Towards a new road map for the Scottish rural economy

Towards a new road map for the Scottish rural economy

An Island Perspective – Help Shape the Debate

Amid the Brexit chaos, it is more important than ever for islanders to express strongly their opinion on how future regional policies should be shaped. 

Building on Brexit discussion at our 2018 AGM in Tiree, S.I.F is pulling together an island position paper –  please help shape the debate by responding to  our survey We hope the post and links below will provide a good background for your response! 

https://www.surveymonkey.co.uk/r/DNGDBFF

No real regional policy in place at present

Brexit is actually providing a real opportunity to look at what rural and regional policies really look like in the UK and Scotland.

The conclusion is that in many respects EU Policies have acted as a proxy for UK and Scottish regional policy:  it is fair to say that in the absence of a UK national regional policy, economic development in Scotland both at regional and local level has in large measure been delivered through eligibility for European Structural and Investment Fund (ESIF) support as well as the CAP (Common Agriculture Policy) and the EMFF (European Maritime and Fisheries Fund).

ESIFs include the European Social Fund (ESF), European Regional Development Fund (ERDF) and European Agricultural Fund for Rural Development (EAFRD). Their aim is to reduce disparities between regions in the EU through its Territorial Cohesion Policy.  This policy has the objective of aligning living standards across the various European regions.

About a third of the EU budget goes into these funds: Over the years, this has had a major impact in terms of reducing social and economic disparities.

In Scotland this money currently provides between 10 and 25 per cent of local authority economic development and employability spend. In the case of a less favoured area – a transition status area like the Highlands and Islands – ESIFs have also been a significant driver in transforming the economic and social wellbeing of our region with £1.5 billion invested up to now.

Support to our rural areas

The importance of Common Agricultural Policy ( CAP) funding to the Scottish agriculture sector must not be underestimated, with support payments in 2016 contributing over 65.42 per cent of the total income from farming in Scotland.  For the Less Favoured Area sheep sector such as in the Highlands and Islands, CAP support was 230 per cent of Farm Business Income. The importance of EU CAP Pillar 2 funding through the Scotland Rural Development Programme (SRDP)  was key in creating and safeguarding over 30,000 jobs as well as improving business efficiency, output, quality and competitiveness under the previous programme.

The European Maritime and Fisheries Fund ( EMFF) has provided crucial support for fisheries, aquaculture, the processing sector supporting communities and jobs that depend on them.

The LEADER approach (currently funded from EMFF and SRDP) has also played a unique role in enabling local partnerships to foster innovation and invest in their local development priorities, including local economies. LEADER funding has also fostered collaborative working between Scotland and others across the UK and EU.

So regardless of Brexit or the form of Brexit, it is time to step  back and consider how policies, programmes and funding can better serve the needs of our rural society, rural economy and environment.

A very sketchy UK Shared Prosperity Fund: 

Unfortunately, there has been little opportunity for UK wide joined up thinking on this issue.  Following the UK exit from the EU, the UK Government has announced the setting up of a “Shared Prosperity Fund” to replace ESIFs.

A cross-party group has looked at how the Shared Prosperity Fund could simply replicate the way ESIFs are allocated, with a simplified bureaucracy. But with no regional policy in place, its report pointed out that nearly everything about the Fund is still to be worked out, leaving huge unresolved issues:

  • How much funding will be available?
  • How will it be divided up across the UK?
  • What activities will be eligible for support?
  • Who will take the decisions about how the money is spent?

Discussing the Shared Prosperity Fund at the Scottish Rural parliament last October, North Ayrshire MP Philippa Whiteford pointed out that only 2 per cent of the fund was intended for the rural economy of the UK!

There is still no indication of what proportion of the fund will come to rural Scotland and less favoured areas such as the Highlands and Islands.

A new Scottish Rural Economy Framework 

The consultation supposed to take place in autumn 2018 for the SP fund to be in place by 2020 has yet to be done. There is now a huge worry that at the end of 2020, there will be a funding hiatus, with nothing in place to ensure a smooth transition from EU funds on which the rural economy depends.

However, a lot more thinking has been done in Scotland. Responding to consultation by the Scottish Parliament’s Economy, Energy and Fair Work Committee, Island Councils have unanymously asked that any future funding mechanisms revert back to giving more decision making powers to the regions themselves and the flexibility they feel has been lacking in the last allocation period. In many respondents’ opinion, the centralisation at Scottish government level occurring in the 2014-2020 period has had a negative effect, resulting in less funding uptake  then previously.

Consultation responses to Rural Thinks workshops by the National Council of Rural Advisers (NCRA),  have led to new ideas for a new rural economy framework that would ensure this much needed  transition to a throughly thought-out and appropriately designed  rural policy for Scotland that would support each of its regions appropriately.

3 policy recommendations 

The NCRA report –  a new blueprint for Scotland’s rural economy – outlines how a change in mindset, culture and structure is required and  has 3 recommendations for this to happen.

1/ a vibrant, sustainable and inclusive rural economy can only be achieved by recognising its strategic importance – and effectively mainstreaming it within all policy and decision-making processes.

2/   an interim Rural Economic Framework ( REF) should be developed, aligned to the National Performance Framework.

“The REF will provide a structure to enable transition, including the development and implementation of a new approach and delivery model for rural policy, development support and investment. We have the opportunity to remove the complexity and lack of understanding surrounding rural support by clearly linking it to the achievement of national outcomes: ensuring it is well understood, accepted and celebrated for improving national economic prosperity and wellbeing.”

3/ a Rural Economy Action Group ( REAG) should be created, which has the clout to get things done and set the tone for change. This would be “a mechanism by which we can hold each other to account and maintain the momentum.”

Targeted support for the rural economy

Action 4 of the new blue print is to look at targeted support and the development of credible finance models. Here are the actions recommended:

  • Scottish Centre for Inclusive Growth must assess the credibility of measurement tools for identifying small/micro business activity in the rural economy
  • Ensure equitable access to finance for rural communities and businesses, including a simplified grants system
  •  A Rural Challenge Fund for communities and small/micro-enterprises to be established in 2019, to ensure no hiatus in LEADER, EMFF and other Rural Development Programme funding
  • The National Investment Bank Strategy and Implementation Plan must consider the REF outcomes, ensuring an accessible offering for rural businesses, particularly small and micro-enterprises
  •  Inward investment plans must encourage sectoral diversity, recognising the opportunities for growth in non-traditional rural industries
  • Address the rural gender pay gap by providing female-focused enterprise programmes and support for women returning to the workforce
  •  Develop a strong and adequately financed policy and delivery framework to ensure a sustainable funding position post Brexit.

Read more about the  new rural economy framework

Read more about the shared prosperity fund  

Read more abouthe need for a future post Brexit regional policy.

Read more about of the CPMR’s analysis on losses to the UK regions through Brexit 

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