Scottish Government

ENVIRONMENT AND RURAL DEVELOPMENT

To increase prosperity in rural Scotland, to improve the environment and promote sustainable development throughout Scotland.

OBJECTIVES AND TARGETS

* The Target in the SR 2002 plans was to reduce risk for 1,850 properties by the end of 2005-06 (including 750 properties in 2005-06). The increased Target of 4,950 shown above includes the previously planned reduction of 750 for 2005-06.

Spending Plans 2002-08

Table 9.01 Categories of spending (Level 2)

Table 9.02 Categories of spending (Level 2 real terms)at 2005-06 prices

What the budget does

The Environment and Rural Development Portfolio covers expenditure by the Scottish Executive Environment and Rural Affairs Department ( SEERAD) and the Forestry Commission Scotland ( FCS). That expenditure is used to make progress towards the Department's outcome goals:

1. People in Scotland healthier, with:

• clean air to breathe;

• safe water to drink;

• all kinds of waste (including nuclear) reduced and disposed of sensibly;

• homes protected from flooding and other environmental hazards; and

• people fitter and refreshed by access to greenspace.

2. Rural communities benefiting from enterprise and services, with:

• agriculture, forestry and fisheries businesses contributing to local economies, supported by processing and retail sectors;

• rural enterprise benefiting from farm diversification;

• tourism businesses profiting from well maintained landscapes and Scottish food produce; and

• rural services accessible to those who need them.

3. Scotland's natural resource protected for the long term, with:

• biodiversity stabilised;

• marine and natural resources conserved;

• river basin ecosystems free of unacceptable pollution; and

• Scotland contributing to a more stable climate.

SEERAD has responsibility for setting the budgets for and monitoring the performance of Scottish Water, Scottish Natural Heritage ( SNH), the Loch Lomond and Trossachs and Cairngorms National Park Authorities and the Scottish Environment Protection Agency ( SEPA). These bodies deliver water and sewerage services, conserve and improve Scotland's natural heritage, protect and improve Scotland's environment and promote sustainable development and enjoyment of the National Parks. The Department also provides support to the Scottish Agricultural and Biological Research Institutes ( SABRIs), Scottish Agricultural College ( SAC) and Royal Botanic Garden, Edinburgh ( RBGE) which contribute to the UK science base and provide knowledge and understanding that informs Executive policies; and the Crofters and Deer Commissions which discharge a range of Ministers' statutory duties in relation to crofting and deer matters. The Department funds a range of measures in support of the National Waste Strategy, through local authorities and others. Financial support is given to the farming and food industries under schemes largely shaped by the EU.

The Department has an important wider role in promoting rural issues, but the delivery of our rural commitments is dependent on spending across the Executive's Departments and is not restricted to the Environment and Rural Development plans set out here. Rural Development spending by SEERAD is mainly in support of the farming and fishing sectors. Spending by FCS promotes sustainable forestry, mainly through grant aid and partnership working and management of publicly owned forests.

In everything that we do, we are committed to ensuring that we work to grow the economy, to promote equality and close the opportunity gap, and to ensure that our activities are sustainable.

Statement of Priorities

In 2006-07, we will focus our resources on:

• pursuing safe drinking water and clean rivers, through further improvements in the quality and standard of water supplies and sewerage treatment, with continued investment of almost £200m;

• pursuing the reduction and sensible disposal of waste through increasing the proportion of waste collected by local authorities which is recycled or composted, with continued investment of over £120m;

• pursuing the protection of homes from environmental hazards through continuing to finance the roll out of the noise nuisance service to the majority of Scottish local authorities;

• protecting more properties from flooding, by increasing spending by £19m;

• support for more agricultural marketing projects, through a £3m increase in spending;

• pursuing the conservation of marine resources and the contribution of agriculture, forestry and fishery businesses to local economies;

• support for the sustainability of Scotland's seafishing and aquaculture industries, through a £8m increase in spending;

• reducing the impact of timber transport on rural communities and the environment through spending £5m on the strategic timber transport fund;

• continued support of over £400m for farmers whose land meets new standards under the CAP Single Farm Payment Scheme; and

• pursuing people fitter and refreshed by access to greenspace through continuing support for SNH and implementing the Scottish Forest Strategy including the further development of the Woods in and Around Towns initiative, with a £4m increase in spending.

We will also ensure that we secure the best possible value for money.

Growing the Economy

Within these priorities, we will help grow the economy mainly by:

• continued support for the water industry which will continue to invest around £550m annually to upgrade and maintain the public water and wastewater infrastructure supporting over 40% of the jobs in the construction sector;

• keeping charges as low as possible through improving the efficiency of Scottish Water;

• continued support of over £400m a year to Scottish farm business through EU Single Farm Payment Scheme and Less Favoured Area Support Scheme payments;

• providing over £40m a year in support of Scotland's agricultural and biological science base;

• providing some £30m a year in support for the development of better marketing and processing of farm and fisheries produce and of farm businesses; and

• working with the Scottish Forest Industries Cluster to develop new products and markets and new investment to take advantage of the opportunities offered by the increasing timber production from Scotland's forests.

Closing the Opportunity Gap/Promoting Equality

Closing the Opportunity Gap

Within our priorities, we will help to close the opportunity gap mainly by:

• improving health and educational opportunities through funding local authorities to establish core path networks, funding educational activities for children, young people and adults and funding greenspace in deprived communities and Local Nature Reserves in urban disadvantaged areas;

• supporting community re-cycling projects and helping to provide employment opportunities for disadvantaged communities and groups;

• creating opportunities for employment and promoting the role of woodlands in and around towns;

• working with others, in particular Community Planning Partnerships, to improve the accessibility and quality of key services in remote and disadvantaged areas;

• supporting rural communities to identify and tackle local regeneration needs, including projects to improve education, employability, health, access to local services and the quality of the environment; and

• enhancing health and opportunity in urban areas through improving air quality in hotspots.

Promoting Equality

We will help to promote equality by:

• providing assistance to vulnerable customers, who are in receipt of Council Tax Benefit, by reducing paying water and wastewater charges by up to 25%. This will be funded by the removal of discounts currently offered for owners of second homes and other household customers;

• ensuring that the needs of disadvantaged groups are incorporated into the design of rural services so that they can be made more accessible and of better quality in line with our rural services target; and

• spending £12m a year on farm diversification which generates additional income and employment throughout rural Scotland, under measures which positively encourage applicants to provide equal opportunities and access for all.

Sustainable Development

Sustainable development principles permeate all that we do. In particular we will be monitoring the delivery of the Scottish sustainable development strategy, to be published later this year, by the Executive, the wider public sector, the private sectors and others.

For a policy to be sustainable, it must respect our principles of living within environmental limits and a just society by means of achieving a sustainable economy, promoting good governance and using sound science. The priority areas for immediate action are sustainable consumption and production, climate change and energy, natural resource protection and environmental enhancement, and sustainable communities. In developing our strategy, we will seek to ensure that the goal, principles and shared priorities for action are applied to the work of our own Portfolio, and we also have the lead responsibility, with the Cabinet Sub-Committee for Sustainable Scotland, for ensuring that they are applied across the Executive as a whole.

We will enhance sustainable development by:

• working in partnership with local authorities and SEPA to improve air quality and alleviate noise nuisance in certain urban communities;

• contributing to reductions in resource use by modernising waste management to reduce landfill, which otherwise wastes resources and harms the environment, for example by increasing greenhouse gas emissions;

• implementing the National Waste Plan with the aim of ensuring kerbside recycling systems for more than 90% of households by 2020 and re-cycling of 55% of municipal waste. Also by 2020, we aim to ensure that only 30% of 1996 levels of biodegradable municipal waste sent to landfill is deposited in this way;

• working with SEPA and local authorities to improve protection for communities affected by flooding and assist adaptation to climate change through investment in sustainable flood alleviation measures and flood defences;

• supporting through the Sustainable Action Fund a range of research, demonstration projects and other relevant activities in support of sustainable development and environmental improvement in Scotland;

• implementing the Sustainable Framework for Scottish Sea Fisheries so as to provide a sustainable profitable and well managed future for Scotland's sea fishing industry; and

• taking forward the Scottish Forestry Strategy, which has sustainability as an over-arching principle. Scottish Forestry must contribute positively to sustainable development and meet internationally agreed standards of sustainable forest management.

WATER

Spending Plans 2002-08

Table 9.03 More detailed categories of spending (Level 3)

Note:
1. The Scottish Water budget for 2002-03 was scored on the basis of capital expenditure less profit, and from 2003-04 on the basis of net new borrowing

What the budget does

The Water Level 2 spending supports the delivery of outcomes on safer drinking water and cleaner rivers. It provides resources to improve drinking water quality and improve the environment by ensuring that effluent discharged meets legislative standards. The budget for 2006-07 for Scottish Water represents net new borrowing and will support the remaining projects in the Quality and Standards 2 and the start of the Quality and Standards 3 investment programmes. Effective regulation by the Water Industry Commission, the Drinking Water Quality Regulator and the Scottish Environment Protection Agency ensures that effective and efficient services are provided to customers. The remainder of the budget provides resources for other water related grants notably the Private Water Supply Grant Scheme. This Scheme will help households and businesses connected to private water supplies to upgrade facilities to ensure that drinking water meets legislative standards.

NATURAL HERITAGE

Spending Plans 2002-08

Table 9.04 More detailed categories of spending (Level 3)

What the budget does

The Natural Heritage Level 2 resources in particular support the delivery of our outcomes on helping people to feel fitter and refreshed by access to greenspace; well maintained landscapes contributing to tourism, biodiversity stabilising and marine and natural resources conserved.

Natural heritage is at the core of what makes Scotland special and it is one of our top selling points and one of the main attractions for visitors. The balance between conservation and improvement of the natural heritage, on the one hand, and promotion of its enjoyment on the other is struck largely by work done by Scottish Natural Heritage ( SNH) in biodiversity, conservation and the promotion of access, by the National Park Authorities ( NPAs) in delivering the National Park aims in their areas and by local authorities through the planning of core path networks. We will ensure delivery through the funding of SNH and by setting clear priorities for its work and through the funding of, and issue of guidance to, the NPAs. Key instruments which influence many of these objectives are the Nature Conservation (Scotland) Act 2004 and the Scottish Biodiversity Strategy.

ENVIRONMENT PROTECTION

Spending Plans 2002-08

Table 9.05 More detailed categories of spending (Level 3)

What the budget does

The Environment Protection Level 2 spending supports our outcomes of clean air and rivers, waste reduced and disposed of sensibly, and homes protected from flooding and other environmental hazards.

SEPA has responsibility for the protection and enhancement of the environment, and its spending is largely determined by the need to implement and enforce regulatory regimes required by national and EU legislation. The resources enable SEPA to carry out its regulatory functions and to continue to safeguard Scotland's environment through better control of pollution and waste management. The resources also allow SEPA to contribute to the delivery of the National Waste Plan and to implement provisions of the Water Environment and Water Services (Scotland) Act. Provision for SEPA also ensures the continuation of the Floodline Flood Warning Service in Scotland.

Provision is made also for complementary waste initiatives to assist implementation of the National Waste Plan. These include support for programmes on recycling and market development, waste minimisation, waste awareness and support for Keep Scotland Beautiful, which carries out anti-litter and anti-fly tipping campaigns and promotes environmental education.

Spending in the Finance and Public Service Reform portfolio includes funding for investment by local authorities in flood defence works. In addition, the funding provided here for flood prevention and coast protection will enable the Executive to take forward initiatives on flood risk management and research to assist policy decisions. It will also enable the Executive to provide improved access to flood risk information.

Continued provision is made for a number of air quality initiatives, including Vehicle Emissions Testing and grants to encourage the installation of lower emission equipment on vehicles. A new and expanding grant scheme has been set up to enable local authorities to establish noise nuisance services.

RESEARCH AND SUSTAINABLE ACTION

Spending Plans 2002-08

Table 9.06 More detailed categories of spending (Level 3)

Note:
1. Resources will be re-allocated from elsewhere in the portfolio in-year from 2004-05 onwards to increase funding to previous levels.

What the budget does

The Research and Sustainable ActionLevel 2 resources support research, demonstration projects and other relevant activities in support of sustainable development in Scotland through Sustainable Action Grants. It also provides development funding for Forward Scotland and distributes the proceeds of the Aggregates Levy in Scotland. In 2006-07 research will be funded through direct commissions or collaborations on climate change, the natural environment, pollution, waste, water and sustainable development.

RURAL DEVELOPMENT

Spending Plans 2002-08

Table 9.07 More detailed categories of spending (Level 3)

Notes:
1. The Plans assume a rate of Modulation of EUCAP Support on-farm payments of 10 per cent by 2007.
2. The 2005-06 Budget allocations reflect Ministers' decisions earlier this year on their priorities for the use of Modulation and match funding resources which, at the conclusion of SR 2004, were shown as being temporarily held for the Rural Stewardship Scheme. The final Budget for 2006-07 will reflect the latest estimates of requirements to meet the priorities now agreed, while the figures above remain those in the SR 2004 settlement.
3. Items marked * include that element of funding by the EU directly. Items marked # show only the DEL element of funding for measures where the EU contribution will come from modulation of CAP payments. Gross provision for payments under the Land Management Contracts and Rural Stewardship Schemes in 2005-06, taking account of contributions to come from modulation, is therefore some £28.7m higher than the DEL only figures above.
4. "Other" expenditure in 2002-03 and 2003-04 includes spending under the time limited Pig Ongoers Scheme.
5. The total here for 2005-06 is £31,000 higher than the Budget approved by the Parliament for the year. This reflects the re-classification of that sum of AME expenditure, in relation to EU Bee Health spending, which appeared in previous plans in the CAP Support Level 2.

What the budget does

The Rural Development Level 2 resources support our outcomes on agriculture and forestry businesses contributing to local economies, and rural enterprise benefiting from farm diversification. Spending assists the agriculture industry in responding to changes resulting from the Common Agricultural Policy ( CAP) reform deal, which provide enhanced flexibility for developing the CAP in Scotland in ways which meet the objectives of A Forward Strategy for Scottish Agriculture.

The plans provide significant continuing support for livestock producers in Scotland's remote hills, through the Less Favoured Areas Support Scheme ( LFASS). The plans also allow for the exploitation of opportunities provided by the EU Agenda 2000 Rural Development Regulation and the process of modulation of CAP Market Support payments, to expand the area of farming land in Scotland devoted to agri-environmental prescription, organic production or converted to woodlands. Support continues for a range of measures to sustain farming communities in crofting areas, for improved advice to farm businesses and to build or improve crofter housing; and for rural community initiatives, through the Scottish Rural Partnership Fund.

AGRICULTURAL AND BIOLOGICAL SCIENCE AND OTHER AGRICULTURAL SERVICES

Spending Plans 2002-08

Table 9.08 More detailed categories of spending (Level 3)

Note:
1. The provision shown for SASA reflects the allocation in 2004-05 of some £16m towards the costs of the Agency's re-location to a new site and, in 2005-06, assumed receipts of £16m from the disposal of its current site. Increases in the baseline from 2006-07 are largely attributable to increased costs of depreciation for the new SASA building.

What the budget does

The Agricultural and Biological Science and Other Agricultural Services Level 2 resources maintain support for the work of the five Scottish Agricultural and Biological Research Institutes ( SABRIs) which are internationally recognised centres of excellence for research into land use and its environmental impact; plant science and biotechnology; animal disease; and nutrition and its impact on human health.

The resources also support the Scottish Agricultural College ( SAC), which conducts applied research in areas related to animal, plant and environmental sciences, as well as socio-economics. SAC also delivers a range of full-time education courses in environment, countryside management, agriculture, biotechnology, horticulture, poultry production, food science and animal and crop production, at levels ranging from diploma through higher diploma to degree. Support is maintained also for SAC's delivery of a range of public good advisory services, such as animal health, pollution and conservation. SAC provides the main animal disease surveillance programme in Scotland.

The Royal Botanic Garden, Edinburgh ( RBGE) maintains and carries out research on a national reference collection of living and preserved plant material and a major library of botanical works, as well as providing public amenity at its main and satellite gardens.

The Flexible Fund for Research commissions research contracts which address Ministers' specific policy requirements or which encourage collaboration between research establishments.

The Scottish Agricultural Science Agency ( SASA) discharges a wide range of Ministers' statutory and regulatory functions in relation to national, EU and other international legislation and agreements on plant health, variety registration, crop improvement, genetically modified organisms and the protection of crops, food and the environment.

The balance of resources here includes pensions provision for SAC/ SABRI staff; continued support for the regulatory and other work of the Crofters and Deer Commissions; and the funding for the operation of Livestock Improvement and Veterinary Service Schemes in the Highlands and Islands.

FISHERIES

Spending Plans 2002-08

Table 9.09 More detailed categories of spending (Level 3)

Note:
1. The Plans for 2002-03 showed what was then unallocated provision for non cash capital depreciation and cost of capital across the Department within the Fisheries Level 2. Plans for subsequent years, for the SFPA and FRS include only their respective allocations for such non-cash costs.

What the budget does

The Fisheries Level 2 resources support our outcomes of fisheries business contributing to local economies and the conservation of marine resources, and in particular the Fisheries Research Services ( FRS) and the Scottish Fisheries Protection Agency ( SFPA). FRS supports the delivery of our outcomes by providing scientific advice on marine and freshwater fisheries, aquaculture and protection of the aquatic environment and its wildlife. SFPA enforces UK, EU and other international fisheries legislation in Scottish fishing waters and in ports around Scotland.

There is support also under a range of measures for the fisheries and aquaculture sectors. Under the EU Financial Instrument for Fisheries Guidance ( FIFG) and the related domestic back-up grant schemes assistance is given towards investments in the fishing fleet, fisheries marketing and processing, port facilities and aquaculture projects. Provision is made also for grant assistance for fisheries harbour improvements.

FORESTRY COMMISSION SCOTLAND

Spending Plans 2002-08

Table 9.10 More detailed categories of spending (Level 3)

Notes:
1. 2005-06 Budget (Scotland) (No 2) Bill moved the Timber Transport Fund from Forest Enterprise Scotland to Forestry Commission Scotland. A similar switch will be made at Budget Bill stage for each of the future years.
2. Because of a change in asset accounting arrangements from 1 April 2004, the bulk of Forest Enterprise cost of capital and depreciation charges for 2005-06 onwards will be reallocated to Forestry Commission Scotland.

What the budget does

The Forestry Commission Scotland Level 2 resources support the delivery of our outcomes on forestry businesses contributing to local economies, and people becoming fitter through access to greenspace. The resources allow the Commission to:

• regulate and support, through grant aid, the private forestry sector;

• promote the expansion and sustainable management of Scotland's woodlands;

• support projects which reduce the impact of timber transport operations on public roads and on communities;

• increase the contribution of woodlands to the quality of our towns and cities through the Woodlands In And Around Towns ( WIAT) initiative;

• support Ministers and advise on the development and delivery of forestry policy in Scotland; and

• manage, through our Agency, Forest Enterprise Scotland, the national forest estate.

FOREST ENTERPRISE SCOTLAND

Spending Plans 2002-08

Table 9.11 More detailed categories of spending (Level 3)

Notes:
1. 2005-06 Budget (Scotland) (No 2) Bill moved the Timber Transport Fund from Forest Enterprise Scotland to Forestry Commission Scotland. A similar switch will be made at Budget Bill stage for each of the future years. The above figures reflect these proposed changes.
2. Because of a change in asset accounting arrangements from 1 April 2004, £19.7/ 22.1/22.1m from Forest Enterprise cost of capital and depreciation charges will be reallocated to Forestry Commission Scotland in 2005 Autumn Budget Revision, 2006-07 and 2007-08 Budget Bills respectively. The above figures reflect these proposed changes.

What the budget does

The Forest Enterprise Scotland ( FES) Level 2 resources will allow FES to:

• manage the national forest estate in accordance with the principles of sustainable forest management;

• maintain effective planning and consultation systems;

• maximise the value to the Scottish Economy of the estate's timber resource, other forest products and estate assets;

• conserve and enhance the biological diversity and cultural heritage values of the estate;

• improve the appearance of the estate; and

• increase the opportunities for everyone to enjoy and benefit from visits to the estate.

CAP SUPPORT

Spending Plans 2002-08

Table 9.12 More detailed categories of spending (Level 3)

Note:
The Plans reflect the AME baseline for CAP Support spending as agreed by the Treasury in SR 2004. The total value of actual payments to farmers will depend on the prevailing Euro/Sterling exchange rates and on the rates of modulation to be applied in any year. Actual gross spending (before the deduction of modulation) on the schemes is expected to exceed £400m a year.

What the budget does

The CAP Support Level 2 resources provide the main means of supporting the contribution made by agriculture businesses to local economies. Under the system applying to the end of 2004, spending is on payments directly to farm businesses for the production of food (cattle, sheep and cereals).

The 2003 reform of the CAP set a new framework for support from January 2005, in response to EU enlargement, EU budgetary pressures and likely developments in World Trade Organisation negotiations. The key elements of the reform are decoupling of support from production, the introduction of compulsory modulation to fund alternative rural development measures and changes to the cereals and dairy regimes. The flexibilities made available under the CAP Reform agreement are being used to advance our objectives under the Forward Strategy for Scottish Agriculture.

The new Single Farm Payment scheme replaces the main commodity schemes which were based on production. Farmers will now receive subsidy in return for land management and for meeting environmental and animal health standards. A national envelope will fund the Scottish Beef Calf Scheme which has been designed to encourage quality beef production and deliver the environmental benefits associated with cattle keeping.

CAP Support spending is funded entirely from the Guarantee Section of the European Agricultural Guidance and Guarantee Fund ( EAGGF). It is classed as Annually Managed Expenditure ( AME) and provision is agreed annually with the UK Treasury, outside the Scottish Block.

Under CAP reform spending in each Member State is subject to fixed ceilings denominated in Euros. The actual level of spending in the UK and Scotland in any year will be influenced by movements in the Sterling/Euro exchange rate.

OTHER ENVIRONMENT AND RURAL DEVELOPMENT RELATED LOCAL AUTHORITY FUNDING

Spending Plans 2002-08

Table 9.13 More detailed categories of spending (Level 3)

What the budget does

The Environment and Rural Development Grant Aided Expenditure ( GAE) figures relate to the level of local authority net revenue expenditure on these services that the Executive is supporting through grant. GAEs are not budgets, but more a basis for the distribution of grant through Aggregate External Finance ( AEF). Local authorities are, however, free to allocate their available resources to each service, including Environmental and Rural services on the basis of local need. The figures in this table are included in the GAE summary table (Table 10.04) contained within the Finance and Public Service Reform chapter of this document.