 Good morning, and happy new year to everyone. Welcome to the first meeting of the Rural Affairs Islands and Natural Environment Committee in 2023. I remind those members using electronic devices to switch them to silent, please. Just to say that Mercedes Villalba will join us approximately 10 am. Our single item of business today is to take evidence on the 2023-24 Scottish Government budget. I welcome to the meeting, Mary Gouge, on the Cabinet Secretary for Rural Affairs and Islands and her supporting officials, George Burgess, the director of agricultural rural economy, Erica Clarkson, joint head of division rural and island futures, Shetell Mahara, excuse my pronunciation, head of strategic engagement for budget and spending review, and Ian Wallace, Marine Scotland, head of strategy and change, and I invite the cabinet secretary to make an opening statement. Thank you very much, convener. When I appeared before the committee in October, I set out the priorities for the rural affairs and islands portfolio, and I'm pleased to come back today to set out how the 2023-24 Scottish budget presented by the Deputy First Minister to Parliament in December supports those priorities. That budget of course takes place in the most turbulent economic and financial context that I think probably most people can remember, and it therefore demands a response from government that supports the most vulnerable and which ultimately helps to build a sustainable economy. That's why we've chosen a progressive path for this budget, investing in our people, our economy and our public services. The resource and capital spending review sets out as best we could at the time, the spending priorities of this Government and the high-level financial parameters for portfolio envelopes. However, a lot has changed in the months since those reviews were published. We've had two fiscal events from the UK Government which have both had a direct impact on Scotland and its economy. The autumn statement in November fell short of the interventions that Scotland needs to guide us through this cost crisis, and that means that we still continue to feel the impacts of the most severe economic upheaval in our generation, and we will continue to do so for some time. Despite that, our spending reviews, our programme for government, the emergency budget review and the 2023-24 budget all show that this Government is determined to act. We are focused on eradicating child poverty, creating sustainable public services and transforming our economy to net zero. We don't view those as three competing objectives. We view them as priorities that are linked together. While it is true that this Government hasn't been able to do everything that we would have wanted to do at the pace that we would have wanted, we have taken action to support those priorities. In relation to the rural affairs and islands budget, the spend of this portfolio supports some of our most fragile communities, businesses and sectors, at a time when they are feeling the effects of multiple shots, recovering from the pandemic, Brexit and, of course, now dealing with the significant challenges of the cost crisis. As I did in 2022-23, I will prioritise the direct cash injection that my portfolio makes in rural and island areas and across the agriculture and marine sectors. £650 million will continue to be invested across these sectors, providing much-needed economic stability. Our commitment to supporting the ambitions for our islands remains strong, with £8.5 million allocated from the portfolio for the islands programme and the carbon-neutral islands project. We are living in a global climate and nature emergency, with climate change and a loss of biodiversity among the greatest threats facing people and our planet. We are dedicated to our critical work with the agricultural sector to co-develop and deliver on our vision for agriculture, investing more than £44 million over the course of 2023-24 to help Scotland to become a global leader in sustainable and regenerative agriculture. We are also delivering a new round of agri-environment support, with more than £36 million planned investment over the coming year. The Blue Economy vision for Scotland sets out the long-term outcomes that we want to see for our marine environment for people and our economy. This work, together with the £14 million increase in marine Scotland's budget, is representative of this Government's commitment to net zero and enhancing biodiversity through the expansion of offshore renewables, climate-related research and environmental protection. We are living in extremely difficult times, and as we look ahead, there are still many challenges to overcome. That makes the budget and allocating funding between priorities extremely and increasingly difficult. However, I am confident that the balance that this Government has achieved is the right one, and I will continue to work across Scottish Government and with our partners across Scotland to support and deliver for our rural, coastal and island communities. Thank you, convener, and I am, of course, happy to take any questions that the committee might have. Thank you very much, cabinet secretary. I am going to kick off. We have some fairly ambitious plans for agriculture and marine when it comes to climate change and biodiversity. We are very aware of the pressures facing island communities with depopulation and so on. It is a very simple question, but maybe it does not have a simple answer. What are the practical implications of the current inflationary pressures on the rural affairs budget, and how are you going to deal with that? Probably it is not too much of a simple answer, but I know that all members of the committee will be aware that we all see right across our constituencies the impact that the cost crisis is having on our communities, particularly the rural communities and island communities that members represent. The resulting impact that that has had on our budget is, of course, huge. As I said in my opening statement, how we then allocate between our different priorities is, of course, an increasingly difficult challenge, as our budgets become more stretched. However, if you look at the overall figures and some of what we are dealing with here, from the Barnett funding, we have an increase in overall funding of £1.7 billion. However, when you look at what that means in real terms, we have seen a reduction of 4.8 per cent since 2021. Of course, that means that there is huge pressure not just within my budget and therefore what I am able to do across the rural and island portfolio, but across the Scottish Government, too. When you look particularly at my portfolio as well and what that equates to, we have left the EU and the EU replacement funding. We have seen that fall by 1.7 per cent over the course of this last year and since 2022-23. However, since 2021, that has decreased by 12.7 per cent. Obviously, we do not have the same spending power that we would have previously had, and all that has an impact. However, that is what I hope, as I said in my opening statement, is that the priorities that I set out to the committee in October and what we are continuing to provide in relation to that cash injection, which is £650 million across which it impacts our agriculture and marine maintenance payments, I think, are absolutely vital in trying to provide some of that stability, too. We are talking about a budget in the context of massive inflationary pressure, and that pressure applies to individual farmers, just as it applies to the Government. How are you planning in the coming year to work within the constraints that that imposes on you, given what we have had without rehearsing history, a parade of chancellers, unprecedented levels of inflation in recent years? How do you plan for this budget in the coming year in those circumstances? In terms of some of the issues that you have raised, we have seen that particularly in our agriculture sector, just the costs of whether that is energy, fuel and feed costs as well, where they have absolutely spiralled. What we have tried to do in that, and I think against the turbulence in the backdrop of what we have experienced, is to try to provide that stability. We have talked about the £650 million and that direct cash injection that we have been making in both agriculture and marine. Over the course of this current financial year, of course, the committee will be aware that we have brought forward the payments that we have made and the direct payments that are making them at their earliest ever stage. We commenced those payments in September. Aside from the latest figures that we have had, we have paid over £411 million to over 17,000 businesses. That is over 98 per cent of businesses that have received that vital cash injection. What I have set out in the budget shows the stability in which we are trying to maintain that and give that message to farmers that that is what they will be receiving and being clear about those figures and trying to maintain that and keep that consistent as possible. Hopefully, that will help to provide some of that certainty and stability. Finally, I know that everyone throughout all sectors, not just our budget area, looks to move toward longer-term budgeting and so on, but given the uncertainty from month to month that we have experienced at the UK end and given our dependence in terms of the budget on what is happening there, I am just trying to find an idea of the predicament that the Scottish Government is in in terms of planning. How does any attempt to move to longer-term planning? How is that possible? That is the thing. It is really difficult at the moment and it is not possible because we have annual budgets and annual allocations. I know that it continues to be an issue and I know that that can be particularly for some of the schemes that we have run and that we have funded. I know that that is a particularly difficult thing for people, but we are trying to—I think that that is where we have had the resource spending review, the capital spending review, even though they are not budgets in and of themselves but to provide that overall envelope. Of course, that can vary year to year as we go through the annual budget-setting process, but I think that what we are trying to do within the portfolio is work. I think that when you look at the islands funding in particular and I know that that has been an issue and something that has been called for is how we can look at multi-year allocations, we are trying to work to see how we can improve some of the processes that we have to make that process to give people as much warning as possible as we can, but of course that will always depend on what the allocation is going to be year to year, unfortunately, but we are trying to work to improve those processes and give that clarity where it is possible to do that. In your portfolio, we have seen a large number of the budget lines with the real terms cut. We have had a record breaking block grant. How do you make the case for Scotland's agricultural and farming sector and to whom do you make it and to which areas did you pitch if you did make it? While you talk about the increase in funding that we have received from the UK Government, I mean that, as I outlined in one of my previous responses as well, I mean what that equates to since 2021 is a 4.8 per cent cut. I think that, especially given the inflationary pressures that we have seen at 11.1 per cent in October, that means that whatever increase that we have had is always going to be worth less. When we look at the EU replacement funding, apply to a wider funding as part of the block grant in your role. I realise that there is ring-fenced funding but that is for broad agricultural support and that you have discretion to make those choices. However, my question is, as part of the record block grant, do you have the ability to make your case for Scotland's agricultural sector? We would always continue to do that, both within my portfolio and across Government too, but, as you can imagine, with some of the inflationary pressures that I have talked about as well, that pressure does not exist within my portfolio alone but right across Government. As I said in my opening statement too, we cannot do everything that we want to do at the pace that we want to do it because a lot of those pressures that we are up against as well. I also need to point out, as part of that, that we are not getting the full replacement EU funds that we have been promised by the UK Government. What we are getting in replacement funds from the UK Government is coming through as resource rather than as resource and capital, which we previously received as part of the EU. That adds more pressure on an already stretched capital budget, which is why, again, we have not been able to do everything that we would want to do, and we have seen that fall. I talked about that in my opening response, I think. 1.7 per cent from this current financial year, but that is 12.7 per cent from 2021. We were also meant to have, as part of the discussions with the UK Government, after leaving the EU a discussion about future allocations and how that would work. However, despite continually raising that with the EU Government, those conversations have never taken place. If I ask the cabinet secretary to give detail of the EMF funding of the £62 million that I presume you are using as the calculation that you are working out of money that you should have got, but that should have got. However, as we know, when we left the European Union, that money increased. That was calculated as part of that rather than what we were receiving before, so it would be really useful for the committee to receive the calculation that you have made as to how you came to the figure. Oh, yes. I would be happy to provide that to the committee. Thank you. I am Jim Fairlie. Thank you, convener, and good morning, team. We have heard that in the emergency budget review from Mr Swinney, that there will be savings of over £60 million made from the rain budget, including £33 million from rural support. We all know the problems, and we know that there is a cost-aliving crisis. To be fair, the Scottish Government has given early payment of ELFAS to help the rural community to get funding into their system. Is there any way that it can tell us what is happening with the £3 million of ring funds funding, and if and when it is going to come back into the rain budget? Yes. As part of what I outlined to committee when I previously appeared, there were about £60 million worth of savings from the portfolio that had gone forward at that time. The biggest part of that was, of course, the convergence funding. I outlined that in the letter that I had sent to committee about the budget as well in relation to the £33 million. That was an amount of funding that we received unexpectedly, so, of course, we had not budgeted for that. That is part of the ring-fence funding that we received, so it has to come back to the portfolio in future years. It has not been returned for the 23-24 financial year, but, of course, I will be discussing that further with the Deputy First Minister when that money will be returned to the portfolio, but it will be returned, and it will not be for the coming financial year, but in future years. We are now going to move on to agriculture funding and reform, specifically to Jenny Minto. As you have pointed out in your opening statement, and other colleagues have mentioned it as well, the Scottish budget is under huge pressure because you talked about Brexit, cost of living, increased inflation, and that is impacting on how you can support fragile communities. Representing Argyll and Bute, I have had a lot of farmers speaking to me about how it is impacting on their businesses, whether that is increased fuel charges through transportation and operating their businesses, increased fertilizer costs and feed costs. You could expand on the response that you gave to my colleague Alasdair Allan about how the Scottish Government is working with farmers and crofters to support them in this situation and perhaps give examples of how the rural affairs and islands budget is doing this as those business costs are increasing. Absolutely. As I said previously, we are trying to provide as much clarity, certainty and stability as possible because, recognising the turbulence and some of the challenges that businesses are facing in particular, we know in our agriculture sector those pressures are really acute at the moment because of all the reasons that we have talked about. That is why we had tried to bring forward payments to make them at their earliest ever rate to help with that cash flow, which we know has been an issue and why we are continuing to provide that stability over the coming financial year. I talked about the funding that we have already paid out through the basic payment scheme in Greening, so there is over £424 million allocated towards that as well. El Fas has been mentioned as well, the £65.5 million that we are getting out the door in relation to those payments. I think that looking to the coming financial year and the budgets that we have in place for that as well, you touched on crofting as well, which I think is really important to mention. Some of the schemes that we are continuing to fund and look at again, which I think help with that cash injection to those communities. We have the crofting, the housing grant scheme, the agricultural grant scheme as well. There is also the extra funding that we have provided to the Crofting Commission to try to deal with some of the particular issues that we know that we have in relation to crofting. That is how we are intending to provide that support. As I say, trying to provide as much stability and clarity as we can through what is a really challenging time. Thank you for that. I think that the key thing is talking about transformation. I have had a few conversations with Nature Friendly Farming about work that they are doing, working together and trying to find new ways of operating and what support. I think that there is an article in the Guardian today about woodland crofting and how people are looking at new ways of trying to work. I am so interested in how you are working with those organisations and Quality Meet Scotland, for example, with the monitor farms, one of which is on Islay. I am just interested in hearing your thoughts on how the Scottish Government, given the constraints of the budget, is able to look at transformational ways of people changing the way that they are working and spreading that out across the country? First of all, thank you for mentioning the monitor farm network, which I neglected to mention in my response, but I think that that was an initiative that I was really excited to announce. That is £1.4 million worth of funding that we will be providing for that programme over the course of the next few years, which I think is really exciting. We know that the monitor farm programme works in terms of the engagement that it encourages, sharing that knowledge and that expertise, so being able to continue with that and have another round of that has been really important to it. Of course, we have done that with agritourism as well, which again is really important to see that exciting part of the sector continue to grow and develop. Of course, we are continuing to invest through schemes such as what we are funding the monitor farm programme through the Knowledge Transfer and Innovation Fund. We are continuing to provide funding through that as well, through the agri-environment climate scheme. We have £36 million invested in that over the course of the coming year, some of those other schemes that I have talked about as well. It is also important to mention the nature friendly farming network, so I have had quite a lot of engagement with it. I think that it is a fantastic network, and it is really important for us. I think that we do, of course, have regular engagement with our key stakeholders. We also have an agriculture biodiversity and climate change network that we are encouraging people to get involved with to really share that knowledge and expertise that we have. That is where we really have tried with this budget to continue. I said that one of the priorities in my opening statement was about that transformation to net zero and becoming a net zero economy. We know that we have to fund that. We need to help with that transition where we can. That is why we have provided the funding across various different schemes to continue on with that work and really invest in that and drive that change that we want to see and ultimately deliver on our vision for agriculture too. Rachael Hamilton. Jim, on a supplementary question. Can you possibly give us a wee update on the Crofting and Agricultural Grant scheme and how it is helping, based on the question that Jenny Minow has just asked? Yes, I think that between that and also the Crofting and Agricultural Grant scheme, as well in relation to the overall figures, I am sure that George can perhaps jump in on that, but that is vital funding. We want to see the continuing development of crofting and to do what we can. We know that people are crofting some of the most remote and rural parts of Scotland and there are particular challenges there. That is why, through the various schemes that we have, we are funding things such as increasing energy efficiency, looking at home improvements and really trying to do what we can to help crofters through those schemes. Sorry, George. I do not know if there was anything that you wanted to add in relation to that. I think that the Cabinet Secretary is pretty much covered it, but certainly on the Crofting and Agricultural Grant scheme, as well as in the past, we have covered development of croft houses, but the new scheme will have a specific element about energy efficiency, because many of the croft houses are not the most energy efficient and this will be a direct way of helping crofters to save money. Maybe, going back to the earlier point about direct help to farmers, an important part of our programme is the provision of soil testing. That is an example where we are helping farmers to understand the specific state and needs of their soils and, in turn, that can reduce the amount of inorganic fertilizer that they require to apply. The cheapest fertilizer is the fertilizer that you are not having to buy in the first place. Alasdair Allan, I would like to come in and supplement you in this. On the Crofting and Agricultural Grant scheme, how many crofters have been assisted with that in the last year or the last period? We have about 900 applications each year, so that gives us a sense of the number. My first question is quite simple. Why has the agricultural transformation scheme been reduced from £45 million to £5 million? We have seen what we are doing in relation to agricultural transformation and an increase in the budget this year in comparison to last year. When we look at the overall climate change spend and what we are investing over the course of this year, we are up £19 million on what we had been over the course of the previous year as well. That covers the investment between our sustainable agricultural capital grant scheme and the agri-environment climate scheme. Why is that not shown in the budget? Why continue with the agricultural transformation fund if you are rolling it all into the rest of that? I do not understand your explanation. Are you saying that one has been replaced by another? No. I would be happy to provide a further breakdown of those figures. I am not rolling one thing into the other. We have the sustainable agricultural grant scheme, which is a capital fund of £5 million. That is what we have put forward for the coming financial year. It was also £5 million within the current financial year. That fund in particular has been used for slurry spreading equipment and slurry store covers as well. That is the particular focus of that fund over that past year. We have budgeted £5 million for the coming financial year, but we will provide more details of that when the fund and the scheme launches. On the agri-environment climate scheme, I know that the NFU was really disappointed because the slurry storage scheme, the farmers are trying to do their best to comply and to meet the rules around that. However, unless the Scottish Government keeps pace with that budget, farmers will not be able to keep pace with those requirements. I absolutely agree. To be honest, if I could put a lot more into that capital scheme, then I absolutely would. However, because of the challenges that I outlined in my previous responses and where we are with our capital budget, and we have not seen that replacement funding come through, that is what has made that particularly challenging. That is why I know that the first round of the capital grant scheme that we had in agriculture was very popular. Because we had reduced capital allocations, we had to really target that scheme, where we thought that we would have the most effect, which is why we focused on those items in particular. Where we are looking to fund those pieces of equipment, we know that we will have the biggest impact. Of course, I would always welcome more funding in a bigger capital allocation, because we would then be able to do more with that. However, as it stands, and with the budget that I have in relation to capital, we have to use it as best we can and target it the best way that we can. I appreciate the difficulties that the Government might have in targeting support, but what assessment has been made of the need for specific support to those who are finding it difficult to access. How are you going to achieve what you want to achieve? How is the Government going to achieve what it wants to achieve if it cannot give targeted support to very different farmers across Scotland? How are we going to achieve that if we do not put some allocation to it? I have focused on the capital grant scheme in particular, but that is where the other funds that we have are really important. Like you said, not all businesses are the same. We have a variety across Scotland, and that is where the support that we offer needs to be flexible to that as well. As I said, that fund in particular had to be targeted for the reasons that I have outlined, but that is where the other schemes that we have are also really important in terms of enabling that transformation and allowing people to take part in that, as you have outlined as well. The AIC scheme is an example of that as well. We have £36 million for that for the coming financial year. The funds that we have through that, the work that we are trying to do through the national test programme as well, and encouraging that uptake and trying to incentivise people to take part in, as George Burgess had outlined, the soil testing undertaking carbon audits. We are looking to incentivise those practices as much as we possibly can and to fund and incentivise that as much as possible, but that particular scheme is one that we have had to target where we think that it will have the biggest effect. I am not really satisfied because I think that the Government should look at a different way that is flexible. I mean, I think that you are giving all the right words here, and I think that you understand the problems, Cabinet Secretary, but I think that from my assessment of this, it would be better to look at a new way to achieve what the Government are trying to achieve, particularly on the carbon audits. I am sure that other people in the committee will be asking questions about that, because it has been a very low uptake. What we want is that we want farmers to be able to have an easy-to-access system that allows them to support our ambitions to meet net zero and environmental targets. I do not think that we are there right now. I would say that I absolutely agree with you, and we want to make it as easy as possible for people to take part and to be part of that transformation as well. You have touched on what other people might want to come in on the carbon audits and the low uptake. Of course, we are really disappointed by that low uptake in the scheme that we have seen so far. That is where the work that we have undertaken with the aerial board has been important in helping us to design schemes that are easy-to-access and offer the right incentives. I believe that is what we have provided that scheme, even though we have not seen the uptake through it that we would want to see. I would just say in relation to that that this is the first year of doing it. If the committee has any particular suggestions as to how we can either better communicate that, we have done our best in relation to working with all the various organisations and stakeholders that we have to get the message out as far as possible to explain what help and support is there. Of course, I am happy to take any suggestions as to how that could be improved. Ultimately, the co-development and co-design process that we are working through at the moment for future policy is to help us to get through some of those hurdles, because we do not want to put barriers and make this hard or make this transformation and some of the changes that we need to see difficult for our farmers and crofters. We want to make it as easy as possible, which is what we are trying to do through those schemes. I am going to bring in Ariane Burgess, because just to carry on that theme, unless Jenny, is it to do with the testing? Not specifically, I can supplement Ariane's question. I want to pick up on the national test programme. You mentioned that we are interested to hear what the funding for that will buy in 2023 to 2024, but also what will be anticipated to have been spent in 2022 to 2023. You have mentioned that there is soil testing and there is carbon audits, and you have spoken to Rachel Hamilton, my colleague, about the low uptake. That is a concern, and it would be interesting to understand what the barriers are. It sounds to me like some of it is just getting the word out to farmers, as part of it, and that you are working through Ariob. Is it just soil testing and carbon audits that the funding is going to cover in the national test programme, or is there anything else that has been rolled out? No, the ultimate ambition with that is to expand the programme. The carbon audits and the soil testing were the first part of that. We have been looking at animal health and welfare measures that could potentially be added to that as well in the programme. In coming years, we will also be looking to include biodiversity audits as part of that, too. I know that that was something in the strong feedback that was received from the annual board that was about introducing biodiversity audits, but they are not in a state yet where they are ready to be rolled out at a national scale. However, at the point that they are ready to do that, we will be looking to include that as part of the programme as well. The uptake has been disappointing but, of course, it is the first year of the programme. When we were budgeting for that, it is a demand-led scheme, so we did not know how big the uptake was going to be. We obviously want to be better prepared from that. It is better for us to be prepared than to have the opposite situation where we could overspend a fund and then not be able to fund all the claims that we would receive as part of that. However, all of that being said, I know that I provided some of the figures within the letter to the committee. We have a forecast for the first part of that for £2 million. That is how much we expect. We could potentially spend through that because we expect a lot of claims to come through at the tail end. George might want to expand on some of the discussions that we have had in relation to the feedback that we are hearing from agents. I also want to give a picture on carbon audits overall. I think that the uptake that we have seen on that this year has been really positive. We also fund carbon audits through the Farm Advisory Service. The budget for the Farm Advisory Service of that was exhausted in the summer this year because there had been such a high uptake and an increase in demand in what they were seeing. I think that the fact that we have seen that has been really positive. I think that we will see more follow-through, but I will hand over to George who will be able to provide some more of that information. I would not want the committee to think that the low uptake is in any way down to the complexity of the scheme that we have. I do not think that anyone could design a simpler scheme. We do not require prior approval. Basically, the farmers can get the work done and then they claim it retrospectively. It is about as simple as you could possibly get it. That means that, for this first year, farmers had until the end of December to do the work. They then got until the end of February to put their claim into us. It does make it difficult for us because we do not know exactly how many tests have actually been done. We will not know that until the end of February and the claim period, but we know from our interaction with agricultural advisers, the colleges and others that at the tail end of last year there was quite a lot of activity out there. Some farmers might have chosen not to do it in the first year, but they are interested in getting involved in this year. Can you give us a sense of the upfront cost and effort for doing the work? Is it a small amount of money to have their land and soil tested? It is a small amount of money. The system that we have got means that you do the work and you pay for it and you claim it back, but there is no delay in the claiming back. As soon as the claims come in, they will be processed and paid. I do not think that there is any suggestion. Suddenly, there has been no suggestion from any farmers to us that the problem is anything about complexity or the fact that they might be lying out a couple of hundred pounds for a matter of a few weeks for the work. I do not think that there is a cost barrier to the work. Thanks for that clarification. Cabinet Secretary, in the Bute House agreement, there is a commitment to at least double our organic land. Does that fit in on soil testing as part of moving to organics and understanding what is in your soil? Is it a natural fit in the national test programme? Is there scope for participation payments for people to start transitioning to organics? Does that fit in the national test programme or is that in another funding pool? As I said in my response to Rachael Hamilton previously, I am happy to write to the committee with some more information on each of the schemes and if you would find that helpful. That would be very helpful. Just in outlining where the different support lies and what each of the different funds that we support, what they do and what they support. That support does not fall within the national test programme, but it does fall within the agri-environment climate scheme that we support as well. We have £36 million in the budget for the coming financial year in relation to that as well, so that is where we support that. I would say that that is not the only work that we are doing in relation to organics. We funded a post within Scotland Food and Drink to look at organics as well. I have been engaging with stakeholders looking at an action plan in relation to organics as well, because we need to be doing more work in that space. As for the support that is available at the moment, that is through the agri-environment climate scheme. George, you mentioned that if we test the soil and understand what is in it, I think that one of the concerns that is coming up for me is about nitrogen and run-off and pollution. Nitrates are a greenhouse gas, and I wonder if you are considering that in terms of talking to farmers in the process of the soil testing and helping them to understand how they can help to limit that contribution to our greenhouse gas emissions? Absolutely. The testing is just the first stage of the process, understanding what the state of the soil is. That will then tell you that you need to be adding more nitrogen through inorganic fertilizer or other means. The more nitrogen that you can keep on the farm supporting growth rather than running off from being lost to the atmosphere, the better. It is classic win-win. It is better for the farmer in terms of reduced costs and greater productivity. It is better for the environment as well. The understanding through the soil testing is the start, the key, into that further conversation. The soil testing occurs, and are you following up with work around, rather than adding nitrogen through chemicals, plants that fix nitrogen and soil, that kind of work? That will depend on the individual circumstances of the farm, but yes, absolutely. Just doing the testing, it is not a case if you do the test and then you have done the logistic on the shelf. The same with the carbon audit. It is not done and that is it. The important part is what work that leads into. We have maintained the support for farm advisory services that will then be able to work with farmers to use the outcome of that testing in the development of their farm business plans. Those are the parts of the discussions that we have had that are really important because somebody could tick a box and say that they have done that test, but as George was saying, it is what you then do with the information that you have that is really important, and that is where those services are going to be going forward. I think that it would be great if, along with the list of all the funds that you have, we are also interested to hear the kind of, I mean, obviously it is not exact for every farm because they have run their businesses differently, but it would be interesting to hear if, once a farmer has a test or a carbon audit, then what are the next steps in general that then they get the kind of feedback on. I have listened to this, it is quite bizarre. George, you talk the talk, the sign is all very good, do the soil test, do the work after that and you will save money. It is all good, it improves climate change, it includes biodiversity, and the cabinet secretary said that it is not just about ticking the box, but the sad fact is that, up to 12 December, we only had 12 people tick the box, and we do not even know if those 12 people then went on to do the wonderful things, and the right things that George talks about, so we do not even know that. It seems bizarre, given that there is funding for something that is the key to future profitability, future low-impact farming and so on, that we have had such a massively slow uptake. In the letter in the pre-budget meeting, you suggested that the national test programme had been slow, and that in the carbon orders or whatever, with a mixture of feedback from the sector. What is the feedback from the sector? Why is it not working? Because of its simple process, it results in far better farming, profitably wise for the farmer, for climate change by diversity. Why have we such a shockingly low uptake? It cannot just be about the lull in people doing the testing and claiming, because farmers are not renowned for doing something and not claiming the money back. Where has it all gone wrong? I would not say that it has all gone wrong, because, as I said, we are still waiting for the final figures for that. Of course, I will be happy to keep the committee updated on what those are. Of course, we are really keen to get that feedback, too. We have got that funding there, we want there to be as high uptake as possible and for people to be engaged. That is where we have worked extensively on communications, sending out and contacting farmers directly to make them know about. You said that you had a mixture of feedback from the sector, so where is the sector saying that it has gone wrong? You admit that it is way lower than expected. What is the feedback telling you the reason? If it is not difficulty in accessing the scheme, if it is not about claiming, if it is not about farmers not recognising the benefits of doing it, where is it? Where is the problem that you are getting back from the stakeholders? That is what I was coming to, because we are getting a variety of different feedback there, so based on some of what George had touched on in his previous response as well. Some people are planning to undertake the work, but they have not done it yet, or they may do that in the coming year. It is to do with the capacity, I think, as well for some agents in terms of carrying out that work, because it has been an issue. George, you want to come in and listen to all the feedback that we are receiving. The feedback that we have got is that the agents are busy, and the businesses that are carrying out the soil testing and carbon audits are busy. I do not think that we have any feedback from the sector that says that the scheme is not working. Any of that feedback is important, and as I said, this is the first year of the scheme. If there are lessons that we can learn in terms of, I do not know, but as we are saying, I do not think that the problem is accessibility to the scheme or the ability to claim, but it is trying to identify where those issues are so that we can hopefully try and improve for the future years of the programme as well. Again, we want as many people to be involved as possible who want to have them get on board. It is within our best interests to do that as well, so we want to work to make that happen. Thank you, convener, for just very briefly touching on what both Rachel Hamilton talked about and Ariane Burgess. I appreciate that this is not necessarily fall into your portfolio, cabinet secretary, but, in contire, there is work going on just now as a pilot looking at the slurry spreading and the capacity and the growth and the impact of run-off. I think that that is an example of where we have farmers that are wanting to find solutions, because, as George Burgess said, the cheapest fertilizer is what you do not have to pay for, so they want to understand the best use of what they are creating through their livestock. I just wanted to add that in as well, just so that you were across that. That is what I would say. I thank you very much for highlighting that example to me, and I am happy to take a closer look at that if you want to contact me about it, because I think that it is that sharing example, which is really important as well. I touched on some of the networks that we have, because there is so much good work happening out there right across Scotland. I see it all the time, when I am out visiting different farm businesses. We talked about the monitor farms and how important that work is. I think that there are so many different networks and examples out there that people can engage with, and I would absolutely encourage them to do that. We are more than happy to learn the lessons from this year of the programme, but I think that sharing that learning and sharing that expertise is really vital. I wonder about the agricultural transformation fund. There is £5 million allocated to that. I wonder if you could say a bit about what it is that you are seeking to transform and how you intend to spend that budget. The £5 million budget that has been allocated for that is the sustainable agricultural capital grant scheme. In this current financial year, we have had £5 million available for that, which has funded slurry store covers as well as slurry spreading equipment. In relation to the utilisation of that fund, we had made about 570 offers of grant and had pretty much exhausted that fund in terms of the grant offers that have been made, so we know that there has been strong uptake in relation to that. I am still to announce the details. Providing the budget is agreed and that is passed, then of course we will be looking to launch a scheme as well, but us to the details of that will be announcing that in due course, but of course we will be happy to keep the committee updated. It is helpful to have examples from last year on this year, but I wonder if you could say a bit more about what the name of the transformation suggests, that there is something dramatic that you are looking to change in the way that agriculture has done, or can you say a bit more about what the reasoning behind that budget is? We know that there is strong demand in particular, as I was talking about previously, in response to Rachael Hamilton's questions for capital items that we know can make an impact. What we are looking to transform is that we want to do what we can as we have outlined in our vision for agriculture. We want Scotland to be that global leader when it comes to sustainable and regenerative farming. We know that we need to do what we can to lower emissions and enhance biodiversity, so through that fund and through some of the other schemes that we have, I have talked about the agri-environment climate scheme and various other funds, that is essentially what we are looking to do, is to encourage the uptake of various different practices and to help fund what can be these pieces of equipment that we know can then have a big impact on emissions. Finally, in terms of purchasing equipment, the inflationary pressures that we talked about earlier on are a disincentive for all farmers to invest. Is this fund going to be adapting this year to cope with that reality? Is it seeking to help farmers in that situation? Of course, we are looking to take all those factors into consideration as we do. Before we launch it, I will be happy to keep the committee updated with further information in relation to that, but I do know that that is going to be a big issue going forward. It would be great to have a bigger capital budget to be able to invest more in that, but unfortunately we are in the position that we are in relation to the capital allocations that we received. That is where we are. What we did in the current financial year is really tried to target that, where we think that it would have the biggest impact on emissions reductions. Of course, we will be looking to consider those factors as well as we develop the scheme going forward. I apologise for harping back at the carbon audits and the soil testing, but I think that we all agree how key it is to agriculture moving forward. Given that we are still experiencing the very low uptake, could you come back to us and let us know what your revised expectations of the uptake soil testing and carbon audits are? Given your engagement with industry, can you give us a better idea of where you feel improvements can be made to increase the uptake? I would be happy to do that. The forecast spend that we have in relation to that is set at £2 million at the moment, so we would expect that to increase, but I would be happy to come back to the committee with further information. I appreciate that. Just to clarify, you have the national test programme that does carbon audits, but you also had the farm advisory service that was doing that as well, and you mentioned that that fund was exhausted. Are you going to continue with the farming advisory service funding of carbon audits or are you going to switch and make it all streamlined into the national test programme? I think that that is what has been good about having the national test programme there, because I think that when the funding for that part of the farm advisory service was exhausted, it would have been able to direct people to the national test programme as a means of having that funding. The contracts for that were due to be up in April of this year, and we have extended the farm advisory service contracts in relation to that as well. We obviously want to work and make sure that we are not working across each other in relation to the uptake, but of course if people are going to the farm advisory service, that is one route, but we of course want to see people taking part in the national test programme. That is the number of carbon audits that we have seen. It is positive that we have seen that exhausted, because the amount that they did within that few months was almost as much of what had been undertaken in the wall of the previous year. I think that that shows that we are heading in a positive direction in relation to that. By having those two different ways, you are creating different doors in a way for people to go through in order to get their carbon audits. I would like to ask the cabinet secretary and her officials to come back on some of the slurry storage stuff as well, because we know that the AIDS funding that you talked about has been cut as well. Only 2 per cent of that is allocated to slurry storage. We know that the farmers have to meet the water regulations and they only have four years to do it to transition. One of those years, you could not get an application for slurry storage. Can we have the figures to the committee of what the criteria will be for the future for the AIDS funding? Will it be realistic for farmers from Orkney to the Borders to be able to apply for that funding? Will that funding for slurry storage be a high percentage of the AIDS funding? I would be happy to come back to the committee and outline that information. Thank you, convener, and good morning and happy new year to the cabinet secretary and her team. I would like to ask you a bit about the food processing and the marketing and co-operation scheme. I note that it is suspended for 23.24, but it will be coming back in a new form. Obviously, having it been suspended this year, I know that that will be disappointing because I know that it is a well utilised fund that we run. I have visited a number of businesses and I know a number of businesses that have received funding from that scheme in the past. Again, it provides that vital capital injection that a lot of businesses need in relation to their facilities and improvements that they can be making there. We also know that the scheme has not been without its criticisms. I think that one of the key criticisms that I have received in relation to the food processing and marketing and co-operation grant scheme and which we touched on previously is about the windows that we have for spend in relation to that. For this current financial year, I announced the outcome of the round in November. Of course, there is a short window. That money needs to be spent. It leaves only a very short window in relation to applicants and successful applicants to be able to spend the funding that they have been awarded. It is also quite a long process in relation to the assessment of that as well for the scheme. What we are really wanting to use this period to do is reflect on that, where improvements can be made to the scheme and fully intend to hopefully bring that scheme back in future years. However, we really want to use this period to reflect on that and see is there a way that we can lengthen that application window, which provides more time for that whole process to be run through, as well as considering questions that, you know, is it accessible enough for small businesses and really looking at the criteria that we use for that fund? Sorry, Georgia, I do not know whether you are looking to come in on that. Yes, I mean, suddenly our hope would be that, while there might not be any new allocation in 2324, that we might actually be running an application round in 2324 for money that would then be available from 2425, so that we give the applicants more time to prepare good quality applications, more time for us to work on them and assess them, and then the full year for the applicants that are successful to make use of it, rather than chasing our tail as we have ended up doing in the last couple of years. That is really helpful, thank you. Jim Fairlie. It is just a quick supplement to that question. Have you done any engagement with people who have used the grant before and got feedback from them as to where the shortfalls are on it? It is a brilliant scheme and it needs to be utilised fully, but I have had lots of engagement myself from people saying that it is too restrictive, there is not enough money in that particular fund, we cannot use it for this. Have you done any engagement with the stakeholders who are actually using the grant or have had use the grant and how to make it better? Yes, I certainly hear some of that from the businesses that I have engaged with who have been awarded funding and some of the criticisms that there have been of the scheme and I have talked about the period of time there. I know that that is a particular issue, I think that George will probably be closer to some of the detail on that, but again, that is where this period of time is important because it gives us a chance to reflect on that feedback and look at what changes, if any, need to be made to the scheme to ensure that it is fit for purpose in doing what we would want it to do. Yes, thanks. In my previous role in food and drink, I chaired the assessment panel that decided on the grants, so I have had quite a bit of involvement in the scheme. I think that one of the challenges is that it was a one-size-fits-all scheme, it did not matter whether the applicant was looking for £20,000 or £4 million, essentially the process and the requirements were the same for applicants of all sizes. I would have to say that it was not always the case that the larger applications were the better applications, there were some very good quality applications from small businesses, so it was not simply a case of you had to get an adviser to assist to make sure that you got a good application in, but I think that all of that is the sort of thing that we can look at in the course of the year. Do we create a separate channel for the smaller businesses to come forward? Do we create some sort of two-stage process as some of the other award schemes have that people get a first in principle approval before they then have to go to get their quotes? There are a couple of areas like that that we can look to make it a better experience, but the feedback that I have had from visiting many of the projects is that they have made a real difference to businesses and to the communities and the supply chains that they are involved in. Has any assessment been made of the impact on some of the businesses that are trying to trade out of difficult situations that Covid has given them? We are looking at businesses developing. It is going to be over two years before funding for the type of business development that we have seen through this before. Have you got any take on how many businesses might be impacted adversely by a lack of funding for the next over two years? It may not be as long a period as that because I think that George Burgess touched on in his response that we could be looking to open an application round so that the funding would be able to be spent at an earlier stage. Of course, I know that— So the year beginning is when a year's time there will be funding available or just the application process. When will actually be money on the table? Are we 24, 25 or 25? It will be from April 2024. Of course, I know that people will be disappointed if they are not able to apply for a scheme this year. I am not able to quantify how many people—in relation to the applications that we saw this year, George, I do not know if you would have the figures in relation to that in terms of the overall applications that we would receive for the fund if that would be helpful. That would be. That is not a precise figure, but the number of successful applications this year was somewhere between 20 and 30 of varying scales out of around 50 to 60 applications. That would give a sense of the number of businesses. If you look at the lists of those businesses that are all published for this year and the previous years on the Scottish Government website, you will see that there are a number of businesses that have been repeat recipients for the scheme over that time. So in terms of the individual businesses that are benefit, it is probably a slightly smaller number than the overall number of applications. Okay. Thank you. Arianne Burgess. Cabinet Secretary, I am going to continue the theme of business development and funding for that. You mentioned earlier in the session that the Farm Advisory Service, Knowledge Transfer and Innovation Fund is going to continue because we know that because you talked about the monitor farms. Will you be interested to hear what else would be supported in that fund? You mean in relation to the Knowledge Transfer and Innovation Fund and the types of projects that that has been supporting? I talked about the monitor farms as one of the key projects through that. That is £1.4 million of funding over the course of the next few years. That is one of the most significant projects that will be funding as a result of that. I would be happy to come back to the committee with more information as to the allocations that we have made this current financial year and who has been awarded funding. Of course, the soil association has been awarded funding through that scheme as well previously. I visited dairy farms in the south of Scotland where they have utilised that funding as well. Through the title of the fund about that knowledge and innovation, that is what we are at a time now. We really want to see that come forward. I think that it has helped fund some really exciting projects in the past. I think that the monitor farm is obviously a key part of that. I look forward to seeing what other applications we get coming forward. I would be happy to write to the committee and give more details to some of the successful projects that have been awarded funding through that scheme so far. That would be interesting to hear. I think that we would be interested to know if the small farms grant scheme is going to be continued. Yes, that is one where we are undertaking a pilot in relation to that at the moment. It is one of the only schemes that we have had that is means tested. From some of the feedback that I have had in relation to that fund as well, it has been challenging for people to apply to. I think that we want to make sure that we have all that support there for small farmers and that that support exists. We are working with SAOS, and I am happy to come back to the committee with more information on that, to look to see how we can better provide that support for small farms going forward and to utilise the funding in a way that works for them. When we talk about small farms, what kind of size, what is the smallest amount of land that good farmers have that they can apply for the fund? That is a thing that is under development at the moment, and we are working to try and see what improvements can be made in relation to that. I cannot remember the exact scheme specifications off the top of my head. I do not know George if you would have that information to hand. Again, I am happy to provide that information, but I know that because of the means testing element, because of who could apply, I think that it was quite a difficult fund for people to get access to. Obviously, we want to improve that and make that better where we can. I think that that would be a welcome. I have been speaking to young farmers, and young farmers tend to be on smaller pieces of land with a lot of passion and ideas for innovation, but they do not really have the capacity to put the time—they are trying to do the work on the land, and then they are finding that the application processes are onerous and they feel that they need a degree in grant writing in order to access it, so it is good to hear that you are assessing it. I think that, especially for those small businesses, the scheme that we have opened that is probably some of the strictest criteria that we have, you know, for one of those schemes, I think, is not fair. Again, that is why we are undertaking this work, to try and see what improvements we can make. We are welcoming to hear how that goes. Thank you. You are welcome. Briefly, you may already have touched on some of this, but last year we sought to unpick what financial transactions meant in the budget, and this year I think that business development might be the one that we seek to unpick a bit further. We want to know whether that is the budget that would cover things like the farm advisory service knowledge transfer and innovation fund, small farms grant scheme, and is the support for those areas being continued to the same level under that heading? Yes, the support for those schemes is being maintained. For example, the knowledge transfer innovation fund, £2 million farm advisory service, is being funded to £5 million as well, so I think that George has the budget line there as to where that falls. Again, I am happy to come back with more information as to the line that is in the various different funds that we have, because I can understand from looking at the table and given some of the funds that we have discussed today, just how confusing that can be in the different titles that we have for the funds that then translate to a different title in the budget headings as well, which I know will not be helpful for the committee. Actually, I am not too sure that I need to ask my question, given the response that the cabinet secretary has just given to Alan. I was specifically going to ask around the financial transactions that they have been spent on this year and why they have been removed next year. No problem. I am happy to elaborate on that as well. The £15 million in financial transactions has been removed this year because that was the loan scheme that we operated on. Of course, the committee will be aware that we moved to a system of advanced payments for farmers this year rather than operating a loan scheme, which is far more efficient than what we operated previously. We have also brought forward the payments in that scheme as well through the SSI that was introduced in September of this year. We do not have the financial transactions there because we do not need to utilise them any longer. That is great. Thank you. Convenience, have you mind if I just ask a question about the FPMC, the food processing sector? Yes, absolutely. Cabinet secretary, are you concerned or is the Scottish Government concerned that there will be a lack of investment in the industry because of that withdrawal? Have you made an assessment of that for the impact that it will have on the farming and food processing sector and the supply chain sector? Of course, everybody wants to talk about that because we want to improve the supply chains rather than withdraw the investment into them. What is your assessment of that? Obviously, it is disappointing and I know that we will be disappointing for a lot of people that there will not be that fund. However, it is one of those areas that I think can also be improved and I have made a better process for people. I think that why the work that we do over the course of the coming few months and the coming financial year is really important in relation to that so that we can make those improvements, building on the feedback that we have received and the various criticism that we have received about that fund. In saying that, I know the impact that it has on a lot of businesses as well because it is investment that otherwise they may not be able to undertake. Some of the businesses that I have visited as an example I have visited the shellfish marketing group in Bells Hill this year as well, who were awarded funding through that to upgrade their freezing facility. They are a co-operative for mussel and oyster farmers across Scotland. Of course, that is a huge investment for them and it is really important that they get that investment. There are other businesses as well, but it has been about their energy efficiency. This year, more than many others, given the increased costs that people are facing, any investment that can be made there would be welcomed if we want to help with that as much as possible. If businesses are not able to undertake that work, that will result in increased costs, especially with the energy costs and the way that that is heading as well. We want to be able to offer that support, but again we need to make sure that we are doing it in the right way and in a way that works for businesses that are applying to the scheme as well. I think that taking that bit of time to make sure that we get this right is going to be really important. Cabinet Secretary, in your opening statement, you touched upon the £14 million increase for Marine Scotland. I was wondering if you could give us a bit more detail on that. No problem, you are right. There has been a £14 million increase in the budget for Marine Scotland. The committee will no doubt be aware from the statement from the Cabinet Secretary that was made yesterday about the energy strategy in Scotland and the ambitions that we have in relation to offshore renewables. The extra increase in funding will help us with the capacity to deal with that, with the planning and consenting, and we have strong environmental ambitions, too, in relation to the HPE network that we want to roll out as well. It will help us and enable us to better deal with the offshore renewable element of that work, as well as the environmental considerations, too. It is really quite exciting how we are progressing this and seeing this moving forward. I was just wondering if there have been any challenges along the way in planning and organising for this. No doubt. There are many challenges, which are, again, in terms of the resource that we need to deal with that. That is why this uplift in funding is going to be critically important. I think that it is a really exciting time, but it is also a really challenging time as well. I do not think that there is any getting around that between the expansion and offshore renewables. I am looking over to Rachel Hamilton because I know that we have had the event with the SFF as well and we have talked about the spatial squeeze. There is, obviously, the HPE network that I have talked about that we want to roll out as well. As much as we think that we have a huge marine resource and, as I said, by the time you factor all those different considerations in, it does become quite a cluttered landscape, which we are, obviously, trying to manage as best as possible through the work that we are doing with the blue economy vision and the focus that we have put on the outcomes there, as well as the work that we will be taking forward through the national marine plan, so, again, that is where the extra resource in helping us to be able to deal with all those different issues is going to be really important. The £14 million, obviously, at any increase in the budget in subjects that our portfolio covers, is to be welcomed. It looks like it is all to facilitate more spatial pressure, so putting more into the sea or restricting fishing. What hope can you give to the fishing industry, which, as you have already touched on, we heard the concerns about spatial pressures at previous meetings, but what hope can you give the fishing industry that their interests will be really looked after when offshore renewables, HPEs, increased aquaculture, or whatever that seems to be the headlines when it comes to the £14 million budget? What is there for the fishing industry? Of course, I am the fisheries minister and I am acutely aware of some of the issues that the industry is facing at the moment and that I have touched on in my previous responses, as well. I think that one thing that I would continue to highlight is the support that we do have available that we are continuing with in the Marine Fund Scotland, as an example of that, as well. I have also touched on the work that we are taking forward in relation to the blue economy and the outcomes that we have in relation to that, because, obviously, the food that our fishers provide is absolutely vital and we want to continue to make sure that we are making the most of that. I think that that is also why it is important to remind the committee of the economic link that has been introduced, because we also want to see the value from what is caught in Scotland landed into Scotland, as well. Of course, that is just because we have touched on the offshore renewables and the HPE network there. I would not want the committee to take from that. The fisheries is not equally important in those discussions, because it absolutely is. It is my role to ensure that it remains as such, as well. I know that you have probably asked some of the questions that I was going to ask, but the cabinet secretary will be aware that I have already raised concerns about the resourcing of Marine Scotland and the ability to cope with its increasing responsibility. What assessment has Marine Scotland made of its operational capability to ensure compliance with the anticipated expansion of marine environment protection? The cabinet secretary is also aware of the concerns of the fishing community that Marine Scotland enforcement targets the UK fishing fleet over other vessels in Scottish waters. How much of the £14 million budget is to be spent on enforcement in Scottish waters? I will ask Ian to come in with some more information on that, but I know that Marine Scotland is working on its delivery plan for the coming year at the moment, so I will be able to provide more information afterwards. The enforcement capability that you are talking about is absolutely vital. The committee will no doubt be aware of the vessels and the capabilities that we have in relation to enforcement. We have the two aeroplanes, so we have three marine protection vessels and two science vessels. We also invested this current financial year in two ribs, which were in the region of £1.25 million for those two as well. We are continuing to invest in that capability that we have, but even if we were to increase that resource, there is no way that we could still patrol or police the marine environment just because of the, across the whole area and the whole coastline of Scotland just because of the sheer scale of it. I think that I provided the committee with information previously as to how we undertake that enforcement. It is a risk-based system that we use based on different intelligence that we receive, and that dictates how we task those vessels and where they go to. I hope that that helps to provide a bit more information in relation to that. We move to a system of proactively publishing the information on what we are doing in relation to compliance and vessel boardings and things like that, but I will hand over to Ian who might be able to provide some more information now. Thank you. As the cabinet secretary said, in terms of our marine operations issue, we are on track to meet our statutory obligations and the cabinet secretary provided some detail to commit on that. We are conscious of the on-going changes of the HBMAs coming up in MPAs, and that is why we look to continually review it and at the moment we are in the process of reviewing our operations across what is going to be that changing environment. As the cabinet secretary said, we are already taking steps through the purchase of those junior ups to bolster our inshore capability and make sure that we are prepared for the new fisheries management measures and each PMAs. How much of the £14 million budget with the enforcement, are you able to target issues such as marine litter? We are in the process of finalising our annual delivery plan right now, so we can follow up with detail on the exact spend on that for you. I am heartened to hear about the two ribs to bolster the inshore protection. One of the things that I would be interested to understand more fully, and I have read in detail the data and intelligence that you use, is to understand what you mean by a risk-based system or approach. Obviously, it is based on intelligence, but one of the concerns that I get from stakeholders and coastal communities is that an MPA is encroached upon and the damage is done. Earlier on, you talked about the blue economy and we have a greater understanding that blue carbon is part of our blue economy and protecting that. It seems to me that we don't, at the moment, have, and I understand you saying earlier, that we couldn't possibly control everything, all of our coastal waters all the time, but I do have a concern that encroachment happens, damage is done very, very quickly, and the speed with which Marine Scotland enforcement and protection vessels can arrive at a place to stop it from happening is too late for something to have already occurred. I wonder what you are thinking is about the long term, especially when we are talking about highly protected marine areas, where that is inviting a change of behaviour, a change of understanding. We are having these conversations because it is all about the long term protection of the fisheries that you are in support of and your role as fisheries ministers. We are trying to protect the waters so that we have fisheries for the future, but enforcement seems to play a really important role in it. I do not think that we have yet the capacity to do it properly, but I would like to understand more about the risk-based system. I would say to start off that one of the key elements that will make a difference with that as well and that will really help us in relations to the roll-out of REM. No doubt you will be aware and the committee will be aware of the consultation that we have had in relation to that. We are still going through the responses and, of course, we will publish the outcome of that consultation in due course and our response to that as well, where we talked about the roll-out of that and the roll-out of a VMS that we want to see across all vessels by the end of this parliamentary term as well. Of course, I will keep the committee updated on that when we publish that information, but I think that that extra intelligence is really critical to it. I do not know if Iain might want to touch a bit more on the risk-based system, but we can receive thousands of reports in a year about particular areas. I would also say from my perspective, in some of the cases that I can be contacted about as well, people may see a vessel in an NPA. It depends on the protections that are in place in that NPA. It does not always indicate illegal activity, so sometimes the reports that you receive what is happening on the ground can be different now, of course, but we know that there are occasions where that is most definitely not the case. If there are particular areas at risk, I imagine that that is where the marine protection vessels would be case and tasked to on patrol. We also have the aerial surveillance as well, which I think helps with some of that, but Iain, I do not know if you want to go into any further detail or expand on that. In terms of the risk-based system, that is one that we continue to look to improve. We made improvements to report mechanisms this year so that we can get better information from public, and that enables us to start to target our operational capability. The cabinet secretary mentioned that the aerial assets play a key role in particular in relation to the NPAs, because the vessels that we can deploy obviously have a restriction around how quickly they can get to a certain area, so that enables us to gather evidence. Other technologies as we move forward, and I mentioned that we are reviewing our future operational model, because it needs to continue to evolve, so REM will play a big partner as we start to move forward, and probably other technologies we can hopefully start to utilise as we move forward into the HPMAs and NPAs. As I said, it is a process of continually building and improving that operational capability. We do have challenges as a vast area that we need to cover, and getting our response times quicker is key. If we have good intelligence that leads us to the areas of high risk, it enables us to be in those areas and on patrol. As we mentioned, those two new ribs, a big feature of them is the capability and the speed at which they can now move and ensure that we do not previously have. Are those ribs going to be base in particular ports? No, so in the last year, we have redeployed them to areas of risk, so they have been on the east coast and on the west coast, and it depends on that risk. We will then flexibly move them. I think that that is key in terms of our operational capability. We need to be flexible and agile to quickly rack to things as well. You mentioned other technologies. Do you have anything particular when you were talking about REM roll-out, but other technologies you could probably use in light of the HPMAs and NPA protection? I think that at this stage, we are exploring and looking at what others are doing in the marine environment as well to start to see what is possible and what we could use. I am happy to provide more information on that one, so we have finally concluded that work. Thank you. Following on from that, I was just wondering how much of your data collection and evidence-based intelligence really feeds into the operations. For example, the cabinet secretary spoke about how people might be in those areas and that might be data collected and reported as somebody breaching, but it might not necessarily be. On that, the cabinet secretary mentioned that we have around 2,500 intelligence reports per year. I love that, not because it comes from the public, but it comes from our officers and what we spot as well, from our vessels and from our coastal offices. Our intelligence team are analysing that on a weekly basis, so they will then rank and prioritise based on the strength of the information that we have. One report would not necessarily mean that we would prioritise that as a high priority in terms of our tasking, but what we do is review our task on a weekly basis and then redeploy it based on that as we start to move forward. That is something that is constantly reviewed and constantly updated, and it is about the triangulation of different information coming in and the strength of the information that is coming through on that evidence. I am happy to provide more detail on some of the information that we get into to give you a sign. It is just quite interesting to make that link between the data collected and the budget setting. It is all intertwined. How can the Marine Fund Scotland be used to help businesses to adapt to increasing costs? I wonder if you could give any examples. Absolutely. I am happy to give some examples of that. I think that I touched on one of the businesses that I visited previously in relation to some of the improvements that they have been making in their processing capabilities. It has been used for quite a wide variety of things. Some projects that have been taken forward have been in innovation in aquaculture and specific developments there. The business that I visited in relation to the scheme was about increasing freezing capacity at the facility as well. I know that some businesses have been awarded funding to fish processing businesses that have been applied for whether that is pieces of filleting equipment to make their businesses more efficient. We have also seen that businesses apply and be awarded funding for energy efficiency measures as well, which I think particularly in this climate we know have a huge impact. I mentioned it in the chamber when we had the debate on fishing prior to Christmas recess. The Clyde Fisherman's Trust has prepared a vision for the Clyde fishery. One of its proposals was looking at harbour infrastructure, modernising vessels, making them more carbon efficient and looking at fish processing, having it more localised. I would like to hear your thoughts on that. Have you got any specific examples further than the ones that you have given Ms Wishart? I am happy to come back to the committee and provide the list of projects and the successful applicants that we have had to the fund this year, if that would be helpful. There were some changes that were made to the medium fund Scotland, I think that it is the second year that we have run it. It is always interesting to get the feedback. If you are hearing anything particular about the scheme in relation to if there are further adaptations that we need to make to that, we want to make sure that it aligns to our blue economy vision and the ambitions that we have there. I am, again, more than happy to take that feedback forward. We know that, from the 60 projects that we funded this year, we had the budget of £14.5 million. It also levered in about an extra £39 million as a result of that as well, which of course is a huge amount. In relation to the vision document that you talked about as well, I met with the Clyde fisheries just before, I think that that was in December, where we discussed the vision document. I am currently looking at that at the moment, and I want to go through that in more detail. I am obviously keen to work with them again, but I am happy to come back and provide you with the specifics on what has been funded through the scheme so far. I am also happy to take any suggestions as to how the scheme can be improved for future years. Just before we move on to the last theme, we heard previously that there was a budget cut of over £60 million announced in the autumn, and that included £2.2 million from Marine Scotland, which was savings from enhanced recruitment controls and forecast changes within research programmes. Can you tell us what that means practically on the ground? I would be happy to come back to you with more detail. I think that some of the other figures that were in that table, including the £33 million, which was the convergence, but the other around £30 million, between Marine Scotland and the ARE, there was a mixture of that, the recommended controls, right across the portfolio. Ian, you can provide more information in relation to the figure from Marine Scotland. I am happy to follow up on that and provide more detail on that. It is just specifically the £2.2 million within Marine Scotland for recruitment and research programmes that are cut in that. It would be good to find out what that means in practice. Cabinet Secretary, we realise that we are right up our timeline. We are moving on to the final theme, and, if you agree, we will continue. We are now going to look at supporting islands in a question from Alasdor Allan. I just wonder if you could say something about how the budget deals with some of the big questions facing island communities. In the past, we have often talked about the need for employment opportunities, and clearly those needs are still there. In a way, the biggest need that is currently facing the islands is the labour shortage and the connection that has to other areas of policy such as housing and so on. I just wonder if you can tell us what is the budget doing to try and address those problems? Yeah, no problem. One point that I would make from the outset is that, as you say, it cuts across other portfolio areas. The island spend that I have within the portfolio is not exclusively all the islands funding that exists because there is the spend from other portfolios as well. I think that, when it appeared in front of the committee just before the summer last year in relation to the national islands plan, it set out there in our strategic objectives and against each of those objectives the different work that we are taking forward in relation to each of those areas at the moment. I am some of the challenges that you have talked about in particular there, though, in relation to employment. One scheme that we have funded so far, we have funded £250,000 for a project together with HIE and with Skills Development Scotland as well looking at employment and retention on islands. We have also funded a post within UHI looking at how they can strengthen the different connections with key island partners as well in relation to that. I am more than happy to come back with further information and particularly looking across portfolios as well as to some of the other spend that is happening. Thank you, cabinet secretary. I will just follow up on that briefly. You have mentioned there that your portfolio is not everything that is happening in terms of Government support in the islands. You have alluded to trying to work across, if you like, traditional barriers or silos within Government. Everyone acknowledges that there is plenty of money going in. Obviously, there is a need to ensure that we overcome perhaps what has happened at a local level in the past where houses are built in an area where a school has just been closed or houses are not built in an area where a school is in danger of closing and all those interconnected problems. What do you feel can be done within Government not just nationally but locally to overcome those silos and work more closely together to get past those kinds of problems that affect the supply of labour? I would probably bring Erika in at some point as well, but I think that one thing that has been pivotal in trying to overcome that silo operation and ensuring that we have that coherent and that joined up thinking is through having the islands team as well and the work that they do right across Government in relation to that. I do not know what Erika, if you would want to come in and provide more detail in relation to particularly some of those issues. One example that I can think of is that we are developing the Moat, Rural and Islands housing action plan as well. I know that the islands officials have been engaged with housing teams as well. We want to make sure that we are working with communities. Again, we are not experiencing the type of problems that you talked about, but if you are able to bring Erika in to expand on that. Dr Allan, we collaborate very closely with our local authority partners through different forums, such as the Unistrategic Group, and we also have a senior officers group, which consists of Scottish Government officials in the islands team and our colleagues in local authorities. We are able, through that group, to inform agendas beyond strategic group based on local priorities. That is one great way of ensuring good collaboration. We also have a national islands plan delivery group, which consists of a very wide membership across a whole load of organisations that have an interest in delivery of the national islands plan. We work across Scottish Government teams to try and break down those silos that you were describing there, Dr Allan, around particular areas such as depopulation, where we are supporting the development of the rural and island housing action plan. My team is also leading on the rural and island part of the depopulation action plan. There is lots of collaboration going on across Scottish Government and across our local authority areas. I should just say that within the islands team we each have responsibility for an individual local authority area. For example, we have somebody looking after Shetland, and that allows us to form really deep relationships with those local authority areas, which is helping to inform our work. It might be a little bit off the script, but touching on rural housing and island housing, we have a mandate from the Government to ensure that all buildings are energy efficient by 2025. Around about 170,000 homes in Scotland are off gas grid, and of those, 40,000 are probably not suitable for installation of air source pumps and things. That might lead to a situation where people in islands, in particular, are facing bills of around £30,000 to install heat source pumps or whatever. Have you done any work to look at the impact on rural housing and island housing, specifically looking towards a three-year target to have those houses at the highest efficiency levels? Have you made any bids for further funding to your portfolio to address that? If there was to be further funding in relation to that and energy efficiency, and if that is coming to homes, that probably wouldn't fall to my portfolio. I am happy to follow that up with my Government colleagues and come back to you or ask them to write to you with further information in relation to that in particular. We are also looking at the different strategic objectives that we have within the islands plan, ensuring that the annual reports that we bring forward are actions against each of those. We also need to make sure that what we have, that we are dealing with issues that are of greatest importance to our island communities as well and that we are tackling the problems that they face. I think that looking at some of those issues will no doubt be a part of that as well. I am interested to hear a bit about how the budget is helping island communities and residents with increasing cost of living. I know that you have announced a £1.4 million budget for that. If you could give me some examples of where that money has been spent and how you expect it to be spent. I would be happy to. I think that we know that the cost crisis is affecting everybody across Scotland, but it is particularly acute for people who live on our islands. I think that it was brought into sharp focus anyway. Some of the figures that some of the local authorities had produced, or Beatrice Wishart might know better than me or correct me if I am wrong, but the work that had been done in Shetland showed that you needed to earn about £104,000 a year to not be in fuel poverty, which is shocking. We knew that we had to do something over and above to try to address the particular issues that our island communities face, which is why we introduced the Islands Emergency Fund. We have provided £1.4 million through that. It has been distributed on a 100 per cent population basis, and that has been determined by COSLA. We wanted to make sure that fund was as easily accessed as possible, so we tried to minimise the criteria that we needed to apply for that fund, because we obviously want to make sure that it is getting to where it needs to go and it is getting out the door as fast as possible. Working with local authorities has been a key part in doing that, too. One example that I have in relation to that is, again, coming back to Shetlands, where I know that they are utilising that funding to provide breakfasts to 14,000 children and young people across Shetland islands. I think that that is what they are planning for that, or to run that until March. That is how they are utilising the funding. I am happy to come back with more information as to how the funding is being utilised by other local authorities, too, if you would find that helpful. That would be helpful, I would say to you, thank you very much. It shows that there has been a level of learning from the Covid pandemic to give local authorities the easiest way, the easiest mechanism to get the funding out. If I may, returning to local authorities, North Ayrshire local islands plan has been given some support. I am interested to know how you are using that, which I believe has been successful. I think that we have created a 10-year island plan in North Ayrshire. How that is being rolled out or being proposed to other councils, such as Argyllun Bute and Highlands, which are a mixture of mainland and island? The feedback that we have heard from that has been really positive so far. I think that we want to take any learning from that example and share that as best we can, so that I know that officials are looking at the work there and are currently looking at how we can share that good work and that good practice with other authorities, such as Argyllun Bute and Highlands. That is something that we are actively looking at at the moment. Great. Just as I was touching on the convener's question, can you give us an update on carbon neutral islands? Yes. I will, of course, be updating Parliament on that and providing more information in relation to that next week, so I will provide more information there. Obviously, we have £3 million allocated in the budget for that this year. The work has been progressing well. There are initial steps that we have got to get in place, so we are looking at carbon audits and then we want the climate action plans to be produced on the back of that as well. I think that what is being really central to all the work with carbon neutral islands is that this is not something that we are foisting on communities. We very much want it to be community based, working with communities on each of the six islands that we are working with too. Again, I am happy to provide more information on that when I update Parliament next week. Beatrice Wishart. Thanks convener. Just before I move on to the question that I was going to ask, I would just make the point that, when we are talking about islands, that without good connectivity links, transport and digital, our islands will not thrive. That is my slight rant over. My question is, can the cabinet secretary explain why the Scottish Government has decided to reduce the capital element of the islands programme budget in real terms, given the impact of inflation on island capital projects? Is that funding for which island local authorities will be bidding for in the next round of the island programme? Just coming back to your first point, I absolutely appreciate what you say about connectivity and I absolutely understand that. Again, it is the spend across other portfolios that is really vital in relation to that, with regard to transport. We know that housing is an issue as well, so we need to make sure that we are tackling those issues. That is where the national islands plan really brings all that together to see how we can tackle them as a whole. There is not an easy solution to any of that, and we have to work across the piece in relation to that as well. Sorry, your main question. I was about the islands programme in particular and the capital allocation. As I have said previously to the committee and throughout the session today, the capital budget is extremely restrained. As I said in a previous response to Dr Allan's question, we have the allocation for the islands programme this year. It is not the only capital funding that will be going to our islands, so we have the islands growth deal as well. The heads of that were signed towards the start of 2021, which will see £50 million of Scottish Government funding and £50 million from the UK Government in relation to capital funding towards our islands. It is important to bear that in mind that that will be coming forward over the course of the next few years. Given the restrictions that I have faced within the capital budget, we are trying to utilise that as best we can. What we are trying to do for the coming year is to make improvements to that programme, particularly based on the feedback and the evidence that the committee had heard. I hope that I have been able to outline some of the changes that have been made in the letter that I had sent to the committee previously. You spoke at the beginning of the session about the fact that you are going to be working on multi-year funding allocations for this island programme. I think that we would be interested to hear a bit about how you are going to go about that to ensure that, certainly in the session that we had before, specifically on islands in the pre-budget scrutiny, there were concerns that communities, organisations apply for the funding and they miss out and they do not get it. You are talking about doing it and we would love to hear a bit more about how you are ensuring that multi-year funding. I suppose that what you mean is how we are able to develop almost a project pipeline rather than just know how challenging it has been, particularly from the feedback that the committee received in previous evidence sessions. Ultimately, we will not be able to run a multi-annual fund because we do not only get the annual allocations, but what we are working to do is, as I have talked about previously in relation to some of the schemes, try to give that certainty and as much clarity as we can about what is going to be coming. I think that that is where some of the improvements that we have planned for that islands programme should help with that. We are actively looking to see how we can do that over coming years, but I think that it is that work that we are engaging with SFT. I think that there was a lot of positive feedback that the committee received about the engagement with them, given the expertise that they have as well. I am working with councils where projects have not been successful previously and I think that on-going work in development is going to be really key going forward. Ultimately, it will be an annual allocation, but we want to try and provide as much certainty as we can. In what way do you go about providing that certainty? Again, it is really difficult because the budget is an annual process, so we do not have that certainty until the budget is passed and we receive that annual allocation. I think that what we have seen through the resource spending review, the capital spending review, is overall funding envelopes that we might hope to receive over that coming period, which gives an indication as to what allocations we might look to have. We have been through a couple of iterations of the islands programme. I think that, hopefully, with the changes that we are proposing for this year, I think that hopefully we are getting that balance right in terms of how the scheme is running and then we can see that continue from here on in, which I hope will help resolve some of those issues. That concludes our list of questions. You have committed to come back to us in quite a number of areas. There is some detail that will be welcome, including a timescale for the £61 million to potentially come back into the portfolio. There is a convener's debate on the budget scheduled for 26 January, so a response before then to the committee would be most helpful to inform our contribution in that debate. I thank you very much for your contribution and that of your officials. I will now suspend the meeting until 10.50.