[Mr. Peter Atkinson in the Chair] — Rural Economy

– in Westminster Hall at 12:00 am on 24th March 2009.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Watts.)

Photo of James Gray James Gray Conservative, North Wiltshire 9:30 am, 24th March 2009

Although I am glad to have this important opportunity to discuss the rural economy as it faces the dreadful recession that our nation is collectively facing, the title of the debate is, to some limited degree, misleading in the sense that I am not sure that an absolutely clear, easily definable difference can be spotted between the rural economy and the urban economy, so, to some degree, it is a slightly false dichotomy and even risks being, in a way, patronising to our rural communities. It seems to indicate that the rural economy is all about farming, food production, tourism and rural crafts—that kind of thing—whereas by far the largest part of employment in the countryside today is manufacturing. Therefore, to a significant degree, the rural and urban economies are similar. I will come back to the stricter part of the rural economy in a moment.

I am glad to see that a large number of my hon. Friends have joined me. A second Liberal Democrat Member has arrived, so I am glad about that, too. There are one or two Labour Members present as well. This is a good turn-out to discuss these important matters.

Without being unduly constituency-minded, I thought I might use some examples from North Wiltshire, which is predominantly rural in terms of acreage—although most of the people tend to live in market towns and villages—to show how the national recession is affecting rural areas. North Wiltshire is not as rural as some parts of Cornwall or other parts of the west country, or other parts of England; none the less it counts as a rural or semi-rural constituency. Therefore our experience in North Wiltshire may be indicative of the kind of thing that is happening elsewhere.

Many people in my constituency who live in the depths of the countryside are deeply concerned about the announcement yesterday that Honda in Swindon is to cut its production and wages further and will be laying more people off. Who knows what the future of Honda is? It is astonishing to see the biggest employer in Swindon—Honda—shut down entirely. No cars are being produced at all until May. Many of the people in my constituency who work there are concerned about what will happen after May. Will we see an improvement?

Dolby Systems, the computer people in Wootton Bassett, chopped 70 people recently; the Faccenda chicken factory in Sutton Benger closed and lost 200 people; Hygrade meats in Chippenham lost 750 jobs; and the St. Ivel dairy in Wootton Bassett closed, with 250 job losses. It is only some 10 years ago—it is history, in a way—that James Dyson moved his manufacturing capability offshore, leaving Malmesbury in my constituency and going to Indonesia, saying that it was impossible to manufacture vacuum cleaners in a rural area such as mine and preferring Indonesia instead. The net result of all that is that, between June last year and January the number of jobseeker's allowance claimants in Wiltshire jumped from just under 3,000 to just over 5,000. In six months that figure has nearly, but not quite, doubled and is showing every sign of growing further in the months to come.

Business confidence, which is crucial to the whole thing, has collapsed. Some 66 per cent. of businesses in my area expect turnover and profits to be down in 2009, 50 per cent. are experiencing worsening cash flow and 33 per cent. expect to have reduced their staffing levels further by the end of the year. Whether rural or urban, those businesses are symptomatic of what is happening elsewhere in the economy, both in towns and in the countryside.

Photo of Angela Watkinson Angela Watkinson Opposition Whip (Commons)

My hon. Friend will be aware that even London constituencies have rural parts. Upminster, for example, is 50 per cent. green belt and has farms on its border, where it has a boundary with rural Essex. The local economy depends on many very small businesses that are struggling in the current downturn.

Photo of James Gray James Gray Conservative, North Wiltshire

My hon. Friend is right. The difference between rural and urban is often blurred, as it is in her constituency. I am glad that, as she inspired me to ask for this debate this morning, she has taken the trouble to come along and contribute to it. I hope that the decimation of the businesses in her constituency is less bad than she is predicting at the moment.

The figures being produced by the Office for National Statistics in respect of elsewhere in rural England are grave: they show that there is more economic inactivity in rural than urban areas and that unemployment is growing faster in rural than urban areas. Some 22 per cent. of firms surveyed in Cumbria have reduced staffing levels and 11 per cent. have made redundancies. The number of people applying for the JSA in Craven has increased by 66 per cent. In the constituency of my right hon. Friend Mr. Hague, the shadow Foreign Secretary, which is probably one of the most prosperous, leafy areas in England and which has one of the largest Conservative majorities of any constituency, the number applying for the JSA has increased by 67 per cent.—just look at the increased unemployment in the most leafy part of England.

I am most grateful to the Country Land and Business Association, and particularly to John Mortimer of the south-west region who has done a good job in helping me to prepare for today's debate. He says that there has been a 106 per cent. increase in redundancies in rural areas compared with 57 per cent. in urban areas. Of course, in rural areas the sparser employment patterns mean that job losses are felt even more keenly. In a village with a small number of jobs a relatively small number of redundancies feels like an enormous number compared with an urban area where even a large number might disappear into the background, as it were.

Stuart Burgess of the Commission for Rural Communities—the excellent rural tsar—has said it all in his latest report called "Rural Economies Recession Intelligence":

"Communities and businesses across rural England face increasing deterioration—business closures, job losses, reduced working, lower consumer demand, and difficulty in securing bank funds. Bad news far outweighs the good."

If that is what the rural tsar appointed by the Prime Minister is saying, he cannot be accused of exaggerating the case.

Before the Minister leaps to her feet and says, "Never mind all that, farming is doing remarkably well," I remind her that people are saying that it is doing well. The Minister is shaking her head, so I hope that she will not say that. However, there are people who would say that farming is doing remarkably well. By comparison with the last 10 desperate years, farming is slightly better than it was. Nevertheless, the Minister should remember that input prices mean that arable profitability is now looking shaky, that milk is some 8 per cent. down from its high last year and that the average hill farmer's income is £15,000, which is less than the Government's official threshold for poverty—so they are below the Government's poverty level. Lowland farmers are at about £20,000 profitability, which is only just above the Government's poverty level. So farming may be off its low point, but it is by no means profitable.

There is a worrying development in people's purchasing habits, and I plead guilty in that regard. My income has not changed at all due to the credit crunch—as Members of Parliament we are paid precisely the same as we were before all this happened—but I have stopped going to Waitrose; I am going to Lidl and Aldi. It is all in the mind and there is no reason to do that, but I am doing it. Lidl and Aldi are reporting booming profits and are doing incredibly well, but they mainly buy their food from overseas. That is worrying for the future.

Photo of Andrew Murrison Andrew Murrison Shadow Minister (Defence)

I expect that my hon. Friend will, like me, be distressed by the state of the British pork industry, which provides a good example of where imports have increased dramatically in recent years thanks to the Government's maladroit handling of differential animal welfare standards. Does he agree that one way around that might be to improve labelling so that people at least have the choice to buy British pork, which is reared to extremely high welfare standards, because at the moment that are unable to do so as they do not know what they are buying?

Photo of James Gray James Gray Conservative, North Wiltshire

My hon. Friend and parliamentary neighbour makes a good point. He could easily have quoted from the Select Committee on Environment, Food and Rural Affairs inquiry into the pig industry, which, among other things, concluded that it is simply absurd that pork sausages, for example, can be labelled "Made in Britain", when in fact they come entirely from Danish pigs. He makes a good point. The situation that he mentions will make farming ever worse. We are merely exporting our high standards of animal welfare elsewhere. We buy our chickens from Thailand and our beef predominantly from South America.

Photo of Jane Kennedy Jane Kennedy Minister of State (Farming and the Environment), Department for Environment, Food and Rural Affairs

I want to bring the hon. Gentleman back to the subject of where he shops, because I wonder when he last shopped in Aldi. Far be it from me to champion a particular supermarket—I shop in many—but my experience is that one can buy British products, apart from bacon, in Aldi if one is prepared to look for them and be discerning.

Photo of James Gray James Gray Conservative, North Wiltshire

The Minister is right. I last shopped at Aldi last Saturday. There is a good new Aldi, and also a Lidl, in Melksham, which is in the constituency of my parliamentary neighbour, my right hon. and learned Friend Mr. Ancram, 2 miles from my house. My other half religiously sends me to Aldi and Lidl in Melksham, despite not having a reason to do so because we could happily afford to go to Waitrose, and should be going to the local farm shops. I shall tell her that when I next speak to her, because we have three or four local farm shops, and we should pay that little extra to support local farmers. Lidl in Melksham will not see me coming through its door as a result of this debate, so I am grateful for the Minister's intervention on that front.

What about the other great urban myth that prosperous rural people live in quiet, prosperous, comfortable market towns? The Commission for Rural Communities—bless it—says that unemployment in market towns is higher than ever before and that the recession is taking a stronger grip there than elsewhere. The Daily Telegraph recently reported that one in six high street shops will be empty by the end of 2009, and that "retail deserts" are a real risk in most of our semi-urban, semi-rural constituencies. Ofcom recently announced that 15 per cent. of households in the country—the vast bulk of them being in rural areas—have no access to broadband. My constituency office cannot have broadband, which makes it difficult to operate, and small businesses, which are the backbone and the life blood of our rural areas, depend on broadband, and if they cannot have it, they cannot compete with bigger, urban-based businesses.

Compounding all that is the historic inequality of rural areas' access to essential services of all sorts. In rural areas, 1.6 million people live below the poverty line. The image is of rich people living in the leafy countryside, but 1.6 million of them live in poverty, much of it grinding poverty. Many of them have no car, and they live in terrible conditions and are extremely poor, but because of the image of leafy, green and pleasant countryside the presumption is that areas such as mine are prosperous. That is simply not true. Stuart Burgess described rural poverty as

"a forgotten city of disadvantage".

Rural poverty and our "retail deserts" are made much worse by the loss of local services such as surgeries, post offices, pubs, village shops, village halls, churches and public transport. All are progressively disappearing from our villages, which makes the poor who live there even more disadvantaged because they rely on those essential services, and the Government have done nothing to support them.

One in 13 rural primary schools has closed since Labour came to power. Only about half of rural households are within 2.5 miles of an NHS dentist or jobcentre, and this year the Government have closed down 20 per cent. more jobcentres, most of them in rural areas such as mine. There is a chronic shortage of affordable rural housing. Not only that, local government in rural areas is among the worst-funded in Britain. Wiltshire receives the lowest revenue support grant of any local authority in England, with the net result that it is difficult to break even on its budgets.

What is the solution? I was somewhat encouraged when I glanced at a recent press release from the Secretary of State for Environment, Food and Rural Affairs on 5 February 2009 which said:

"England's Rural Businesses will be vital in helping the country through tough economic times".

I thought that that was good news and sounded interesting. He went on to pledge

"Government support for rural communities and businesses" and to say that he is

"determined to ensure that rural businesses benefit fully from Government help during the economic downturn."

It sounds pretty good if the Secretary of State is absolutely committed to helping rural businesses, treating the matter seriously and doing something to help our countryside. I looked forward to reading about radical solutions and real action, but this is what he plans to do:

"So today I am announcing that I will call together the Rural Advocate Stuart Burgess, the chairs of the RDAs and others to look at the impact of the recession on the rural economy and see what further assistance we can give through the National Economic Council."

Hooray. Goodness, he is going to call together the rural advocate and see what can be done. Thank goodness we have the Secretary of State. Gosh, he really is concerned. But what is he going to do? He is going to report to the National Economic Council. Will that great champion of rural England, the Prime Minister, take great strides to help out my community in Wiltshire? Lord Mandelson of north London or wherever he is from is not exactly the biggest ever champion of rural areas.

Photo of James Gray James Gray Conservative, North Wiltshire

The hon. Gentleman corrects me and says that Lord Mandelson might have gone there once, perhaps on his bicycle, but he is from north London. I have no confidence that he and the Prime Minister have any commitment to doing anything to help our rural communities, and I do not believe that the much-lauded press release on the subject from the Secretary of State for Environment, Food and Rural Affairs stands for much more than yet more talking, yet more websites and yet more focus groups, so there will be more discussions, but no action.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Secretary of State for Wales, Shadow Minister (Environment, Food and Rural Affairs)

I congratulate the hon. Gentleman on securing this important debate. He drew attention to the parlous state of rural businesses, but one issue that he has not touched on and which the group that the Secretary of State is getting together might consider is business rates, which will rise by nearly 5 per cent. next year because the retail prices index was 5 per cent. in September. It is likely to be minus something today. Is it not ludicrous to put up business rates by 5 per cent. for this year and put an added burden on rural businesses?

Photo of James Gray James Gray Conservative, North Wiltshire

That is an extremely good point. Business rates in areas such as mine are having a grave effect, and the increase when we are facing deflation rather than inflation in real terms is worrying. In addition, the rates on empty properties, although now reduced thanks to the Government's late announcement, are still much more than they would have been had buildings simply stood empty.

Another good example is the increase in council tax. It is claimed everywhere to be only 3 or 4 per cent. and even that is quite a lot, but in areas such as mine villages are being brought into towns—Chippenham and Calne—and the increase in council tax resulting from that local government boundary change is 20 per cent. Such factors have a real effect on ordinary people, many of whom fear for their jobs.

I shall try to keep my contribution short, because I know that other hon. Members want to speak. Conservative Members have long called for real, practical, sensible and workmanlike actions that would have an effect on the sort of economic downturn that I have described. We have long called for a national loan guarantee fund to help businesses, particularly small businesses, and we have called for help by deferring VAT bills, cutting tax and national insurance, and cutting red tape for businesses and farms. Those actions would have immediate and real benefits for our wrecked rural economy.

The reality is that in towns and villages alike there is a terrible social price to be paid for the wreckage of the British economy. In Wiltshire, 77 per cent. of residents have reined in their spending in some way, 27 per cent. have seen an increase in their levels of debt, 24 per cent. are concerned about losing their jobs, 10 per cent. believe that they will struggle to pay their mortgage or rent, and 5 per cent. fear repossession of their homes. Rural areas and rural dwellers are facing just as much of an economic disaster, and perhaps a greater one, as urban ones, but our local economy and services are less well poised to survive it. These are grim and gloomy times for our market towns, our farmers, and our villages and country areas alike.

Photo of David Drew David Drew Labour, Stroud 9:48 am, 24th March 2009

I am delighted to take part in this debate, not least because I have been trying for some weeks to obtain a debate on the rural economy, but I foolishly used the words "and the role of social enterprise", which do not seem to fit the selection criteria, but I shall say something about that. I welcome my fellow member of the Select Committee on Environment, Food and Rural Affairs, Mr. Gray, but I was a wee bit concerned that he did not mention our excellent report on the potential of England's rural areas.

Photo of James Gray James Gray Conservative, North Wiltshire

I left that to the hon. Gentleman.

Photo of David Drew David Drew Labour, Stroud

The hon. Gentleman is leaving that to me. The report is a good starting point, and I do not deny many of the problems that rural Britain is facing, but I want to examine some other issues and where we should be going in dealing with current problems.

Let us start with the Select Committee report. Certainly I have some pride in what we penned. It is a good analysis of the problems and comes up with a number of solutions. There were two key points of inquiry that we started from. The first was the degree to which the rural economy can mainstream policies. We see this with the recession at the moment. The recession has an impact, but policies can also impact on the rural economy in the same way as they do on the urban economy. I have never believed that we have a sacrosanct rural economy that sits in splendid isolation and is different from the rest of the country. I feel strongly that we caricature the rural economy in that way to our cost. We also too often fall into the trap of believing that there is one rural economy and that we can have policies that embrace that.

That is one reason why some of us were never happy about having any form of Ministry of rural affairs. It tends to make people believe that they can pull levers, but as the Select Committee has found time after time with our inquiries, DEFRA is unable to pull those levers in the rural economy, because so many of them are with—dare I say it?—higher-order Departments such as the Department for Children, Schools and Families, the Department of Health and the Department for Transport. Nevertheless, DEFRA can have an influence, and one of the good things that it has introduced is the idea of rural-proofing to see how wider policies are playing a part in the rural economy. That has become part of our lexicon.

The second point of inquiry was to consider the potential for economic growth. Again, I am a wee bit disappointed that although the hon. Member for North Wiltshire quoted Stuart Burgess on a number of occasions, he did not refer to what Stuart Burgess said on that issue. He came up with astounding figures when he said that the unlocked potential of the rural economy is worth between £236 billion and £347 billion. All parties need to consider that as their starting point. One problem is that we are not considering how development can be a keynote element in what we talk about and do.

My area is suffering because, again, there is a misunderstanding of the Strouds of this world. My area has a higher percentage of people employed in manufacturing than the national average and a higher percentage than anywhere else in Gloucestershire. At the moment, a number of the bigger firms face difficulties, which has a knock-on effect on the smaller firms. That said, one of the strange elements for someone such as me, who calls continually for a local supply chain, is that not having as much of a local supply chain as we want has meant that there has not been as great an impact on some of those smaller firms as I had feared. However, we do need to find ways to forestall some of the worst impacts of the recession.

Like other hon. Members, I am involved every week in negotiations to try to protect jobs—principally to secure training opportunities in two of the larger companies in my area, Renishaw and Delphi. I hope that my right hon. Friend the Minister will take this point away, although of course it is not her responsibility: we need to ensure that we get wage compensation into the automotive industry, so that we can give value to that training. I and a number of other hon. Members are calling for that.

Interestingly, agriculture is having almost a counter-cyclical impact on the economy. I do not believe that farming is going through an unalloyed period of joy. Nevertheless, the figures from 2007-08—the latest year for which we have figures—showed growth of nearly 40 per cent. in total income from farming. That can only be a good thing at the moment, because that money is going into the rural economy. The Committee's current inquiry is on food security. Without wishing to prejudge it in any way, I think that the future must be in our growing more of our own food. That means more farmers and more land. Although I could argue with the Government about the set-aside rules at the moment, perhaps we need to move on and consider the opportunities to which I have just referred, because that will help our rural economy and it really concentrates our minds on what opportunities there are.

There are other impacts on the rural economy. I think that the Government have a good record on protection of public services—bar the Post Office, which I shall deal with separately. In my area, we have blocked the closures of village schools, other than in one case, in which there was an amalgamation. In other parts of Gloucestershire there have been closures, but that is because there are, in effect, no young people living in those villages any more. All parties have to face up to the fact that there has been rural depopulation. There has not necessarily been a huge movement of people away, but there has been a change in terms of social class—we know about the cost of living and the cost of housing in those areas—and we have also seen the ageing of the countryside. That is having an enormous impact, and the more rural and peripheral the areas, the greater the impact has been. We must do something to overcome that.

When Labour came to power in 1997, some of us set up the Back-Bench group of rural Labour MPs and we did a rural audit. I think that that document has stood the test of time. I pay tribute to Peter Bradley, who was the chair. He is sadly no longer with us. We found that the overwhelming issue in rural Britain at that time was access to good public transport. Lack of such access was the reason why people either could not or did not live there. When we examined the issue again, housing had clearly moved way up the agenda. I suspect that at the moment the issue of jobs would be paramount in most people's minds. Again, we have to turn that into an opportunity, rather than just seeing it as a threat.

As the rural advocate, rural tsar or whatever we want to call Stuart Burgess has been saying, there is clearly untapped potential in the rural economy. That has as much to do with jobs as anything else. We must recognise that we have to create jobs in rural Britain, and that we can do so. If we do that, we have to have people who can live in rural Britain, and we have to have reasonable transport so that people can move about there.

The Government, with their rural transport grants and some of the things that they have done on health and a rural policy domain, have done well. The issue of the Post Office, however, is a running sore. I believe that the closures were often unnecessary and hurried and could have been dealt with in other ways. I have to say that dealing with Post Office Ltd or Royal Mail is part of the problem because they seem to have a death wish in terms of the services. I am pleased that at long last—through ideas such as the post bank and offering postal services, rather than the complete panoply of things that one would expect in a post office—we are beginning to move on and see how a flexible approach can begin to lock those services in.

Let us move on to the private sector. The situation is in a sense gloomier there, partly because of the current state of the economy, but more than anything because of the way in which many of our villages have changed in terms of social stratification. We have seen the closure of shops and pubs, and we have seen other services dependent on them suffer. We could argue all day about the causes of that. I am pleased to see the work being done by Greg Mulholland. With the help of some of us, he has just made a submission regarding the Select Committee on Business and Enterprise inquiry into the future of pubs. That looks at, very straightforwardly, the role of pubcos—pub companies—which I think has been largely negative, and the way in which they have encouraged the closure of many pubs. The impact on shops has a lot to do with the lack of a market threshold and people not buying in their local shop. That is causing immense problems.

That brings me to where I see many of the answers. We need social enterprise because that is the way to keep services open. I have three voluntary shops in my constituency, and I am likely to get two more. The three existing shops are at North Nibley, Cowley and Whiteshill. Another is operating as a pseudo-social enterprise at Chalford, and I hope that a further shop will shortly open in Horsley. All of that has come about because of the will-power of the local population, with some help from outside. That is the way we need to go.

I want to link that to another issue. I pay tribute to two academic colleagues from the university of Gloucestershire, Nigel Curry and Stephen Owen, and to Kate Braithwaite from the Carnegie Institute, who have taught me what really goes on in rural areas. I want to advertise their work and I encourage the Minister to look at it, because there are some very interesting ideas about how we can provide, protect and improve services in rural Britain.

The other issue that I want to link to is asset-based rural community development, which uses the property base in rural communities. Like other hon. Members, I have argued strongly that some buildings are underused—the church is an obvious one, and there are also the village halls. We need to look at that asset base and do some interesting things with it. That is crucial at this time in the recession. That asset base gives us an opportunity, and that is where the state can help centrally. Innovative grants and support in the form of advice and encouragement are long overdue. That is where we need to go. We need to learn the lessons from what has gone wrong. Too often, the rural economy is seen as an anchor that pulls things back, but it can be a driver. There are opportunities, and I want us to act on them.

The key areas of housing, transport and jobs keep coming back, and we need to act on those and act quickly.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

I hesitate to prolong the hon. Gentleman's speech, but I am slightly puzzled. He started by telling us that it was wrong to say that there was any such thing as the rural economy, that it was all the same or that it would be a mistake to divide it, but he is now telling us that the rural economy is to lead the way forward. Which is it? Is there a rural economy or is there not?

Photo of David Drew David Drew Labour, Stroud

There certainly is a rural economy, but my point is that it is a caricature to believe that we can just separate it from the wider economy. I am making specific points, and I hope that the official Opposition also have some, but as far as I know, their only point of policy is to reintroduce hunting, which rural Britain needs like a hole in the head. I will take lectures from no one about who is doing things in the rural economy, because there is a vacuousness in the official Opposition's approach, which is depressing.

To conclude, I am looking for the Government to recognise that the rural economy manifests the same problems as the wider economy. However, there are real opportunities at the moment, and we must not lose them in all the wider talk. We have problems with manufacturing that need to be addressed, but we also need to look at other issues, which come down to the usual things: providing leadership; recognising that there are no one-size-fits-all policies—policies need to evolve from the bottom up; concentrating on co-operation and on building a consensus; and making sure that we put resources in. That will not sort the recession out this time, but it will pay dividends in the long run when people are encouraged to live and work in rural areas and to deal with some of the problems there, including the ageing of the population, which causes huge problems in terms of care provision. That is what I hope DEFRA will do.

Photo of James Gray James Gray Conservative, North Wiltshire

I would not have intervened had it not been for the fact that the hon. Gentleman was clearly not listening to my contribution, in which I laid out precisely what we would do. Is he seriously saying, however, that the two or three things that he mentioned—providing leadership, working from the bottom up and social enterprise—will help? The debate is about the effect of the recession on the rural economy. We are talking about tens of thousands of people across Britain losing their jobs and businesses going bankrupt right, left and centre. Does he seriously think that the two or three very laudable little enterprises that he mentioned will make a blind bit of difference to the recession in general?

Photo of David Drew David Drew Labour, Stroud

I thank the hon. Gentleman for intervening, because that just shows how clueless the official Opposition are. They do not understand rural Britain—what they have said is tantamount to that. I am talking about the wider need and about how we regenerate rural areas, which is crucial in this time of recession.

I do not want to go on, because we clearly have a difference of opinion. I am pleased about that because it shows that the official Opposition have no policies on this issue and that they are part of the problem. I get fed up with Conservative councillors spending all their time blocking development that could be crucial to the prospects of the rural economy, whether it is housing, economic development or some of the other issues that we have mentioned. I am glad that we have had a difference of opinion. Normally I work on a consensual basis, but if the official Opposition want to say that they feel they can wave a magic wand at the issue, that is up to them. I am looking at the real problems of rural Britain and at how we face up to them.

Photo of Mark Williams Mark Williams Shadow Minister (Innovation, Universities and Skills), Shadow Minister (Wales) 10:05 am, 24th March 2009

It is a pleasure to serve under your chairmanship, Mr. Atkinson. I congratulate Mr. Gray on securing this important debate.

I should say at the start that there is rurality and rurality—the hon. Gentleman alluded to that—and there are differences in the communities that we represent. We have heard about the farms on the periphery of Upminster and we have heard from Wiltshire and Gloucestershire. However, I represent a very rural, sparsely populated constituency of 440,000 acres and 147 villages.

The recession affects all parts of the country, of course, and national political and economic dimensions permeate every part of our constituencies. However, my point to the Minister—I am sure that she understands this—relates to the fragility of the rural community and particularly of its sparsely populated communities. I do not necessarily subscribe to the view that the recession is hitting rural areas harder than urban areas, but we none the less need to respond to that fragility. Rural communities find themselves on the brink and are struggling to ensure their future viability.

Like all hon. Members, I have been having discussions with small businesses in my constituency. Such businesses play the most vital role in our rural communities. More than half the people employed in my constituency are employed in micro-businesses—businesses that employ fewer than nine people. About two thirds of the people employed in my constituency are employed by businesses with 49 or fewer employees.

The chief concern of such small businesses is still the lack of credit from the banks. They are also concerned by the charges that the banks are levying. A Federation of Small Businesses survey found that 16 per cent. of small firms have seen an increase in their bank fees in recent months, while 33 per cent. said that the banks were imposing changes in their financial arrangements that would prove detrimental to their futures. The case has been well rehearsed, but there is a mismatch between what we hear from the Government in this place and what is being done on the ground.

As my hon. Friend Mr. Williams suggested, there is also concern about the forthcoming 5 per cent. rise in business rates in England and Wales. The RPI in September 2008 was the determining factor, but inflation was then at its peak. Although my hon. Friend did not use the word today, he described the situation as "madness" during the last week's Welsh questions, and indeed it is—it is difficult for any of us to disagree with him. It is bad enough to hit businesses with a massive rise in business rates at any time, but when we are in the grip of the worst recession for a generation, it is entirely counter-productive. If our intention is to kick-start the economy, we should encourage businesses far more proactively. I urge the Minister to take back to the Treasury the message that we need an averaged RPI when we look at business rates, rather than a figure at a particular point in time.

My hon. Friend and the hon. Member for North Wiltshire alluded to empty property rates. The introduction of a £15,000 threshold is helpful, but many businesses are still suffering from having to pay full rates. Again, I ask the Minister to take that concern back to her colleagues.

The hon. Member for North Wiltshire is a member of the Environment, Food and Rural Affairs Committee, and Mr. Drew mentioned its excellent report, so I hope that they will not mind me, as an interloper from Wales, briefly touching on it. The report focused on the potential in the rural economy, rather than just on the concerns that many of us have. I find it odd, as, I think, the Select Committee did, that DEFRA has not quantified the potential in rural communities. I hope that the Minister will give her backing to that recommendation. The sum that has been mentioned of, I think, £237 billion, represents huge potential for the rural community.

The report rightly highlights the position of rural issues within the Government, and points out that instead of making a rural affairs target a departmental strategic objective, those matters should be part of a cross-Government public service agreement. Of course, although DEFRA must pay attention to rural needs, other Departments certainly do not rural-proof their policies. I can give two parochial examples of that from west Wales. The new motorcycle testing regime requires testing to be carried out at a multi-purpose test centre. There will be none of those centres in Ceredigion or Powys, so my constituents will have round trips of 150 miles. The other example is the closure of tax offices. The closure of the office of Her Majesty's Revenue and Customs in Aberystwyth, in my constituency, was justified on the grounds that it was the smallest tax office in the country. Neither of those decisions was rural-proofed.

I have only one, very mild, criticism of the report, and that is its focus on the Commission for Rural Communities as the body that will have to consult on rural benchmarks and indicators. The CRC is an excellent body, with an excellent rural communities tsar, but it is an England-only body, and given that aspects of DEFRA policy are not devolved, I hope that Welsh bodies and Ministers will be consulted about non-devolved matters.

It is not possible to overstate the importance of broadband in the future of the rural economy, which would be significantly boosted by a universal service obligation, as Lord Carter identified in his report "Digital Britain". We await the final report for details about how that can be achieved. There are significant issues to overcome in some of our communities, not least of which is topography. We want a thorough report, but I hope that that will be swift. The new universal service obligation could certainly alter BT's current position as the supplier of internet infrastructure, and my concern is that with uncertainty about the future of the new USO, BT may be reluctant to carry out the work until the new system is in place. We need action on that now.

Much of rural Wales is blighted by "not-spots". It is not just a case of the speed at which broadband can be accessed; it is more that there are no broadband connections at all. Broadband is vital for rural communities, and they are mindful of its importance. The broadband think-tank Point Topic recently released a figure showing that 26.9 per cent. of people in Wales are unable to get 2 megabits per second connection. In that respect, Wales is second only to Northern Ireland, which has a figure of 32 per cent. BT claims that 99 per cent. of homes in Wales can access broadband, but that is not the experience in my constituency.

Some parts of the farming community have pointed out that they can do well in the recession. The growing popularity of locally sourced and organic food has given farmers opportunities—there is potential. The increase in lamb and beef prices has been welcomed, although of course much of the benefit has been dulled by increased costs. There are, of course, other severe impediments to the farming sector. The chief concern among my constituents is the proposed introduction of compulsory electronic identification of sheep, even though that may seem like a peripheral issue. I was alarmed when, during a recent Prime Minister's questions, Mr. Jones raised the issue and he was roundly laughed at from the Labour Benches. The issue is a critical for hon. Members representing the farming community. The National Farmers Union revealed in a recent survey that 84 per cent. of sheep farmers in Wales said they would reduce their flock, and 32 per cent. said they would consider quitting altogether. The hon. Member for Stroud is of course right that we need to attract new people and young people into the farming sector, but that is not the way to do it in the less favoured areas of much of the country. The NFU has provided a vivid illustration of the concern in the industry about the plans in question.

I secured a debate on the matter last year. The Minister—I think that she had just been appointed—was extremely sympathetic to our cause, and there was cross-party agreement. The nationalist party in Wales, the Liberal Democrats, the Conservative party, and Labour voices as well, all sympathised very much with the view opposed to the proposal. I believe that the Council of Ministers meets this week, and it is essential that we put the matter back on to Europe's agenda.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Secretary of State for Wales, Shadow Minister (Environment, Food and Rural Affairs)

My hon. Friend raises an important point. As I understand it, the Minister may have been discussing the matter yesterday, so perhaps she can give us some news. There seems to be a growing body of opinion that the technology is not suitable for areas such as England and Wales, which have large sheep flocks, although it might be appropriate for smaller countries with smaller sheep populations. Surely, therefore, the system should be voluntary, not compulsory.

Photo of Mark Williams Mark Williams Shadow Minister (Innovation, Universities and Skills), Shadow Minister (Wales)

I am sure that we shall hear from the Minister about that point later. I endorse my hon. Friend's comment about the inappropriateness of the so-called technology to our farming community.

Photo of Philip Dunne Philip Dunne Opposition Whip (Commons)

Does the hon. Gentleman also agree that the whole objective of tagging is to ensure traceability of supply, but that once the head has come off the body in the slaughterhouse, traceability disappears, so the measure is perfectly pointless?

Photo of Mark Williams Mark Williams Shadow Minister (Innovation, Universities and Skills), Shadow Minister (Wales)

The hon. Gentleman is right. There is a complete lack of coherence in the policy, and we need the Government to continue to make those points on our behalf and on behalf of the farming community, not least because it is strongly felt in that community that the measures already in place were robust enough to deal with the problems that the European Commission wanted to alleviate. I hope that we shall hear from the Minister whether progress has been made.

I shall leave my script now to talk more directly about the social issues raised by the hon. Member for Stroud. My constituency is rural, and I have no doubt that the sun is shining on the coast of Ceredigion today and that it all looks very rosy. However, underneath that picture is something more sinister. It is a convergence funding area for good reason. Many of my rural and urban communities have the National Assembly for Wales designation of Communities First area, because they have some of the highest rates of deprivation in not just Britain, but the entire European Union. Perhaps my vision of the essential ingredients of village communities is old-fashioned, but it is one in which there is still a functioning post office—not the van that trundles in intermittently and disappears, and which, I suspect, will disappear altogether in three years' time—in which there are churches and, to add to what the hon. Member for North Wiltshire said, chapels as well, and one where if there is still a last village shop, it has a sustainable future. We have heard about young people moving into a community. I suggest that if those essential ingredients of community have gone, if the village hall or old church or chapel has been sold to development when people have moved from outside and is no longer there for community use, if the community facilities and post office have gone, if the last shop has gone, if there are pressures on rural garages—something that has not been mentioned in the debate—and if the pub is under threat, there is very little incentive for young families to move into a community. That is, of course, all compounded by the economic situation.

In parts of rural Wales there is migration of young families away—goodness knows where to, given the enormity of the economic problems. The hon. Member for Stroud alluded to the fact that elderly people are moving in. That means elderly people living on the interest from their savings which, in the present climate, affects their purchasing power as well. That is the reality of rural life now. It is not in a box that is distinct from national pressures, but there is a sense of fragility about our communities, and we ignore that fragility at our peril.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight 10:19 am, 24th March 2009

I thank my hon. Friend Mr. Gray for securing this valuable and timely debate. Rural communities are often the hardest hit during a recession, and a large factor is unemployment. People in rural areas are often at a natural disadvantage compared with those in urban areas. Large towns and cities have some advantages; for instance, comprehensive transport links and a multitude of employment choices. Many in rural areas are less able to seek employment at a considerable distance from their homes. Rural residents often have to rely for employment on a large number of small businesses, whereas urban areas provide a large number of large and medium-sized employers. When I say small, I mean really small: the average size of workplace on the island is one or two employees plus the owner. If those businesses are forced to lay off staff, or even to close, rural residents have few other options.

Many small businesses in rural areas exist in a symbiotic relationship with each other, and if one fails they all suffer. That can be a major problem for rural areas when unemployment or even recession takes hold. My constituency has had a history of relatively high unemployment, even during good economic times. We are in the bottom third in the number of residents that have employment. The recession is not helping. Indeed, the research paper "Unemployment by Constituency, February 2009" shows that we are 202nd in the United Kingdom. We are in the fourth quintile for unemployment, and are eighth among the Conservative constituencies, so we understand what is happening.

However, matters could be worse. It is interesting to note that other nearby rural constituencies are feeling the effects of the recession more keenly. Isle of Wight was about four-fifths up the list for unemployment in February, but over the past year we have been well down the list. Other areas have a significantly increased yield: from Devon to Kent and from Cambridgeshire to Worcestershire, other constituencies are feeling the pinch more than us, although they may have less unemployment. Those areas of course are not islands, and they do not share our particular problems. Nevertheless, we will all head to rock bottom if more is not done.

Of great concern to me is the disadvantage that islanders in my constituency and elsewhere have over and above the average rural resident. Those not in employment do not often have the means to seek employment or retraining on the mainland. Isle of Wight residents have to travel to the island's ferry terminals, cross the five or so miles of the Solent at a cost of about £10 and travel on from the mainland terminal, and then repeat it on the return journey. That is significant, and I would like it to be taken more into account. If employment dries up on an island, the unemployed literally become trapped. It is a vicious circle.

I agree with John McFall, the Treasury Committee Chairman, on one matter. He said yesterday that the recession will leave lasting scars if more is not done to solve rising unemployment. More help is needed for rural and island communities to help them through the recession.

Photo of Philip Dunne Philip Dunne Opposition Whip (Commons)

My hon. Friend is making a powerful case for Isle of Wight and island communities generally. At this time of rising unemployment, particularly in rural areas, the Government are removing employment in departmental offices in rural areas—for instance, as others here today will know, offices are being closed by HMRC in rural areas, particularly along the Welsh borders—but the Jobcentre Plus offices that were closed last year now need to be reopened to cope with the increase in unemployment. Does my hon. Friend not agree that the Government are scoring own goals, and that they should put a stop to it?

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I do, indeed. I understand well the point that my hon. Friend makes, and I congratulate him on inserting those words into our debate.

The Government need to get their act together, and get their economic policies, such as the loans guarantee scheme, up and running as quickly as possible. We need to protect small businesses against the recession in order to keep the economy in rural areas going. I hope that the Government will bear that in mind when deciding which businesses to bail out. If something is not done, I suspect that those areas will lag behind the rest of the country when it comes to getting back to work; and it and may even slow recovery.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

I call Mr. James Paice. I beg your pardon, Mr. Paice. First, I call Tim Farron.

Photo of Tim Farron Tim Farron Shadow Secretary of State (Environment) 10:26 am, 24th March 2009

Thank you, Mr. Atkinson. I am not sure whether to be flattered, but at least Mr. Paice has a few more minutes to prepare his speech. None the less, it is a pleasure to serve under your chairmanship.

I congratulate Mr. Gray on making a powerful opening speech. The debate is of immense importance to the House. Frankly, it ought to have been attended by more Members. However, as Members representing rural areas, we are not engaged in special pleading. We have many strengths, as well as facing many challenges. However, we feel that the rural economy presents a slightly different picture to the urban one.

We are concerned that the Government, and the apparatus of government in general, lack an understanding of the workings of rural communities. For instance, a number of the excellent civil servants that I meet see the countryside as something that is to be visited on the odd weekend; they do not understand the vitality of the rural community. That is part of the malaise; it is part of the problem.

As the Member of Parliament for a large chunk of the Lake district, part of the Yorkshire dales and a large swathe of south Cumbria that is just as beautiful but not in either, I have a body of evidence to draw on in my remarks. It is important to stress the strength of the rural economy. It is important to remind people that, much more than in urban areas, businesses and industries in the rural community are more likely to have a more positive balance sheet. We export more; we do more business outside our shores than the average business in an urban area. Our contribution to the bottom line of UK plc is therefore greater.

Over the past 10 years, the growth in rural areas of knowledge-intensive services, often home-based, has been at twice the rate of that in urban areas. Contrary to public perception, the percentage of people employed in manufacturing in rural areas is roughly the same as in urban areas. There is an innate strength in the rural economy, and it is important to acknowledge that before considering the fact that the recession is hitting us, and hitting us hard—and in some ways hitting us differently from urban Britain.

Unemployment is undoubtedly rising. I draw up experience in my constituency. Kendal serves the bulk of my constituency, and the local jobcentre has seen a tripling in the number of people claiming jobseeker's allowance for the first time. As we heard from other Members, we also struggle because the other jobcentre that serves my constituency closed a couple of years ago. It is at Ulverston, just outside my patch, in the constituency of Barrow and Furness, which is represented by the Secretary of State for Defence. That is having a critical effect on the ability of people living in the rural areas on the Furness and Cartmel peninsulas to find employment. The quality of Jobcentre Plus has undoubtedly increased, but it is not good if one cannot get to it. I think that that was incredibly short-sighted.

As has been mentioned by a number of hon. Members, rural areas have a higher proportion of older residents, who are more likely than others to rely on the income from savings. Negative inflation and almost non-existent interest rates have a massive impact on the spending power of ordinary families in rural Britain, which, obviously, leads to a negative multiplier effect and people spending less money in their communities. We heard about the fragility of the rural economy from my hon. Friend Mark Williams, who made an impassioned plea on behalf of his communities.

The drop in demand comes at a time when many of our rural services are already under threat. We have lost rural post offices owing to a deliberate closure programme and the removal of vital services that underpin post offices. As Mr. Drew said, we have also lost village pubs, which is down not only to a reduction in demand, but to unfair competition and ownership legislation. That needs to be addressed immediately. Furthermore, over the past 20 or 30 years, we have also lost community shops, in part, due to unfair advantages granted to out-of-town supermarkets.

The recession has hit an infrastructure already weakened by bad Government policy over a number of years, but the ultimate strength of our rural communities centres on their creativity and resourcefulness. We should be proud of that and play to those strengths. I shall provide three quick examples from my constituency: the first is the Greyhound pub at Grizebeck, where I spent Friday night. It is a community-run pub that would have shut had it not been for the community volunteers running that enterprise. Secondly, I also went to the Storth post office, which is a community-owned, co-operative enterprise employing its own postmaster. Had it not been for those people, it would undoubtedly have shut. The third example is the Witherslack shop. The former post office closed down, and Post Office Ltd would not allow it to reopen, so the local people—this is a small community of 400 houses—raised £150,000 and worked with the local community land trust to reopen that outstanding local shop. All those wonderful examples, which demonstrate the vitality of rural communities, happened despite, and not because, of the Government. We need to play to the strengths of rural communities, not cause greater difficulties.

One of the great problems faced by rural areas is that we appear more affluent than we are, a point to which the hon. Member for North Wiltshire referred. Unemployment in many rural areas is relatively low, but we must not forget that employment, certainly in places such as mine, is very much part-time, low-paid and, because it is often in the tourism sector, seasonal. Another important indicator of poverty and well-being that is rarely acknowledged is the differential between average incomes and average house prices. In rural Britain, the gap between those two figures is greatest. In my constituency, the average house price, even with the drop in house prices, is 12 times the average income, which leaves the average person completely unable to afford their own home. Some 12,500 houses in my constituency were once council houses, and a few more than 3,000 still are, but now, with the great tragedy of repossession, more people are moving on to the waiting list. It is a real pressure-cooker situation and a problem that we need to address.

The development of more affordable housing would not only meet the needs of the hundreds of thousands of people in rural Britain who are desperate to escape the abysmal housing, or who have to move away from rural areas, which robs them of their vitality, but give a vital boost to the construction industry. That has to be done in a bottom-up and effective way. There is the will within rural communities—we are the opposite of nimbies—to build new more affordable homes, but the Government's one-size-fits-all regional spatial strategy is not the answer. It is counter-productive and a nonsense in a district such as mine, where more than half the land mass is in a national park so cannot be touched. That is why the regional spatial strategy should go.

We need to support rural communities in coming up with their own solutions. For example, in my area, we have trailed a "home on the farm" initiative, which allows farmers to develop under-used or disused farm buildings and turn them into affordable homes for local families. In the past few weeks, the first was built at Selside just north of Kendal. We also need to maintain consumer demand in rural communities and acknowledge the damaging impact on some of them of excessive second-home ownership. We need to consider ways of managing that problem, putting covenants on new builds and perhaps giving local authorities some tax-varying powers.

It is vital that farming, which is the backbone of the economy, be put at the top of the agenda. It tends to survive recessions—it tends not to do too well out of the booms either—because even in developed economies people still have to eat. They might change their demands and where they shop, but the bottom line is that they still need to eat. We are also blessed by the fact that British farmers are some of the most entrepreneurial in the world, producing the highest quality food and meeting by far the highest environmental and animal welfare standards in the world.

It is important to note, however, that British farming is at a crossroads, because despite the industry's huge strength in quality and innovation, the unit of production—the family farm—is under enormous pressure from the overly powerful players higher up the chain, such as, most notably, the supermarkets. The impact on the farming economy of this unfair market is huge. Despite British farming's many strengths, we have still lost 900 million litres of dairy production in the past three years, and dairy farmers still leave the industry at a rate of two a day.

Anecdotally, in my constituency, six out of every seven hill farmers have no line of succession. The hon. Member for North Wiltshire referred to livestock farmers' incomes, but it sounds like his livestock farmers are doing better than mine. Average hill farm incomes are significantly less than £10,000 a year, so no wonder that many question whether they have a future in the industry and struggle to persuade their children to follow them. Furthermore, I endorse the comments of my hon. Friends the Members for Ceredigion and for Brecon and Radnorshire (Mr. Williams) about sheep tagging, and I hope that the Minister will refer to the situation in Europe.

It is important that the Government accept the Liberal Democrat proposal for a supermarket regulator, rather than a toothless ombudsman, to provide control and power within the market and to ensure that farmers get a fair price for their produce. It is also important that we make good use of the public money invested in agriculture. It seems a nonsense that we are wasting £7 million a year handing out tiny cheques to people at the bottom end of single farm payments—people who, bless them, are not farmers—when that money could be redistributed and spent on, for example, setting up a new hill farm apprenticeship scheme. We should certainly do that.

I endorse the comments of Mr. Dunne about public sector jobs in rural areas. It is beyond me why the Government are pressing ahead with their tax office closure programme at a time like this. During British tourism week, it is important to ensure that we support British tourism and recognise that, in England, the funding for the marketing of tourism is dire compared with other parts of the United Kingdom. We should also recognise that, in the Lake district alone, we have a £1 billion industry giving vast amounts of money to the Exchequer, but getting very little back for marketing support.

There are real ways to boost our rural economy. We can make the food market fair through a supermarket regulator. We can ensure that taxpayers' money designed to support farmers does actually do so, and that it is not wasted on bureaucracy, but directed at helping a new generation of farmers to bring new vitality to the industry. At a time when we are wasting more than £10 billion of food a year, we could help farmers by investing in new anaerobic digestion facilities on farms—where people want them—to create clean energy and to dispose of waste. We could back companies in rural areas that want to reduce energy usage while creating employment. I must mention the croppers who provide the paper for Hansard who want a biodigester for their site in Burneside, but need £200,000 of public of money to buy one. That would be a massive service to the community, if only they could get it. We need a new deal for the countryside. Rural Britain should be seen as a living and vibrant set of communities that must be able to reach its potential and play to its strengths. We need a Government who understand rural communities and who are on the side of the many in those communities.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs) 10:39 am, 24th March 2009

I congratulate my hon. Friend Mr. Gray on obtaining this debate, which, as several hon. Members have said, is perhaps long overdue. It reflects issues that concern nearly a quarter of the population of the United Kingdom. Obviously, much time is spent in this House debating issues of national importance, but usually as a generality. If we go any deeper, it is nearly always related to large-scale manufacturers or the industrial areas of the country, but rarely to the almost 25 per cent. of people who live in rural areas and the issues that affect them. I say to Mr. Drew that, of course, countless issues affect all people regardless of where they live, who they are and what they earn, but certain aspects of living in rural communities are totally unique and have to be considered as such. He does such communities a disservice by saying that we should not even have a Ministry of rural affairs.

I want to start by referring to some good news. Last week, in the other place, the annual awards for country and rural industries were presented by the Countryside Alliance and others. We saw some wonderful examples of village stores and farm-based businesses. All sorts of different businesses, including a carriage maker, are making a great success of life in rural areas. However, even some of them are facing very real pressures. Such pressures are particularly unique to rural areas, but, obviously, have their own reflection in the wider urban areas.

In rural areas, there are more businesses proportionate to the number of people than there are in urban areas. I would argue that that reflects a higher level of entrepreneurship. As has been said, rural businesses are more likely to be selling into the international markets, but the vast majority employ fewer than 10 people, and a very large proportion employ fewer than five. The most important statistic, which underlines so many issues, is that the average earnings of people who work in rural areas—I am not talking about those who live in a rural area and commute to an urban area—are £4,655 a year less than the national average wage; that is very significant. The Government have not done much to understand that pretty fundamental distinction. We have heard several times about the closure of jobcentres. Some 23 per cent. of the population have just 4 per cent. of the jobcentres.

On the impact of the recession, the proportion of rural households living below the poverty line has risen from 16 to 19 per cent., which is almost one in five rural households. Mark Williams referred to the tough social situation facing many of his constituents. He would probably agree with me that part of the problem in rural areas is that that poverty is so often hidden because it stands cheek by jowl with affluence. For example, an elderly person could be living in a run-down cottage that they may own, and nobody realises how badly off they are because next door—on both sides, perhaps—there are people with three cars who live a very different lifestyle. Therefore, we must pay particular attention to ensure that we address the problems of the smaller groups of individuals, because they form a large proportion of the population.

There is increasing evidence of a downturn in the turnover of village shops and others. The fact is that, although some would argue that this is not directly related to the recession, over the past 12 months there has been an almost 20 per cent. increase in robbery in rural areas. Bearing it in mind that we have had senior police officers warning society that crime would rise in the recession, I do not think that we should completely ignore that fact.

Let me now touch on farming. As hon. Members know, I stand second to nobody in my respect for the British farming community, but we should not overestimate its role in the rural economy. It is very important, but accounts for less than 5 per cent. of the rural work force. However, that ignores the supply chain and food manufacturing, which is often based on our own agricultural production.

The reality is that British agriculture is facing a relatively good situation at the moment. However, it is all very well to talk about a 40 per cent. increase in income, but 40 per cent. of virtually nothing does not add up to a great deal. We must be careful about such distorted statistics. You will know from your own constituency, Mr. Atkinson, that this great improvement in the fortunes of most sectors of agriculture has been brought about as a direct result of Government incompetence. The fact is that the currency has collapsed, and imports of red meat have become much more expensive. That means that prices for our own red meat—beef and lamb—which is already in shorter supply than it used to be, are now at a much higher level. They have drawn up pig meat with them because they are linked. The price of feed wheat is around £100 a tonne, but it would have been only £80 a tonne had it not been for the collapse of sterling, and that would have destroyed the arable sector. Even the milk sector—it is probably facing the most difficult problems, with further price cuts anticipated in the coming months—would be far worse off were it not for the astonishing weakness of sterling, which is a direct consequence of Government policy.

Even if we accept that there is a relative improvement in agricultural fortunes, the industry is still faced with the problems of pesticides, electronic ID—I hope that the Minister will tell us why we had to depend on the Hungarians to table a motion on the subject yesterday when the British Government, who keep repeating their opposition, failed to do so—nitrate-vulnerable zones and the set-aside issue. I hope that the Minister can tell us when the Government will make an announcement about what they plan to do with the section 68 proposals that were part of the health check.

Let me turn to the other general issues affecting the economy, the first of which is credit insurance. I do not know about other hon. Members, but I find that businesses keep telling me about how much more difficult it is to gain credit insurance and how impossible it is to trade if they do not have it. One of the largest animal feed manufacturers recently told me that it had been instructed by its board not to trade with anybody who has not got credit insurance. That is a perfectly reasonable business decision to make, but it means that countless farmers are desperately trying to get credit insurance at a time of financial difficulty when nobody is tempted to provide it.

I visited a business in my constituency that produces electron microscopes. Although it operates from a small industrial base, it is the only such British manufacturer. It wants to double production this year, but it will require huge investment and that money is not forthcoming. I also spoke to a training business that is facing a drop in work as firms cut back on their spending.

Moreover, there are issues related to rurality and the distances that one has to travel to get to a jobcentre, to attend further training, to upgrade or gain new skills, or to go for another job. Those are specific issues relating to rural businesses. In addition, the fall in house prices is nowhere near sufficient to rejuvenate the opportunities for first-time buyers in rural areas. The multiples that I last saw were that the average rural home is about seven-and-a-half times the national average wage, and the average urban home is six times the national average wage. Such figures come at a time when we are trying to persuade people not to borrow massive multiples of their wage.

I support the idea of people getting together to run the village shop, the village pub or whatever. I have some good examples in my own constituency—I suspect that we all have—of communities working together. I am not aware of anyone having stepped in to save a post office because that decision was made from on high, rather than by the Post Office. Nevertheless, it is well worth doing.

As my hon. Friend the Member for North Wiltshire rightly said, steps need to be taken. This party did not support the Government's policy of putting public money into banks just for the sake of propping up the balance sheet or in the interests of shareholders; we supported it in order to enable money to keep flowing into perfectly viable, good businesses so that they can go on operating. We advocated a national loan guarantee scheme over and over. The Government, having criticised it for weeks, eventually announced the introduction of a pale pink imitation, but it does not yet exist. We are told that it may be introduced next week, but businesses are struggling now. To understand what is going on in rural areas, people must understand the unique nature of rural businesses, rural employment and rural communities.

Photo of Jane Kennedy Jane Kennedy Minister of State (Farming and the Environment), Department for Environment, Food and Rural Affairs 10:50 am, 24th March 2009

It is a pleasure to be here under your chairmanship, Mr. Atkinson. I know that the constituency that you represent gives you a keen interest in this debate. Mr. Gray is to be congratulated on securing the debate. Normally, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend Huw Irranca-Davies, would have responded to this debate in detail, but he could not be here this morning as he is on Government business. However, I hope to be able to respond to the genuine concerns that have been expressed.

It is true that the recession is making life hard for many communities and businesses. As we have heard this morning, that is just as true of rural communities as it is of our towns and cities. It is important that we do not treat the two separately. I heard the comment that the hon. Member for North Wiltshire made from a sedentary position about my urban constituency of Liverpool, Wavertree, and I thought that it was somewhat ungenerous.

My hon. Friend Dr. Kumar has been urging me to respond robustly to some of the more ridiculous suggestions that the Labour party is unaware of the concerns of rural and farming communities. After all, more than 120 Labour Members represent rural constituencies. However, I will not respond to those suggestions, because I should take time to respond to other, more serious points, not the least of which concerns what happened yesterday at the Agriculture Council in Brussels.

In many ways, the economies of rural areas mirror those of urban areas, but rural areas boast businesses of all shapes and sizes, as hon. Members have said. They provide all sorts of goods and services, and change in rural communities continues apace. That can be seen particularly in the growth of high-tech and high-skill businesses. The Commission for Rural Communities tells us that in the past 10 years, the number of people working in businesses in rural areas has risen by nearly 300,000, which is more than twice the increase in urban areas. As Mr. Paice said, rural areas are home to about 1 million businesses—a quarter of England's total—providing just over 5.5 million jobs. Together, they have a turnover of more than £300 billion a year. In fact, there are more businesses for every 10,000 people in rural areas than in urban areas.

The evidence to date suggests that the impact of the current economic situation on rural areas is similar to its impact in urban areas. Not a single Member who has spoken has failed to mention concerns about rising unemployment and job losses. Many have listed the impacts on their constituency. Dr. Murrison, who is not in the Chamber just now, and other hon. Members drew attention to, and criticised, Government decisions to move Government work, as they described it, from rural communities into more urban settings. However, in my previous roles, I have spent many hours debating such issues, particularly how we collect taxes in this country. We need to modernise our tax collection systems, and that involves employing fewer people. In this economic climate, it would not be right for the public sector to be less efficient than it could and should be simply to provide employment. I know that hon. Members who have participated in this debate would not urge that of any Government.

The employment rate in rural and urban areas is similar, but there are proportionately more retired people and fewer unemployed people in rural areas. The proportion of people claiming unemployment-related benefits is rising at a similar rate in rural and urban areas. The number of redundancies is lower in rural areas in both absolute and proportional terms, but not by a great deal.

I am not complacent. As someone who represents a Liverpool constituency, I have particular reason to know the threat of serious unemployment, although I will not waste time drawing attention to the previous Government's attitude to dealing with unemployment. We need a better understanding of risk if we are to enable rural communities and businesses to survive the economic downturn. It may be that we should discuss those risks and how they should be managed on another occasion when we have more time.

I have been asked a couple of specific questions, and I shall respond to the question about e-ID, as I know that there is a lot of interest in it. It was discussed yesterday at the Agriculture Council, and a large number of countries—13 or 14, I think—took part in the debate. I would not say that I was overly encouraged by other member states' responses, but it was encouraging, at least, that many countries spoke in favour of the Hungarian motion to introduce e-ID on a voluntary basis. The Commission also responded relatively positively to my suggestion that it should consider further our proposals that would reduce even further the burdens of that otherwise costly regulation. Although I accept that not all rural businesses involve farming, businesses such as upland farmers and sheep farmers are critical to some of the most beautiful areas of the British countryside, and I accept the points made about such farmers' income.

We need to ensure that any regulation that we make is proportionate to the policy problem that we are trying to fix. There is unanimity not only among parties in the UK, but in the Welsh Assembly and Scottish Parliament, that the e-ID proposals, as they stand, are disproportionate and that the Commission's assessment of the impact is inadequate and should be revisited and renewed so that we can get a better understanding at Commission level of the proposals' potentially damaging impact. I am hopeful that we can make further progress with the Commission. The commissioner indicated that she was prepared to consider further details, including locating reading equipment at centres where sheep are brought in the normal course of business, whether in marketplaces or in abattoirs or processing plants.

As always happens in such debates, time is running away. My hon. Friend Mr. Drew, who made a good and thoughtful contribution, referred to ways in which we could help rural communities through the recession. He promoted the idea of social enterprise—I agree. If anything, other parties demonstrated their lack of understanding of the potential benefits of such ideas in their responses to his proposals. The social enterprise model has strengths and could be adopted in a rural setting.

There are great pressures on the housing market at the moment, which is why the Government are taking steps to help home owners and first-time buyers in urban and rural areas, expanding the availability of shared equity, and working closely with lenders to keep people in their homes. For example, we are extending income support for mortgage interest payments to help people when they fall on hard times.

Finally, as I have only a few moments left, let me say that I agree with the comments of the hon. Member for North Wiltshire about broadband. We are working hard to ensure that funding is available through the regional development agencies to encourage and help farmers and other rural businesses to adopt and adapt to broadband.