Examination of Witnesses (Questions 1
- 19)
TUESDAY 30 JUNE 1998
MR DUDLEY
COATES, MS
JUDY ALLFREY,
MS LINDSAY
CORNISH AND
MS DIANA
KAHN
Chairman
1. Mr Coates, welcome to this first session
of the Agriculture Committee's new inquiry into the rural development
aspects of Agenda 2000. It is our first evidence session, as I
think you know. It would be very helpful to the Committee if you
were to introduce yourself and the other members of your team?
(Mr Coates) Thank you, Mr Chairman. I
am Dudley Coates. I am Head of the Environment Group in the Ministry
and we have co-ordinating responsibility for the Rural Development
Regulation. And, on my left, Judy Allfrey, who has actually been
chairing the Working Group during the UK Presidency which has
been looking at some of the Regulation, but they have not completed
their work. Lindsay Cornish, on my far left, from the Ministry's
Livestock Group. And Diana Kahn, on my right, from the Department
of the Environment, Transport and the Regions, who looks after
rural issues in that Department.
2. Thank you very much indeed. Can I begin by
apologising for keeping you waiting rather longer than we had
intended, we had a lot of business to get through, and I do apologise,
but I do not think I should constrain our evidence session now.
Now we know what we are talking about, one of a number of draft
Regulations that the European Commission has published to implement
the proposed reform of the Common Agricultural Policy. I think
it would be helpful perhaps to begin with a general feel of what
it is we are talking about by asking you if you could relate this
particular draft Regulation to the wider reform of structural
funding proposed under Agenda 2000, going beyond the narrowly
agricultural issues. Some comments will be appreciated?
(Mr Coates) Yes, Mr Chairman. I will do my best. This
particular proposal is part of the Commission's CAP package within
the Agenda 2000 broader package, and what it does, essentially,
is integrate the 1992 so-called accompanying measures, the things
which were adopted in the 1992 reforms of the Common Agricultural
Policy and which are funded from the Guarantee Section of the
EAGGF, with those current structural measures which are funded
from the Guidance Section of the EAGGF. The Commission's proposal
is that this does not involve these things becoming Structural
Funds, in themselves, but it is linked to the Structural Fund
proposals, in that the Structural Funds model of programming on
a multi-annual, seven-year basis, with the monitoring and evaluation
arrangements, is adopted in this Regulation. So, whilst the Commission,
as we understand it, do not see this proposal as formally part
of the Structural Funds, there is clearly some overlap, particularly
in the programming parts of the arrangements. Does that help?
3. Up to a point; it is probably the best that
anyone can do at this stage though, so thank you for that. Before
I hand on to my colleagues, I want to explore the more general
themes about the scope and emphasis of the draft Regulation. I
want to start with a general discussion of what it is trying to
achieve. Can I ask you one point of detail from your very helpful
memorandum to us, for which we are grateful. In paragraph 4, you
said: "The Commission has indicated that the scope of the
new Regulation may also be extended to a new Community Initiative
on rural development." That is potentially quite a big event.
Do you know any more about that?
(Mr Coates) We know a little more. Perhaps I could
ask Ms Kahn to say a word or two about that.
(Ms Kahn) We do not know a great deal more, because
the Commission have not put forward any detailed proposals, but
it is one of three Community Initiatives proposed by the Commission
as part of Agenda 2000, the others related to transnational co-operation
to fight discrimination and inequality in employment, and to transnational
and interregional co-operation to stimulate regional economic
development. For simplicity, each of the three Initiatives is
expected to be financed from a single Structural Fund, and the
Rural Development Initiative has been provisionally allocated
to the Guidance Section of the EAGGF, but the Commission has not
issued any detailed information; our expectation is that it will
continue the work of the LEADER II Initiative under the current
Structural Funds arrangements, but that is speculation, to a certain
extent.
4. Speculation, or a well-informed guess?
(Ms Kahn) I think, a well-informed guess, might be
a fairer description.
Chairman: Thank you very much. I will move on
to Mr Hayes to explore the general themes.
Mr Hayes
5. I am grateful, Chairman. In your memorandum,
you draw attention to the contradiction, or, at the very least,
I suppose you would say, the inconsistency between Article 2 and
Article 31, the first of which talks about the conversion of farming,
and the second of which talks about wider issues, the precise
phrase is "related to rural activities" which is tacked
on to the end of "farming activities and their conversion".
Presumably, you would welcome this slightly wider view, and, if
so, would you give us some feel for how widely you feel the Regulation
should apply?
(Mr Coates) Yes. Perhaps I could ask Ms Allfrey to
reply to that in a moment, but perhaps I could also make a general
point, which arises in connection with this question, which is
that clearly there are some parts of this Regulation which have
not been discussed in detail with the Commission or in the Working
Group, and some of our answers will inevitably be speculative
or uncertain, and that may apply to part of this answer, but I
will ask Ms Allfrey to reply, if I might.
(Ms Allfrey) As you say, there does appear to be an
anomaly here. Article 2 seems to limit support to measures related
to farming activities and their conversion; but not only Article
31 but also the forestry measures seem to go wider than that.
In our view, agriculture remains an important part of the rural
economy and we welcome proposals that will enable the continuation
of support for agricultural businesses; but we think that is not
sufficient on its own; for rural development to be effective,
we would like it to go beyond strict support for the farming activities.
The rural economy is getting increasingly diverse, with jobs being
created in service industries, tourism, small businesses, and
many of these have not got much relationship to agriculture. We
therefore think that the Regulation should be extended to cover
non-agricultural businesses and to activities that support them
and rural services, and we will be arguing this case in the Working
Group and in Council.
6. I know that Mrs Organ is going to ask some
specific questions with her typically incisive approach, but before
she does so, Chairman, I just want to press you on this. I take
your point about the desirability of a wider application, and
I know that this will come up in more detail in questions later,
but do the mechanisms and structures exist for the delivery of
that wider view?
(Ms Allfrey) The mechanisms have yet to be set up,
under this Regulation. The Regulation proposes a programming-type
system, similar to that which has been employed for the Structural
Funds, and it would be possible to envisage applying that to rural
development, wide rural development measures, in the same way
as it could be applied to narrower, agriculturally-based rural
development measures.
(Mr Coates) Perhaps I could add, in Objective 5b areas,
we have applied similar sorts of approaches and, other things
being equal, one might build on those sorts of arrangements in
this connection.
7. Yes, I am familiar with Objective 5b and
the need for it to work, but you have to be talking about something
considerably deeper, considerably more fundamental than that.
You have yet to convince me that experience illustrates that those
mechanisms could be put in place and have real impact in rural
economies. We do not want to be toying with the edges, do we?
(Mr Coates) That would, of course, depend on the finance
being available. You have not specifically asked that question,
but perhaps I could say that in the Commission's proposal there
is not a substantial new provision for new expenditure. I think,
if you were looking for a large and very radically different programme,
that would imply significant shifts in expenditure, which are
not necessarily implied in the Commission's proposal.
Mrs Organ
8. I am a little bit confused about this. First
of all, we are saying there is some scope with this new Initiative
and we would like to see the Article 31, the sort of wider Regulation
apply. But then we are going on to say, am I right, that you are
saying, "Well, we would quite like it for some support for
farming activities, bearing in mind they are so important in the
rural economy; but, on the other hand, other activities are also
important, such as tourism and bits of industry"? What I
cannot quite get to grips with, from your answer, is, we are not
talking about Objective 5b, which is only into certain areas,
like Cornwall wanted, we are talking about the whole of the rural
economy here, which, in the past, through the previous regime,
was getting support, either arable in the East, or dairy in the
West; are we saying then that you would only like to see a little
bit of tweaking, or actually do you want to see a fundamental
change?
(Mr Coates) The Government's long-term policy is that
there should be a fundamental shift in expenditure from support
to agriculture through the Common Agricultural Policy Instruments,
and particularly the commodity support regimes, into measures
of the sort that would be covered by this draft Regulation. The
point I was seeking to make a moment or two ago is that the Commission's
proposals, as they currently stand, will not release the substantial
sums of money from the commodity side that will be necessary to
fund a very much larger programme. You are correct in identifying
that the scope of this Regulation would cover the whole of the
country and not just designated areas, but what the proposals
do not do is release substantial funds. So I think, in reality,
there would have to be some priorities set in deciding which parts
of the Article 31 type measures to use; that is not to say that
we are not in favour of that being as wide as possible so that
one can choose from as wide a range of possibilities.
9. So if we support the regulation of activities
in Article 31, let us take improvement of, say, living conditions
in rural areas, now that is fairly important for all those that
live in rural areas, particularly those that are in poor housing,
socially excluded and with poor transport, what are we talking
about, how the Government would construe that, and how much money
would they be putting into that through this scope, from these
funds that would be available?
(Ms Kahn) If I could answer that question. I think,
as my Ministry colleagues have made clear, this bit of the Regulation
has not yet been discussed in working groups in detail, and so
it is an informed guess again about what actually, at the end
of the day, it might cover. But it clearly seems to be a recognition
that village life does depend on a range of services and facilities
and provides a framework, potentially, for support for those,
as and when resources become available, through a reduction in
sums going into the commodity regime. I think the best way of
illustrating the sorts of things that we envisage it might cover,
as and when funds become available, are by looking at some of
the sorts of initiatives that are currently supported by the Rural
Development Commission and through ERDF 5b projects, and I suppose
one might talk about child care, the Child Care Initiative, which
the RDC has put some funds towards, one might talk about improving
access to training and employment opportunities through IT, using
modern technology to develop access to IT in rural areas. But
I think the best way of explaining it is to have a look at the
sort of work that is currently being done under existing programmes.
10. That slightly begs the question then. If
we are looking at Article 31 and the application, the other thing
I was going to ask about was all these issues, renovation and
development of villages, development and improvement of rural
infrastructure, all of those issues are actually things that are
already being tackled by the Rural Development Commission; in
my area, they do a pretty good job with a few funds. So, in the
end, why do we not say, well forget this Initiative, let us just
move all of the money from the funds that might be available and
just give it to RDAs and Rural Development Commissions to do with
an enhanced programme that they are already doing quite successfully,
and why are we dancing around doing all the rest of it?
(Mr Coates) First of all, this is a Commission proposal
that would bring into play, in principle, European funds, as well
as existing national funds. It might therefore make available,
in the long run but not necessarily in the short run, which is
perhaps the point I was making a moment ago, additional funds
over and above those that might currently be deployed. But I think
I do need to make clear that we do see this draft Regulation very
much as a framework which might be built on in the longer term.
In the short run, as I said a few moments ago, the Commission
is not envisaging allocating additional funds, apart from the
small additional funds which are provided in the Commission's
proposals which are specifically related to the agri-environment
side, which is not the part of the proposal we are currently discussing.
So there is not, on the proposals as they currently stand, significant
new money likely to be available, and, as I said earlier, there
would have to be choices about priorities. The point I think we
are making is that some of the sorts of things which are currently
done would be where we would assume we would start from in thinking
about the things one might use this Regulation for.
Chairman
11. Is what is happening here that the Commission
is laying a sort of exit strategy from production-linked subsidies,
it is a bit of a Trojan horse, and there will be a further development
of its thinking when we next discuss form; is not this a first
stage in a carefully crafted process by the Commission?
(Mr Coates) I am not sure the Commission would admit
to being quite that subtle, Mr Chairman, but certainly it would
be fair to say that some of our reasons for supporting the general
thrust of this Regulation are on those lines.
Mr Curry
12. Chairman, I started off by being puzzled
and I am now puzzled and deeply alarmed, and it seems to me that
the less new money available the better, judging by what I have
heard up to now. Are we seriously talking about a new, we will
not call it a fund because you said it is not really a fund, like
Structural Funds, but it is sort of the equivalent to that, are
we really talking about a sort of pot of money which is going
to be sprayed across the country generally, are we actually talking
about the removal of funds which, for example, support hill farmers
in the Yorkshire Dales, which is then going to support villages
round Harrogate, for example, where the prices start at £250,000,
or somebody starting a business in Hetton, which is the most desirable
village north of the Trent? Are we serious about this? How do
we decide what businesses we are going to help and not help in
an allegedly competitive environment, what villages need it and
do not need it? Given that 5b was such a catastrophic experience
for most of its existence until the administration was finally
sorted out, a lot of that to do with PES issues, of course, should
we not conclude that the experience we have had has actually been
rather bad and the less the Commission does in this regard the
better?
(Mr Coates) I am not quite sure I know where to start,
in reply to that question, Mr Chairman. Whilst I certainly would
not want to claim that everything we have done under Objective
5b was perfect and that, certainly, as we began the process of
implementing the present Objective 5b arrangements we all had
a fairly steep learning curve, that is to say Government and people
in local communities who were potential applicants, and so on,
we were all on quite a steep learning curve. Some mistakes were
made, I would not want to dispute that. I do not think I would
want to agree with the implication of Mr Curry's comment, that
the whole thing has been a disaster, because I do not think that
is right. I think there have been some significant and very useful
things that have been done through the Objective 5b programme.
13. But you will admit that the decision-making
process was very, very difficult, it took for ever to get authorisation
through. I realise that, recently, that has been significantly
improved. I am not going to level a retrospective criticism at
it, I am just concerned, if we are going to reproduce this on
a sort of national scale, and how we seem to get away from any
concept of need at all?
(Mr Coates) If I can then go on to the main substance
point, which Mr Curry has just identified, clearly, if this Regulation,
or something like it, is adopted then judgements are going to
have to be made about priorities, both which measures within it,
of which there is a very wide range, not just the Article 31 measures
but all the measures earlier in the Regulation, which measures
one chooses to use and how much money might be available and which
areas to focus on; all three of those sorts of decisions will
have to be taken. And at this stage, of course, I could not prejudge
what decisions might be taken, some time next year, probably,
when the Regulation has been adopted. The point I think we were
trying to make was that, particularly since we are not expecting
there to be a significant shift in the sums available, our starting-point
will inevitably be where we are now, and that, insofar as both
the Rural Development Commission and the 5b programme have targeted,
for example, on rural areas of greater need, in various ways,
we would assume that the Article 31 measures probably would also
be targeted in similar sorts of ways.
14. But it is, geographically, very tightly
defined, is it not, it goes round the edge of Skipton but not
into it, for example?
(Mr Coates) Yes.
15. Whereas will this Regulation be tightly
defined geographically, or not?
(Mr Coates) Not as such, but the programmes that would
be adopted within it could have, they do not have to have but
they could have, geographical lines, they could relate to the
Rural Development Commission's, Ms Kahn can remind me of their
correct name, rural development areas, or to 5b areas, there could
be different arrangements for different parts of the country in
that sort of way. What this Regulation is is a framework within
which programmes are adopted which then define which of the measures
are adopted, which areas might be covered, how much funds go in.
16. It is going to be a lot of work for the
Regional Offices, is it not?
(Mr Coates) There is a lot of work for whoever puts
the programmes together and implements them, yes.
Chairman: I think, in the interest of making
a bit of progress, we will move on, because Mr Mitchell and Mr
George both want to make quick points in this area.
Mr Mitchell
17. It is just a supplementary question. I am
getting more and more baffled here. We are just wrestling with
a cloud of gas, are we not, because it is all so hypothetical?
The Commission claims a nice intention of shifting expenditure
into development matters but is not going to provide the money,
you say; the Government welcomes that intention because it is
doing a little bit in that area and would like some supplementary
money to be provided from Europe, which it ain't going to get.
The basic questions are, who is the money going to go to, is it
going to go to farmers, or is it going to go to existing channels
for rural development, in which case, is the British Government
going to cut back on what it is doing in that area and just rest
on European money?
(Mr Coates) The straight answer to the last question
is, nobody has taken any decisions on what priorities would be
set within this Regulation were it to be adopted. I think, what
I am trying to stress, again and again, is that the Regulation,
in itself, is very much a framework, there is a long list of possible
measures that can be adopted within it; we would like those measures
to be relatively wide so that they can include the sorts of things
that Ms Kahn has mentioned, the sorts of things such as the Rural
Development Commission does now, some of the sorts of things that
we have done in Objective 5b areas, using that particular instrument,
that they would be available to us as and when funds were available.
But I was also seeking to make the point that on the Commission's
proposals as they stand there are no proposals for new funds in
these areas in the initial package. Where that might lead one
further down the road, with hopefully more radical reform of the
agricultural commodity arrangements in due course, would then
be with an Instrument that could be used more widely and could
extend some of these arrangements, with additional money, into
wider areas, for example.
18. But that is all hypothetical. Unless the
money is diverted from farmers, this is really a means of putting
a better public relations face on the CAP and continuing it by
other means?
(Mr Coates) I do not know that I would say that that
is the impact of this particular draft Regulation, which forms
part of a wider group of CAP proposals, which do not release new
funds, as we would prefer that they did.
Chairman: We must remind ourselves, I think,
that we are looking at a Commission document, which I would tease
out from you what your attitude to the Commission document is,
and we must not criticise you for any shortcomings of the document
itself.
Mr Mitchell: Much as we would like to.
Mr George
19. I would just like to come back to some of
the lessons learned from previous experience of LEADER and 5b,
which David Curry was touching on, and, in particular, just to
emphasise, if you like, a scenario, that experience seems to suggest
that both under LEADER, which was, as you know, very slow in starting
and incredibly bureaucratic, and also the 5b programme as well,
which was found to provide small community groups, who would no
doubt be encompassed in the Article 31, which, as you rightly
say, is very widely drafted, they found many obstacles put in
their way to obtaining any of the funds, EAGGF, ERDF or ESF funds,
under those programmes, and many were actually worn down by the
bureaucratic process involved. Now what lessons would you say
you have learned? If it is a widely-drafted Article, it is a wide
framework, will you be pushing to ensure that the Commission continues
to take, if you like, a light-touch approach and give local community
groups, local programmes, the freedom to have delegated responsibility
for the implementation of these, because that clearly is the lesson
which I think many areas have learned?
(Mr Coates) As I said, I think, in answer to Mr Curry's
question earlier, we have certainly learned quite a lot and I
think potential applicants have learned quite a lot from the 5b
process, and we would certainly try to take those lessons into
account, just as in the light of the mid-term evaluation of the
various 5b programmes we have simplified our administrative arrangements
and delegated within MAFF approval to our Regional Directors and
away from headquarters for the great majority of projects. I am
sure it is also right that, in some cases, effectively, we sub-delegate
grant-making powers; one example Mr George may know about is the
West Country Tourist Board arrangement which comes to mind; I
have visited one of the projects and it is quite a good model.
It does not necessarily always apply in every case and different
circumstances may apply in every case. But we would certainly
want to try to learn lessons from all that experience in implementing
this Regulation, if it were adopted. I do not know whether Ms
Kahn wants to say anything about the non-EAGGF side of anything.
(Ms Kahn) Yes, if I may. I think that we certainly
agree that, in the negotiations for the reformed Structural Funds,
certainly, we want to keep the administrative arrangements as
simple as possible and they should be kept under review, and one
of the things that is being pressed by the UK is for more simplification
of the way the Funds can be administered. Last year, we took some
steps to simplify the way the ERDF and ESF are working, by introducing
an Action Plan approach, so that regional/local partnerships were
empowered to appraise individual projects which were part of the
Action Plan, rather than them having to be decided by the wider
partnership. So that sort of delegation, simplification, is certainly
what we will be pushing for, provided the Community rules allow
us to do that.
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