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Mr. Charles Kennedy: Will the hon. Gentleman give way?

Dr. Fox: No, I do not have time. The pictures of the Prime Minister being embraced by Euro mobs are an adequate price for a few farms going out of business--as far as the Government's news management is concerned.

A strong pound has driven down farm incomes. It means more imports and fewer exports. It means that minimum prices in the United Kingdom are cut. As my hon. Friend the Member for Congleton (Mrs. Winterton) asked, why are the Government doing nothing with agrimonetary aid; every other eligible state in the European Union pays its share? Why not Britain? The Minister who is to reply, who has responsibility for Scottish farmers, should tell us why we in the United Kingdom will not support Scottish farmers but, as EU taxpayers, we are subsidising every other group of farmers in the Union.

In Scotland alone, the costs are £7.6 million for cattle passports, £8.3 million in new Meat Hygiene Service charges and £12 million extra in charges for abattoir waste disposal. HLCA payments are down by £50 and sheep support has been frozen at the 1996 level. What will the Minister tell Scottish farmers when they are confronted with those drops in income and when the service industries face reductions in their income as a consequence? He cannot simply sit back and say, "Well, there were 18 years of Conservative government, so we have no responsibility for the crisis you face." Much of the crisis that farmers face at present lies fairly at the door of the Labour Government.

There is no doubt that the rural economy is in crisis. Farming needs action; not inquiries or soundbites. Farmers have not sought confrontation; it has been forced upon them. Everything the Government have touched has been bad for the countryside. Everything they have said shows a callous disregard for farmers; and everything--from the Prime Minister's pictures in Country Life magazine, posing as the country boy, onwards--shows that their appeal to the rural electorate was, like so much else, a web of deceit.

10.49 am

The Parliamentary Under-Secretary of State for Scotland (Mr. Malcolm Chisholm): I congratulate the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) on securing this debate on the rural economy. We have had an informed and wide-ranging debate that has covered many areas of public policy. The House will be aware that I do not have responsibility for all--indeed, for most--of those areas, but since May I have visited many parts of rural Scotland in connection with my responsibilities for transport, local government housing and European structural funds.

I have 10 minutes in which to speak and I propose to spend five minutes on the general matters the hon. Gentleman raised and five minutes on the beef question. He started by asking about the Government's philosophy and their role in supporting the rural economy. The Government have been elected on a manifesto

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commitment to sustain vibrant local communities in rural and remote areas. We recognise that those who live and work in rural areas have special needs. Our manifesto also stated that we recognised that the countryside is a great natural asset and a part of our heritage that calls for careful stewardship.

On 31 October, in Scotland, we published a discussion paper, "Towards a Development Strategy for Rural Scotland", which set out the aims we plan to follow in all our policies for rural Scotland. It stressed that sustainable development is at the heart of those policies. In rural areas, such development requires an integrated approach to three main policy objectives: economic, social and environmental. In economic life, we want more job opportunities and improved education and training to enhance the life opportunities of the rural population. In the social area, we want to improve services and enable local communities to retain population and expand social and cultural facilities. In environmental matters, we want to safeguard our natural heritage in a way that recognises that people continue to have an active place in the rural environment.

In short, we are committed to a living countryside. We reject the assumption of general rural prosperity that underlay the previous Government's 1995 rural White Paper. We recognise that there are specific rural problems: low wages in some sectors of the rural economy; inaccessibility for new businesses; and lack of employment opportunities. These are not new problems, but the Government are committed to enhancing opportunity and promoting employment and investment for sustained economic growth. Our aim is to enhance the life chances of rural citizens, especially those who suffer from social exclusion--as mentioned by my hon. Friend the Member for Stroud (Mr. Drew).

Mr. Laurence Robertson (Tewkesbury): When the Minister discusses employment opportunities in the countryside, will he bear in mind the enormous impact a hunting ban would have on countryside employment?

Mr. Chisholm: How I voted on that issue is a matter of record and I do not propose to speak about it now.

Since coming to power in May, the Government have taken decisive action to help rural communities. First, our proposals for devolution will enable far more extensive discussion of rural issues in Scotland; a proportional voting system will ensure that the new Parliament is an inclusive one in which rural Scotland has a strong voice. Secondly, we have announced our intention that national parks will be established in Scotland, ending many years of indecision on that matter. Thirdly, we have established a land reform policy group for Scotland, in fulfilment of our manifesto commitment to


I shall comment briefly on the three specific areas mentioned by the hon. Member for West Aberdeenshire and Kincardine: structural funds, housing and transport. He will be pleased to learn that a press release today will announce objective 5b funding for his area of the country and we are determined that structural funds for rural areas should continue under the new objective 2 arrangements.

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We are also determined to keep funding for the highlands and islands and hope to invoke the sparsely populated area criterion to establish that. Some hon. Members might be surprised to learn that the highlands of Scotland are almost as sparsely populated as Finland. We shall also make use of the new treaty language on islands. I am especially aware of the problems of island communities, having visited the western isles this summer. I recently wrote to the chairman of Caledonian MacBrayne asking him to reconsider the decision to raise fares on the Ullapool-Stornaway route.

In the past two weeks, we have started three major housing initiatives that will help housing in rural areas: the energy efficiency initiative, which is tied in with welfare to work; the empty homes initiative, about which there will be announcements next week; and on Friday we announced £35 million for new housing partnerships, and I have said explicitly that that should apply to rural as well as to urban areas.

In many recent transport speeches, I have emphasised that solutions appropriate to urban areas might not be appropriate to rural areas. We shall have a new framework for bus services, which the hon. Member for West Aberdeenshire and Kincardine mentioned. I have also flagged up the importance of community transport and I hope that there will be an announcement about that soon. I have ensured that a member of the Community Transport Association is on the national transport forum which I recently convened.

Beef contributes between one quarter and one third of Scotland's total gross farm output. The continued presence of beef production on our hills and uplands is testament to the Government's commitment to this sector and the extent to which, as a Government, we are prepared to continue to support it. To put that contribution into perspective, I remind the House that the beef industry in Scotland received £127 million in direct subsidies in 1996, not to mention the institutional support that is provided via intervention. Put another way, direct subsidies represent between 200 and 300 per cent. of net farm income on specialist beef farms in our less-favoured areas.

Mrs. Browning: Will the Minister give way?

Mr. Chisholm: I have only four minutes left, but I shall take an intervention at the end of my remarks about beef.

On average, each beef farmer in the less-favoured areas receives roughly £25,000 in subsidy. Much has been made--understandably--of the present difficulties that confront beef farmers. In considering that, one has to recognise that various forces are at work. First, there is the long-term downward trend in beef consumption. Secondly, bovine spongiform encephalopathy is having a major impact on the sector. Thirdly, as has been mentioned in the debate, sterling is strong at present, which is a clear reflection of the confidence investors have in the current Government--unlike the previous one.

Much has been made about the downside of a strong pound. I acknowledge that it is aiding imports to this country, particularly from Ireland. It is hardly surprising that farmers--especially beef farmers--are queuing up to press for agrimonetary compensation. There was, however, no such queue when the pound was weak and

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farmers were overcompensated to the tune of £100 million per year on average between 1992 and 1996. Even taking account of recent revaluations, common agricultural policy prices in the UK are converted at a rate that is 5.6 per cent. higher than it was in January 1990.


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