Brexit and Scotland's rural economy

Written by Liam Kirkaldy on 21 June 2018 in Inside Politics

Concern over challenges faced by rural communities have been long-running, but with Brexit on the horizon, new ones have emerged

Image credit: Holyrood

For MSPs in the chamber, the go-to word had been “historic”.

The Islands (Scotland) Bill, which had received unanimous cross-party support, had been introduced to parliament with the aim of making provision for a national islands plan, imposing duties in relation to island communities on public authorities, making provision for the electoral representation of island communities, and establishing a licensing scheme for marine development adjacent to islands.

Most attention, though, had been drawn to Shetland and the campaign to address the way it’s depicted on maps, with locals fed up of seeing the islands placed inside a box and represented far further south than is the reality.

Under an amendment to the bill, tabled by local Lib Dem MSP Tavish Scott, public authorities will be prohibited from putting Shetland in a box on maps of Scotland, though ministers inserted a second amendment, allowing public bodies to break the rule if they could provide a good reason.

Meanwhile, following other amendments brought by the Lib Dems, MSPs also voted to back measures aimed at ensuring that the proposed National Islands Plan will include specific reference to the needs of island communities, in relation to lifeline transport links, broadband and digital connectively, as well as the need to address fuel poverty.

Humza Yousaf said: “Our starting point has always been the power that local communities hold rather than the powers that are held by institutions. Ultimately, we want power to be transferred to local communities, rather than to local government.

“I know from the many island visits that I have undertaken that, for some island communities, the local council seems as distant as Holyrood – on many islands that I have travelled to in the Argyll and Bute Council area, as well as Barra in the Western Isles, people have suggested that. We want to ensure that, ultimately, power is devolved to local communities, which should not be conflated with local government.”

He added: “That is entirely fitting for our islands, which contribute so much to our culture, our landscape, our heritage, which have inspired poets, songwriters, composers, artists, and which attract visitors from near and afar.

“They have contributed hugely to our past and our present, and with this bill and other measures will now have the opportunity to contribute even further to their own and our collective futures.”

Backing the changes, Lib Dem MSP Liam McArthur, who represents Orkney, said: “This bill finally recognises that the needs and circumstances of our island communities are different. It should now bring an end to a one-size-fits-all approach to policy and law-making that has been so damaging to our islands over the years.

“The commitment to ‘island proofing’ future policy and legislation was always a welcome step, but it could never be the extent of our ambition. I am pleased, therefore, that the parliament backed my amendment ensuring existing policy and legislation can be subjected to the same test.

“It was also encouraging to see parliament support my efforts to enable local authorities to apply for further powers in future. Over time, the appetite and ability of island communities to take on additional responsibilities will change and this legislation needs to allow that to happen. After all, as former First Minister Donald Dewar once observed, devolution is a process, not an event. 

“Through these and other changes, parliament has helped strengthen what is a welcome bill. We now need to see government and its agencies held to account in respecting not just the letter but the spirit of the law. Island communities will expect nothing less.”

Concern over challenges faced by rural and island communities have been long-running, with issues ranging from connectivity, transport, infrastructure and housing already well known.

But with the UK Government still locked in negotiations over leaving the EU, and with ministers in Scotland deeply worried over the impact of Brexit on the economy, new challenges have emerged.

The UK’s food and drink supply chain supports more than one in ten jobs, while contributing around £112bn to the economy. Included within the chain are farmers, doing primary production, businesses providing seeds and feed, and the industries that purchase their goods, as well as those which manufacture, process and sell them on to others.

And as a recent report from the National Farming Union (NFU) found, all of these businesses will be deeply affected by Brexit.

Releasing its food supply chain manifesto highlighting business concerns, the NFU said: “Many currently rely on a high proportion of non-UK permanent and seasonal labour sourced from within the EU; many are part of highly sophisticated and integrated supply chains that rely on the free flow of goods between the UK and other EU member states, free of tariffs, veterinary and customs check, and subject only to necessary phytosanitary checks; and many operate under an array of regulations and programmes derived from Brussels and applicable to all EU businesses. It is clear that the effect of the decision to leave the EU is already being felt in the sector as uncertainty and lack of clarity impacts business confidence.

“The UK food supply sector has come together to establish a common view of the objectives the UK Government should pursue as it negotiates the UK’s withdrawal, establishes its future relationship with the EU, and puts in place domestic policies.”

As such, the NFU has urged the UK to maintain “free and frictionless trade” with the EU, and secure the benefits of existing EU preferential trade arrangements, at least until government can replace them with acceptable alternative deals.

It called on ministers to ensure ongoing access to an adequate supply of permanent and seasonal labour and continue to promote food production through agricultural policy alongside existing environmental, health and animal welfare standards.

Finally, the farming body made a plea to “ensure businesses operate under an efficient and proportionate regulatory system that is centred on scientific evaluation and that incentivises innovation and competitiveness”.

Concern in Scotland is particularly pronounced. Speaking after the manifesto was published, SNP MSP Graeme Dey said: “Scotland has the opportunity to strike a completely different tone to the Tory government’s hostile environment that presents unnecessary barriers to vital EU workers which our burgeoning food and drinks sector depends on.

“With continuing uncertainty for the thousands of rural EU workers already living and working in Scotland, and for our farming and food production sector’s future access to permanent and seasonal workers, not to mention the loss of half a billion pounds of EU support for our rural economy, it is clear that rural Scotland will pay an unnecessarily high price for a Tory hard Brexit.

“The only sensible path to protect jobs and prosperity in rural Scotland is for the Tory government to confirm that we will stay in the single market and customs union following Brexit.

“And if we want to reach our potential and welcome a sufficient number of permanent and seasonal workers to Scotland, it is clear that we need an immigration policy tailored to our social and economic needs – something that will only be possible with full control of immigration devolved to the Scottish Parliament.”

Meanwhile, for Scottish Land & Estates, a membership organisation for landowners, rural businesses and rural professionals, the key for rural sectors trying to navigate through turbulent conditions is being able to adapt.

As executive director Sarah Jane Laing put it: “There are examples where land-based businesses are grabbing the steering wheel and investing in a new approach. In agriculture, we are seeing more flexible arrangements coming into place such as more contract farming and joint ventures. There is certainly a growing interest in forestry and we are seeing diversification such as deer farming and a drive to create many more farm shops.

“This is encouraging and, given the uncertainty the rural business sector is facing, it is a trend that will have to gather pace quickly.

“Scottish Land & Estates will continue to ensure that the importance of the rural business sector is reflected in all Brexit discussions and negotiations.”

David Johnstone, chairman of Scottish Land & Estates, added: “The more Scotland in general and rural businesses, in particular, learn from the Scottish and UK governments on how Brexit is shaping up, the better.

“We all know great uncertainty remains around agricultural and rural policy, trade arrangements and what they will mean for food imports and exports as well as the potential impact on profitability for many Scottish businesses. However, the reality is that change was heading our way regardless, most notably in terms of the reform of agricultural support.

“What is clear is that we who live and work in rural Scotland cannot afford to sit back and wait for Brexit and the post-Brexit era to arrive before we take action. There really is no choice but to find new ways of working that will help businesses through a very challenging time.

“It is encouraging to see rural land-based businesses rising to that challenge in different parts of the country and the rural economy is going to need to see a lot more of that type of enterprise.”

And while landowners attempt to diversify their business activities to cope with changing times, the aquaculture industry has continued to pursue expansion plans.

The sector, worth around £600m to the Scottish economy, has faced criticism from environmental and sustainability campaigners in recent months, with the National Trust for Scotland calling on ministers to introduce a moratorium on the expansion of fish farms until the sector can improve its environmental record.

Meanwhile, a recent report from the Scottish Parliament’s Environment Committee found that fish mortality was at “unacceptable levels” in fish farms, while warning that the industry would cause “irrecoverable damage” to the marine ecosystem if environmental concerns are not addressed.

But with Rural Economy Secretary Fergus Ewing backing the industry’s target to double production by 2030, a new report from Highlands and Island Enterprise highlighted the challenges of ensuring the availability of a suitably skilled workforce to meet recruitment demands.

Recommending that Scotland should do more to promote the aquaculture industry to school leavers and graduates, the report, ‘Skills Review for the Aquaculture Sector in Scotland’, found the growth of the sector and its supply chain will bring a rising demand for skills in engineering, digital and IT, as well as leadership and organisational management.

It highlighted a gender imbalance in both the industry and education system, as well as an ageing workforce.

The study encourages the industry to enhance work-based learning and vocational training and ensure this is accessible to industry employees across the country, particularly in rural areas. It also stressed the need for more consistency in training to create accredited industry standards that are transferable across the sector and can facilitate the development of a digitally enabled workforce.

HIE recommended that training should be accessible to learners whether they are in part-time or full-time employment.

Ewing said: “This report highlights the importance of developing and retaining a well-trained and highly motivated skills force. For a sector that has a significant focus on sustainable growth in the future, it is clearly becoming even more important to be accessible and to be an employer of choice.

“I look forward to future discussions around how we might look to achieve those aspirations and how we can break down any potential barriers as aquaculture has a key role to play in our economic ambitions, not least through innovation and the provision of highly skilled STEM job roles.”

Alongside the Scottish Government’s ambition to grow the fish farming sector, Ewing has also unveiled a £250,000 Connect Local Regional Food Fund, aimed at supporting collaborative projects in their early stages.

Ewing said: “The Scottish Government’s aim is to support the industry’s ambition to double its value to £30 billion by 2030. In order to do that, we’re working with partners to develop new and existing markets, boosting innovation and skills, and supporting local producers via business rates exemptions, and schemes like the Connect Local Regional Food Fund.

“These grants of up to £5000 will support collaborative local projects, providing vital funding when these initiatives need it most. This relatively modest outlay will result in long-term benefits for our regional food industry and the wider economy.”

Ministers hope the funding will help stimulate a sector that is of critical importance to both the rural and national economy. In fact, with the food and drink sector supporting around 17,000 businesses and 115,000 jobs in Scotland, its performance is closely linked with the health of communities across the country. But, with Brexit looming, the future of the sector remains steeped in uncertainty. 

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