Rural Scotland's decline isn't a mystery – it's the result of policy choices
Rural Scotland is back in the headlines today after new GDP estimates showed a 4.5 per cent contraction in the rural economy over the past year. Farming, forestry and fishing – the backbone industries of rural Scotland – have now seen three consecutive quarters of decline, reversing the modest growth observed last year.
Predictably, politicians are already scrambling to pin the blame on each other. Westminster’s controversial changes to inheritance tax on farms are being treated as the villain of the piece, while the Scottish Government insists rural decline is the consequence of budget cuts imposed by the UK Government. Both of these arguments contain fragments of truth. Neither explains the real crisis.
Because the uncomfortable reality is this: rural Scotland has not suddenly begun to decline – rural Scotland has been allowed to decline. What we are witnessing now is simply the point at which long-term structural neglect becomes impossible to spin away.
For decades, rural Scotland has been treated as a sector to be managed, not an economy to be built. Policy is reactive rather than strategic. Funding is fragmented, short-term, and insecure. The industries that sustain rural communities – food production, timber, aquaculture, tourism – have been left exposed to market volatility, supermarket power, globalised supply chains and endless uncertainty about future support.
So when today’s figures show a 4.5 per cent GDP fall, the question is not ‘What caused this?’ but ‘What did you think was going to happen?’
Instead of facing that question, the political debate has narrowed around a single issue: the so-called ‘family farm tax.’ Westminster’s changes to Agricultural Property Relief and Business Property Relief – effectively taxing landholdings above £1 million at 20 per cent on inheritance – have angered farmers across the UK, with nearly half reporting that they have delayed or cancelled investment plans ahead of the policy coming into effect. The UK Government’s concession this week, allowing married couples or civil partners to transfer unused allowances between them, has been welcomed by some but dismissed by farming unions as nowhere near enough.
But focusing on inheritance tax alone misses the point. Inheritance rules matter, yes, but they do not explain a multi-quarter GDP contraction across the rural economy. The decline predates the tax changes. It predates the current Scottish budget cycle. It predates this year’s market downturns. The decline is structural.
The deeper truth is that Scotland has no coherent rural economic strategy – neither at Westminster nor at Holyrood.
Consider farming. Scotland’s farmers are expected to deliver food security, environmental stewardship, biodiversity protection and economic stability, all while being squeezed between supermarket buyers on one side and volatile global commodity markets on the other. They are repeatedly told to invest, innovate, modernise – but on what timeline? Under what support scheme? With what long-term certainty? A farmer cannot invest in new equipment or sustainable practices when government support is announced in one-year bursts like a grant-funding lottery.
Forestry faces similar contradictions. Scotland champions tree-planting targets but relies heavily on external investors to finance commercial woodland, meaning profits flow out of communities rather than into them. Local processing capacity remains weak. Sawmills consolidate. Employment declines.
And fishing – one of the oldest and most culturally significant industries in Scotland – has been left to navigate the post-Brexit landscape with all the disadvantages and few of the promised gains. Boatbuilding, processing and coastal infrastructure have all been allowed to wither, leaving fishing communities more dependent on precarious landing prices and external ownership than ever.
That is what structural decline looks like: a series of industries left to survive whatever storms the market brings, with neither government investing in the foundations of long-term resilience.
Which brings us to the Scottish Government. Ministers point out, correctly, that they cannot control inheritance tax and that they oppose Westminster’s changes. But Holyrood is not merely a bystander in rural Scotland’s economic fortunes. Cuts to the rural budget, delays in agricultural policy reform, a lack of investment in local processing, and an unwillingness to take land reform beyond modest, slow steps have all contributed to the vulnerability we are now seeing.
The truth is that rural Scotland is treated in policy terms as though it were a cost centre rather than an engine of national prosperity. Yet rural industries underpin our food supply, our natural resources, our renewable energy potential, and many of our export markets. They are foundational sectors, but they are governed as if they were peripheral.
What would a serious rural economic strategy look like? It would begin with recognising that rural Scotland must be allowed to capture and retain the value it creates. That means investing in local processing for food, timber, and fish so value is added in rural communities, not exported raw. It means supporting community ownership and land reform so profits aren’t siphoned to distant landlords or speculative investors. It means stable, multi-year support for farmers tied to clear outcomes, not annual uncertainty. It means rural banking and finance models that keep money circulating locally. And it means treating rural housing, infrastructure and connectivity as economic fundamentals – not afterthoughts.
Today’s GDP figures are not an aberration; they are a warning. Scotland’s rural economy doesn’t need an inheritance-tax tweak. It needs a strategy. Without it, the decline we are witnessing will not reverse – it will accelerate.
Rural Scotland is not failing. It is being failed. And until policy catches up with that truth, the numbers will continue to fall. Rural Scotland’s decline isn’t a mystery – it’s the result of policy choices.
