Rural Economy

– in the House of Lords at 11:38 am on 2nd February 2006.

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Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Spokesperson in the Lords, Environment, Food & Rural Affairs 11:38 am, 2nd February 2006

rose to call attention to the state of the rural economy; and to move for Papers.

My Lords, the rural economy is facing a time of tremendous change following the implementation of CAP reform. Like any period of change, it offers threats and opportunities. But I believe that the opportunities are greatest for the country as a whole, while the threats are greatest for those who live and work in rural areas. The opportunities offered by CAP reform—and Members on the Liberal Democrat Benches believe that there are tremendous opportunities—must be taken up.

I tabled the debate in a spirit of optimism because of the new opportunities offered by CAP reform. However, since then it has emerged that funding for the rural development pillar of the CAP may have been slashed as part of the EU budget deal struck in the dying days of the UK presidency, so I hope that this debate will provide an opportunity to explore whether the rural areas of England will end up bearing the full brunt of the deal—and that depends on a Treasury decision on whether it will co-finance the rural development pillar of the CAP properly.

The debate will offer three things. It will offer the chance for the Minister to tell us exactly what the figures are, because I believe rumours are unhealthy, spreading uncertainty and fear, especially among the rural community. There are some pretty wild figures out there—40 per cent, going down as low as 18 per cent. I hope that today the Minister will be able to give some certainty to what, inevitably, looks a pretty grim picture for rural areas.

Secondly, the debate will offer a chance to look at ways that the Government could make good that shortfall and how they could finance that, whether through co-financing or modulation of Pillar 1.

Thirdly, and perhaps most importantly, the debate will offer an opportunity for the Members of your Lordships' House to say why the Treasury should be investing in rural areas. I believe that investment in rural areas pays dividends, not only for the rural areas themselves but for the nation as a whole. Given the noble Lords who will be speaking, and the depth of your Lordships' experience of many aspects of rural life, across a wide range of issues, I believe that we will be able to make an excellent case.

I would like to look briefly at the picture from the point of view of those trying to make a living in rural areas—those who live and work in such areas. Socially, of course, there is no reason why just because you were born in one place in England your chances of a decent wage or an affordable home should be so much poorer. In fact, however, that is what the statistics show.

In 2005 the average weekly household income for people in urban areas was £367, but for rural areas it was £318; that is, £60 less. We have heard many times in your Lordships' House that rural housing is already unaffordable and getting more so by the day, with very little provision. Just to put some figures on that, one-third of rural residents spend over half their income on mortgage payments. That figure is around a quarter for urban dwellers. There is also, of course, the whole question of the provision of rural housing. So, those that live in rural areas are earning less and spending more. I am sure we will have to consider that they spend more on rural transport, for example.

For the substantial part of my speech, I move to the rural economy and will look at what it produces for us as a nation, particularly against the issue of climate change, which has sharpened our awareness of the need to conserve and invest in our natural resources. Indeed, at Question Time, that very question came up about water.

Rural areas are the reservoir of our natural resources. When I say "natural resources", that could mean water, which we discussed earlier, wildlife, land management to prevent urban flooding when we have too much water, energy crops, all sorts of renewable energy and, of course, food.

My noble friend Lord Livsey will speak on food production, which is and must remain of prime importance. But we cannot take that for granted because for the food that we can easily grow here, the trade gap is, according to Defra's own figures, growing. We are exporting less of that food and importing far more. The trade gap in food that we can grow in this country—I am talking of beef and dairy products, vegetables and wheat—is now £11 billion. Why are we importing so much of something we can grow ourselves? What has happened to the effort to reduce food miles and Defra's "buy local" policy? Food from Britain received £8 million in grants from Defra last year. Where is that money is going?

I could spend all my time on the subject of food—it is very close to my heart—but I want to move other areas of the economy. To begin with, I would like to divide the areas up into different areas of capital. I will start with environmental capital. It is a plus for the countryside that it is rich in such capital; the quality of the landscape and biodiversity of rural areas are among their biggest assets. That shows in purely financial terms: the tourist industry is worth over £12 billion, with at least 380,000 jobs. Visitors are coming to Britain to look at our incredibly wonderful landscapes: either at the jewels of that landscape, such as national parks, areas of outstanding natural beauty or our coastline; or at the run-of-the-mill—if you could call them that—little villages and bluebell woods; all the things that might seem clichés when you see them on a calendar, but which are wonderful assets. I believe the Government have done a good job in giving people the facility to explore more of those assets through outside recreation. There is another benefit, too, in terms of health. Investment in our footpaths, open access areas, coasts and hills pays off twice: once through tourism, and once through improving the health of our nation.

The second area of capital is economic capital; that is, such things as transport, communications, IT connections and work space. That area of capital is in very poor condition. I am sure my noble friend Lord Bradshaw will tell us about rail connections again being under threat from the Government. The broadband IT infrastructure is still in a dire state in rural areas, with only 1,116 out of the 5,500 exchanges offering broadband services. Banks have closed at a phenomenal rate: 4,000 so far, with many more to follow. I am sure noble Lords will touch on post offices. Digital TV and radio are still mainly unavailable in rural areas, as I found out to my cost when I bought my husband a digital radio for Christmas; there is no digital reception in north Devon. There is a direct correlation between poor economic infrastructure and poor economic performance, which the Government must address through rural development. Rural areas cannot help themselves if the sort of infrastructure that should be provided is simply not there.

Thirdly, there is cultural capital, and I am relieved that the noble Baroness, Lady McIntosh, will speak on this. She is so well qualified, and I am not. The fourth sort of capital is social capital, which includes people's networks, their communities and their extended families. Historically, this has probably been one of the greatest strengths of rural areas. There is a lot of truth in the cosy picture of village life, where everyone knows each other, and three generations of the same family live around the corner from each other in a very small area of rural Britain. However, that is changing, partly because of the lack of affordable housing. The costs of providing services once provided by social networks are much higher in rural areas because of the greater distances and the lack of economies of scale. According to the National Council of Voluntary Organisations, there is a particular problem caused by sparsity and distance, which create challenges. Will the new Social and Community Programme aim to give full cost recovery to the voluntary sector and enable it to continue doing its job effectively?

Of the different sorts of capital, I want finally to mention human capital. That includes education, skills, health and entrepreneurship. Many of the rural economies are low-wage economies, where workers have seasonal and low-paid jobs. One of the things that has been discovered to hamper such economies from becoming higher-wage is a lack of educational skills. Schools in rural areas are still facing problems with teacher recruitment. Children find it harder to take part in after school activities due to transport difficulties. However, the Government's agenda for schools in rural areas is not helping. Paragraph 97 of the Select Committee report on the education White Paper trenchantly makes the point that real choice in schools is no choice when there is only one school within reasonable travelling distance—that is the case with almost all schools in rural areas.

My noble friend Lady Maddock will touch on many of the difficulties of living in very remote rural areas. I am extremely pleased that she will do so. The peripheral areas with the greatest sparsity problems have multiple problems. I was going to say that they lack all five sorts of capital that I mentioned, but they still have wonderful landscapes, so they lack four sorts of capital. However, you cannot eat the view, as I think somebody once said. All those areas need capital investment—that is what rural development is. Everyone expects investment to pay dividends and I am sure that the Treasury is no different, but I hope that our debate will show that rural areas repay investment. We must get the Treasury to look at those facts.

On 6 June last year the noble Lord, Lord Whitty, who used to occupy the position that the present Minister—the noble Lord, Lord Bach—now occupies, said:

"We have also managed to enhance the European budget for rural development, perhaps by not as much as we would have liked, but it is still a significant benefit".—[Hansard, 6/6/05; col. 707.]

I must ask the Minister now, is that position different? My Lords, I beg to move for Papers.

Photo of Baroness McIntosh of Hudnall Baroness McIntosh of Hudnall Labour 11:52 am, 2nd February 2006

My Lords, I am very pleased to be the first to congratulate the noble Baroness, Lady Miller of Chilthorne Domer, on introducing this timely debate. Her experience and knowledge of rural matters is widely respected in this House. She has attracted a list of speakers who all have similar credentials. I cannot represent myself as any kind of expert but I want to make a few brief observations based on my own experience.

I was brought up in a village in rural Hertfordshire, and I live now in a village in rural Essex. Both are settlements that have remained recognisably the same over many generations, while also undergoing profound changes. Both are quite close to London, which, in economic terms, is both a blessing and a curse. What they have in common, which has allowed them to retain their distinctive characteristics, are, among other things, the following: first, a diverse population within which there is a proper balance of young and old, and a high proportion of people who are economically active. Secondly, as a consequence of that there is a thriving primary school with a growing intake. Thirdly, there is a significant number of small businesses providing reliable services to the locality.

I hope that your Lordships will indulge me if I give an example of that by citing the fact that my daughter is about to get married in the village where I live. We have been able to source from within the village just about everything that we need to make this quite big event—in my life, anyway—happen. We have the flowers, the catering and the cars. We even have a craftsman carpenter who has been commissioned to make one of the wedding presents. I think that is pretty good. On top of that, a great deal of accommodation is available in the village, which will allow many of the guests to stay there. All of that is generating income for the community. I cannot say that my daughter's wedding is the biggest event that will ever happen in rural north Essex but it is not insignificant. The essential element is that services are available in the locality which can be drawn upon so that the money stays in the locality.

Fourthly, there should be a variety of social activities, for instance drama, music and sport, and places in which they can take place such as a church, a village hall or, as in my village's case, several pubs. Finally, there should be enough local shops to provide for most daily needs within the community itself.

All those things happen to be available in the rural community that I am part of, but I know that my village is no longer typical. It is harder and harder for such communities to retain their distinctiveness and viability, and even where there is considerable affluence, as there is in my area, house price inflation has made it extremely difficult for young people to stay where they were born and grew up, which threatens to undermine the broad demographic so crucial to a dynamic community. The growth of large out-of-town supermarkets has hastened the decline of local shops, and rural post offices are struggling to survive. While I accept that it is not possible to resist the forces of change—nor always desirable to try—it is worth putting some energy into supporting the social and economic micro-climates that healthy rural communities generate.

What will it take to keep rural communities dynamic and allow them to retain or regain their vitality? There are many answers to this, and no doubt we shall hear most of them. I suggest three things, all of which have already been touched upon by the noble Baroness, Lady Miller. The first of those is affordable housing. The Government have plans to increase the availability of housing in the south-east, and we know that large-scale development is planned, for instance, in the Thames Gateway and along the M11 corridor. While I do not view these changes with huge enthusiasm, there is a need to be met and this is one way of meeting it. Yet, smaller, more incremental development within existing communities is also hugely important if small towns and villages are to be sustainable. Making it possible for young, economically active people, particularly those with young children, to live in rural areas depends among other things on housing being available, but those same people often choose to live in such areas because of their special character, which can be quickly distorted by unsympathetic or excessive expansion. What do the Government plan to do to support the provision of small-scale housing development in rural areas?

My second point concerns transport. In my area, the transport infrastructure is not too bad. There are rail services, though they are under pressure, and a good network of interconnected buses. This is not true everywhere, as the noble Baroness, Lady Miller, has already pointed out. We have learnt just this week that further review of the rail network is being undertaken. It seems almost inevitable that if the axe is to fall anywhere it will be on rural lines. Healthy, diverse communities have diverse transport needs. What do the Government plan to do to monitor pressure on the rural economy created by reduction in public transport, and to make resources available to keep services going?

Finally, on arts and culture, in November last year Arts Council England published Arts in Rural England, outlining the results of its review of arts provision in rural areas. The report notes that the arts are contributing significantly to regeneration in small towns and villages. It points to the importance of arts activities in increasing tourism in many rural areas—I think, for example, of the Yorkshire Sculpture Park and the development of the Maltings at Snape in East Anglia—and to the rise of new creative businesses where agricultural land or buildings have become redundant. It cites the example of Middle Rocombe in Devon where a dairy farm becomes an art farm each September, allowing up to 50 artists to show their work. In 2003, the event attracted over 3,200 visitors and produced sales of £13,000. There is also a growing network of small arts festivals across the UK.

It seems clear that communities which have managed to sustain, often against the odds, both amateur and professional arts activities derive both social and economic benefits, including making themselves attractive to visitors who spend money and to potential residents, especially families, who are more likely to be drawn to areas where there is a strong cultural life. In the village where I live, one of the most heartening events of the year is the annual gathering of morris dancers—please do not laugh. They come from all over the UK, including the City of Westminster, to participate in a weekend of dancing in the streets. Morris dancing is often held up as exactly the sort of symbol of rural life that we do not want to get stuck with, being a bit weird and distinctly comic. I can assure your Lordships that when the police close the streets on the first Saturday in June in Thaxted, a dozen teams of morris men strut their stuff outside my window and there are many hundreds, of all ages, watching and cheering them on. They are all spending money.

Participation in arts activity, whether as audience or artist, gets creative energy running in a community. Yet it is hard to keep it going, particularly as the costs of maintaining venues in which activities can take place are mounting.

There is some evidence that the business of applying for licences under the Licensing Act 2003 has become a problem for rural communities. The costs can be very difficult to meet, and the application process is complicated. Will my noble friend impress on his colleagues at the DCMS the importance of monitoring the impact of the Licensing Act 2003 on rural communities and of reviewing it if necessary?

I live a particularly privileged kind of rural life—apart from the aeroplanes, but I promised myself that I would not go on about them today, and I will not—in a part of England that is both beautiful and affluent. I know that is far from the whole story; there is acute poverty and deprivation in some rural communities where the loss of traditional employment, allied to the lack of effective infrastructure, has been devastating. England still has strong rural cultures, and those cultures can be helped to develop their economic muscle to the benefit of everyone, as the noble Baroness, Lady Miller, has already indicated. I hope that the Government will continue energetically to develop their policies in support of this important aspect of our national life.

Photo of Lord Brooke of Sutton Mandeville Lord Brooke of Sutton Mandeville Conservative 12:01 pm, 2nd February 2006

My Lords, this is not the first time that I have followed the noble Baroness, Lady McIntosh of Hudnall, yet it is as much a pleasure today as it was previously. Hers was a model contribution to the debate on today's subject, for which we congratulate and thank the noble Baroness, Lady Miller of Chilthorne Domer. Seven- or eight-minute speeches make for cameos and telegraphic ones at that. I have lived part of my life in rural Wiltshire for the past 30 years; 18 years north of Salisbury Plain and 12 years south of it. The saying "chalk and cheese" comes from Wiltshire, and the plain is a cordon sanitaire in terms of pace of life, but the valley in which we live is not a bad microcosm from which to extrapolate. In one of AG Street's Wiltshire books, he takes the villages of Sutton Mandeville and Teffont Evias and turns them into Sutton Evias and Teffont Mandeville, as being typical of the villages around us.

The established Church in Wiltshire is more given to team ministries than most other dioceses, and last Sunday we finally became one, after negotiations worthy of Barchester, at least from where our valley river rises as far as Salisbury's outskirts, where Wilton was the ancient capital of Wessex. Tisbury church, which gets into Simon Jenkins's book in the junior grade, is the cathedral of the valley, and Tisbury is the largest and equidistant village in the 25 miles between Salisbury and Shaftesbury. Its origins are mediaeval, but it has a well served railway station and at least 20 shops for a population of 2,000, apart from the radial outlying villages.

In the days when I used to sit annually at the feet of the futurologist, the late Herman Kahn of the Hudson Institute, I also used to read Norman Macrae, the deputy editor of the Economist, which released him for a six-month sabbatical every five years to go round the world to find out how it was likely to change. One of his earlier forecasts was the growth of one-person or two-person businesses working from home, inspired by the new opportunities that technology would offer. We have one such, some 100 yards from our cottage, where a husband and wife team do automotive engineering design for clients around the world from their home in the hamlet's former chapel. Rural areas spawn such units more prevalently than urban ones, with a higher number per capita than in towns and cities. In our case, the normal rural deficit of IT literacy is counterbalanced by a website specialist a village away, though, as the noble Baroness, Lady Miller, said, broadband facilities are dramatically less available. Only 7 per cent of rural villages and 1 per cent of remote rural areas have access to affordable Internet connections, compared with 95 per cent of the urban population.

Not everything in the garden is lovely. Historically, rural poverty has been assuaged by personal vegetable plots. It will be interesting to see how far that survives the relative disappearance of the agricultural labourer, one of whom lives next door to us. CAMRA says that there are fewer pubs now in rural areas than during the Norman Conquest. At least two such pubs have become private houses in our valley in the past decade. That is also an index, as the noble Baroness, Lady Miller, said, of the crisis in affordable housing.

The growth in rural homelessness since 1997 has been three times that in urban areas. Government emphasis on the quality of life in the countryside in part masks a lower standard of living. Rural Britain has the highest proportion of working-age adults receiving in-work tax credits. The Social Exclusion Unit is still without a section specifically dealing with rural poverty. The paucity of accessible citizens advice bureaux makes rural tax credit clients more reliant on helplines, and, as emerged from a supplementary answer to a Starred Question and subsequent ministerial correspondence last year, the Revenue helpline is not universally reliable.

It all comes down to the reduced effect of the sparsity criteria in the past decade under the standard spending assessment rules per capita, and it looks like it will get worse. Our admirable local GP envisages that the NHS will reduce local facilities over the coming decade, so the under-resourced transport facilities will be under further pressure. Of the increased funding of the national transport budget, less than 0.02 per cent will go towards the rural transport fund for the extension of rural bus services.

When Lloyds TSB closed its branch in Tisbury, the announcement on the door implied that there would be a warm welcome in Wilton, nine miles away, for its former customers. One of the valley's local post offices, which are candidates to inherit financial services opportunities, has just won the Post Office's prize for the best post office in the region, but there is a continuing threat of post office closures. Council tax problems threaten the closure of Tisbury sports centre, and the resolution of those problems will still see cuts to the arts budget.

These modest observations are not the utterances of a pessimist or a cavalier caviller, but those of a realist. Potentially, rural areas have ground for optimism in their capacity for community spirit. In our valley, the eventual creation of the team ministry last weekend is itself a beacon, not just for Christian reasons, but for that sense of community for which the Church at its best stands.

Within the past 18 months, in the debate on an Unstarred Question on church buildings asked by the noble Lord, Lord Harrison, who happily is in his place, I described how Sutton Mandeville, our eponymous village, was raising £65,000 over three years to restore a mediaeval church tower in a parish of fewer than 100 souls. Your Lordships' House would not normally expect an update on so microcosmic an event, but we raised £54,000 in the first two years entirely by our own efforts, without institutional aid, and so have a relatively soft landing for the final year. The significant victory has been that this was the work of the whole valley and not just of the village. Two of your Lordships' House have generously given lectures to packed audiences within the church. In seven weeks' time we shall have an Ashes celebration cricket dinner with an ex-president of the MCC as speaker.

Self-help is not dead and the spirit that the valley engenders is redolent of Burke's small platoons. I do not want to rub salt in the wound of the defeat of the Government's referendum for regional government in the north-east, but opportunities for rural areas lie best on a local, not a wider, basis that is almost contradictory to local chances.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 12:08 pm, 2nd February 2006

My Lords, first, I declare an interest as a farmer, a landowner, a rural businessman and as chair of Somerset Strategic Partnership. Secondly, I thank the noble Baroness, Lady Miller, for introducing this debate.

The rural economy is a large canvas and I shall touch first on a narrow area, and then a wider one. The narrow area concerns Wheels to Work schemes. For those that do not know, they deal with a particular rural problem of getting young people to work. They have no transport to get to a job, and they have no job to earn the money to buy themselves the transport—a Catch-22 situation. The simple answer is to lend them a moped for free until they have been in work for six months and can afford to get their own set of wheels. The numerous pilots have shown that after taking part in the scheme, they buy themselves transport and thus launch themselves on to a lifetime of earning, tax paying and independence.

My point is that the cost of Wheels to Work schemes is about half the cost to the taxpayer of the jobseeker's allowance and the other benefits that those youngsters can receive by remaining out of work. In other words, if the DWP were to sponsor nationwide Wheels to Work schemes, it would instantly save money within its own department and, of course, for the taxpayer. But no—the DWP leaves the decision-making process to its regional Jobcentre Plus managers, who inevitably see a cost on their budget rather than a saving to the taxpayer. So, many of the pilot Wheels to Work schemes are ending while others struggle on—raising funds through coffee mornings and the like—whereas what should be happening is for the scheme to be universally available in England and Wales. I get quite cross about such a waste of taxpayers' money, not to mention the waste of young rural lives. I happen to know that Defra also gets quite cross about that. Maybe the Treasury should be told, as Private Eye would say. Enough said; I have got that off my chest.

My second point refers to planning in the context of sustainable development. Everyone knows that one requirement for a sustainable countryside is to have profitable and diverse businesses supporting it. Everyone also knows that agriculture is no longer the backbone of the rural economy; it now represents less than 5 per cent of rural gross value added, whereas services and manufacturing enterprises represent over 90 per cent.

There are good reasons for supporting such non-agricultural enterprises. First, since over 25 per cent of all VAT-able UK businesses are in rural areas, what is good for rural must be good for UK plc. Secondly, growth in the wider rural economy is the best way to tackle the real deprivation that exists in rural England. Thirdly, prosperous businesses are also vital in conserving and enhancing the fabric of our countryside for the benefit of all—locally and nationally, now and in future.

Therefore, planners at all levels must understand the huge benefits of having diverse rural businesses. Every community should have its non-agricultural workspace. Maybe every home should be allowed to have a small business operating from it, as the noble Lord, Lord Brooke, was saying. In fact, recent research by the Countryside Agency called Under the Radar showed that rural dwellings are already home to nearly 700,000 businesses, which are largely ignored by business support services.

Equally, we must all understand that our countryside is part of the capital of life for us and for our children. Furthermore, since our debate is on the economy, if we spoil the attractions of our countryside we actually destroy our economic future. For instance, the countryside hosts a £15 billion per annum rural tourist industry. It is also a magnet for incoming businesses; 66 per cent of all new countryside businesses are started by newcomers. They move there and then start a business, so we destroy the beauty of our countryside at our peril.

However, my point here is that with the changes happening in the countryside, we need to change our approach. Having merely a locally reactive approach to planning, based on guidelines from the centre, is not enough. Neither will merely controlling development sustain our countryside. Regional and local planners must assist diversification more actively. For instance, local planners should get together with their own enterprise departments—and with other bodies, maybe neighbouring planning authorities or under the county council umbrella—to encourage and help businesses which want to start up, move to or expand within their boundaries.

There are still far too few regional and local rural action plans, or economic strategies, which reflect the reality of rural business. The reality of potentially healthy rural economies is swamped by too much attention to the weaker parts. Dare I mention farming, which I involve myself in, or even tourism in that context? In this way, the real economic potential tends to be ignored by urban-led policies. There are, for example, more manufacturing businesses per head in the countryside than in towns. RDAs running their dreadful "city region" policies need to recognise that "rural" means more than a pleasant landscape attracting a few tourists. Rural enterprise is stronger than urban enterprise, and RDAs need to help it.

A vibrant countryside needs jobs. Every level of government, from parish council upwards, needs to be bold and innovative in attracting new businesses. We need to plan the workspace, not just leave it to chance or the vagaries of the land market. We need to be bold and innovative in promoting the adaptive reuse of buildings, including farm buildings. We should seek high-tech, high-value enterprises.

Our rural economy has changed dramatically in recent years, with the decline of agriculture and the advent of broadband being two major factors. It is vital that we adapt our planning systems and the input of local government to positively promote a sustainable future for us all. Development control is important. At all costs, we must not damage what I call our "countryside capital". A little bit more thinking and real planning about how we are to sustain our countryside over the next 10 to 15 years, however, is an absolute must.

Photo of Baroness Prosser Baroness Prosser Labour 12:16 pm, 2nd February 2006

My Lords, I join others in thanking the noble Baroness, Lady Miller of Chilthorne Domer, for initiating this debate. I am an urban person. I have never lived in the countryside, but developed a love for it many years ago in my days as a Girl Guide, when we used to annually go camping in what I thought of then as the far-flung reaches of the Sussex Downs. I have spent many happy and enjoyable hours since then walking and rambling and, when I was a little younger, even mountaineering.

Such activities, while healthy and enjoyable, can lead to a rather romantic view of rural life. We do not note the isolation of many rural dwellers, often brought about by the paucity of public transport which, in turn, makes it difficult to access health and education services, and constrains employment choices. The impact of the second-home culture on rural property prices particularly hits the younger generation, who are needed to remain and regenerate declining populations but are often forced out of their own environments in order to find somewhere affordable to live.

We are all familiar with these issues; they have already been mentioned this morning. I shall concentrate, however, on two aspects of the rural world of work. I declare an interest as a member of the Transport and General Workers' Union, which is in the forefront of representation for rural and agricultural workers. First, I was pleased by the Government's sensible decision to maintain and support the Agricultural Wages Board structure and its protective mechanisms. There were some who said, when the national minimum wage was introduced, that the AWB was no longer necessary. However, the Agricultural Wages Board recognises careers paths and skills acquisition, and covers more than rates of pay. The availability of a statutory framework is valued in particular by employees in small farms or workplaces, where day-to-day relationships are key to survival and questions of personal pay can be tricky.

Secondly—and I shall listen carefully to the Minister's reply on this—there was much rejoicing, not only among rural workers and their representatives but from employers who play by the rules, supermarkets who did not want to be seen to gain from the abject exploitation of vulnerable workers and from the National Farmers' Union, when the Gangmasters (Licensing) Act 2004 was passed. The Morecambe Bay tragedy was the most vivid example of what can happen when greedy, ruthless characters prey upon the weaknesses, lack of knowledge and lack of rights of those who are desperate for work and money. Too many other examples exist of underpayment of wages, illegal employment of children, bonded and forced labour, illegal employment of foreign workers and breaches of the law on hours worked. Each one of those misdemeanours by exploitative, uncaring gangmasters represents a story of human misery and often of fear.

The Act is a good thing, introduced with cross-party support. Arising from the Act will be the establishment of a Gangmasters Licensing Authority, a non-departmental public body made up of key industry stakeholders and enforcement agency representatives. Part of its responsibility will be to enforce the licence conditions. What has not yet been decided are the sectors of the food and agricultural industries to be covered under the Act. There is a view in some government departments that so-called secondary processing should be excluded from coverage. If this view prevails, areas such as the sorting, cutting and packing of meat, vegetables and fruit will be excluded from the requirements to operate under licence and could be left open to the very exploitation which the Act is designed to eliminate.

An audit was recently conducted by the Temporary Labour Working Group—a body made up of unions and businesses with a direct interest in this sector—of gangmasters supplying casual labour to the food and farming industry. Two hundred gangmasters voluntarily participated and the 164 reports so far completed show a whacking 90 per cent of them were operating outside the law, including one example of a 14-year old child driving a fork-lift truck. These, I point out again, were gangmasters who volunteered to be involved, so presumably thought they had nothing much to worry about. If that is the case in what we might call the better end of the market, what is happening with those gangmasters who are not prepared to be open to scrutiny?

These are the very areas of employment which the Act was designed to protect. These are the vulnerable people—the migrant labourers or simply the indigenous rural workers with few choices in the world of work—who need the cover of legislation, inspection and enforcement to prevent them suffering at the hands of rogue employers.

I ask the noble Lord, Lord Bach, to give serious consideration to my comments so that the full intentions of this legislation can be realised.

Photo of Earl Peel Earl Peel Conservative 12:22 pm, 2nd February 2006

My Lords, I thank the noble Baroness, Lady Miller, for introducing the debate and I declare an interest as an owner of land in the north of England.

My remarks today were largely triggered, curiously enough perhaps, by a letter written by the Minister to my noble friend Lady Byford in response to questions raised in the proceedings on the Natural Environment and Rural Communities Bill. Under the paragraph in the noble Lord's letter referring to the funding of the new agency Natural England and its various responsibilities to deliver agri-environment schemes, the Minister made clear the Government's intentions to siphon off money from Pillar 1 to Pillar 2 through the process known as modulation. There is nothing new in that. We have known that that was going to happen and indeed is happening. What caught my eye particularly was the use of the words "Pillar 1 subsidies". I appreciate that some 20 per cent or so of Pillar 1 funding is still inextricably tied to agricultural production and export subsidies, but the remaining 80 per cent or so is now in the form of the single farm payment, which is open to all farmers subject of course to certain environmental and animal welfare conditions—a process known as cross-compliance.

My question to the Minister will not come as a surprise to the noble Lords, Lord Cameron and Lord Lewis, because they sit with me on Sub-Committee D and have heard me raise this before. Did he mean to use the word subsidy and does he acknowledge, as I do, that the single farm payment is in fact a payment to farmers in return for complying with the new environmental and animal welfare conditions? It is worth recalling that the architect of the common agricultural policy reform, Franz Fischler, made it quite clear that it would be unjust for EU farmers to be economically disadvantaged in trade because of those new responsibilities.

Subsidy has become a dirty word, a word that conjures up all the distortions of the past. It is important that it is used only in its correct context. I seek from the Minister a qualification as to whether Pillar 1 payments are in his view a subsidy or a payment in return for the delivery of certain environmental goods. We have known for some time that Pillar 1 payments will be cut through modulation between now and 2012, but no one seems to know by how much, which is extremely unsettling for those involved in farming, who are looking for stability above all. It is also clear that the level of funding under the rural development regulations will be reduced. We have heard some pretty alarming figures.

Furthermore, it has not been determined how those reduced funds are to be distributed among the member states. Everything seems to be up for grabs at the moment. It is important that the Government fight the UK corner, on the grounds not simply of historical payments but of need—my goodness, there is plenty of that around, especially in disadvantaged areas in my part of the world. It has become increasingly clear that because of the Government's lack of confidence in securing a healthy settlement, they have committed themselves to the maximum modulation rate to help to fund their rural development projects from the single farm payment. That is another way of robbing Peter to pay Paul.

I simply ask the Minister—although it is not a simple question, as he will understand—two specific questions. Will the 20 per cent modulation rate to which the Government have committed themselves be subject to matched funding by the Treasury, as under the rules—and, if not, why not? Secondly, is the Minister satisfied that the Government are likely to have sufficient funds to meet their obligations under the rural development programme—and, if not, where are the cuts likely to be made?

As has been said, the European agriculture industry—for want of a better term—has been going through what is probably its biggest revolution since the war. Huge changes are taking place. Some will adapt, some will not. These are difficult times. The people of this country want from our countryside, from our farmers and land managers, safe, traceable food and a countryside of which we can all be proud. But that begs the inevitable question: what is the point of imposing all those conditions and restrictions on our producers if they are undermined by imported goods produced under conditions far short of the standards by which our producers must abide? That presents a real problem, but it is a top priority to be addressed. I would be interested to know whether the Minister shares my concern and, if so, what the Government can actually do about that. What mechanisms are in place to prevent those activities?

Returning once again to the payments that our farmers and land managers receive for environmental delivery, it is worth reminding ourselves that if we want a countryside that is well cared for, coupled with a rich array of wildlife, it must be paid for; it does not simply happen. The truth is that there is no real competitive market in environmental management and wildlife conservation, except in special circumstances. Access is largely free at the point of delivery in exactly the same way as is the National Health Service. Green tourism, which is part of our modern culture, comes at a price. That will inevitably fall on the public purse if we are to ensure that the infrastructure of an attractive countryside is to be maintained and managed. Inevitably, that role will fall on those who own, farm and manage our landscapes.

It is also important that taxpayers are provided with good value for money. There is no point in throwing large sums of money at conservation schemes if they do not deliver. Far too often, too little scrutiny is applied to the success or otherwise of these agri-environment schemes and habitat restoration projects. A habitat that is restored does not necessarily imply that the associated species will automatically appear. Specific management requirements are often called for and too often discounted.

The countryside is changing. Tourism is now the leading industry—as the noble Lord, Lord Cameron, has pointed out—and new businesses are emerging. These are vibrant times. Yes, there are great challenges—there is climate change, and there is rural housing, to name but two—but the backdrop to all this is the landscape itself and the way in which it is cared for. I have said it before, and I will say it again: it is largely the farmers and land managers who have the responsibility to deliver the aspirations of the majority, and we must all acknowledge and rise to that challenge.

Photo of Lord Livsey of Talgarth Lord Livsey of Talgarth Spokesperson in the Lords, Welsh Affairs, Spokesperson in the Lords (Agriculture), Environment, Food & Rural Affairs 12:31 pm, 2nd February 2006

My Lords, it is a great privilege to speak in this debate today on the rural economy, a debate that was initiated by my noble friend Lady Miller of Chilthorne Domer. We have already heard some excellent contributions, including one from the noble Lord, Lord Cameron. I was very interested in the remarks of the noble Baroness, Lady Prosser, about the social welfare of people in the countryside. I wholly agree with much of what the noble Earl, Lord Peel, has said about the single farm payment and about the production of public goods, for which, after all, the environmental payments are made for the benefit of the whole population. Our fear is how that will be financed.

Rural life varies between agriculture, added value to primary produce, farm diversification, contracting, farmers' markets, co-operation, countryside pursuits and environmental initiatives. These days, those are all underwritten mainly in the private sector by adequate access to IT, market towns with viable businesses, small businesses, adequate transport, and affordable housing, which has already been mentioned. In the public services, in particular, they are underwritten by primary and further education, and by vital rural services such as GP services, community hospitals, the education provided in play schools, care for the elderly, keeping pubs and post offices open, and a viable police force, which is under threat from amalgamation proposals.

That is a very wide canvas and, to be successful, a rural economy has to succeed in many combinations of these facets of rural life. Demography often plays a vital part because it is often skewed in rural areas to the elderly, and young people have left the countryside. It is often a case of whether enough money is circulating in the rural economy, whether businesses and local services are successful, and whether the local authority helps or hinders. Does the local authority have a good economic policy, for example? Are planning policies sympathetic to the development of rural areas, and does the rural development authority assist with progress policies itself? Is the local supermarket so big that it removes cash from the local authority, takes it straight along the motorway to the metropolitan areas and we never see it again?

We all know that the downward pressure on the primary producer—the farmer—is best illustrated by the depression in milk prices from, for example, the supermarkets. The farm gate milk price has gone down by 30 per cent in the past 10 years. Yet the supermarket margins have risen from 1.3 pence per litre to 13 pence per litre in the same period; there has simply been a transfer within the milk market from one to the other. The Milk Development Council says that 1,500 dairy farmers leave the industry every year. Even the Rural Affairs Minister in the Commons, Jim Knight, accepts that. He says that farm gate prices,

"are too low for many to be able to sustain their businesses".—[Hansard, Commons, 9/11/05; col. 132WH.]

I would add that in many cases product is being sold at less than the price of production.

The situation is obviously different in different sectors, but cereals are still being marketed at exactly the same price per tonne as we were using when I lectured students 20 years ago. The Government must act and get fair play into the market place. We strongly propose there being someone at the OFT who is responsible for policing the practices of the supermarkets that militate against primary producers and are not even in the best interests of the consumers. There are many issues of this kind, including the one of single farm payments. In that respect, I say merely that cash flow for those public goods to which the noble Earl, Lord Peel, referred is vital in order to sustain farming businesses at the present time.

Rural regeneration is also very important, and the impact on Pillar 2 of the CAP and the cuts to it will be enormous. I could never understand why the Government argued before Christmas to put CAP funding at 1 per cent of gross national income, instead of the 0.15 per cent in Pillar 2. There is an attempt to haul the GDP of many areas up to the national average from 75 per cent of GDP per capita in, for example, Cornwall, parts of Wales and parts of the north of England, which is 25 per cent less than what the rest of the European Union is achieving for the social programme of Objective 1 funding. There is also Objective 2, of course.

Rural disadvantage is enormous. That has been referred to in this debate, and I do not wish to repeat it. I merely add to what the noble Lord, Lord Brooke of Sutton Mandeville, said about the population sparsity funding of the SSAs, in particular, which has been steadily reduced on that formula and has hit services in rural areas very badly. Housing is a crucial issue in areas where the cost of houses averages 15 per cent more than the national average. On the average wage in a rural area, it very often takes eight times the average annual earnings to meet the value of the house that a first-time buyer is trying to buy. These are all factors that push people out of the rural economy and, in so doing, a lot of dynamism is lost in the rural economy. Extraordinarily, the banks are not being socially responsible and are trying to close branches. Indeed, they have closed 4,000. In my area, we had to meet the regional manager at the regional branch and place placards outside his door to keep the branch open, because the next one was 17 miles away.

Very briefly, to finish, I have been involved in a number of initiatives both with young farmers and 50 year-old-plus people to start new businesses. Prime-Cymru—a Prince of Wales charity, of which I am a member—has started 1,000 new businesses, created by 50 year-olds with 12 business advisers in the past three years. The businesses vary between finding one's own family roots, making ice cream out of sheep's milk, dog beauty parlours, making and marketing paintings, making harps, and producing organic chickens. There are many initiatives of that kind, but they need finance, risk capital and market town initiatives in order to succeed. I could go on, but I have no more time. Many initiatives require help, and there is not enough of that at the moment from central and regional government.

Photo of Lord Harrison Lord Harrison Labour 12:40 pm, 2nd February 2006

My Lords, I, too, thank the noble Baroness, Lady Miller, for initiating this excellent debate. I want to remind the House that a rural economy relies on a sound economy in general. I pay tribute to the Government because the IMF, in its December 2005 report, says that the UK's impressive record of macro-economic stability owes much to good macro-economic financial and structural policies, underpinned by a sound policy framework.

Is there a problem? Yes, there is, but in certain pockets of the countryside. Roger Turner, a Countryside Agency economist, says that there are sometimes discrepancies between the perceived and the real problems in the countryside. Farming may well be in decline, but he goes on to say that in the broader view, including all types of businesses, not just rural businesses, the picture is very different. Indeed, according to the CRC's State of the Countryside 2005 report, many rural residents enjoy comparatively high levels of household income. We discovered how that same report describes these pockets. It argues that there are two rural Britains: one which is well off, in less sparse areas, associated with people who are commuting; and then a poorer rural Britain, often in sparse, peripheral areas of the United Kingdom, mostly on the fringes of towns or villages found in those remoter areas. We should be concerned about those areas because often they contain families with children living in real poverty. That is why we must do something.

The Government's policy should be twin-tracked, not only supporting shrinking industries such as farming. The Government have done so since the election, with the whole-farm approach, introducing innovative IT systems, cutting, apparently, £28 billion in red tape for farming. There is also their new farm business advisory service, funded by £7.5 million. The Government recognise that the farming industry may be shrinking, but it is important to try to give support. We should remind ourselves that at best farming provides only 4 per cent of work within the countryside.

I want to ask my noble friend the Minister about other forms of support from the European Union, including the LEADER programme, which is the six-year programme for fostering partnerships of local organisations in the countryside. Will he give us a report on that, it is an important initiative whereby we share best practice with our cousins elsewhere in the EU?

As has been pointed out by the noble Lord, Lord Cameron, there has been a sea change—one might say a land change—in the way in which the economy is based in rural Britain. A clear example, subject to a recent report, was the prediction that within the next 10 years the rural traditional craft industries will provide more jobs than farming. How does my noble friend respond to that report and how can we encourage the resuscitation of such crafts?

We should also adopt a policy of supporting other kinds of industries which are already with us. Despite what the noble Lord, Lord Cameron, said, tourism is important. It mirrors the profile of those in the countryside because it can reach the parts that others do not. The countryside often has a higher degree of SME formation, sometimes in the sparsest areas by 3:1 over their urban equivalents. Of course, there is home working, which is labour-intensive. There are many good examples of tourism flourishing. I consulted my local Visit Chester and Cheshire tourism board, which told me about some of the initiatives. One is supporting an enterprise called "Spa and Pampering"—somehow, never has Cheshire seemed so exotic as when represented by that one. I was also pleased to learn that my old stamping ground of the agricultural college at Reaseheath now provides a business centre to advise those who seek change and promote business within the community.

Another example by Visit Chester and Cheshire was the flourishing of the equestrian tourism industry. There is, for example, the stud farm for shire horses at Cotebrook, near Tarporley, which demonstrates the history of the shire horse and its use in the countryside. There are also other forms of equestrian tourism. I make a point about that because those concerned with the advent of the fox hunting ban believed that a perilous loss of employment in the countryside would be associated with it. As I thought might be the case, the reverse is true.

Will my noble friend also consult the Forum of Private Business and the Federation of Small Businesses, both of which have produced excellent reports on how small businesses might be helped within the countryside? For instance, the Forum of Private Business talks about infrastructure. Examples are impoverished road networks, broadband availability, which has been mentioned today, and labour shortages, which can be dire. The noble Lord, Lord Brooke, mentioned the closure of post offices, which I believe, with thought, could be revived and provide centres for small businesses in particular in a variety of ways. The Federation of Small Businesses points to the national website which the Government have set up to help small businesses, but there is not a separate farming or countryside section, which would be a useful addition. Will my noble friend consider that? These areas are important.

I want to conclude with one other form through which most of us townies receive knowledge of the countryside. It was set up after the war to help to promote understanding of the countryside, especially farming. It is the radio programme "The Archers". I consulted a great expert on the programme, my wife, and also my noble friend Lady Pitkeathley. They report to me that in some ways "The Archers" does not reflect modern Britain and modern business. Of course, there are many representations of farming, but far fewer representations of the small businesses which populate our rural areas, full of young entrepreneurs. The few examples of business and the use of IT are represented by Lynda Snell's husband and some estate agent, whose name escapes me, who is part of the nouveau riche and is seen as a bit of a wide boy.

I make these points because that is how the majority of us may receive our information about the countryside. It is time that we modernised that view in order to have a firm basis on which we can go forward and develop the industries, the prosperity and the jobs that people need in the countryside for a better Britain.

Photo of Baroness Maddock Baroness Maddock Liberal Democrat 12:49 pm, 2nd February 2006

My Lords, I am grateful to my noble friend Lady Miller of Chilthorne Domer for this interesting and wide-ranging debate on the rural economy. I intervene to bring to the House my experiences of living in a rural area; they follow on nicely from the closing comments of the noble Lord, Lord Harrison.

I now live in Northumberland, but I have spent most of my life living in the south-east, which is a crowded area. For a great deal of that time, I lived in a city. I am now living in one of the sparsely populated areas of this country, a long way from the centre of gravity in Britain, which I consider to be London and the south-east. It has been an interesting time. I am now also a county councillor in Northumberland and married to my local MP. Being married to the local MP involves once a year visiting all the villages in his constituency, which is 50 miles north to south. That takes us eight days; most days we drive something like 120 miles. I am not only the chauffeur but the clerk in this arrangement. It has certainly given me a great insight into not only the problems of rural Northumberland, but, of course, the beauty of the landscape.

My reflections this afternoon are therefore personal. I have become aware of the extra hurdles involved in running an economy in a rural area, some of which have been mentioned this morning. I illustrated the distances that one has to deal with, particularly when one is accessing health and education. There are also the distances from some of the major networks. For example, very few people in my area are on the mains gas supply. My noble friend Lady Miller talked about other reliable infrastructure, such as broadband and digital. We do not have digital. Broadband is improving—we might receive it—but we have some areas where the electricity supply is not always reliable because some of the lines are overhead. The situation is improving, but it is not perfect. Historically, the whole area is a low-wage economy.

Another main factor—it has certainly affected us and people coming to us—is the problem with delivering emergency services in rural areas. The police, ambulance and fire services have to travel long distances over slow roads. From my experience in the Houses of Parliament, having been a Front-Bencher for a number of years considering national legislation, it has become obvious to me that many central government policies add to the problems that we have. It is not necessarily deliberate, but our whole system is very urban-centric. I have been able to see the huge difference in the time that I have now spent in Northumberland—which, I have to say, is only five years.

I want to highlight one or two problems that have come to my notice in recent weeks. One of those is transport. With many things such as transport, housing and planning, the Government wanted to have a regional agenda and regional government, and I supported them. Unfortunately it did not happen, but we still have part of it. Whichever side of the argument you come from, the problem is that, if you are stuck with the present arrangements, you have policies handed down from above. That is causing several problems for us.

One of the most recent problems has been the thorny issue of what we see as the strategic A1 through Northumberland. It is the main line up to Edinburgh from Newcastle and for many years people have been fighting to get it dualled. Recently, we discovered that under the new arrangements from the Government the A1 is no longer a strategic road but is shoved in with all the other decisions that we have to make in our area within the meagre budget that has been handed down. I was at the county council yesterday. We are desperately trying to get the Government to look at the road and say, "Yes, we need a strategic arterial road in Northumberland, as it's of national importance". Only the day before yesterday I was reading about the problems of congestion. All the traffic to Scotland on the roads goes up the west side and through the central part of Scotland. The main railway is up the east side. It seems to me sensible to have good road and rail up both sides.

In Northumberland, we used to have the Rural Transport Partnership, but now our regional development agency, One NorthEast, has taken away the money funding an officer that had helped to produce good results in the area. Another problem we have had—not necessarily regional—is rail services. We have excellent main line rail services—I would not be able to do what I do if we did not—but on the stopping stations in-between the service is not quite so good. There is a train that goes from Newcastle up to various places, with its final station at Chathill, which is in rural north Northumberland; the train then goes a little further to Belford, where it turns round, but there is no station there any more. That is an extraordinary situation. For five or six years or more, people have been trying to get the station open. The train goes there—it is not a problem—but health and safety has said that the driver might not know on which side to open the doors. With all the changes that have happened in running the railways, this is a big issue. We hope that at last the new authority will look at that issue, but such matters are simple and should not arise.

Other noble Lords have mentioned housing. This is another problem. The figures for the houses that can be built in the area come down from central government through the region and they are based on urban policies. We have been told that, in an area such as ours, we must preserve the countryside and therefore can build only 60 houses per year in Berwick borough. But if that is what you do, as the noble Baroness, Lady McIntosh, said, your villages and towns become unsustainable. If you go just across the border into Scotland, you will see that in the Borders region a completely different attitude has been taken to development in the smaller towns and to the provision of transport links: the A1 is dualled for most of the way on the other side of the border. Will the Minister look at the policies that have been implemented in the Scottish Borders, because we are just next door and we could benefit from similar policies?

When making policy, the Government should always be thinking about what effect it is going to have on rural areas. We have suffered from the change to out-of-hours provision by doctors. The decision was disastrous; it was made by people living in cities who had no idea what would happen in our area. I do not have time to go into it. Similarly, the decision to make people apply for a passport in person is another issue—we can perhaps go to Edinburgh or Newcastle. Can civil servants think about rural areas when they are drawing up policies? What has happened to rural-proofing? I would like the Minister to talk to us about that. I also ask him to look again at the regional administration agenda, which is not working in our interests at the moment.

Photo of Lord Chorley Lord Chorley Crossbench 12:58 pm, 2nd February 2006

My Lords, in thanking the noble Baroness, Lady Miller, for initiating the debate, I want to talk about the new CAP. Here I greatly endorse the remarks of the noble Earl, Lord Peel, who has much more experience than I do. Between now and 2012, how we adapt to it will have a dominating effect on our rural economies, particularly on our upland areas and their communities. It is on the uplands that I want to concentrate. The future of the upland communities depends on a symbiosis of farming and tourism. Most of our national parks and AONBs are uplands and they are some of our finest landscapes, as the noble Baroness, Lady Miller, reminded us. Their attraction depends on their being actively farmed. I emphasise that without farming they would revert to scrub. But in economic terms they are fragile. Cumbria, for example, has one of the lowest GDPs per capita in England. For decades the farmers have depended on subsidy, and as we all know, a production-based subsidy—a headage-based subsidy. As is well known, the new CAP is now in the main a single-payment hectarage-based subsidy. In the uplands, that is having a dramatic and alarming effect.

Last summer, the National Trust analysed the future prospects of 60 of its tenanted hill farms in the north of England. The analysis showed not just that larger farms, especially those with large areas of moorland, did much better than smaller farms, which was to be expected. The major finding was that smaller farms would under Pillar 1 be loss-making, some seriously so. That was particularly evident in the Lake District, where the average farm size is 900 hectares compared with, for example, 1,500 hectares in the Peak District. A further factor emerged: smaller farms tended to be more intensively grazed—that is, they were overgrazed, so the switch to hectarage has been a double whammy for them. But, environmentally, it was a good thing because overgrazing had been a problem. We now are perhaps likely to face the opposite problem of undergrazing.

What is to be done? Some responses, such as diversification, bed-and-breakfast or part-time farming are not really a true answer. Certainly, amalgamations will in particular cases be a possibility, albeit a reluctant solution—an "if all else fails" solution. One is left with the agri-environment measures of Pillar 2 of the CAP, the so-called rural development regulation budget. It seems to be clear that the future of many of these upland farms, and hence the local tourism economy, will depend on how the RDR budget is developed. It would be most helpful therefore to have the Minister's thoughts on that. What, for example, is likely to be the extent of switching funds from Pillar 1 to Pillar 2—modulation, to use the jargon—and over what timetable? The noble Earl, Lord Peel, spoke about that with more authority than I can.

I am told that the Government are consulting widely on this, which is surely to be welcomed. I hope that these consultations are wider than pure farming considerations. I hope that they take on the wider aspects of upland economies and the experience of our national park authorities, NGOs such as the National Trust, the CLA, and so on.

The more that I think about this complicated subject, with its technical Euro-jargon, the more striking I find the contrast of the Euro-bureaucratic world with the real world whose problems it seeks to address. It is a world of farms of all shapes and sizes, of varying characteristics and of different traditions, which are run by people and families who are the custodians of some of our most important landscapes. In our uplands, they underpin a much wider economy. That contrast suggests that we need to come up with a shopping basket of environmental goodies. We need to get away from the blanket solutions; to understand and tackle the issues at a farm level; to provide advice and training; and we may need to provide exit strategies for retiring farmers or as a result of amalgamations.

If we are to ensure the future of our upland landscapes, a good deal of modulation or agri-environment farming will be needed. It will need to be of a rather tailored nature, tailored to individual farms. I am reminded of a European Union Committee report published in November 2002, which warmly commended "whole farm" management schemes, which may be the appropriate way forward.

Photo of Lord Desai Lord Desai Labour 1:04 pm, 2nd February 2006

My Lords, we are all very grateful to the noble Baroness, Lady Miller, for initiating this debate. I am particularly grateful because when I saw the topic, I thought that I had better find out something about the rural economy. I do not live in a rural area. I am not even what I might call a townie with a weekend rural property—a twerp, for short. But I have views on agriculture and the rural economy, which I would like to share. I welcome CAP reform. I was against CAP for a long time. The more that we reform CAP and the less we spend on subsidising farming across Europe, the better not only Europe would be but also the world. CAP and export subsidies have done a great deal of damage to the third world. The sooner we can get shot of this, the better.

I congratulate the Government on trying their best during the UK presidency to link budgetary reform to CAP—even offering the UK rebate for it. Sadly, western interests are very powerful, so we still have some way to go. I hope that eventually we will have an agricultural policy in Europe which is of benefit to Europeans and the world at large.

On looking at the state of the rural economy, I turned to the Defra report on social and economic change published about two years ago, which sort of matched what I thought rural areas were like. Some people who live in rural areas make a conscious lifestyle choice to live far away from it all. Having made a lifestyle choice, they complain that they are far away from it all—that they do not get regular transport or other things. That is precisely why they moved to the rural area. They moved there because there is no traffic, noise or pollution. All of us want to live in a remote area where everything that we need is supplied only for us and everyone else can stay away.

However, the data show that rural areas are not being depopulated: they are being repopulated. There is a higher growth in the rural population than in the urban population. As my noble friend Lord Harrison said, we should make a distinction between the two parts of the rural population. Obviously, where there is good access to towns there is prosperity and few problems. It is in the remoter parts where we have to concentrate our attention and see how we can improve the lives of people. There again, there is a tendency to exaggerate problems, just as when we discuss the National Health Service. We have to say that nurses' morale has never been lower than now. Everyone says that every time it is discussed. Similarly, people always say that rural poverty is terrible, and so on.

Although the numbers may be wrong, they do not bear out any notion of a great deal of rural poverty. The index of multiple deprivation cited in the report states that 94 per cent of people who suffer from multiple deprivation live in urban areas, 29 per cent of the population live in rural areas, and only 6 per cent of multiple-deprived people live in rural areas.

Numbers have been bandied about on earnings. Again, it turns out that in rural areas with access to cities, income is higher than in urban areas. It is only in remote areas where income is lower. But it is not that much lower. The difference is about £3,000: earnings are approximately £23,000 in remote areas, £26,000 in urban areas, and £29,000 in rural areas with access. It seems to me that we are not talking about great deprivation. What is interesting, however, is that people are choosing to move to rural areas, especially retired people and people who want to raise their children in more salubrious surroundings. Given that it is a problem arising from life choice, one ought to respond to it accordingly. The Government ought to provide services that help people enjoy their lifestyle choices, but it is not, in my view—and maybe I am being very complacent—a panic situation. It is not a story of urban deprivation or crisis. People have mentioned that there are all sorts of shortages in rural areas: affordable housing; transport; lack of broadband; lack of post offices, and so on.

Therefore, I propose that Defra—and I do not expect my noble friend to answer this—should research a proper price index for rural living. Well-being is a different matter, because obviously bluebell woods and so on add a fantastic amount to well-being. I do not begrudge those things. If people want to live there they can live there; it is their business. I would not live there. Given that there are frequent complaints about affordable housing and so on, it would be interesting to see how true this is. If there were a different price index for rural areas, as against urban areas, and remote rural areas as against accessible rural areas, perhaps we could find out if there really is a problem here. I suspect that the problems of real deprivation—such as unemployment—are to be found more in urban areas than in rural areas. Living in rural areas is a lifestyle choice and I congratulate those people who have made that choice. I do not think this is a dire problem.

Photo of Lord Bradshaw Lord Bradshaw Spokesperson in the Lords, Transport 1:12 pm, 2nd February 2006

My Lords, I challenge the analysis of the noble Lord, Lord Desai, which we have just heard. I want to speak for the people for whom living in a rural community is not a lifestyle choice; they are the people who live there now. I am not concerned about the people who decide to retire to a rural village or people who have made a lot of money elsewhere and wish to buy a house in a rural village. I am talking about the people living there now, whose fathers and grandfathers often lived there. They live in cottages and small houses which, when they come on the market, get snapped up, usually by people who want second homes and who like the country lifestyle, but retreat to urban areas.

Nor am I debating whether people in urban areas are poor: that is not the subject of today's debate. The subject is the people who live in rural areas. My analysis suggests that there are two problems to be confronted. The first is rural housing; we have heard it mentioned by several people. It is absolutely essential, in my view, that each rural district council or housing authority sets aside some area in the locality where they will produce some houses that can be afforded by people on basic wages in that area. I do not use the word affordable, because I am not certain what it means. Those houses should not be subject to any sort of right to buy. I am advocating not a system by which people can make a lot of money out of property development, but a system by which housing will remain available in the locality for people who have some association with the area and contribute to the rural economy, not people seeking second homes or who want somehow both to enjoy country life and live elsewhere.

The first thing I ask the Minister is whether he is completely satisfied with the housing policy, as it is promulgated by government to district councils; whether sufficient money is made available to them; and whether the arrangements for the purchase of land for those houses from the agricultural stock around the village are fair and likely to lead to the production of good houses for people who live there. I contrast the policy there with that for the redevelopment of farms. Often, local authorities are very generous in their interpretation of the rules about the redevelopment of farm buildings. Barn conversions are often for, again, the more affluent people, and certainly not targeted at many of the people from rural areas.

The noble Lord, Lord Harrison, is not in his place at the moment, but I was in a very rural part of Cheshire and the one new house being built there, in a country lane, was an enormous establishment for a footballer, it is rumoured. I do not begrudge the footballer his money but we seem to have our priorities for housing totally wrong. The man who looks after the cows on the farm where I stay is to retire soon and they need a new cowman. What is needed is premises where he can afford to live, not footballers who commute from Merseyside or Manchester.

The second issue I wish to raise is that of rural transport. Obviously, we do not want to see any railway lines closed. I suggest to my noble friend Lady Maddock that the excuses about health and safety as to why a train cannot call at her local station are a lot of nonsense. I hope the Rail Regulator will sort them out, because I fear that health and safety is trotted out as an excuse for not doing something when, in fact, there is no rule or regulation preventing it. So often, an excuse for not doing something is so much more convenient than doing something about it.

We are wasting a lot of money in subsidising rural bus services. I am an Oxfordshire county councillor and know how much it costs to subsidise very inadequate rural bus services. I am going to take my text from the noble Lord, Lord Brooke of Sutton Mandeville, and trespass on the enormous good will that exists in a lot of villages. I suggest to the Government that it would be a far better use of money to make a present of a minibus to each village that undertakes to operate that bus, to take people to work and college, bring them back again in the evening and provide a shopping and leisure service. I am not suggesting that any bus of this sort should go all the way to the town or city, but it should at least take people to a railway station, or a point on the main road where the network of bus services that can be sustained is provided. We would give up trying, as I know we have in many areas, to tip good money after bad in providing inadequate and very little-used rural services.

What I am suggesting in many ways builds on the work of Wheels to Work, mentioned by the noble Lord, Lord Cameron. The small initiative, which builds on the inventiveness of people living in rural areas, is far more likely to succeed. But whether it is something which can be taken through the bureaucracy and made to work is another question. I hope that the Minister will address this point when he responds to the remarks made by the noble Lord.

I want to make one last point concerning aeroplanes, an issue raised by the noble Baroness, Lady McIntosh of Hudnall. Aeroplane noise is the cause of a lot of concern in rural areas. An opportunity to do something about it will arise in the Civil Aviation Bill currently before the House. Could the Government suggest to National Air Traffic Services and the Civil Aviation Authority that a rule should be in force against routing aircraft across national parks and areas of outstanding natural beauty? If not, before long, every part of this land and every person will be subject to the noise inflicted by aircraft.

Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury 1:20 pm, 2nd February 2006

My Lords, it was with some trepidation that I agreed to take part in this debate because I have been a townie all my life. It is a bit like a non-lawyer speaking in a debate on home affairs in your Lordships' House. You take your life in your own hands. I am particularly grateful to the noble Baroness, Lady Prosser, and the noble Lord, Lord Desai, who have provided a certain amount of townie support through their participation today. I also come from a part of the country where, during my lifetime, I have seen all the basic industries collapse completely. I have a certain amount of sympathy with people living in rural areas who have also seen a considerable degree of change. I hope they will accept that change—and change not always for the better—is not something that has affected only rural Britain over the past couple of generations.

A number of noble Lords have stressed the need to take a balanced view of what is happening in rural Britain, and that it is not a two-dimensional picture. In his intervention the noble Lord, Lord Harrison, referred to two types of rural Britain. However, as the debate has progressed, it is clear that there are many sorts of rural Britain and that the economic picture overall is very far from bad. There are arguments over exactly what proportion of Britain is rural, but if we accept that it embraces around 25 per cent of the population, it is interesting to note that only 11 per cent of income support claimants come from rural areas. That gives us some idea of the balance of where multiple deprivation lies.

I turn to the complex question of economic growth in rural areas. I hope noble Lords will not mind that my speech is peppered with statistics from Yorkshire and the Humber, but it is the region I know best. Economic growth over the coming decade for rural Yorkshire is estimated at 27 per cent compared with 31 per cent for the urban areas. One's first response may be that of slight concern. However, those rural areas embrace the Yorkshire Dales, which are extremely sensitive environmentally and where the pressure of people, whether living in the area or visiting it, can threaten the fragile ecosystem. That demonstrates how the question of economic growth in rural areas is complex: while economic growth is necessary, it is not as straightforward as it is in urban areas suffering, say, from a major deficit of aggregate demand.

However, a common theme of today's debate is that there are rural areas in which more needs to be done in order to improve the economic infrastructure and to promote sustainability. I shall concentrate on the kind of innovation we need to see. When we refer to industry and the economy in general, we are talking about innovation. It seems to me that the only way in which rural areas will prosper is by adopting the same spirit in their approach to economic development. Inevitably one starts with agriculture, and here I agree strongly with the noble Earl, Lord Peel, and his remark that farmers and landowners, while not numerically forming the largest proportion of the economy, are responsible for maintaining what we see when we look at rural Britain. Given that, the regime within which they operate is hugely important. Both the noble Earl and the noble Lord, Lord Chorley, raised issues about the way the restructuring of the CAP is to work. There seems to be a considerable degree of confusion in this area and I look forward to the Minister's attempt to clear it up.

I also agree strongly with my noble friend Lord Livsey on the question of farm gate prices and the fact that there has been a transfer of surplus, as it were, from the farmer to the supermarkets. This is a difficult issue to resolve without over-regulation, but my noble friend's suggestions on the role of the OFT are valid.

There is a great deal of innovation in the agricultural sector. Over recent months I have read of four initiatives that demonstrate the interesting and positive ways in which the sector is developing. Given the lack of guaranteed prices, it is good to note that the financial markets, and LIFFE in particular, are offering an alternative and relatively low-cost way of ensuring prices for grain. That is a sensible, market-based approach to change. Turning to the changes in the EU sugar regime, I admire the way people are now looking at the viability of bioethanol. That too is a positive response to change and one that helps to build on the sustainability agenda in more than one way. Farmers are increasingly specialising in organic produce which they can sell into domestic markets. However, farmers are having to learn new skills in the areas of marketing and packaging. In the past, they did not need to worry about those elements. Finally, the RDA in Yorkshire, through its food processing cluster approach, is looking at how to source more food within the region to be processed locally. That is an encouraging activity and another example of positive innovation.

We have heard a lot about the problems of transport and, again, there are interesting developments in this area. Some rural railways have been opened up as community enterprises and provide small examples of how innovation has worked well. The Wheels to Work programme mentioned by the noble Lord, Lord Cameron, is, I believe, receiving financial support from Yorkshire Forward. It is a good, low- cost proposal. I also support my noble friend Lord Bradshaw in his remarks about minibus services versus fixed bus routes. Another innovation which I know operates in some urban areas—my mother is a beneficiary of it—and builds on the scheme described by my noble friend is a system whereby retired people run what is in effect a low-cost taxi service providing transport for other retired people when they want to visit friends, attend hospital appointments or do their shopping. That is an innovative approach to a major problem which avoids the excessive bureaucracy that often accompanies a more formal system.

We have heard a lot about various new sources of employment in rural areas. It is fascinating to note that the small and medium-sized enterprise sector is so buoyant and that, as a proportion of the population, there are more self-employed people in rural areas than in urban ones. I suspect that most of us do not expect this area of the economy to be strongest in the countryside.

Many noble Lords have spoken of the need to extend broadband coverage. The roll-out of broadband is growing, but much still has to be done. This is another area in which the regional development agencies are in a good position to take the lead. Further, much job development around our historic market towns should take place for reasons of sustainability and the environment. Many of our market towns have had a rough time over recent decades. I particularly congratulate Yorkshire Forward on its Renaissance Market Towns initiative, a 10-year programme addressing development in market towns in the same way that government has looked at urban redevelopment; that is, taking the long-term view and considering holistically the issues of property, skills and so forth, thus raising the whole area over the longer term. In terms of ensuring that market towns and villages are places where people want to live, this is a good approach, especially in its emphasis on making life more satisfactory for everyone. It addresses cultural life as described by the noble Baroness, Lady McIntosh, and community life as described by the noble Lord, Lord Brooke. Both are hugely important.

On housing, there seems to be a consensus among those who have spoken that smaller, incremental developments in small rural communities is a way forward.

On delivery, at the moment there is a muddle as to how rural policy is delivered. Looking at the plethora of initiatives that have to fit into regional agendas on rural policy, the whole thing is a mess: Defra pathfinders, local enterprise initiatives, local area agreements and city regions. The latter has not come from the regions themselves, but is an imposed response of abject failure by the Government to sell their regional agenda. All these things leave a major problem for regional development agencies, which are doing a good job on balance of attempting to grapple with rural problems. They are trying to work with a framework set by government that simply does not meet their needs.

On balance, there is much positive news to have come out of today's debate about the future of rural Britain. The Government could be making a much more positive contribution, not necessarily by spending more, but by being more efficient and competent and by giving rural areas more freedom to develop in ways that best suit them rather than Whitehall. If the Government can get these things right, I believe that the prospects for our rural economy can be better than at any time in a generation.

Photo of Baroness Byford Baroness Byford Shadow Minister (Food & Rural Affairs), Environment, Food & Rural Affairs 1:31 pm, 2nd February 2006

My Lords, I begin by thanking the noble Baroness, Lady Miller of Chilthorne Domer, for giving us the opportunity to have the debate on the state of the economy in the rural areas of the United Kingdom. I am sure that she would say that she has been rewarded with a wonderful cross-section of contributions.

We have gone from considering the community spirit to sparsity funding. We have talked about the arts, the support that local communities give, opportunities and the practical problems of gangmasters. As someone involved with Concordia, which helps to bring people in, I appreciate that particular contribution. We have talked about the huge changes taking place, police reforms, sparsity funding, tourism and young entrepreneurs. We have also had an interesting contribution from the noble Baroness, Lady Maddock, about the very rural and the remoteness of some areas of the countryside, and from the noble Lord, Lord Desai, who challenged those of us who live and work there; we also covered the importance of rural housing and of transport generally. It has been a worthwhile debate and I congratulate the noble Baroness.

The state of the rural economy varies from place to place and from activity to activity. In many places tourism is good at providing a living for those who work in hotels, restaurants and visitors' attractions, and on farms. Sadly, however, there are areas suffering from the counter-attraction of cheap air fares to the Mediterranean, particularly in spring and autumn. It is disheartening that it is cheaper for a family of four to fly to some European destination than it is to put enough fuel in the car to go from London to Cornwall and back. The reason for that is the lack of fuel tax on aviation fuel, compared with car transport. There is also the pollution caused and the night-time flying that afflicts several of our villages.

As other noble Lords have indicated, agricultural incomes have been at a low for a number of years. It is not easy to predict area by area or region by region what will happen under the new single farm payment system, but the recent 2005 Farm Business Survey shows that 16 per cent of farm households have an income of less than £10,000. Total income from farming is estimated to have fallen in 2005 by 11.4 per cent in real terms. If some of those who have jobs elsewhere had a fall of that degree, they would be very worried about their incomes.

By diversification farmers earn extra living and income—by renting out production units in former farm buildings, by adding value to agricultural products, by using their land for activities and by encouraging people to come and visit their farms. Many have developed, as the noble Lord, Lord Cameron, said, high-tech, specialist small businesses. Those are to be welcomed.

However, in some areas village retail has contracted. The growth of supermarkets has put pressure on small grocery and other shops. Whereas in the past you were able to buy fresh meat or fresh bread from a number of villages, in some parts that is now becoming difficult. The only opportunity one gets to buy those, along with homemade cakes, pots of jam, home-grown vegetables and local, high-quality products, is usually at farmers' markets.

Larger villages have a GP's surgery, even if some only have them open on one or two days a week. They also have a number of pubs—sadly, many have closed—and some specialist shops have survived in some areas.

As my noble friend Lord Brooke reflected, in many villages the community spirit is there. That is perhaps highlighted in the contribution of the church and, if I might link it in the same way, the post office, which are centres of activity. I was pleased to hear the example of the noble Lord, Lord Brooke. In our local village we managed to add a meeting room to the back of our church, which took a lot of doing, but was worth it and people supported it.

The position of postmasters and sub-postmasters and postmistresses who have tried to add groceries, vegetables and other things to their shops is fairly precarious. There are some 14,500 post offices in the United Kingdom today, and 8,000 of those are in rural areas. They belong with one or two of the other small food chain shops, which work from the arrival of newspapers in the morning before 6 until 8 or later in the evening. The reward for those efforts is limited—the income is small. But there is still competition from big business and big banking, which wish to nestle in on what they are providing.

As recently as 22 September last year, the Under-Secretary of State, Barry Gardiner, confirmed that the Government understood the social value of the post office network. He accepts that the Government must improve the lot of the most disadvantaged, who rely on post office services. Nevertheless, he confirmed that the current special payment scheme will end in 2008.

I would briefly like to highlight one of the problems with regard to the post office. There has been great pressure from the Government for people to have their payment of benefits paid through banks rather than through post offices. I can speak from personal experience, because I recently followed that path myself. There is pressure put on you at every stage. The response to my written letters confirmed that the Government would much prefer to pay into your bank. All I can do in the time allocated is to say that this is another wedge that will stop the footfall of people who used to go their post offices to claim benefits. That will have greater spin-off effects, to which the Government need to give serious consideration.

The Government are failing many people who live and work in the rural community. They are without a long-term strategy for farming and appear to be unconcerned about United Kingdom food security—the Secretary of State has stated consistently that domestic self-sufficiency is not needed or desirable. They want to drive down the cost of food, but seem unconcerned about the miles that food is transported or the pollution caused and they do not acknowledge the increased CO2 emissions, which are a consequence of that decision. My noble friend Lord Peel very sensibly raised that issue.

The Government also fail to seek derogation from—or to oppose—legislation that keeps coming from Europe. They cut back on the funding of important projects, recently and regrettably including the cut back of the UK wildlife research centres. We heard yesterday how the national park in the Lake District was to receive a below-inflation grant settlement. But chairmen of the English park authorities warned Defra last month that the spending standstill would result in an "unacceptable reduction" in the ability of the parks to meet those Government targets for sustainable development. We do not have joined-up government here.

On the positive side, though—the Minister will be glad to hear me being positive—he announced earlier this week that the bulk of the single farm payments would begin in February and be completed in March. I ask him again today, because he did not answer me yesterday: what percentage of farms will that cover? How many farms? How many farmers whose claims are yet to be dealt with will be left outside that bulk? What happens to those who are still struggling to get the RPA to respond to their letters and deal with applications? I wrote to the Minister on 12 January this year, bringing to his attention two such cases. I am sad to say I have not yet heard from him. I hope a response will come quickly.

I would also like to correct the Minister when he said the other day that our party welcomed the changes proposed to the single farm payment. He was not the Minister at the time. I urge him to look back at Hansard when we heard the Statement. He will realise that I clearly raised my concerns on the situation between English, Welsh and Scottish farmers, let alone farmers overseas.

Many people have touched on affordable housing, which is critical. I share many of the comments of the noble Lord, Lord Bradshaw, on that. But again I should like to be positive. I will turn to wider issues. I welcome the Government's U-turn in not closing 100 cottage hospitals, which are of vital importance to local communities. However, I urge the Government to think through their new proposals for primary care trusts, where there is already great pressure on GPs to provide the services they are now required to.

The Government keep producing new strategies—some welcome, some questionable—but, whatever the pressure, they pass down the delivery to local authorities. The trouble with national funding is that it often does not follow these new strategies, and the pressure on local authorities forces them to raise their council taxes. The Government need to give this some serious thought, and accept that those responsibilities they pass down must be fully funded. I too am concerned about the suggestion that the police force should amalgamate into bigger and bigger units, because very rural areas will be jeopardised.

I am a minute over my time, and I apologise. Again, I thank the noble Baroness, Lady Miller. It has been an excellent debate.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy) 1:43 pm, 2nd February 2006

My Lords, I agree with what the noble Baroness has just said: it has been an excellent debate. It probably could not take place anywhere else within Parliament in such an able way. There is a huge amount of expertise in your Lordships' House and we have heard a great deal of it today. If I have a criticism, I would say there was a degree of negativity in the debate, though not from the noble Baroness, Lady Miller. There was a little too much on the negative side and not enough about the positive, and I regret that. It is easy to be negative and to talk down the good things that are happening in the countryside and in farming. Sometimes the talking down becomes self-fulfilling.

I have no chance of answering all the questions that were asked of me during this debate. If I were to do so we would be here at the weekend. I hope to touch on some of the issues in what I have to say, and if there are any outstanding matters of great importance to noble Lords, I will write.

We have been reminded today of some of the great challenges that face people and businesses in our rural communities. These challenges should not be underestimated, but, as I have just said, we must not paint a picture of doom and gloom, because the facts simply do not bear that out. The economy of rural areas is in many ways in a strong position, in absolute terms and compared to urban areas. I want to mention a few facts to demonstrate this. Unemployment is down across England, and stands at less than 3 per cent in rural areas compared to around 4 per cent in urban areas.

My next fact is one that the noble Baroness may contradict: average earnings in rural areas are higher than those in urban areas. The figures I have from the Commission for Rural Communities report State of the Countryside 2005 suggest that the average income in urban areas is £29,189 and some pence, and in rural areas between £30,630 and £36,787. In other words, it may be close, but rural areas clearly have the advantage. In some rural areas, particularly those close to our major cities, average earnings are at the very highest end of the spectrum. On the whole the rural workforce is more highly skilled, with an above-average number of graduates too. The noble Lord, Lord Newby, asked about broadband, as did my noble friend Lady McIntosh. The figure for broadband availability in rural areas is now 99.3 per cent.

It is important, though, to keep the story of success in mind when we come to focus on what are genuinely difficult issues and problem areas. What are the challenges? In some areas there continues to be a preponderance of low-paid jobs; areas such as south Shropshire, where more than 60 per cent of employees earned below two-thirds of the median English wage rate in 2004—that is, less than £6.23 an hour. While one cannot draw a simple causal link, it is interesting to note that south Shropshire also has the highest proportion of employees working in farming, more than 50 per cent of those in employment. I can see the noble Lord, Lord Biffen, nodding his head.

Other areas are sparsely populated—the noble Baroness, Lady Maddock, spoke about a sparsely populated part of the country—or are far from urban areas and their markets, and have to overcome the barriers posed by distance. We will continue to ensure that Government policy does not exclude these areas from enjoying the fruits of economic growth. Many noble Lords raised the issues facing our farming community, which is such an essential part of our countryside. It does not have much to do with the proportion of people who work in farming; anyone who goes to our countryside knows that it is a farm-made countryside.

In approaching these challenges, sustainable development must be at the heart of our strategy. That is simple common sense in rural communities. Economic, social and environmental issues are inseparable. Many rural businesses, whether farming, tourism or lifestyle businesses, depend directly on the quality of the natural environment. Equally, access to services and community cohesion underpin the development of new and existing businesses. That is why the Rural Strategy 2004 sets out our three linked priorities for rural policy: first, economic and social regeneration; secondly, social justice, fair access to services and affordable housing; and thirdly, valuing the countryside as rural England's and, dare I say it, rural Wales's greatest asset.

Perhaps farming illustrates more than any other industry the importance of an approach to the rural economy based on sustainable development. Although farming is no longer the dominant economic activity in the countryside—the noble Lord, Lord Cameron, described it as no longer the backbone of the countryside—it remains at the heart of many rural communities, and its activity impacts on a vast area of our countryside. I firmly believe that there is a bright future for farming in this country. Farming's future will be different from its past, but a bright future exists. Through our Strategy for Sustainable Farming and Food—I was slightly surprised that the noble Baroness, Lady Byford, said that we had no long-term strategy for farming—we will continue to provide the support that farming needs through the dramatic current period of change. The strategy identifies how the Government will work with the whole of the food chain—and that means producers too—to secure a sustainable future for English farming and food as viable industries contributing to a better environment and healthy and prosperous communities. Part of that approach comprises the whole farm approach that has been referred to and the farm advisory service— both of which were mentioned by my noble friend Lord Harrison.

The implementation of CAP reform and the single payment scheme in particular are integral to our vision of sustainable farming. Subsidy payments have been decoupled from production so that farmers are now free to produce in response to the market rather than what subsidies dictate. That should have happened years ago. I well understand that a successful and timely start to payments under the single payment scheme is the major preoccupation in the farming industry at the present time. Noble Lords will not be surprised to hear that it is for me as well. The announcement I made on Tuesday that full payments will start before the end of February, with the bulk made in March, will, I hope, provide some reassurance on the issue. The noble Baroness knows that I cannot answer her question accurately on how many payments will be made by the end of February or by the end of March. I cannot do that because we are still in the process of making sure that those payments are made.

All this is designed for a purpose—to lead to an industry in which farmers are rewarded for enterprise and are able to farm with the grain of the market. But economic success in this day and age must, of course, go hand in hand with environmental quality. The countryside that we see today, and which we all value so highly, has, as I said, been shaped by farming practices over generations. That is why I believe that public money should reward farmers for the landscape and environmental benefits which they can provide.

Alongside the reformed CAP, the new environmental stewardship scheme further rewards the delivery of additional environmental benefits beyond cross-compliance through higher standards of environmental management. Through such measures we are supporting the crucial role that the farming community plays not only in producing safe, nutritious food—I put on record that it is our view that the farming industry plays a vital part in producing a large amount of the food that we eat—but also in protecting and enhancing our landscape, wildlife, soils, water and other natural resources. In that way we can look to a more secure future for the farming industry and a better environment for all of us to enjoy.

We have had mention of the uplands. The noble Lord, Lord Chorley, and others mentioned the problems that those farming areas have. I am happy to tell the noble Lord that there will be a public consultation—as he wished—on how we should progress with regard to the uplands. The present scheme ends at the end of 2006. We look forward to hearing what he has to say. We understand the important role that that part of the country plays in England.

Looking beyond farming for a moment—

Photo of Earl Peel Earl Peel Conservative

My Lords, from what the Minister has said, can I assume that he regards the single farm payment as a payment made to farmers in exchange for providing good environmental and animal welfare, and that it is not a subsidy? That is a very important question to which the farming community would be very interested to know the answer.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, the noble Earl cannot assume that. It is a payment for public goods but it is also a subsidy from government. If I had to choose a word for it, it would be a "subsidy". It is based—thank goodness, not in England—solely on historic subsidy. In Wales and Scotland it is based 100 per cent on historic subsidy—the years 2000 to 2002 being the crucial years. In England we have been a little more farsighted. We already have a flat rate based on land held. Frankly, it is a question of semantics whether you call it a payment or a subsidy. When the Government are paying out £1.7 billion or thereabouts, one can still call it a subsidy.

Photo of Earl Peel Earl Peel Conservative

My Lords, are agri-environment schemes subsidies? Is that what the noble Lord is saying?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

No, my Lords, I am not. I have eight more minutes in which to speak. I am very happy to debate this with the noble Earl on another occasion.

Looking beyond farming, our strategy is to minimise regulatory burdens and at the same time provide support to help enterprise flourish. We are working with England's regional development agencies to increase their activity in support of the economy in rural areas. This ensures a strategic economic development within each region, considering the needs of both rural and urban businesses, which are surprisingly often similar. We are ensuring that money is directed to areas which need it most. This year the regional development agencies have received £72 million from Defra. They will receive a similar amount in each of the next two years. We have successfully engaged them as key strategic partners in the delivery of our aims for rural areas.

As I noted earlier, in rural areas unemployment tends to be low. However, many jobs are low skill and low paid or seasonal. Jobs in the food industry and tourism are important examples. Such sectors are important in rural areas. With RDAs and sector skills councils, we are doing our best to address low skill level jobs, and we are working with a range of partners to develop a framework which will provide a greater career structure—which is one of the problems—to jobs in the land-based sector. We are also working to ensure that the potential of the tourism industry is more fully exploited.

When I talk about work in the country, I have to address the comments that my noble friend Lady Prosser made in relation to the gangmaster scandal, which was shown most blatantly in the tragedy which occurred. She acknowledged that the Government had acted quickly and firmly to put an Act on the statute book, with the help of other political parties. We have some issues within government about who should be included and who should not. I refer in particular to the field of processing. We are determined to tackle gangmasters who act illegally and exploit their workers. We are currently considering the outcome of two consultations on the draft exclusion regulations. The main agricultural exclusions proposed in the first consultation are largely acceptable, subject to some redrafting. The Government hope to be in a position to announce the outcome of both consultations by the middle of this month. I confirm that the GLA is on track to commence licensing from April 2006. I am very grateful for what my noble friend had to say on that very important issue.

I have mentioned broadband. Commuting can also be reduced by ensuring that a range of housing is available in rural areas. The availability of affordable housing for both rent and purchase—mentioned by the noble Baroness, Lady Miller, and many other speakers today—is vital to a prosperous and vivacious countryside, helping to support diverse communities which are socially and economically vibrant and inclusive. That is why in July this year—as we promised in our manifesto—the Affordable Rural Housing Commission was launched to identify ways of improving access to affordable housing for people in rural areas. Our work on affordable housing will contribute to ensuring that housing is available at all levels of the market and provide a full range of local labour supply, allowing businesses of all sizes to change and develop.

The commission will consider the evidence and reach a consensus on the relevant issues with regard to affordable housing needs in rural areas. This is real progress, but noble Lords will quite rightly want to wait and see what the results are. Assistance to the rural economy is provided by Defra through funding support under the England Rural Development Programme, which is the, by now famous, Pillar 2 of the CAP. This programme directly contributes to all three strands of sustainability. The current programme has provided £1 billion to farmers for more effective environmental management of their land through the agri-environment schemes. The new environmental stewardship scheme, launched in March last year, builds on the success of the environmental sensitive area scheme and other schemes. More than 65,000 applications packs have been issued, and it currently has more than 12,000 live arrangements in place, covering nearly 1.4 million hectares under agreement.

In addition, assistance of more than £200 million will have been provided to the rural economy through the programme's project-based schemes: the rural enterprise scheme, the vocational training scheme and the processing and marketing grants. While much of this funding is directed towards agriculture, a proportion is set aside for wider village and community activities to deliver sustainable local enterprises, including social enterprises that we have heard about today at first hand, such as community shops and post offices. The rural enterprise scheme is the main route through which Defra channels assistance to farmers to diversify their agricultural business. Nearly £46 million has been committed from the scheme to help farmers diversify. While these grants provide support for individual farm businesses, there are also gains for the wider rural economy. By way of example, a farm shop and café funded through the scheme has been so popular that it has expanded, creating more local jobs, providing outlets for other local food producers and is now a venue where local people meet.

The new EU rural development regulation agreed last September provides the basis for funding the successor programme. I have not got time to go into the details of where we are in terms of that funding. Those who were present last night will know that we discussed this issue during the debate on Amendment No. 203 to the Natural Environment and Rural Communities Bill. Noble Lords can see in Hansard what I said about the state of play as it is now. The House will want to know more and there is an Oral Question on this on Tuesday. I will also write to the noble Baroness who raised this with the state of play as it is now.

I have to finish in the course of the next minute or two. At a more local level, we want to continue to provide support for local village shops. The Government have assisted local services by extending mandatory rate relief at 50 per cent to include sole-village public houses, petrol stations and village food shops under the village shops scheme. We have issued planning guidance advising local authorities to adopt a positive approach to planning proposals designed to improve the viability, accessibility or community value of existing services and facilities. Taken together, the action I have outlined demonstrates this Government's strong and continuing commitment to a vibrant and diverse rural economy in England. We have to build on the success and prosperity that is enjoyed by many rural communities, but we must not be complacent about the significant challenges that face farming and other rural businesses and the communities they serve. That is why we will continue to make supporting successful rural enterprise a high priority and why we will continue to invest public resources to reflect this commitment. I thank the noble Baroness again for initiating this debate.

Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Spokesperson in the Lords, Environment, Food & Rural Affairs 2:04 pm, 2nd February 2006

My Lords, I thank all noble Lords who have spoken. The breadth, depth and quality of the contributions have given enormous food for thought. I shall certainly enjoy reading them. I hope the noble Lord, Lord Harrison, takes the opportunity to send a copy of Hansard to the producers of "The Archers" so that they may see the great example given by the noble Baroness, Lady McIntosh of Hudnall, of local sourcing for an entire wedding. I am glad the noble Lord, Lord Brooke of Sutton Mandeville, was able not only to give his own terrific contribution, but to fill in for the right reverend Prelates, from whose presence we were not benefiting. I warmly thank all noble Lords who have spoken and the Minister for his reply to us. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.