Scottish Government

SCOTTISH EXECUTIVE ENVIRONMENT AND RURAL AFFAIRS DEPARTMENT
CONSULTATION ON DRAFT RURAL DEVELOPMENT REGULATION

This document is also available in pdf format (157k)

Responding to this consultation paper

We are inviting written responses to this consultation exercise until 5 November. However, consultation on the various sections of the draft Regulation will take place in stages, so earlier comments are required on specific sections. Please send your responses electronically wherever possible to:

RDRConsultationResponses@scotland.gsi.gov.uk

or

SEERAD
RDR Consultation
Area 1E, Pentland House
47 Robb's Loan
Edinburgh
EH14 1TY

If you have any queries contact Douglas Atkinson on 0131 244 6161.

We would be grateful if you could clearly indicate in your response which questions or sections of the consultation you are responding to (using the consultation questionnaire if appropriate) as this will aid our analysis of the responses received.

This consultation, and all other SE consultation exercises, can be viewed online at http://www.scotland.gov.uk/consultations. You can telephone Freephone 0800 77 1234 to find out where your nearest public internet access point is.

The Scottish Executive now has an email alert system for SE consultations ( SEconsult). This system allows stakeholder individuals and organisations to register and receive a weekly email containing details of all new SE consultations (including web links). SEconsult complements, but in no way replaces SE distribution lists, and is designed to allow stakeholders to keep up to date with all SE consultations activity, and therefore be alerted at the earliest opportunity to those of most interest. We would encourage you to register.

Access to consultation responses

We will make all responses available to the public in the Scottish Executive Library by 3 December 2004 unless confidentiality is requested. All responses not marked confidential will be checked for any potentially defamatory material before being logged in the library.

DRAFT RURAL DEVELOPMENT REGULATION

Section 1: INTRODUCTION

1. The European Commission published the draft Council Regulation [insert link] on support for rural development on 15 July. Once agreed, this Regulation will determine rural development spending from 2007-13. This will replace the current Council Regulation 1257/19994 [insert link] which expires at the end of 2006. The existing regulation is currently implemented in Scotland through the schemes of the Scottish Rural Development Programme (SRDP).

2. In summary the draft regulation proposes;

• the establishment of a special fund, the European Agricultural Fund for Rural Development (EAFRD), separate from the normal CAP mechanisms, with simper financial rules, and which includes EAGGF Guidance;
• a requirement for European and national strategy documents;
• three priority axes for spending (improving the competitiveness of the agricultural and forestry sector; land management (including animal welfare); and diversification of the rural economy and the quality of life in rural areas), with detailed measures under each axis;
• a requirement that a minimum of 25% of community support for each rural development programme is spent on axis II (land management), and that a minimum of 15% is committed to each of the other two axes;
• LEADER to be 'mainstreamed' within the rural development regulation and a minimum 7% of funding for LEADER (funding for local action groups in rural communities) within rural development programmes;
• a mechanism for revising the designation of Less Favoured Areas (LFAs);
• the creation of a 'European Observatory of Rural Territories' to collect and disseminate information and best practise.

3. This consultation forms the core part of a [9] week consultation exercise in Scotland which aims to seek the views from those stakeholders with an interest in the draft Regulation. This consultation applies to Scotland only. Defra are holding a similar consultation exercise for their interests as are colleagues in Wales and Northern Ireland.

4. SEERAD is working with other Scottish Executive Departments and other Government departments to develop an agreed UK negotiating position on the regulation. That position needs to be reached at different stages as the work progresses. This document sets out a number of key issues in the draft regulation on which Scottish stakeholder views would be valued and by when comments need to be received. The responses from this consultation exercise, along with those from similar exercises to be carried out in the rest of the UK, will be used to further inform the development of the UK negotiating position for the Council working groups which commence in the Autumn. The timetable for responses to this consultation is as follows:

• Comments on general strategy issues are needed as soon as possible
• Comments on Axis 1 are needed by 17 September 2004
• Comments on Axis 3 are needed by 4 October 2004
• Comments on Axis 2 are needed by 20 October 2004
• Comments on evaluation, monitoring and financial management including Leader+ are needed by 5 November 2004

5. This consultation does not look at the detail of how the draft Rural Development Regulation will be implemented in Scotland. The successor arrangements to the current Scottish Rural Development Programme will be subject to consultation during 2005, when the draft regulation has been adopted. Links to these documents and other useful sources relevant of information can be found at Annex D.

6. A list of the stakeholder organisations that we have contacted directly about this consultation is attached at Annex C. This is not an exclusive list and views are welcome from all interested parties.

Scottish Executive Environment and Rural Affairs Department
Edinburgh
September 2004

Section 2: OBJECTIVES AND GENERAL RULES ON ASSISTANCE

(Draft Regulation Articles 1-8)

Commission Proposal

1. The Commission have developed three major objectives for rural development policy for the period 2007-13 to ensure the sustainable development of rural areas. These reflect the November 2003 Salzburg conference conclusions and the outcomes of the Lisbon and Goteborg European Councils;

• increasing the competitiveness of agricultural and forestry by means of support for restructuring;
• enhancing the environment and countryside by means of support for land management (including rural development actions related to Natura 2000 sites); and
• enhancing the quality of life in rural areas and promoting diversification of economic activities through measures targeting the farm sector and other rural factors.

2. The Commission summarise the importance of EU rural development as:

• accompanying and complementing further CAP reform and ensuring coherence with the instruments and the policies of the first pillar; and
• contributing to other EU policy priorities such as sustainable management of national resources, innovation and competitiveness in rural areas, and economic and social cohesion.

3. The Commission view clearly set objectives developed in consideration of EU priorities which, along with more emphasis of reporting of programme results through reinforced monitoring and evaluation, ensure greater transparency and accountability of the use of EU funds, and will provide Member States with more flexibility in implementing programmes.

4. The draft regulation sets out three priority axes, each of which contain a number of measures. The proposed EU strategy document (see Section 2) will be an important instrument in ensuring the focus of rural development programming on EU priorities and complementarity with other EU policies.

5. Support for specific methods of land management should contribute to the implementation of the 6th Community Environmental Action Programme and the Presidency conclusions on the EU sustainable development strategy. In particular, the following should be addressed:

• the conversion and enhancement of biodiversity;
• the management of Natura 2000 site management;
• the protection of water and soil;
• climate change mitigation, including the reduction of greenhouse gas emissions;
• the reduction of ammonia emissions; and
• the sustainable use of pesticides.

6. Forestry measure are an integral part of rural development and should be adopted in the light of undertakings given by the Community and Member States at international level, and be based on Member States' national or sub-national forest programmes or equivalent instruments. These should take account of the EU Forestry Strategy and commitments made in the Ministerial Conferences on the Protection of Forests in Europe.

Questions:

• Are the 3 objectives the right ones for ensuring the sustainable development of rural areas in Scotland?

Section 3: THE STRATEGIC APPROACH TO RURAL DEVELOPMENT

(Draft Regulation Articles 9-13)

Commission Proposal

1. The Commission proposes that EU and national strategy documents should be created so that rural development programmes are focused on EU priorities and complement other EU policies (particularly Cohesion policy) for the programming period 2007-13.

The EU strategy document

2. The EU strategy document would be prepared in advance of the programming phase, within three months following adoption of the new Rural Development Regulation.

3. It would set out EU priorities for the three priority axes (see Section 5) and serve as a basis for national rural development strategies and programmes. It will identify strengths and weaknesses at EU level and core indicators to measure progress in achieving the EU priorities. The EU rural development strategy would then be adopted by the Council and form the basis for the national rural development strategies of all Member States.

4. The Commission propose to report annually on the progress of the implementation of EU priorities for rural development and the strategy document may be updated to take account of changes in Community priorities.

The national strategy document

5. It is proposed that a national strategy document should be produced by Member States to translate the EU priorities to national situations. It should ensure that Community aid for rural development is consistent with the EU strategy document and that Community, national and regional priorities are co-ordinated.

6. National strategy plans would be prepared by Member States immediately after the EU strategy document is adopted, and would be implemented through Member States' rural development programmes.

Questions:

• Do we need both EU and national strategy documents?
• If not, which would you retain and why?
• Should we have a Scottish strategy document?
• How closely should the EU strategy define the UK and/or Scottish strategy?

Section 4: PROGRAMMING

(Draft Regulation Articles 14-18)

Commission Proposal

1. In the draft regulation it is proposed that Member States' rural development programmes will implement national rural development strategies through a set of measures grouped under the three priority axes. The programmes will articulate the national strategy into a strategy for each axis, using quantifiable objectives and core result indicators.

2. Rural development programmes should contribute to Community and national priorities and complement the other Community policies, particularly the CAP, Cohesion Policy and the European Fisheries Fund.

3. It is proposed that, for each programme, a minimum amount of Community programme support should be allocated to each axis, 25% to axis II (land management), and 15% to each of axes I and III. In addition, a minimum of 7% is dedicated to the LEADER 'axis' (which crosses all three of the axes).

4. In reality this will mean that axis II (land management) could account for a minimum of 25% and a maximum of 70% of expenditure and axis I and axis III can each utilise a minimum of 15% and a maximum of 60% of expenditure respectively.

Questions:

• Should the RDR complement national (i.e. Scottish) policies as well as Community policies?
• If so which ones?
• Is the proposed distribution of resources to each axis the right distribution?
• If not, what should the distribution be?
• Should a minimum level of funding be set for the LEADER axis?
• What should that be?

Section 5: RURAL DEVELOPMENT PRIORITIES (AND MEASURES)

(Draft Regulation Articles 19-69)

Commission Proposal

1. The draft regulation introduces three priority axes

• improving the competitiveness of the agricultural and forestry sector;
• land management (including environmental measures and animal welfare); and
• diversification of the rural economy and improving the quality of life (in rural areas) with detailed measures under each axis.

2. Each of the priority axes consist of a range of measures (34 measure in total; see Annex A for complete list), similar to the measure in the current Rural Development Regulation, although the conditions under which the measures can be implemented have been streamlined and simplified.

3. Also included are a set of provisions for a successor to LEADER, to form part of the mainstream rural development programmes, but following broadly the pattern set in the existing Structural Funds regulation (see Section 4.2 for more detail on the integration of the LEADER approach).

4. New measures include:

• establishment of agro-forestry systems for land management which mixes tree-planting with agriculture; and
• an option for support for rural micro-enterprises (defined as those with 10 or fewer employees, or annual turnover of less than €2m).

Changes include:

• a revision to the Less Favoured Areas (LFA) measure;
• broadening of the scope of training (under axis I and II) to encompass all adult persons dealing with agricultural and forestry matters and to include information and dissemination activities;
• a revision to the support measures for maintaining and improving the ecological and protective value of forests to encompass 'Natura 2000' and 'forest environment' payments; and
• not including support for the establishment of associations of forest holders as under previous regulations.

Axis I - improving the competitiveness of the agricultural and forestry sector (Articles 19-33)

5. For Axis I, the Commission proposes that the restructuring strategy would be built on measures relating to human and physical capital and to quality aspects. It would allow the phasing out of certain measures currently applicable in the new Member States.

6. The draft regulation includes a meeting standards measure to promote a more rapid implementation by farmers of demanding standards based on any new Community legislation concerning:

• the environment;
• public health;
• animal and plant health;
• animal welfare; and
• occupational safety.

Axis II - land management (Articles 34-48)

7. The axis II strategy includes agri-environment schemes as a compulsory component and supports the sustainable use of agricultural and forestry land.

8. The draft regulation proposes Member States redefine the existing Less Favoured Areas (LFA) delimitation of intermediate zones (currently partly based on socio-economic data which in many cases have become outdated). The new delimitation is to be based on:

• significant natural handicaps, notably low soil productivity and climatic conditions and where maintaining extensive farming activity for land management is important; or
• low soil productivities and poor climatic conditions giving an indication of the difficulty of maintaining agricultural activity.

9. It is proposed that natural handicap payments in mountain areas and payments in other areas with handicaps should contribute, through continued use of agricultural land, to maintaining the countryside, and the maintenance and promotion of farming systems. Objective parameters for fixing the level of LFA payments should be laid down in order to ensure the efficiency of this support scheme and ensure that its objectives are achieved.

10. The axis II strategy also includes a sub-section focusing on the sustainable use of forestry land. Measures have largely been transferred from previous regulations and encompass afforestation, forest-environment payments and support for non-productive capital investments in forests.

11. The draft regulation also proposes that farmers should continue to be encouraged to adopt high standards of animal welfare by providing an option to support farmers who undertake to adopt standards of animal husbandry which go beyond the relevant mandatory standards.

12. Beneficiaries will need, in order to receive payments under the measures in axis II, to meet EU and national mandatory requirements relevant for agriculture and forestry respectively.

Axis 3 - diversification of the rural economy and the quality of life in rural areas (Articles 49-59)

13. The proposals to not significantly expand the scope of "wider rural" spending. Some measures are farming-linked in the same way as a number of measure sin the current Rural Development Regulation, although a new measure to support micro-enterprises is included.

14. The Commission propose that the preferred implementation method for axis III is through local development strategies targeting sub-regional entities, either developed in close collaboration between national, regional and local authorities or designed and implemented through a bottom-up development using the LEADER approach (selection of the best local development plans of local action groups representing public-private partnerships).

15. The draft regulation suggests that the list of measures for support to the broader rural economy should be defined on the basis of the experience of the LEADER initiative and have regard to multi-sectoral needs. It also sets out the need to define clearly how this priority fits with other Community financial instruments, particularly those of Cohesion Policy.

Questions - The Axis Approach

• Is the approach and allocation of measures to strategic axes relevant and appropriate?
• Are the proposals for redefining LFAs appropriate?
• What parameters should we consider for a future LFA Support Scheme?
• Does the proposed scope of forestry measures and the increased integration with measures to support agriculture and rural development meet the needs of Scotland's forestry sector?

The LEADER approach (Articles 60-66)

16. LEADER+ is currently financed by EU Structural Funds and is designed to help rural representatives and stakeholders consider the long-term potential of their local region. Encouraging the implementation of high-quality and original strategies for sustainable development, it encourages a bottom-up, territorial and integrated approach to pursue local development in rural areas.

Commission Proposal

17. The Commission proposes a significantly strengthened role for LEADER within rural development programmes for the next financial perspective, and propose that each programme should contain a LEADER axis (the funding of which covers the main 3 axes) to finance:

• the implementation of the local development strategies of local action groups built on the three rural development axes;
• the operating costs of local action groups;
• the co-operation projects between local action groups;
• experimental and pilot approaches; and
• capacity building necessary for the preparation of local development strategies.

18. The proposal retains all of the features of the current EU LEADER+ programme. It would also allow local action groups to fund the types of activity eligible under the current LEADER+ Programme, though support for rural businesses would be limited to micro businesses (less than 10 employees and turnover less than €2m per year).

19. The draft regulation requires at least 7% of Community support per programme would need to be spent on this 'axis' (this is a confusing terminology, as it implies that LEADER is a separate support mechanism, which may not be the case), as the proposal stands, and 3% of overall EU funding (excluding modulation) will be kept in reserve to the allocated in 2012 and 2013 to the Member States with the best-performing LEADER axes. The criteria for the allocation of this amount is yet to be decided.

Questions

• Should LEADER form a separate (4 ^th) axis or be integrated within the 3 main axes?
• Should LEADER be limited to one or more of the proposed axes?
• Is the restriction of support to micro-businesses (rather than e.g. small businesses too) appropriate?
• Should a performance reserve be set for the LEADER axis? If so, how should it operate?

Support for technical assistance (Articles 67-69)

Commission Proposal

20. The Commission has proposed that up to 0.30% of the total Fund can be used annually to finance the preparatory, monitoring, administrative support, evaluation and control measures at the Commission's initiative, or on its behalf.

21. It is also proposed that Member States can use up to 4% of programme funding for technical assistance in the implementation of the programme. This can include financing of national networks (which is a new requirement for Member States to establish) to support the implementation of rural development measures and, in particular, local action groups. Technical assistance funding of this type has been available under past Structural Funds programmes. A European Network of the new National Networks is also proposed.

Questions

• What sort of national networks would be relevant and beneficial to the rural development of Scotland?
• How might these operate?

SECTION 6 - FUND CONTRIBUTION

(Draft Regulation Articles 70-73)

Commission Proposal

1. The draft Regulation sets out that €88.75 billion (at 2004 prices) will be available under EAFRD for the period 2007 to 2013. Of this at least €31.3 billion will be concentrated in regions, which under the proposed Structural Funds proposals, would be eligible for Convergence Objective funding (regions with less than 75% of EU25 GDP).

2. It is proposed that rural development funds will be divided between Member States after deducting the amounts referred to in Paragraphs 20 and 21 of Section 4, based on objective criteria and taking in to account:

• the amounts reserved for regions eligible for the Convergence Objective;
• past performance; and
• particular situations and needs.

3. It is also suggested in the draft regulation that the rate of EAFRD contribution to rural development programming should be set in relation to public expenditure in the Member States and take account of:

• the priority for land management and environment;
• the situations in the regions covered by the Convergence Objective;
• the priority given to the LEADER approach; and
• the outermost regions and specific islands.

Amounts generated from modulation will be in addition to the amount outlined above.

4. The Commission has also proposed that the EAGGF Guidance element of the EAFRD, along with funds from ESF, ERDF and FIFG should not exceed 4% of each Member States' GDP.

Questions

• Are the criteria set out in paragraph 2 appropriate for allocating funding between Member States? If not, which criteria would be better?

Co-financing

Commission Proposal

5. The Commission has proposed that EU co-financing rates will be set at axis level, with a maximum of 50% of total public expenditure (75% in Convergence regions) for axes I and III. For axis 2 and the LEADER 'axis' the maximum rate will be 55% (80% in Convergence regions). The minimum level of co-financing for all axes will be 20%.

Section 7: MANAGEMENT CONTROL AND INFORMATION

(Draft Regulation Articles 74-80)

Commission Proposal

The draft regulation proposes that for each rural development programme there must be a managing authority, paying agency and certifying body. The managing authority can be a public or private, national, regional or local body designated by the Member State.

Section 8: MONITORING, EVALUATION AND RESERVE

(Draft Regulation Articles 81-92)

Commission Proposal

1. The Commission has proposed more detailed and structured monitoring and evaluation rules than currently apply - each programme must be subject to suitable monitoring, watched over by a Monitoring Committee on the basis of a common monitoring and evaluation framework. The creation of a Monitoring Committee was an option under the current regulation to be used "where appropriate", but is now a requirement.

2. The requirement for the production of an annual progress report have been made stronger, with the proposal that the Commission will examine and comment on it after it has been submitted to them. In addition, it is proposed that expenditure on the Convergence Objective should be identified separately.

3. The proposed system for evaluation is similar to the existing Rural Development Regulation, with requirements for ex-ante, mid-term and ex-post evaluations. However, an additional requirement is proposed for ongoing evaluation. This would involve the submission of an annual report of evaluation results to the Commission along with the annual progress report.

Questions

• Do the proposals for monitoring and evaluation help to reduce bureaucracy?
• What alternatives might there be?

Section 9: STATE AID

(Draft Regulation Articles 93-94)

Commission Proposal

The draft regulation proposes that rural development measures should be eligible for Member State support without Community co-financing, and be approved by the Commission as part of the programming approvals outlined in the draft regulation.

Section 10: OTHER ISSUES

Modulation

Commission Proposals

1. The issue of modulation (the transfer of funds from Pillar 1 (CAP) to Pillar 2, Rural Development, has not been addressed in the draft regulation.

Annex A: RESPONDEE INFORMATION FORM

Form also avialable in PDF format

Annex B: The Scottish Executive Consultation Process

Consultation is an essential and important aspect of Scottish Executive working methods. Given the wide-ranging areas of work of the Scottish Executive, there are many varied types of consultation. However, in general Scottish Executive consultation exercises aim to provide opportunities for all those who wish to express their opinions on a proposed area of work to do so in ways which will inform and enhance that work.

While details of particular circumstances described in a response to a consultation exercise may usefully inform the policy process, consultation exercises cannot address individual concerns and comments, which should be directed to the relevant public body. Consultation exercises may involve seeking views in a number of different ways, such as public meetings, focus groups or questionnaire exercises.

Typically, Scottish Executive consultations involve a written paper inviting answers to specific questions or more general views about the material presented. Written papers are distributed to organisations and individuals with an interest in the area of consultation, and they are also placed on the Scottish Executive web site enabling a wider audience to access the paper and submit their responses. Copies of all the responses received to consultation exercises (except those where the individual or organisation requested confidentiality) are placed in the Scottish Executive library at Saughton House, Edinburgh (K Spur, Saughton House, Broomhouse Drive, Edinburgh, EH11 3XD, telephone 0131 244 4552).

The views and suggestions detailed in consultation responses are analysed and used as part of the decision making process. Depending on the nature of the consultation exercise the responses received may:

• indicate the need for policy development or review
• inform the development of a particular policy
• help decisions to be made between alternative policy proposals
• be used to finalise legislation before it is implemented

If you have any comment about how this consultation exercise has been conducted, please send them to Douglas Atkinson at SEERAD.

E-mail: Dougie.atkinson@scotland.gsi.gov.uk

Annex C: List of consultees

Annex D: List of useful links

Proposed Regulation
Scottish Rural Development Plan
Existing Regulation
English Consultation