Scottish Budget 2024

To govern is to choose, and never is this more apparent than when politicians set the budget for the year ahead.

The annual spending announcement is an opportunity for the government of the day to communicate where its priorities lie.

This year, the financial backdrop was very challenging, with a £1.5bn funding gap driven largely by inflation and the increased cost of delivering services.

So there were tough decisions to be made around the Cabinet table, with competing demands across government.

Finance Secretary Shona Robison laid out the government’s stall just before Christmas, with a promise to “protect people, sustain public services, support a growing sustainable economy and address the climate and nature emergencies.”

The initial news headlines were dominated by a pledge to create a new tax band for higher earners, but it did not take long for details to emerge of cuts across many government departments.

 

And the Rural Affairs and Islands budget line was not spared the axe, with a cash terms reduction of £33m, down to £706m for 2023/24 from £739m in 2022/23.

So what does this mean for farming?

Firstly, it is frustrating to see funding reduced at a time when our farmers and crofters are being asked to do more to protect and restore nature, reduce greenhouse gas emissions while continuing to produce high quality food.

The initial announcement included a reduction to the Agri-Environment Climate Scheme (AECS) budget of 17% or £6.2m.

AECS is really the only part of the agricultural funding system that supports farmers and crofters to deliver on government objectives around climate and nature, for example by protecting habitats for wildlife, planting hedges or improving slurry storage.

AECS also provides vital conversion and maintenance payments for organic farming – which evidence shows delivers clear environmental benefits.

 

Soil Association immediately sought – and received – assurances from government officials that funding to support organic farmers would be protected, despite the cuts. This is very welcome and underlines the high-level political support we have here in Scotland for organic farming.

Priorities on payments

But to go back to those hard choices, there was clearly a decision to protect direct payments to farmers. The budget for BPS and Greening payments was kept at the same as last year. The Scottish Government did have options. For example, Scottish Environment LINK had suggested capping the highest BPS payments (above £100,000) to free up money to spend in other areas – but this was not pursued.

There were further cuts elsewhere in the budget. The Scottish Forestry budget reduced by a third, with funding for woodland creation grants down from £77.2m to £45.4m. It was hard to see the logic for this decision, given Scottish Government convened a Woodland Creation Summit in Perth the week before the budget to discuss ways of tackling barriers to new planting.

 

It wasn’t all bad, however. Despite media reports suggesting budgets for the environment agencies were in line to be cut, the funding envelope for NatureScot and the Scottish Environment Protection Agency actually increased. This was really good news, and credit should go to lobbying efforts by Scottish Environment LINK and others to highlight the importance of these bodies during a climate and nature crisis.

And Cabinet Secretary Mairi Gougeon, in an appearance before the Rural Affairs and Islands Committee last week, announced that £15m of “ring fenced” funding that was previously re-allocated was being returned to the rural spending portfolio.  

What comes next?

The parliamentary committee scrutiny process is still ongoing, so there may be some more movement of funds before the budget is finalised. This usually happens by the end of February, in time for the new financial year starting in April.

But one thing is clear. The public finances will be challenging in the next few years, so pressures on departmental budgets are likely to continue. If the agriculture budget is going to shrink in future, then it will become increasingly difficult to meet government policy objectives on climate and the environment. It will also lead to an annual tussle among stakeholders over a limited pot of funding – with so many schemes supporting different parts of the food and farming industry.

We hear a lot about the private sector potentially filling some of these gaps – whether through the “blending” of public and private finance, or via emerging markets for ecosystems services that farmers and crofters may be able to access.

There’s not much evidence of that happening yet, however.

Clearly, the public sector can’t do it all. But given we are now in a general election year, the Soil Association wants to see greater recognition at a UK level of the value of supporting those who are tasked with producing food while addressing the climate and nature crisis.

We have published an election manifesto, with a call for all parties to commit to an increase in the agriculture budget of at least £1bn – with a multi-year settlement for the devolved administrations.

That would provide some certainty and allow resources to be allocated to help deliver on those crucial climate and nature targets.