My Lords, like the noble Lord, Lord Plumb, my comments principally concern agriculture and its potential to contribute to the economic stability and growth referred to in Her Majesty’s humble Address. I declare an interest as a farmer in Northumberland, and my other interests are listed in my declaration.
It is a matter of deep concern that the farming and food sector has huge potential to contribute to economic recovery and be a significant driver in building on the economic growth that we have seen to date, but the potential is not being realised for a number of reasons. The first is that almost all commodity prices are extremely depressed at the present time, and unless circumstances change the farming sector will experience another very difficult year financially.
Prices are depressed for a number of reasons. The absence of extreme weather events globally has led to increased production, and as a consequence prices are lower. The strength of sterling has also impacted on our domestic market prices, and continuing price wars by retailers trying to price match the discounters is devaluing the price of food. Margins right across the food chain are being eroded and farmers sit where the buck stops. It is not a happy picture.
Food price deflation is a major contributor to the current consumer prices index, and milk is a great example of a product being sold way below the cost of production. In the short term this may be good news for consumers, but the longer this continues the more that confidence is eroded within the farming community and long-term investment decisions are being questioned. I was, however, delighted that the Government announced in the last Budget that farmers would benefit from five-year tax averaging. This is very welcome.
Secondly, as the noble Lord, Lord Plumb, has mentioned, at present farmers are totally preoccupied with filling in the BPS application forms. This is a time-consuming, bureaucratic nightmare. As chair of the Better Regulation Executive, I was very impressed with the performance of Defra as a department in reducing regulatory burdens last year and delivering on the one-in, two-out policy during the last Parliament.
I complimented the Permanent Secretary on doing so well, but we now risk going into reverse, and there is a fear that through the manual labour required to process these forms by the Rural Payments Agency due to the failure of IT systems to be fit for purpose, payments later this year might be delayed, which in the light of the price pressures I mentioned earlier could have devastating consequences for farmers’ cash flow. This is contributing to the current uncertainty.
Finally, we are suffering from a lack of investment in scientific research and skills both by government and the sector over the past 25 years or so. The noble Lord, Lord Plumb, also mentioned this. Our productivity and therefore our competitiveness has fallen, and this is not good news. Poorly thought through decisions taken during the 1990s to cut back on investment in science are having an impact today. Yields have plateaued and our productivity has fallen. We used to lead the world, and we need to regain that position. Thankfully, the coalition Government recognised the urgency of this and committed additional funding through the agri-tech strategy, which is hugely welcome.
It is now essential that these funds are targeted to deliver long-term improvements, and it is encouraging that the farming and food industry, through its various bodies and institutions, is becoming engaged in the process. I am involved in a number of these, which include those who see the need to professionalise our sector through skills development, the recognition of qualifications and the promotion of agriculture and its extended sectors as an exciting career opportunity. The noble Baroness, Lady Byford, and I are patrons of Landex, the land-based college sector organisation. Student numbers studying agriculture have doubled over the past five years, so interest is definitely growing.
Agriculture is a long-term business. Short-term pragmatic decisions can have long-term consequences. I am delighted that, as I understand it, Defra has decided to take a long-term strategic look at what needs to be done with regard to policy development. As has already been mentioned in this debate, this is now long overdue. If it is true, it is welcome. As some Peers are aware, I was involved in the last strategic review in 2002. If we are to stem the decline in self-sufficiency in food production, now at around 60% and dropping every year, action has to be taken. Global trading conditions are important to this, and the current EU-US TTIP negotiations are one example of making sure that British food production is given the opportunity to compete. Too often our competitive position is undermined by imported product that is not subject to the same legislative standards and costs but has free access to our markets. Of course I support the freeing up of international trade, but resolving non-trade issues that undermine our competitiveness is crucial to our success.
I should like to refer to one other issue that is an important element of Her Majesty’s gracious Speech. The Government are planning to devolve more powers to cities and city regions. I have to confess that I have failed to define what a city region is and where it starts and ends. I know that if you live in Upper Coquetdale, where I was born, you feel a very long way from a city region. Even a northern powerhouse looks a distance from Coquetdale.
It is vital that rural areas of Britain are not neglected in the Government’s determination to focus on cities. The absence of any formal rural proofing of this element of government policy is a real concern. The potential for rural areas to contribute to economic growth is huge and in many areas untapped. I asked for confirmation previously in your Lordships’ House that the LEPS—the local enterprise partnerships—are monitored on their inclusion of rural areas in their economic strategic plans. We need inclusive plans that encourage and promote opportunities for an expansion of the so-called rural economy.
An issue about which I have become increasingly concerned is the silo approach by government agencies, NGOs, local authorities and even government departments in the development of strategy and the delivery of their responsibilities. If the remote areas of Britain, with their patchwork of family farms and fragile village communities living in the main in river catchments, are to be saved from extinction, all these bodies need to work together. That includes the local authorities, the Environment Agency, Natural England, national parks, the Forestry Commission and the LEPs, to mention a few; I could go on. These upper-river catchment areas throughout Britain need one sustainable joint plan that addresses the specific issues that are relevant to each of these vulnerable communities, so that important skills are retained, schools and services are maintained, and employment increased because access to high-speed broadband is a given. We are not maximising the benefits of the current public spend by the fragmented nature of public-policy delivery.
I do hope that these issues will be addressed by the Minister.