Written evidence submitted by Quality Meat Scotland (FSG0002)
Quality Meat Scotland is a Non-Departmental Public Body. This advice is freely available and further information can be provided by the designated contact above.
Please note: This response is specifically focused on the funding provided to the Scottish Government for agriculture.
- How effective is the Barnett formula in calculating the amount of money made available to Scotland for providing essential public services?
1.1 Following the Autumn Budget in October, UK Government funding for Scottish agriculture is no longer provided as a ringfenced addition to the block grant, as has been the case since the UK left the EU. This means that future funding for Scottish agriculture could be applied via the Barnett formula.
2.1 The Treasury is using the current £620m that Scottish Government receives for agriculture as a baseline within the total sum the 2025-26 block grant. However, this is not ring-fenced and is for 1 year.
3.1 At the moment, Scottish agriculture receives c.17% of the total UK agricultural budget. If the Barnett Formula were to be directly applied, this would reduce to 9%.
4.1 As it stands, with the removal of the ring-fence, the sector will be in direct competition with other sectors such as health, education and prisons for the funds.
5.1 t is widely acknowledged[1] that there are serious limitations to the Barnett formula, which sees block grants rise and fall as a proportion of budget allocations in England, rather than being assessed by needs relevant to the administration.
6.1 In both England[2] and Scotland[3], as per the 2023 censuses, 70% of land mass is used for agriculture.
7.1 However, in 2013, this was 78.6% in Scotland[4] the utilised agriculture area (in hectares) has reduced by 0.9% in England, and 4.5% in Scotland[5].
8.1 Over 85% of Scotland’s land is classed as a ‘Less Favoured Area’[6] (and within that, the vast majority ‘Severely Disadvantaged’). In England, only 17% is LFA[7](see appendix A). This immediately demonstrates the different support and funds needed for the different areas.
9.1 The Bew Review in 2021 analysed Intra-UK Allocation of Domestic Farm Funding.
10.1 The events leading to this began in 2013, when the EU gave the UK Government a convergence uplift of €223m between 2014-2020, to account Scotland’s low payment rate per hectare (approx. €130 per hectare), as part of the reforms of the Common Agricultural Policy (CAP).
11.1 At this time, Scotland’s area payment rates were 45% of the EU average.
12.1 The UK Government chose to share this dividend across the whole of the UK based on historic allocations, rather than it only being applied to Scotland.
13.1 As a result, the Bew Review developed the “Bew formula” based on the proportion of land in England, Scotland, Wales and Northern Ireland which met the EU’s criteria (on a Member State level) to qualify for a convergence funding uplift. The Bew formula provides additional funding for land with low per-hectare payment rates. This land is predominantly in upland areas and is predominantly in Scotland[8].
14.1 The UK Government accepted the Review’s recommendation that the convergence funding budget is split according to the proportion of land in each part of the UK that received in 2013 lower CAP funding per hectare than 90% of the EU average. This saw, for 2020-22, England receive 13.9% of the notional convergence funding budget, Scotland receive 63.7%, Wales receive 13.7% and Northern Ireland receive 8.7% (see appendix B).
15.1 The Review advised that future agricultural funding is allocated on the basis of productivity and need – for example, to those farmers who farm in the toughest environments.
16.1 This clearly differentiates the challenges that Scottish farmers face in contrast to the conditions, climate and topography of the rest of the UK.
17.1 The Review also highlighted how critical it was to adequately support the farming sector, noting “the value of farming to local communities, to the countryside, and to the UK economy as a whole”. It encouraged governments “in all parts of the UK to recognise this value by protecting, if not enhancing, funding for agriculture in future”.[9]
18.1 Finally, it outlined “the social value of upland farming in particular and the challenges facing those practising it, as well as the potential for delivering environmental public goods”.
19.1 Farming and crofting are being tasked to deliver more in terms of high-quality food production, tackling climate change, enhancing nature and underpinning rural communities.
20.1 It is imperative that this industry receives the funding it needs in order to help the UK Government achieve its national objectives of climate change emissions reduction and food security.
21.1 Applying the Barnett Formula to future Scottish agricultural funding would have an instantly counter—productive effect on those aims, as well as being harmful to the upstream and downstream socio-economic multipliers that are critical to wider rural prosperity across Scotland , and the vibrant rural communities that are underpinned by a thriving agricultural sector.
- Following its review in 2023, to what extent does the current Fiscal Framework effectively govern the mechanisms for Block Grant Adjustments and fiscal flexibilities of the Scottish Government?
We have no comment
- Within the existing devolution settlement, what steps could the UK Government take to offer Scotland more financial certainty?
3.1 Rural businesses are on the frontline when governments talk about climate change and food security but progress can only be achieved when it is underpinned by sufficient and meaningful funding.
3.2 These businesses also need certainty in order to be able to make long-term decisions and investments.
3.3 Livestock farming in particular works on cycles of several years at a time, with the implementation of any changes having to be factored in to planning many months in advance, and the changes themselves then taking many months more to filter through into meaningful outcomes.
3.4 Therefore, the sector needs the reassurance of multi-annual funding to give businesses the certainty and confidence they need to plan for the future and make meaningful investments.
- Are there any comparative perspectives that should be considered when assessing the effectiveness of fiscal devolution in Scotland?
We have no comment
- Appendix A – Scotland and England LFA maps
Appendix B – Allocation of the UK convergence budget versus the Bew Review’s recommended allocation
December 2024