Seòmar agus comataidhean

It adds to the cluttered landscape and it cuts across some of the objectives that we would like to achieve. Among the different pots of funding, the prioritisation can be completely different. When we were members of the EU, the Highlands and Islands was a high-priority area for funding due to its remote and rural nature and the specific challenges that our rural communities face. That area was a high priority when we were in the EU, but it is certainly not as high a priority if you look at spending through the shared prosperity fund. Those allocations all fell far short of what we should and would have received were we still members of the EU. Fisheries is a devolved area, so if there is money there, it should be given to the Scottish Government to distribute in line with our own funding priorities.

Yes, I have. I make regular representations to my counterparts in the UK Government, as do other ministers. I think that the Minister for Business, Trade, Tourism and Enterprise has been dealing with that in relation to the shared prosperity funding. We regularly make those representations.

If we look at agriculture as an example of this—indeed, the term “agflation” has been used—we will see a tremendous increase in input costs across the bit, whether for feed, fuel or fertiliser. For some of those areas, it is not possible for us to make meaningful interventions, because the main levers rest with the UK Government. We have tried to do what we can, both within the portfolio and across the Scottish Government, to mitigate those pressures, but, without those full powers, I am unable to do everything. It is just not possible to take the meaningful action that we know is needed. Obviously, we welcome the package that the UK Government has introduced—that is, the package of energy reliefs—but, unfortunately, it is for only six months. We do not know what is going to happen after that, which will be of little comfort to those who are really struggling at the moment.

Yes, that is why it is not possible for us to do that. We get indicative allocations.

I should make it clear that what we see through the capital and resource spending reviews are not budgets; those figures are based on a number of assumptions, and we still have to go through the normal annual budget cycles. I should also emphasise that we do not have any clarity on funding beyond 2025; it is therefore not possible for us to plan in detail beyond that point, because we do not know what our allocations will be. What we have set out in the capital and resource spending reviews are the overall funding envelopes, but we will still have to work through the detail when we know what the actual allocations will be.

It was interesting to go through the evidence that the committee heard last week. We ran the competitive model for funding this year and the direct allocation process the year before. It is important for us to hear feedback and find out how local authorities are finding the process.

As with anything, there are pros and cons to both approaches, but it is all learning that we can take forward as we look to develop the islands programme in future years. I know that some local authorities will probably have received less through the competitive process than they would have received through the direct allocation process, whereas other local authorities will have received more. In some instances, it was quite a significant chunk of funding. Orkney Islands Council, for example, was allocated £1.5 million, which was over and above what it would have received through a direct allocation model. It is important for us to listen to the feedback to determine how we take the programme forward.

We decided to go with the competitive funding model this year to ensure that we delivered the funding as effectively and efficiently as we could within the available timescale. I know from evidence that the committee has heard that there were concerns about the local government elections, but we want to ensure that there is enough time to develop bids and that those bids are going to be successful and deliverable in the timescale to which we are working.

The model that we are using was built on the model for the regeneration capital grant fund, with which local authorities are familiar. That is why we adopted it. However, it is important that we take this learning into future years.

I agree with you—it does. Indeed, that comes through in the evidence and the feedback that we get. It can make things very difficult, and I appreciate the difficulties that businesses have when they apply for our grant funding rounds, because of the tight timescales for turning things around. I talked earlier about the model that we adopted for the islands programme and why we adopted it—we did so to ensure that projects were deliverable in the timescales that we had. I am absolutely sympathetic to that, but unfortunately, it is not possible for us to open up multiyear rounds, because we do not have the clarity of the seven-year funding rounds that we previously had when we were a member of the EU.

To be honest, I have to agree that it would be. Unfortunately, however, we are not in a position to do that, because we do not have certainty of funding for future years. It is therefore simply not possible to deliver to that timescale. I am really sympathetic to those arguments; ideally, we would be running multiyear rounds, but, unfortunately, it is just not possible because of the yearly allocations that we are getting from the UK Government.

When we were members of the European Union, it was different, because we had the clarity of seven-year funding. That made it possible for us to plan things. I know that the situation is difficult for local authorities, but it is just not possible for us to consider doing that at the moment.

I think that it does strike that balance. Another benefit of the competitive model was that it enabled us to ensure that we aligned national priorities with the needs of our communities on the ground.

In response to the first question that I was asked, I spoke about a project that we funded to build a nursery in Orkney. I think that, during your evidence sessions, you have heard about that project’s impact on retaining the population in Orkney and how critical it was. The competitive model has benefits in relation to such projects, and the work that SFT did in working with local authorities and giving its expertise was helpful throughout that process.

As I said, the approach was modelled on the regeneration capital grant fund scheme because that model is more familiar to local authorities. There are pros and cons on both sides when it comes to whether to use the competitive model or the direct allocation model. I think that some of the projects that were successful in the rounds show that the competitive approach has delivered on the national priorities and on what our island communities need.

That is right. We are significantly constrained. Obviously, we could do a lot more if we had the full allocation that we believe we are entitled to, but, instead, we received £14 million. From the regulations that we passed earlier in the year, the committee will be aware of what we can fund. We can fund a broader range of activities now, which is good, but we still have the same budget, of course. The resources that we have significantly constrain our ability to do more.

I believe that it is very effective. The ARIOB is critical, because we want to ensure that we are co-developing our policies for the future. It is really vital that we do that with the industries that are most affected by the policies that we are going to implement, because we need to make sure that the policies will work for our farming and agriculture industries.

An example of the impact of the ARIOB and how that has informed our work is the national test programme. I talked about the different phases within the programme. We launched track 1, on preparing for sustainable farming, earlier this year. We are looking at the roll-out of carbon audits and encouraging farmers to undertake those carbon audits, and, in the next phase of that, we will be encouraging farmers to consider doing soil testing as well.

The ARIOB was critical to how that developed, ensuring that the claims that people could make for carbon audits would be done in a way that was simple, accessible and easy for the industry to undertake, and its work has helped us to focus on the key areas that will make a big difference. That is where its work has been critically important, and that will continue to be the case. The ARIOB is, of course, an advisory group to the Scottish Government. It has been able to get all those interests together and hear those ideas, which has been really important for us, and I think that is why we have been able to do the work that we have done so far.