I'm just defining what falls within that overall budget line and to be clear on where any movement has been. The common market organisation line had £9 million against it. That fund went largely, while it was unspent, apart from the specific examples that I've talked about. That is where it was felt that the resources, rather than having a budget line against funding that hadn't been getting utilised, we were better to reallocate that to other areas where the funding could be spent. That's why the other pillar one scheme looks like there has been a reduction. I've got supplements from Rachel Hamilton, Ariane Burgess and Alasdair Allan. Good morning, cabinet secretary. Can I get some clarification on the previous questions that the convener was asking? You say that the UK has cut the capital budget and that that's a blame for the cuts that you've made within the rural budget. However, £65 million in total has been cut from the rural affairs budget, but the capital funding for all the portfolios that include health, justice and education have seen cash increases to their capital budgets. How did you stick up for farmers in the cabinet meetings around the budget if all that money saw an increase in capital budgets to those portfolios? However, you're not seeing that right across the piece as well. There is no getting around how difficult the decisions right across the piece have been with us. And what you're saying right across the piece. Why did health, justice and education get an increase to their capital budgets and the farmers who maybe you would agree with me that they do provide Scotland with a public service? Why did that see a £65 million cut when other portfolios didn't and saw an increase? As I said in one of my previous responses, part of the issue in relation to the funding that we get from the UK Government is that it does not come through as a mix of resorting capital as it used to previously. Therefore, we have had a fallen capital allocation throughout that time. Now, together with all my colleagues, of course, my job in cabinet and within the Scottish Government is to represent the needs of farmers, crofters and land managers and of rural Scotland and to really ensure that we are getting the best possible support and prioritising that as best we can. I believe that, with the package that we've got, the capital settlement has been difficult and difficult decisions have been made in this portfolio in other areas as well. Now, you highlight some of the portfolios in Government where there has been an increase. That's not the case right across Government where there have been cuts to capital budgets in other areas, which have been very significant. And in my portfolio in particular, it has been very difficult. When you look at the woodland grant schemes in particular, where we have seen quite a significant shortfall in the capital that is required to deliver on that, it is a very disappointing settlement as a whole. It is my job to try and do what I can with the funding allocations that we have and to ultimately fight that corner. We have made really difficult decisions, but I do believe with the budget that we have, the fact that we have been able to secure that resource to capital switch, which then enables us to do that bit more with the capital funding and what were previously unfunded priorities within the portfolio, I believe, that we are delivering on that as best we can within the settlement that we've got. Thank you Cabinet Secretary for that positive spin from the Scottish Government, but you have not increased the capital budget in this portfolio. It has been cut by £65 million, and the other portfolios have seen an increase. I just don't get the spin on this, but it seems as though farmers have been failed and they are the scapegoats of this budget. I am concerned about the payments to fruit and veg producer organisations. As we have discussed, horticultural provides more food per hectare than any other forms of farming and crofting, and it would be critical to have a healthy horticultural sector in order to achieve Scottish Government's agricultural vision. I would like to hear from you what your plans are in terms of the payments towards the fruit and veg producers' organisations. As I say within that and with the other pillar 1 payments, that's where we have the £2.7 million that goes to the producer organisations that supports our fruit and veg sector. I completely understand the concern that you have outlined, but that has been identified as a key priority. We have been able to meet the needs of those programmes and secure that funding for the interim while we look to transition to what future support may look like. That's where that £2.7 million is critical. It's probably a sterile debate to ask, as some have, why you didn't argue for more from health to go into agriculture, given that there are no doubt, as we speak. Opposition members are on another committee asking why more was not argued for to be taken from agriculture to go into health. Instead, you alluded to the issue of long-term certainty and how there is less long-term certainty in the environment ahead. What is the impact of that on budgeting decisions in agriculture? It is difficult, because this is the last year in which we have any clarity on a settlement and what that is going to look like. From 25 to 26 onwards, we do not know what that is going to look like. We have tried to engage in those discussions with the UK Government. It has proven very difficult. We have raised it on numerous occasions with the various secretaries of state in DEFRA. That was on the basis that there had been a commitment to discuss the intra-UK allocations of funding support, but, as yet, those discussions and the offer of those discussions have not been taken up. I have been in touch with the new secretary of state, Steve Berkeley, on a number of occasions so far. We have yet to receive a response to the correspondence that we have issued in relation to—essentially trying to reset the relationship so that we can have a positive discussion about that going forward, but that is still to take place. Can I just clarify what the total agricultural budget is at the moment? Do you mean for the whole— For the whole agricultural portfolio. So, for the portfolio— Going back to my original question about the total funding being around £680 million, what is it now? What figure are you working with? Well, when you look at the total for over the coming financial year for agricultural support and the related services within that £705 million, then you have the rural services budget on top of that, which is £59 million. If you are just looking at the rural affairs and islands element of the portfolio on that total budget, it is £864.6 million. That is resource and capital. You will no doubt have seen that former NFU president Jim Walker was particularly scathing in the budget. Given that, he hoped that we would be looking at new additional management plans by diversity audits and plans, animal health and welfare plans and so on, on the premise that there would be additional funding for them to be implemented and that farm businesses would have a clear idea of what was expected of them, he is now suggesting that there is no funding and in no shape or form will that be belatedly proposed now, not a chance, he said. We are heading for a cliff edge, beaten by sticks unless, you know, and where is the carrot? So where is the carrot? You know, when we are expecting farmers looking forward into the new agriculture bill, a whole range of new policies are going up to implement to reach our carbon targets or biodiversity targets. So where is the funding to give them reassurance that they will be supported in delivering those targets? First of all, I just want to clarify that funding for that does exist. So we are still continuing to fund the animal health and welfare plans, the carbon audit soil testing within the national test programme. There is £12 million of funding allocated towards that for the coming financial year. But it is very little, isn't it? Well it is up against the forecast spend and I believe that that still allows us to increase the uptake from where we are at the moment. I know that when I was at the committee last year we were looking at very low figures in terms at that time of the number of people that had undertaken carbon audits and soil tests. Now we did see that jump up towards the end of the claim period which was towards the end of February last year and we have seen an increased uptake in relation to that as well. So I would say that we have ensured that what we have within the budget can meet the current level that we are seeing but also that there is that capacity there for uptake within those schemes as well. But I would want to reiterate that the support for that is still there and I would still very much encourage farmers and crofters to take that up. I would like to ask a question about the Agricultural Transformation Fund. It has received a further cut and is now allocated £3 million in resource funding rather than the £5 million in capital funding. I would be interested to understand the reason for the reduction and then also the thinking behind moving it from capital to resource and what the funding will be spent on. I would just want to be clear on that one and I know that that will have been updated since the committee has seen the budget papers but when I talked about the £15 million that we have been able to agree with the Deputy First Minister to switch from resource to capital that is funding which we have been able to move from resource to capital. So it is still £3 million but it is now a capital fund rather than resource since that is where the greatest need was. I think that by having that agreement to switch that funding has been so important. In terms of the Agricultural Transformation Fund, over the past couple of years, we first used that £5 million over the course of 2022-23. That was through the Sustainable Capital Agricultural Grant scheme at that time and it was used for more efficient slurry spreading equipment and really to prioritise that spending on slurry given the water environment regulations that had been introduced and the requirements that farmers were being expected to meet within that so we felt that it should be prioritised in relation to that. However, with a £5 million fund, although initially we had £4.6 million of that committed to the actual spend in the end was around £3 million, over the course of last year with the Agricultural Transformation Fund we had another pot of £5 million available. The spend that was channeled through AICS looking at slurry storage and focusing on that and around I think it was just over £2 million spent over that budget. So, while it is a reduction, it is against what we think we can actually spend within that fund and what the actual spend has been over the course of the past couple of years, too. For a bit more information, why have you taken it from capital and put into resource? I understand that overall envelope has moved, but why is it better to have it in resource for what you are trying to achieve? I would say that that is why we needed it within the capital so that we could ultimately, if we wanted to fund similar items as what we had done in previous years, we would need that funding to be capital rather than resource. You actually moved it previously into capital to do the slurry work and now you are bringing it back into resource and then what do you anticipate it being spent on now while it is in resource? Sorry, I know that the way it is set out, and given the announcements that we are making today, it seems like it is quite a confusing picture. However, the Agricultural Transformation Fund had been capital over the course of the past few financial years. It was as resource this year because of the significant constraints on the capital budget that we have seen. However, again, with the £15 million being returned and the agreement to switch that to capital, that is why that has moved from the resource line into the capital budget. You have the money and a different budget, but you are spending it on the same thing. Can you switch that way? I have a very brief technical question. The regulations are going to require 22 weeks' storage. Will there be any restrictions on claiming through the AICS budget? Farmers who have previously claimed for slurry storage will be excluded, or will they be included in future schemes now that the requirements have increased? Sorry, I think that George wants to come in on that. Yes, thanks, convener. I believe that you have a written question on the subject at the moment and an answer will be coming forward. That rule about claimants only being able to get funding once has been in place for a long time, and to explain the thinking behind it is that it allowed farmers and landowners to get their business into a compliant position if they then changed their business by taking on more livestock or by buying another property, such that that moved them out of compliance. That was something that they should be aware of at the time. Effectively, it was a rule to try to make sure that the benefit was spread around as many recipients as possible. We are still developing the rules for the scheme going forward, but that has been a rule for a considerable period of time. I am certainly aware of one case, convener, in your constituency, where that has meant that farmers have felt us at a disadvantage if they had not realised that at the point that they took on additional property. I think that that is helpful. You are suggesting that farmers increase their business if they get one bite at the chair and they have a budget for an increase in cattle. However, if the regulations change in 22 weeks and farmers are then not compliant, surely the grant would be available for them to then become compliant when those regulations increased to the 22 weeks storage. If the goalposts change in that way in terms of what is compliant, that is a reasonable point. The rules are still being developed for the future scheme. My apologies, Kate Forbes, for being so remote. I did not see you waving, could you come in now, Kate? Thank you very much. You have no problem at all, convener, and it is good to see you, cabinet secretary. It was to go back briefly to the convener's question to which you responded that the budget is £864 million for rural and islands. Can you just clarify, how does that compare in cash terms to last year? I assume that one of the reasons why this is such a challenging budget in rural affairs, as it is for everywhere, is because of the inflationary environment, which is neither farmers fault nor the Scottish Government's fault. Question 1, and a mini supplementary to that one. What percentage, roughly, is the budget going directly to farmers in terms of cash in their pocket? Do you think that that compares well to elsewhere in the UK? First, to outline in cash terms what that equates to, if you were to look at the last financial year that we had, it was £905 million for one was the total amount of funding that we had over the course of this financial year. It is £864.618 in relation to that. I do not know if that answers your question. In relation to the payments that are going directly to farmers and crofters, we have the direct payments within that, which totals £474.7 million. That is in relation to pillar 1, but we also have pillar 2. We have the ELFAS funding, which equates to £65.5 million, which is unchanged from the previous year. In relation to those direct payments, obviously, we have a number of other schemes that will contribute to that. We have the crofting agricultural grant schemes, too, but in terms of the overall payments, I hope that that answers your question and the information that you are looking for. Thank you. Sorry, I think that George wants to come in and add information. Perhaps just to provide a bit further, in the published budget document on the basic payments scheme. Last year, £282 million this year has come to £282 million, so that is being kept level. You will be aware that, in other parts of the UK, basic payments such as that have not been preserved. In England, in particular, basic payments are on quite a steep downward taper, and any money for farmers has to be through new schemes such as the sustainable farming incentive. You touched on something that is of great interest to me there, Cabinet Secretary. It is the £65 million for ELFAS. I presume that that is something that you are aiming to continue. We have seen upland farms in south of the border with a 37 per cent cut in their support payments, and any of you down there are looking at a catastrophic decline in the way farmers can be supported in England and Wales. I presume, as a former health farmer, that that is the direction of the travel to government that we are looking to stay in to continue to support health farming. You are absolutely right. I recognise how vital that support is. That is why we have maintained that funding over the course of the current financial year. I have no doubt that the committee will be aware of the information that we have published about the future route map for support and how that looks going forward. Of course, we are still continuing to maintain that commitment to support the LFA funding until such time as we transition to new parts of the future framework. I also met the LFA committee in the NFUS fairly recently—that was just before the recess—to hear its thoughts on future support. I understand from my own visits visiting farmers and crofters across the country just how important the LFA and the support that we provide for that is. That is why that has been a priority within the funding and we have been able to maintain that. We know that, with the future agriculture bill, the Scottish Government is planning to introduce enhanced conditionality to support biodiversity gain and to look towards a low-carbon approach to farming. However, you mentioned the agriculture reform budget, which was cut significantly. We seem to have information in the committee that it was because of lower than expected uptake in previous years, which you have just mentioned. Why cut the budget if you are trying to move those farmers who are not currently soil testing or doing carbon audits? Why not support those people to get up to speed so that they can be ready for the next demands that you will be making of them in terms of enhanced conditionality? Why cut that budget? Why not just promote that ability for them to improve uptake? For me, it is not a case of either or. We were talking specifically about the agricultural transformation fund, which more accurately reflects the actual budget spend that we have had over previous years. Ideally, it is within everyone's best interests for us to be utilising all money and budgets that we have available to us. I have talked about just how difficult the capital situation has been. That is where it has been very difficult in this budget settlement, trying to prioritise which schemes are funded and what level of funding they should receive. Of course, with the agricultural transformation programme, it was felt that that would still cover more funding than what we were able to spend last year. However, in terms of the improving uptake and how we can go about doing that, that is something that we are really trying hard to do, in particular with the national test programme. You talked about the carbon audits and soil tests. We also have the animal health and welfare plans available. We want to see the uptake of that support increase going forward, because it is there. Again, it is within everyone's best interests for that funding to be fully utilised. We are trying to incentivise that and do it as much as possible in that regard. We really tried to step up our communications over the course of the past year, whether that was through email communications that we send out. It was also about increasing the physical presence that we have in a lot of areas. Whether that was various agricultural shows or marts, so that we had a physical presence there where people could find out about the support that was available, as well as discussing the route map and all the other information that we have published, because I think that there needs to be greater awareness raising of that. I think that when it was at the committee last year, I genuinely asked if there were any means of communication that we are not using or any ways that we could be communicating better. I am more than happy to hear those suggestions as to what more we can do, because we want to see that uptake of those schemes. With the budget that we have aligned for the national test programme, we still have that ability to ensure that we allow for increased demand and uptake on the schemes that we are funding so far. I disagree, because it is a percentage change of negative 40 per cent. On the 2021-22 budget, there was allocated £51.3 million for the national test programme. How much of that was not spent and how has that been reallocated? That is where some of that has been reduced this year in terms of our forecast spend. There had initially been £20 million allocated against that, and we have £12 million allocated in relation to that for the coming year as well. Over the course of the last financial year, the funding had not been fully utilised. I do not know if, Karen, you have the information of the exact figure. I will find it for you. That information. 2021-22, and I just want to know— No, sorry, it was just over the three years. Yes, three years. I do not know where the 20 million is coming from. That was 23-24, that was last year, but it is down to 12 million now. On this specific subject, the development support budget was cut entirely. What was that for and what would be the impact of that cut? Development support is really just for the whole modernisation programme within the agricultural reform programme as well. That was the capital element of the funding that we had been looking at, which I think was sitting at around £10 million. That had been initially aligned that was looking at the modernisation costs, so we were potentially earmarking moneys for IT systems going forward. What we are doing as part of the agricultural reform programme is continuing to assess what those needs might be going forward and still developing the case for that. Oh, sorry, George, I do not know if you had further information. Yes, that was money to add to modernise change the IT system that we use within the Scottish Government. We are now looking to make the best use of the existing IT infrastructure that we have, making changes where necessary. However, as the cabinet secretary said, this is essentially prioritising the money that is going out the door to farmers, crofters, landowners, rather than the money that is being spent in-house on our own systems. How much of that £10.8 million was spent on upgrading your IT system? In the last year, a relatively small proportion. How much will you need to deliver future agricultural support for an IT system to put into the budget? There is a capital budget, I will swear, that provides for the maintenance of our existing systems. We will be using that for a combination of maintenance and development of the system. That is around £9 million. Sorry, is that new capital funding? No, that is... In terms of development, that was touched on there. Is allowing farmers to develop one of the aims behind what would seem to be the policy objective of early payments or getting money into farmers accounts early? Does that represent a departure from policy elsewhere in the UK? If so, is there a budget implication for that? How is that planned? With the payment strategy that we have had for the coming year, again, those were changes that we knew that that had been a call from the industry, particularly over the course of the past couple of years, seeing the cost of living crisis and ensuring that money was reaching bank accounts as soon as it possibly could. I think that the UK Government brought forward its initial payment schedule over the course of the past year. We have brought forward our own payment schedule to our paying farmers at the earliest ever stage. We have done the same with other schemes such as the ELFAS funding, knowing how important having that money coming through at an early stage is. There is no doubt that, right across the entire UK, we have seen budgets being squeezed. I have already mentioned the 37 per cent cut in support for hill farmers down south. We have environmental targets that we are trying to reach. The ex-budget has taken a hit. What do you see being the impact of that, and what impact will it have on meeting the objectives that the Scottish Government has? AX is a very important fund for us. Out of all the funds that we have, it is the one that we know really delivers against the objectives within it in terms of funding the climate mitigation and the nature enhancement activities that we want to see as well. It is also one of the key mechanisms that we have for increasing the amount of land that we have farmed organically. It has been very successful in that regard. We have, in previous years, either had to restrict certain rounds or restrict the things that we are looking to fund within that because of the various financial constraints that we have faced. Within the current budget that we have against the AICS allocation for this year—and, of course, remembering that AICS are rolling contracts year-on-year—just over £16 million of the budget this year will go on the previous year's contracts that have been agreed, which means that we have—and the remainder of the budget that we have for AICS—means that we are in a position where we should be able to finance the vast majority of applications that we have had come through to AICS this year. I would say that AICS is not the only funding mechanism that we have that can help to deliver on the climate and biodiversity enhancements that we want to see. Of course, we have greening, we have the nature restoration fund, which, of course, does not sit within this portfolio, but within the NSET portfolio as well, we have the farm advisory service. We have a number of other certain pots that still contribute to the overall objectives, even though they do not sit within that AICS umbrella. Okay. Are you noticing or do you have any evidence of farmer changing behaviour as a result of AICS not being in place? I am—well, the AICS funding is in place. Let me rephrase that. If AICS wasn't there, do you anticipate or do you see farmer behaviour changing as a result of that? Well, I would think if the AICS scheme wasn't there, it just means that I think a lot of the activities that we would like to be able to see wouldn't be able to take place or farmers or crofters may not be in a position to undertake certain activities if the funding didn't exist for that to happen. I think that's why it is such an important fund. That you have just said that you've got the funding that you think for the claims that you've got coming in this year? Yes. For the application for the 2023 round, so we're still to announce the outcome of that. Obviously, we've been going through the budget discussions at the moment, but through the funding that we have allocated in the budget, as I say, the vast majority of the applications that we've seen come through the 2023 round, we would expect to be able to be funded. Just kind of highlights the difficulties that you're facing in order to try and juggle all these things to make sure that the priorities are kept in place. I don't have anything else on this, so you won't be going to... Thanks, just a quick supplement. From what I understand, Aix is going to get phased out and a new scheme will come in place. Is that correct? Well, it will continue until such point we have the future tiers of the framework in place as well. In terms of that, the new scheme, when it replaces it, will you... So Aix has been... From talking to farmers, I find that Aix is quite a tricky one to actually get the funding for. I've heard farmers that make almost all the points but miss it by a few. When you're talking about how we urgently need to get farmers to move in towards climate and biodiversity mitigation, and then you have a fund that is difficult for them to get to, they miss it by a couple of points, will the new scheme take that on board and make it more user-friendly to apply to? Because my sense is that we really need to kind of open the floodgates for farmers to really get on board with these schemes. Oh, absolutely. And make it as easy as possible. I think it's, again, it's within everybody's best interests. We don't want it to be a bureaucratic exercise. And I think for the types of activities that we see through Aix, we want to make any future support as easy as possible for farmers to access. And again, it's within all our best interests as we do that. So I know that the committee is scrutinising the bill at the moment and, of course, will be in close communication with the committee. And there will be that scrutiny process of the secondary legislation that we will be bringing forward, which would, of course, contain the detail of what any future scheme would look like as well. So Aix may not exist in the same form it is now going forward, but certainly we want to see the types of activities that we're undertaking as part of that more fully embedded within a future framework of support. Thanks. Just before we move on to the question from Jim, research has shown in the US that doubling down on research and development funding would reduce greenhouse gas emissions, raise outputs and curb the need for land use change, and reduce crop and livestock prices. So there has been a reduction in research and development, or research and analysis, I think, is the budget line. What consideration did you give to increasing that, given the climate emergency and the need to go further and faster? I think that, with a number of the budget lines that we're looking at, I think that there are a number of areas to be honest that I would have liked to have seen an increase in. But again, with the overall capital envelope that we've got and the funding envelope is how best to prioritise within that as well. I think that we have tried to minimise area reductions in those areas as far as we possibly can, but I think that it's also important to highlight that, yes, we have the overall research programme where we've had a broad envelope of about £50 million a year to try and support, but we do also support schemes that are really trying to encourage that research and innovation piece as well, for whether that's farmers directly. So when you look at the knowledge transfer and innovation fund as well, that's one that we've managed to maintain the funding for going forward this year. And again, we want to see the uptake of these funds and really see that innovation, that research support and of course that peer-to-peer learning as well, which I think is really important. Okay, thank you. Jim Fairlie. Okay, thanks, convener. The business development budget which gave rise to the food process and market and co-operation grant scheme. What progress has been made in reviewing that scheme and what are the plans for it in the future? Yes, I think that when I appeared at the committee last year in relation to the FPMC, I mean obviously we were extremely disappointed at that stage to not be able to run the scheme over the course of the last financial year, because we know how valued it has been by the food and drink sector as a whole. But we utilise that time to undertake a review of the scheme as you've outlined. That work was undertaken by Scotland Food and Drink. That work is now completed. There were a number of recommendations in relation to that. I think that one of the key findings that came out of that report was just exactly, as I've said, just how valued the scheme was by those who had applied to it. A few recommendations are recommendations that we would be able to implement quite readily. There are a couple of recommendations within the report from Scotland Food and Drink that would take a bit more work, so we've taken all that on board. The business development support line, as you've outlined in the budget, was the line where we funded the FPMC grant previously. The funding that is available within that budget line now is for the crofting agricultural grant scheme, so that's where the biggest reduction in that has been. However, it would be the intention if we are able to, at any point over the course of the year, to reintroduce the FPMC grant scheme. That's something that we would like to do if that opportunity arises, but we're not in a position today to be able to say that that is something that we'll definitely be able to fund. Okay, one of the food processing market and co-operation grant scheme is a vital one, and I'm reading stuff just now about Jeremy Clarkson, who's not somebody I would normally be quoting, but he's talking about his diddless squat farm. They're making zero profit and there are protests right across Europe because of supply chain issues, so this seems to me the kind of scheme that we want to keep on encouraging as we have done over years. I just ask the cabinet secretary to have that in mind as we go forward. However, there's one other scheme that was funded that I'd like to ask you about. It's the small farm grant scheme to allow farmers to make improvements, so I think it was cut in 2022. Has that money been used elsewhere? First of all, just coming back to your first point about the importance of the FPMC, I absolutely agree with you and I've visited a number of businesses who've received funding from that in the past where investment wouldn't have been possible to either upgrade facilities in a number of different ways. They wouldn't have been able to develop their business without that injection of funding that we provided, so I think it has been vital in that regard. We will be looking for any or any available opportunity to restore that funding as a priority going forward. In relation to the small farm grant scheme, that is one that we've undertaken a great deal of work on. It was one of the only funds—I'm sure George will correct me if I'm wrong on this—that was one of the funds that we had that was the most difficult to access, which meant that it was largely underspent. I think that we had a million pounds budgeted against that. In the past, it was a means-tested fund, and given that it was to support small farmers, it was one of the things that was hardest to access. So what we did was quite an extensive piece of work with a variety of different stakeholders, and that's where I announced—was over the Christmas recess there—that we would be launching a small producers pilot fund in place of that. The funding that had been used previously for the small farm grant scheme will now be getting utilised for the small producers pilot. So there's some projects within that. Again, this has been through that engagement with different stakeholders as to the best support and what would be most useful for them going forward and in helping our small producers. There's a couple of abattoir projects that will be funded within that. There's been calls for a website for small producers as well, and also looking at specific packages that could be used, I think, in relation to skills and further development as well. So there are a number of different strands within that, but I do think that that is potentially a really exciting bit of work and where we can really better utilise that funding in the way that people would like to see going forward. I've got a particular interest in this tiny wee fact. You've just mentioned abattoirs. What does that look like? What is it? What do you think it's going to shape out like? Because small abattoirs in real rural communities? Yes. The FPMC in the past has provided quite a lot of support for abattoirs large and small. In this particular scheme and the pilot project, many members, I'm sure, will be aware of the difficulty that farmers' crofters wanting to get a private kill done have in engaging with the abattoir. So this is trying to create a better mechanism to work between the number of farmers' crofters that might have one or two animals that they're wanting to take to the abattoir and how that fits in with the abattoir's own scheduling of kill to see if we can actually get a system that works better for all concerned so that that will then allow that private kill to happen and the farmers and crofters get better value for their product. So early days but we have enthusiasm from the abattoir and the potential users of the system. If I could just add, the abattoir piece of that work was quite substantial and there'd been surveys in a number of other pieces of work undertaken because I think certainly when I'd go to specific events, whether they're at small holders festivals or again visiting different farms across the country, I think the abattoir provision is certainly one of the most informal issues that comes out every single time. So I think that that was a key focus of that work in developing the small producers pilot fund, a key focus of that and why we've had that recommendation come out and why we're supporting that within it. So I'm quite excited about the potential of this support and what that can do. Okay, thank you. Question from Kate Forbes. It was to go back to a point that the cabinet secretary has already made in terms of the £50 million that has been returned and it's encouraging to hear that that is now his capital. Just to clarify, I'm assuming that the way that that's already split in the budget will remain as it's split. You talked about funding and unfunded priorities in terms of agri-transformation, crofting grants and so on. Beyond it being changed to capital, will there be any other changes to the budget in terms of the split? No, I don't believe so, but I'm happy to follow up with the committee in writing and to provide the information as to exactly how that £15 million has been split and where the changes within the budget lines would be if that would be helpful. That would be great. Thank you very much. Just one other point, that's obviously £15 million out of the reported £61 million, if I'm right in understanding that. Is there any understanding from the Government when the remainder might be returned or is that subject to future budgets? Yes, I'll be having those discussions with the Deputy First Minister, so you're absolutely right. The £15 million is part of the £61 million deferred funding, which has been returned to the portfolio and which we've had the agreement to switch to capital funding as well, so that still means that we have £46 million outstanding. The Deputy First Minister has confirmed that that will be returned to the portfolio, but in terms of the sequencing of that and how that can be utilised, that's still subject to further discussion. I'm happy to keep the committee updated on that. Can I also ask where that is reflected in the Scottish budget lines that I am looking at right now in terms of that return to the portfolio? Well, again, that's where, as I've just outlined in my response to Kate Forbes there, I can show that there will be changes within the budget lines that have been set out there in terms of the overall switch. It doesn't change the envelope because we'd had the £15 million confirmed at the time that the budget was published, but it was there as resource funding rather than capital. That's what was outlined as Kate Forbes. I can outline exactly in which budget lines you would expect to see changes. Does that come under the adjustment line? Where will it sit ultimately? For a layman looking at this Scottish budget, I can't see where, if you've already allocated it, you reallocate it where it sits. Can you just give me an indication of why you think it will sit? Okay. The £15 million is in the budget at the moment, but if you look, for instance, at the tables in the published budget document, they don't, in the tables, distinguish between resource and capital, but below there is an off-witch capital. What we will see is that the capital line there will increase by £15 million, but some of that money, for example, is 3.6 million, is an aches. It's already reflected in the top of the table under the aches line, but that will now be capital rather than resource. In 2024 aches money from £29.6 will reduce by half, and it will be moved into the capital, which is £13.8 million. No, the £29.6 will remain the same, but the £13.8 million that's down below will increase, because those figures at the bottom about fiscal resource, non-cash and capital are within the figures higher up. Okay. Does that mean that when we go back to the budget in the chamber, the aches funding, all that part that supports the aches funding, you will reflect that there is a further cut to aches funding? Because you're taking it out of there and putting it into capital? No, there is no further cut to the aches funding. What if it is resource aches funding and not capital aches funding? Well, it's all aches funding, so the aches line is the aches line. So why are you going to put it in both lines? Because if you move £15 million to the capital funding under level 3 of the Scottish budget to £13.8 million and you add the £15 million, you take it off the aches funding of £29.6 million, what to a layman does that not look as though you're shifting funding, but you're not necessarily spending it on aches? Sorry, with respect, and the tables are complicated, but I think this is misunderstanding of how the tables are set out. So if you look at the level 3 table, you'll see those 15 or so lines followed by a total agricultural support and related. The lines that are above that, and let's take agri-environment measure as the example, that's showing £29.6 million. That £29.6 million is itself a combination of resource and capital. What you have below the line that says total agricultural support and related are a set of lines headed up with off-witch, which then break that down into resource, non-cash, capital, financial transactions. So that's a further analysis of what's above. So the change that we will have will be that the capital at the bottom will increase by, let's say, £15 million. The agri-environment measures line up above will not change because it's already got both the resource and the capital in. We will work with our colleagues in central finances how this then appears in the budget bill documentation. The change, as the cabinet secretary explained in her opening remarks, has taken place just in the last couple of days. We were anticipating it, but couldn't confirm it at the time of the budget documentation. But we put the money that we hoped to change from resource to capital into the right lines in the budget. So it's less of a change than it might otherwise have been. So in a nutshell, the £29.6 million allocated in 2024-25 to the agri-environment measures will still remain the same, but one half will be capital and one half will be resource. Effectively. There will be more now as capital than previously. Right. And so where in the budget, the total budget, the total Scottish budget is the other money that is to be returned of that £61 million? Where is that reflected? The £46 million is still to be returned. So that would be in future years budgets. Okay. Where do I see that in other? Where is it gone? Sorry, Ed. It's not a waste of time, Arianne. It is really important because this money, £61 million has been removed from the budget in 2024-25, and that is why this committee is here to scrutinise it. So apologies for picking you up on that, but it is important. Sorry, it's just to clarify. So £61 million hasn't been, when you're talking about the deferred funding, that's not a saving from 24-25. That was from 22-23 and 23-24. So if you remember back to when John Swinney was the finance secretary, when he made the emergency budget review, that was where there was £33 million announced at that time, which were savings that had been taken. Then we'd heard the announcement from the Deputy First Minister, I think it was perhaps in November this year, where she talked about the savings and the path to balance that we had to reach this year. So that's £61 million in savings is what we are waiting to be returned to the portfolio. £15 million of that has been returned this year, but that leaves £46 million, which, as I was saying in my response to Kate Forbes, is still subject. It has been confirmed that it is coming back to the portfolio, but the sequencing of that and when that happens is still to be discussed with the Deputy First Minister. Okay, and just the last question briefly on this, where did the Scottish Government find the money to pay £3.2 million fine from the EU over cap payments, and how will it pay for the remaining £2.3 million should a dispute resolution be unsuccessful? I think the fine that had been paid initially had come from our budgets, as far as I'm aware. I don't know if George or Karen would have the information specifically where that had come from. The fines have been accrued in prior financial years, under normal accounting convention. There has been no finding of money now. They were accounted for at the time that the penalties were incurred. From the agricultural budget? From the appropriate budgets, which £2 million has come out of the rural affairs budget to pay for a fine? It would have been at the time that we had the EU income coming back as well, so there has been no reduction from the 23, 24 or 24, 25 budgets to meet this. They were accounted for in the period that they were brought to our attention. Okay, I'm running out of time, so I'll leave it there. I've got a supplement from Alasdair Allan and Arrianne Burgess. It's been briefly touched on, but you won't be surprised to hear me mention crofting. I just wondered how many of the budget lines are seeking to meet the Government's objectives on crofting, or can you say more about those aims, please? Yes, I'd be happy to, so I think as I touched on in my response to Jim Fairlie's question about the business development support in that as well. That's where we've seen the remainder of that budget is for the crofting agricultural grant scheme. We also are continuing with the crofting housing grants as well, which I believe falls under the crofting assistance budget line there, too. I know how important those budgets are for some of the most rural parts of Scotland, particularly for our island communities as well, and that's why we have obviously made that a priority within the budget to ensure that we're still continuing to maintain that as well. The crofting agricultural grant scheme is a demand-led project, and I think we have about 900 applications to that every year, so of course ensuring that we're continuing that support going forward was really critical. However, alongside that, we have the funding for the crofting commission, which I think we've been able to maintain at a similar level as to the previous financial year. Again, I think that funding has been really critical in terms of the maintenance, so that we're seeing that continued improvement. I think that when it comes to the crofting commission and the work that they're enabling there and that they've been taking forward, all that support in its entirety is vital for our island communities. I want to thank the cabinet secretary for going over in great detail about the £61 million removed from the agricultural budget in 2021 to 2023. My question is that, despite the overall cut in the rural affairs budget, there was a 5.2 per cent increase in the community-led local development budget due to a dissipated demand. I'd be interested to hear what the thinking is as to where that money will be applied and also if regional land use partnerships will feature in that given that they're doing such important landscape-scale work. Just to highlight first of all, I completely understand your point about the imports of the rural land use partnerships. You'll be aware that we've got a number already established across Scotland. I've been looking at how the development of the land use partnerships has been going. That does fall under a different budget line within the budget as it's presented and falls under the land reform element of that as well. I think that we've funded that up to £400,000 a year in relation to the RLUPs. Of course, they're continuing on at the moment, but we want to carefully evaluate how they've been performing so far to determine how we potentially take that work forward. You've mentioned the community-led local development and the funding that we have available to that. I'm going to provide the committee of the breakdown of how the £15 million and where that's been allocated. Some of that has been allocated to the community-led local development within that to ensure that we have a capital element of funding in there too. That's funded really vital work across the country and, of course, is the legacy to the leader scheme that we had previously, which is about that development in our rural and island areas. We have the local action groups across Scotland who are the delivery bodies in relation to that. If I look to my own constituency, we have the Angus Rural Partnership as well. They've become a charity to enable them to really drive forward work on the basis of the funding that they receive there. I know how critical that is for our local areas, for our rural communities in particular, which, again, is why we've prioritised that within the budget as well in ensuring that there is funding there going forward. I've got a supplementary from Beatrice Wishart. It's actually a supplementary on Alasdair Allan's supplementary about the CAGs, the capital agricultural scheme. Our local crofter indicated to me that there's been no increase in the threshold of £25,000 and I just wondered if that was something that might be under consideration. If there are particular concerns that are being raised with you, I'm more than happy to look into that. It's not a concern that I've had raised directly with me. You'll be aware that the Minister for Energy and Environment has responsibility for crofting and I don't know if that's an issue that's been raised with her. I mean, as with anything and with some of the crofting schemes that we have, we do look to make improvements where we possibly can. So, if you look to the crofting house grant as an example of that, where we have increased the grant rate there and we've also looked at introducing measures for energy efficiency too that didn't exist previously, so I think that if there are adjustments that we can make within that or that's something that we need to look at, then I'm more than happy to follow that up with the Minister for Energy and Environment and consider that further. Stuart Goodall from Confor has congratulated the Government for its increased woodland creation targets but over the last five years the amount of trees that it has created has fallen. We're now looking at a massive cut of over 32 million and its grant budget, which means that, in the words of Stuart Goodall, it will only serve to make the gap between targets and deliver even wider a bad situation becoming worse. It goes on to say that a cut of the scale proposed will lead to job losses and struggling in rural areas, destruction of millions of young trees and a blow to the sector's confidence that will take a long time to recover. How on earth will such a massive cut in its budget Scottish Government be able to meet its forestry ambitions? In relation to the targets that we have within the climate change plan, that had been due to increase to 18,000 hectares of planting this year. That's the thing, and to be perfectly frank with the committee with the levels of funding that we've got, that's the target that we are unable to meet, which is particularly disappointing. I completely understand the comments of Stuart Goodall and how frustrating that is for the forestry sector. I think that, especially at a time over the course of the past year, we hadn't met our planting targets last year, had held a woodland, well, a forestry summit towards the end of last year, as well, to really look at what some of the issues were in terms of reaching the targets, what were some of the barriers and the challenges that the sector was coming up against. We also made a number of different changes to the forestry grant scheme, and we'd increased rates to try to encourage more agroforestry and to see more trees on farm. Obviously, to be in this position and be in front of you today with the level of cuts that we're looking at for forestry isn't a place where I want to be and certainly not what the forestry sector wants to see as well. I understand exactly, just as I've said and outlined that Stuart Goodall's comments in relation to that, and I think that what's really important now is the work that we do from here. I think that the forestry summit that we have had was valuable in a lot of ways, and it's how we can really look to work within the budget available that we have. It would ultimately enable us to plant roughly the same level that we've planted, or just slightly above the level that we've planted this year, so it's really how we can best utilise that funding. But again, when it comes to the overall capital funding across the piece, if we were to put more funding into that, it's what areas of capital would we cut and put in its place? It has meant that those really difficult decisions have had to be taken, and again, certainly not a position that I want to be here in and discussing with the committee today. The Allister Seaman from the Woodland Trust has suggested that creating new woodland and protecting what we've already got is one of the simplest and most effective responses that we have to climate and the nature crisis. We're here on almost a daily basis, your colleague Mary McCallan talking about the crisis, the emergency we face. So surely you're getting your priorities wrong by such a massive cut in the budget for woodland creation? But again, it comes back to, if we were to fully increase that budget, then where do we take the capital from? I mean, as we've talked about today, each of these funds that we have is vital in its own area. I would say that I agree with the comments that you've just mentioned there, and that's where, I mean, when you look at the investment that we're making in the Atlantic Rainforest as well, where I think it's around £4.5 million this year, and that's exactly to do that work. It's about looking at the resource managing invasive species that we have there to and best protecting that resource. We have done an absolute power of work in relation to forestry, and I think when you look at how the industry has grown, we're still responsible on the whole. I think it was around 62 per cent of all planting within the UK last year. We want to ensure that we do still build that confidence in the sector and that future for it going forward, but there is no getting around it. It is a big cut to the capital budget that we've seen, and we have £27 million available for new planting this year, but we have to ensure now that we utilise that as best we can and ensure that we're getting those trees in the ground. Okay, thank you. Kate Forbes? Thanks very much. It's more just a general point at the moment as to whether the Cabinet Secretary is content that we are on track to meet planting targets. I'm conscious that, at the end of the day, all the debate about budget is really about whether we can achieve our aims and ambitions, and our planting target is one area where the Government has very ambitious targets, which we require to meet. We have very ambitious targets, but as I was just outlining there, the capital that we have available for new planting isn't sufficient to enable us to meet the targets that we have set out for the coming year. The targets within the climate change plan right now and what we have been hoping to try and reach this year would have been 18,000 hectares of new planting. With the current capital budget that we have, it doesn't enable us to do that. In last year's budget, the marine directorate received a £14 million increase in its budget allocation. Cabinet Secretary, you indicated at the time that the extra funding was to increase capacity to deal with the Government's ambitions for offshore wind and its ambitions in relation to highly protected marine areas, but given that HPMAs have been abandoned, how will the funding be redistributed, the funding that was allocated to HPMAs, how will that be redistributed? When you look at part of the budget reduction in relation to the marine directorate, that is partly due to the fact that we are not proceeding with the HPMA proposals. What we have done, of course, is best to utilise that funding on the priorities that we are taking forward. When you look at marine protection as a whole, of course, it is my colleague Mary McCallan who leads on the policy for HPMAs and the marine environment, but our priority remains for us still delivering on the fisheries management measures for the MPA network and the priority marine features. That is no small exercise in and of itself. We have about 160 different sites where we would be looking to implement measures. Of course, that is going to mean that we have extensive stakeholder consultation as part of that process. Again, that is where the funding that we have in relation to the marine environment is now being prioritised and ensuring that we are looking to deliver those measures and previous commitments that we have made in that regard. I do not know if Dave would have any more to add in relation to that. Just to agree with the cabinet secretary that the funding is for marine protection as a whole and that HPMAs are one option, but we are still taking forward the protection of the marine protected areas and the priority marine features. When do you expect that consultation to start and what form it will take? I guess that there is a lot of rebuilding of relationships that need to take place to make sure that everyone is happy and on board with processes going forward. Yes, you are absolutely right. That has been quite a long, long-going process, as it has been anyway. I know that there are proposals in relation to the offshore MPAs as well as the inshore MPAs and priority marine features, but I believe that the consultation—I am sure that Dave will correct me if I am wrong—is due to commence towards the end of this year. I think that that is the current timescales that are being worked to. The budget document states that the marine directorate is delivering savings through recruitment controls by maximising income streams and by achieving greater operational efficiencies. I am interested to hear what is meant by maximising income streams in this context. In relation to the different income streams that the marine directorate has, there is commercial science that brings in more than £3 million. There is marine licensing fees. I think that there is another one that I am missing there, Dave, but I will hand over to Dave so that he will be able to give a bit more detail about the extent and the levels of funding that we receive through that and how some of those areas, in particular, will be growing in the future with offshore wind developments. We generate income through commercial science using our facilities in Aberdeen, and we receive licensing fees and energy consenting fees, which is the third category. Obviously, the licensing fees and the consenting fees create demand, so it is more of a cost-neutral situation in which we are using that income to meet the demand for the consenting and the licensing. Can you say a bit more about the recruitment controls and also achieving greater operational efficiencies in the directorate? Again, I know that Dave will have more detail in relation to that as well. I think that it is fair to say that there has been a fair amount of transformation within the marine directorate and really focusing on this and reducing those costs where possible. One of the main indicators is the number of staff in the marine directorate. That has gone from 825 full-time equivalents in December 2022 to 760 in December 2023, so that is a fall of about 10. Between 5 and 10 per cent through restructuring and bearing down on staff costs, that has been matched by looking for ways to be more efficient on the compliance side. We are looking at maximising the use of our assets, our marine protection vessels. We are using more intelligence-led and risk-based approaches to that compliance and trying to get the most value for money that we can. Can you ask about marine directorates and what is the support for science and enforcement in the budget and what changes have you had to make? In relation to that and the science and enforcement, I think that in previous communications and appearances that I have heard at the committee, I think that the last time I was here we spoke about at that time what was the science and innovation strategy that we just launched last week in Aberdeen. That really just sets out how we are going to be, well, it is our science and innovation strategy and sets out six outcomes within that. We want how we are best going to focus our resource on science going forward and to maximise the value of that resource. We have a world-leading marine science within the marine directorate and we need to ensure that we are utilising that resource as best we can. A big part of that is about how we can collaborate with others, whether that is research institutions, academic institutions and looking at that more widely within Scotland, how we can better collaborate on the pieces of work that we are doing as well as looking internationally to. Of course, in terms of the overall funding within the directorate for when you look at marine science, we have around £9 million when you look at the science around fisheries and the vast majority of that funding is about £6.5 million for the two research vessels that we have as part of that work as well. Of course, another critical part of the marine directorate is the compliance and enforcement work that takes place too. We have, I think that it is 18 coastal offices, two surveillance aeroplanes, we have the three NPVs as well as two ribs that we can utilise as a resource too. In terms of the overall budget for enforcement and compliance, that is around £30 million, of which just over £11 million is for the NPVs that we have. That investment that we have has stayed broadly similar to what it has been over the course of the previous financial year. On the subject of the major vessels that the marine directorate has, the research vessels, is there an element of spend to save required here for the future? Are you making plans for how those vessels might have to be replaced in the future or maintained? Of course, I mean, like anything and like other vessels, they do have an overall lifespan. Of course, that is something that we have to factor into our planning going forward because there are very specific vessels as well when you look at the Scotia, which is one of our key research vessels, so we have to ensure that we have those resources going forward. Of course, that does form part of our planning for the future too. Thank you. Can I just ask a quick supplementary on that? Something I have been involved in for many years is the pay settlements for marine Scotland mariners. They are significantly lower paid than other mariners employed through the public purse. I am wondering what impact that will have on a pay settlement for them. I will have to ask Dave Ifeas any further information in relation to that. I do not have any further information in relation to that. What I can say is that the pay negotiations for the marine staff are part of the same negotiation process as for the Scottish Government. I will pay to follow up with you specifically or provide the committee with further information in relation to that. I will ask you your next question. Can you give us the reasons why there is a 50 per cent cut in harbour grants? How will that impact on harbours, both for fishing and storm damage, because most of those harbours are multi-purpose? That will have an impact on infrastructure with regard to ferries and renewables. Absolutely. Again, we have outlined in quite a lot of detail today the significant capital pressures that we are facing, but also to highlight in relation to that fund. As an example, it can highly vary from year to year, depending on some of the storms and weather events that we have seen as well. If you were to look over the course of the last year, we had spent only £84,000 within that overall envelope of £1 million of funding. It is also highly variable where we can see, and depending on where those storms are, the ports and harbours that we have on the east coast tend to be more exposed than those on the west. We believe that, with the funding that we have available, hopefully that will enable us. Should there be any other events that we can utilise that, again, it can be a variable fund. It has been reduced because of the pressures that we are facing, but because of the fact that it had been so underspent over the course of the past financial year. However, I think that that is one that we will have to continue to monitor closely. I am aware of, for instance, what harbour needs substantial investment and that would have been coming out of this current financial year. If there is an underspent, would you look to making that available to the harbour? I think that I would need to follow up with that one directly so that I can look into the circumstances. I am not able to say right now if there has been any communication between ourselves or what involvement there has been unless, Dave, you have any more information on that. No, I can definitely follow up on Wick harbour. We are anticipating a spend of about £900,000 this year. Some of that is a direct result of Storm Babbit, which was an east coast storm predominantly. We are not anticipating a big underspend this year because, obviously, we have been working with some of the harbours on the emergency repairs from November onwards. You will be pleased to hear that we are moving on to the final few questions in the first from Alasdair Allan. I was going to ask firstly about the island's programme and the funding for it. It is welcome that, despite the capital climate, there is capital spend in there. Can you say more about the budget lines and how they are being utilised in that area for the island's programme? Yes, I would be happy to. I can understand that the committee would be disappointed that it looks like it is a cut on the previous year, which, of course, the funding is lower. What I would say as a whole, when I last appeared in front of the committee, when you look at the capital spending review and the overall allocations, there has not been anything against the island programme. That is where, in spite of the really difficult financial circumstances that we are in, particularly with our capital budget, I am delighted that we are able to continue with the island's programme for the coming year, as well as to provide that vital funding for the carbon neutral islands as part of that. In relation to the overall island's funding, we have £1.5 million, which has been allocated to the resource funding for the island's programme, and £3 million, which has been allocated for the capital element of that. We also have within that the carbon neutral islands, and we have £0.9 million against the resource funding for that and £1.3 million. If you are taking those two programmes as a whole, there is an overall envelope of £6.7 million of funding for the coming financial year. Are there any budgets out with that that are relevant to the aims that the Government has on islands that you can say anything about where they stand budget-wise this year? Absolutely. I would say that, even within my broader portfolio, if we look at spending that is going to be relevant, you know that you asked me a question earlier about crofting, which is of course vital, and I think that it is really important to spend for our island communities. We have the funding of the island's growth deal, which of course is developing and delivering some really important projects. When you look at the wider spend across the piece, I come to committee every year when we talk about the national islands plan, which is ultimately showcasing how every portfolio is delivering and what they are outlining, what they are delivering for the islands and against the strategic objectives that have been set out in the islands plan as well. That is where I think it is not just the funding immediately through the islands programme, which is relevant here, but also the various different funds that we are taking through, whether that is housing, when you look at health, education and all those different areas. There is spending there that will have an impact on our islands and that is relevant for that too. Obviously, as you expect me to point that out as well, islands have very distinctive needs, but are we getting nearer a point where, if you like, an understanding of that fact is being mainstreamed across departments? Or is it left to your department? I do not know if Erika would want to come in on that. I think I have said this previously to committee. I think that the fact that we have an islands team who do work extensively across and with other portfolios across government has been really critical in helping to develop and further that understanding. It is something that is inbuilt to decisions that are taking in different portfolios. There is that engagement right from the outset, but I do not know if there is anything further that you want to add on that, Erika. Not a great deal, Dr Ion, but thank you for the question. I think that I have answered something similar before at this committee. We do work extraordinarily hard to try and make sure that island needs are recognised right across Scottish Government and the whole team are very committed to doing that. We have, through the legislation, the added benefit of having island communities impact assessments. We have a tool that we can go out to other areas across SDGs and make sure that they are considering island needs. Those unique island needs that you just highlighted there, there are different needs in the work that they are doing. When the island bond policy was shelved, we were assured that the £5 million would stay within the Scottish Government budget to deal with depopulation. Could you tell us where that occurs within the budget and, indeed, what other specific monies are being set aside to deal with the depopulation in our islands? Just to clarify in relation to that point, I know that that had been in ask of the committee. At that time, when we were considering that policy, there was not a £5 million budget allocation within the budget for that year, for that to be developed. Obviously, we were undertaking the initial work to undertake that engagement on the island's bond. Initially, there had been a £300,000 allocation within the budget for the island's bond policy. Of course, with the extensive engagement that we had undertaken, we heard quite loud and clearly that this was not something that island communities wanted to move forward. That is where we utilised the funding that had been available in the budget at that point to deliver on the practical policy test that I think I have talked about previously in the committee before. That was based on the outcome of the engagement that had taken place on the islands and based on ideas that people thought would help tackle issues such as depopulation and could help assist with that. Within that, we had about 11 different projects that had been under way as part of that work. One of those that I discussed previously in committee was in relation to a piece of work that had been undertaken with—well, the biggest part of that funding, I think, was about £250,000. It was work that had been undertaken with SDS, with Highlands and Islands Enterprise, as well as different local authorities on a skills and population pilot. The work on the evaluation—I am sure that Erika could come in with more information, but the work on the evaluation of that is still to take place and will be under way. That took part in three different local authority areas. I am really looking at bespoke solutions that could be created around skills. Erika, if you have further information, you can add on those projects. Just a little bit more detail. The three areas were Argon and Bute, North Esher and Northern Isles. We worked closely with the partners that the cabinet secretary has already outlined in her answer to make sure that that project was a success. We intend to evaluate that in the coming financial year, subject to the cabinet secretary's approval, and that will allow us to consider the impact of that work and whether there is any value in rolling out further areas. What you are telling us is that the £5 million that was set aside for the islands bond is no longer going to be in the budget to address depopulation, but that had not been a commitment? The £5 million was an overall figure that would have been used for islands bonds had they progressed, but it had not been £5 million within that budget. Purely because, in developing the policy, we had to go through the engagement exercises and, as we have seen and talked about before, we are in an annual cycle of budget processing. Of course, we would be looking at those decisions. If we proceeded with that policy and decided that that was something that we were going to pursue, then, of course, the budget and the priorities within it, as you are seeing it today, probably would have been different. Of course, it was decided that we would not be moving forward with that policy. That is why we undertook the work on the different tests, which are then helping inform what interventions are going to be best to address depopulation going forward. Of course, we are still waiting on the publication of the address and depopulation action plan, which is being led by the social justice portfolio. I am responsible for the rural and islands element in that plan, and we hope that we are in a position to be able to publish that shortly. However, that is where it has been important for us to listen to that engagement, undertake that work, which will be helping to inform the actions that we have as part of that plan going forward. We know that the interventions that we make to address depopulation are going to be meaningful and have the impact that we all want to see. Can I ask why it has been delayed, the address and depopulation action plan? I think that it is about ultimately making sure that we get the address and depopulation action plan right and that it is in as strong as a place that it can be and ensuring that we have the right actions within that. However, of course, I am happy to write to the committee and keep you updated on the timescales and when that is eventually published. However, again, I do hope that that is going to be shortly. With regard to the £250,000 that is looking at employment and retention on islands, is there something similar in the budget this year? We are very aware of island businesses really struggling because of very unreliability and what moneys is there to encourage those businesses to stay on island? Again, in specifically relation to that, as Erika had mentioned, we are still to undertake the evaluation of that project in particular. However, I think that it is where the funding of other elements that we have undertaken has been really important. We have had the community resettlement officers of positions that we have helped to fund as part of that work. Also, the funding in relation to the address and depopulation action plan is not just coming from this portfolio or interventions from this portfolio. I think that there is a further commitment from the social justice portfolio as well in relation to funding for that too. However, again, that is all part of the considerations and what we are looking at as part of the address and depopulation action plan. How can we measure that as regards the budget? How can we measure the amount of money being invested in repopulation? Overall, in the national islands plan and the report that we can do on that, address and depopulation does not just come down to one specific intervention that we take. It is right across portfolios, what we are doing in housing, what we are doing in skills and all those different areas and in transport as well. It is right across that that you will see that spend. Ultimately, a lot of that is what we will try and capture within the address and depopulation action plan. That will set out the different actions that we are taking across Government to help and try to address some of those challenges. I am afraid that I do not have a straightforward answer to that because it is something that ultimately all portfolios within Government have to work together. That is why, on the population task force, we have representation from I think the vast majority of portfolios across Government because it is within everyone's interests and we all have a part to play in delivering on that too. Of course, the detail of that will be in the document that we publish. Is this question 15? No, it was the supplementary one. No, no, we already got it. Okay, thank you. Can you perhaps give us a little bit more information about what the 1.5 million revenue funding element of the island plan budget is? Well, I think obviously because we have been undertaking the work on the budget and again we have been looking at what we would be able to fund in relation to capital, we are still to finalise and we will still have those discussions about how that resource funding could best be utilised. In previous financial years, of course, we have had the Islands Cross Crisis Emergency Fund and it has helped to contribute to that as well. We will obviously be having those discussions with local authority partners as well to see how best we can utilise that going forward. Okay, thank you. This is on carbon neutral islands and given the significance of the project for Scotland's net zero ambitions, I've been interested to hear about the thinking behind the reductions in the budget from last year to this year and also having met with some of the amazing young development officers, I can see how important those roles are and also the challenges of the one-year funding cycles. I had a conversation with one of them that doesn't see a it's not sustainable for them because they're making major life considerations and they're not sure if they're going to be employed. So I think it's really important that we're clear with those people doing those amazing projects, incredible work, what the future is going to be for them. I can completely understand why they would feel like that and being in that position. Unfortunately, we do go through those annual budget processes, but I would say that you're absolutely right in terms of just how vital their role has been. I think that the project is being successful and it will hopefully continue to be successful, but a lot of that will, it is all down to the fact of the groundwork that the community development officers have put into making it a success and ensuring that we do have that real true community engagement happening on the ground and the buy-in to the process as well. So we will be continuing to fund that going forward and again absolutely recognise how important their role and their job is within that. So as much security as I can look to provide to them, I'll absolutely strive to do that. I would say within the budget, as it is set out, there is a fall in the resource funding. Part of the reason in relation to that is that there hasn't been as much requirement for resource funding giving the stage at which the project is at. So all the carbon audits for the islands have been completed, the community climate change action plans have been published and some projects are in the middle of being delivered as well. So the key focus in the next stage in that programme was about the investment strategies going forward and how we can look to leverage and make the most of other sources of funding within that. So that's going to be the real critical piece of work. I think that one good thing about the funding that we have available this year is that we do have a slight increase in the capital funding that's available too. So I hope that that will be of benefit to the overall project. But I think that it has been one thing that is proving to be successful. We have seen really develop again down to the work of the community development officers, so we want to make sure that we are seeing that continue because I think that it really gives us such a good platform. Also, I think that one thing that we are considering now—I don't know if Erica would want to add anything to that as well—is about how we can share the learning. I think that that's been a critical part of the project from the start. It's not just for the six islands themselves, it's how we can share that thinking and share the progress with other islands as well as looking internationally on that point too. I just agree with absolutely all of that, but just to maybe offer some reassurance around the development officers that my team are working on a one-to-one basis with them very frequently to just try and give them as much certainty as we can around the funding cycles and future funding because we do recognise very much that they are central and at the heart of this project. Just to pick up on the cabinet secretary's final point there and her response in terms of the roll-out, the further roll-out of the project, we're now going to be starting moving into a phase where we're working with our partners to understand the best way to do that and to try and find the most pragmatic way to share the learning and that's going to be a target for the project that's coming financial year. My concern is around Highlands and Islands Enterprise budget. We see another large cut this year following on, year-on-year cuts over the last decade. Given the state of the economy and the need to repopulate and encourage population retention in the Highlands and Islands, what impact is that going to have? Again, I don't have the exact information in relation to the high budget. It's not an area that falls within this portfolio, so I'd be happy to follow up with more information in relation to that. Again, it's important, as I've said, with other parts of the budget too, particularly in relation to our islands. High undertake a really important job, which is really valued. There are partners and a number of pieces of work and I think I've touched on some of that today, but we can't look at each of those things in isolation. It's about how we're working across the piece. It's not down to one agency or to one portfolio to deliver for our islands and assure we're addressing the challenges there. It takes that cross-government working and that cross-government approach to delivering on that. Again, I'm sorry, I don't have the specific details in relation to that, but I'm more than happy to follow up afterwards. Do you have concerns about it given the impact it'll have on your area of responsibility, islands, land reform, the social and economic impact of fishing, farming and traditional industries as well? It all makes high less able to act and build on those economic drivers? Oh, I absolutely have concerns about that. Again, I think I've probably come back to the comment that I made at the very start. I'm not sitting here happy with the budget settlement that I've got and ideally I would love to be able to fund some of these more areas or plough more funding into that. The fact is we have got the envelope that we have. There are similar challenges right across government and I know that none of these decisions are easy decisions to take at the moment. So of course it does concern me. It concerns me some of the cuts that I've seen within my own capital budget as well, but ultimately we have to try and find a way to work within the envelopes that we have for high, that will be no different. So of course I'll work with Neil Gray, the economy secretary as well, to see how we can best work together going forward and make sure that we're still maximising the positive impact that we can have on rural and island areas. Thank you, cabinet secretary. That concludes our evidence session for today. Thank you very much for your attendance and that of your officials. I'll now to spend the minute, the meeting until 11.30.