Examination of Witnesses
(Questions 258 - 279)
WEDNESDAY 21 OCTOBER 1998
MR JOHN
EDWARDS, MR
MARK PEARCE
AND MR
BRIAN WILSON
Chairman
258. Gentlemen, welcome to our first autumn
evidence session. Our first victims! Mr Edwards, I wonder if I
could just invite you to introduce yourself and your team.
(Mr Edwards) Yes. I am John Edwards,
I am the Chief Executive of the Rural Development Commission.
On my right is Brian Wilson who is the head of the research branch
of the Commission. On my left is Mark Pearce who is head of rural
economy and until very recently was our regional manager in the
West Midlands.
259. Can I begin by expressing the Committee's
gratitude to you for the two memoranda which you provided for
us. One more subjective, one more objective in its tone. We are
very grateful to you for both of those. They have been very helpful
to the Committee. If we may, we would like to begin with you on
some of the practical stuff in the second memorandum before turning
to your view of the proposals from the Commission for a regulation
on rural development. We would like to begin with the more factual
material, if we may. In your very helpful submission to us you
talk about the trends evident in rural areas and they are familiar
to many of us: repopulation rather than depopulation, restructuring
of the economic base, radical given the present problems in farming,
increase in part-time and lower skilled employment and lack of
access to public services. Now that last probably is not very
true of the rest of the country but the others strike me really
as being quite typical of the rest of the country as well, the
urban areas. To what extent can you draw a real and effective
distinction in policy terms now between urban and rural areas?
(Mr Edwards) It might help, Chairman, if I just deal
with maybe three or four broad areas that you have just outlined:
the population trends, the economic trends in the countryside,
small firm issues and then I will finish up talking about key
service issues which you mentioned last. The population growth
is much greater in the majority of rural districts than it is
in urban areas. The age structure is quite different as well.
There are more people of retirement age in rural districts, in
excess of 20 per cent, compared to 18 per cent in England as a
whole. A much lower proportion of people in the 15 to 29, young,
economic active group, 20 per cent compared to 23 per cent in
England as a whole. As you said, we have seen a much faster growth
in population in rural areas than we have in urban areas in the
last 20 years. It had grown by 17 per cent compared to four per
cent nationally in the period 1981-91 so we now have a much greater
population in many rural areas. The fastest growth has been in
Cambridgeshire, Berkshire and Buckinghamshire, so shire counties,
close to main centres of population. A large proportion of that
growth, about two thirds, has been by net in-migration. In some
counties virtually all of the population growth is by in-migration
and Devon and Dorset are two examples of that. That gives a way,
if you like, in which the population structure is changing quite
dramatically in rural areas. If we turn to look at the economy
for a moment and talk, first of all, about agriculture, which
obviously is a rural occupation. Less than two per cent of the
national workforce are employed in agriculture. The average in
rural districts is 4.4 per cent but in some of the more remoter
areas, those which we call rural development areas, the figure
climbs as high as 16 per cent and one of those is South Holland
in Lincolnshire. Therefore you get quite considerable differences
in the agricultural population between rural districts. Nevertheless
we have seen agricultural employment in long term decline with
some 68,000 job losses between 1986 and 1996, so whilst it is
still a very important industry in pure employment terms it is
declining quite dramatically. The wider rural economy is very
diverse, it is characterised primarily by small and medium enterprises.
The rural economy continues to undergo some dramatic change with,
as I said, a decline in much of its traditional employment base,
not only agriculture but the extractive industries as well and
an increase in the service sector, distribution, catering, financial
services, and the public caring services have been the main job
creators. Tourism is a major employer in many rural areas. Spending
by visitors in rural England is estimated at about 10 billion
pounds per annum with some 320,000 jobs directly in tourism and
supporting a further 380,000[4]
jobs. If I may later on I will perhaps talk a little bit about
the problem that tourism is facing this year. If one looks at
wage levels and GDP per head of the population, and the latter
is very important because it is one of the key criteria for the
new regional development agencies, the lowest GDP levels in England
are in rural counties: Cornwall 73 per cent, the Isle of Wight
68 per cent of the national average. There are major issues to
address there. If we look at the small firm economy which is prevalent
in many rural districts now there are in excess of 400,000 VAT
registered firms in rural districts, one third of the national
total. It demonstrates the relatively small size of many rural
firms. A study for the then Department of the Environment some
three or four years ago showed that 41 per cent of rural employment
is in firms of less than 10 employees compared with 31 per cent
in most urban areas. Conversely there are very many fewer larger
firms in rural areas as well. Having said that, rural firms have
performed well. They have created more jobs on average than their
urban counterparts. They have been relatively profitable and few
of them have gone out of business in the last few years. Linking
that to wider employment and unemployment issues, in rural districts
there are some 6.7 million people in employment, an increase of
almost 150,000 in the period 1992-98 which is a 3.8 per cent increase
compared to a 0.9 per cent increase nationally. So that shows
that in rural districts a lot of people are in employment and
employment growth is within rural districts which again moves
across to a later question about: if you create jobs in rural
areas are they actually filled by local people. Self-employment
is also a major job creator in the remoter rural areas. Self-employment
in most rural districts is around 15 per cent compared to 12 per
cent nationally. If one goes to the remoter areas of Cornwall,
Devon, North Yorkshire and Herefordshire that climbs to 25 per
cent and also part-time employment is very prevalent in many rural
areas so it is around about 26 per cent. That links across, to
the seasonal nature of much of the employment in some of the remoter
more sparsely populated areas. We know that the unemployment data
for rural development areas tends to fluctuate by about one per
cent around the national rate because of this fluctuation in seasonal
employment. If I could ask Brian Wilson to deal with one issue
we have researched which is under-employment.
(Mr Wilson) Yes. The claimant count of
unemployment is seen as a fairly narrow measure of unemployment,
it is the narrowest of all the measures which is used. It is just
what it says it is, a count of people who are eligible to receive
unemployment benefit in the form of Jobseeker's Allowance. There
is quite a lot of evidence that quite large numbers of people
who lose their jobs do not find their way on to that register
and indeed quite a lot of people who move off that register of
unemployment do not find their way into jobs. Attempts have been
made to design broader measures of unemployment and indeed the
Government itself now frequently quotes an international measure
but the hidden unemployment measure which has been designed by
an academic at Sheffield University is really a much broader measure
of joblessness, if you like. It includes four other groups in
addition to the claimant unemployment which are people who consider
themselves to be unemployed, but are not eligible to receive the
benefit; some of the people who instead of claiming unemployment
benefit are on sickness benefit, not all of them by any means
but some of them; some of the people who retire early on the grounds
that some of the people who do so have lost their jobs and presumably
decided that they will not find another job at that stage in life
and also people who are on Government training schemes. That is
the make up of that broader measure. The finding is that there
is a disproportionate number of people who are in that group of
hidden unemployed in our rural development areas, higher than
the national average.
(Mr Edwards) To deal with one final issue on economy
and small firms, just to pick up the incomes data. The average
level of income, weekly earnings in England in 1997 for men was
£414 but in Cornwall that dropped as low as £315. For
a female, £301, and again in Cornwall down to £241.
It demonstrates that there are low income levels in many rural
areas as well. The final point you did mention, Chairman, was
the issue of key services which is a particular rural problem.
Many rural people are without access to essential services and
on the figures from our latest tri-annual survey of key services,
picking up five key indicators, 42 per cent of parishes have no
permanent shop, 43 per cent no post office, 83 per cent no surgery,
49 per cent no school and 99 per cent no Job Centre or Benefit
Office. That last issue is very important when one is looking
at the New Deal for Young People. In Cornwall, for example, 49
per cent of people who were eligible for the New Deal programme
cited access to training and job opportunities as a key constraint
facing them because public transport was relatively poor. So when
you have got poor local services and poor transport provision
it does compound the problem. The smaller parishes and more remote
parishes have even lower services than those averages for those
parishes below 10,000 population. I think, Chairman, that deals
with the broad background.
260. That is very useful. Thank you, it is very
helpful. Two quick questions from me, perhaps with rather briefer
answers before I bring in Sally Keeble. Can I just ask, that analysis
you have just taken us through very helpfully, does that lead
the RDC to believe there is a genuine need for separate policy
instruments in rural areas? I do not want to go into detail at
this stage, just in conceptual terms, is there a need for separate
policy instruments? Perhaps I can link my second question with
it: are the number of parishes and rural areas in need of assistance
in your judgment increasing or decreasing?
(Mr Edwards) If I could deal with the first issue
first, Chairman, about separate policy instruments. There needs
to be an acknowledgment in the way the policies are delivered
that there is a particular rural context. Policies need to be
rural proofed. Is the way they are developed and going to be delivered
actually applicable to rural areas and particularly remoter rural
areas? So it is not necessarily about separate policy instruments
but it is recognising that policies and the way they are delivered
needs to have a particular rural context.
261. Are you stressing that rather like with
the compliance cost assessment legislation at present there should
be a rural test as well to make sure legislation actually formally
does help rural areas?
(Mr Edwards) Yes. The second point you mentioned was
rural areas in need of assistance, are they increasing or decreasing?
The only robust statistical evidence that we have is that which
designated the Commission's 31 Rural Development Areas in 1993.
That was based on 1991 census information. It is difficult at
this stage I think to identify whether there are more or fewer
rural areas in greater need than there were when we designated
those areas in 1994. Some issues of rural disadvantage are widespread
and that is the access to services, lack of affordable housing,
that is a pan rural England problem. There are areas which suffer
a concentration of economic and social problems, peripheral rural
areas, areas which lost their coal mining industry are still suffering
great problems and continue to do so. We are all aware of the
problems facing agriculture and there are the continuing problems
of the seaside resorts which are facing a restructuring of their
tourism industry. It is a complex picture. You can look at a certain
area and say it is getting better there but it is getting worse
in other areas as well. Certainly I cannot and the Commission
cannot at this stage say whether there are more or fewer areas
than there were in 1994.
262. Your hunch would be that it is broadly
the same order of magnitude.
(Mr Edwards) I would not even want to back that hunch,
Chairman, at this stage.
Chairman: I think there was a nod on your other
side, I am not sure. Our shorthand writer cannot record nods.
Ms Keeble
263. I listened very carefully to the answer
you gave to the Chairman's question but I feel in a sense you
have not answered it. I wondered if I could press you again on
it. You said unemployment fluctuates at around one per cent around
the average depending on seasonal factors and that applies to
lots of other parts of the country too, for example, London, if
you have seasonal factors for summer, tourism and so on, you talked
about hidden unemployment again as a factor elsewhere. You talked
about successful small firms that by and large are more successful
than the average. Large areas of the country have had an economy
that is dominated by small firms and what you seem to be saying
is in rural areas they are more successful. Certainly you can
go and see firms who have successfully relocated. £300 a
week you mentioned is not much below the average wage in my constituency
which is an urban constituency. What I wonder is whether you can
identify what the structural differences are about the rural economy
or whether it is just the same trend but in different locations
and also the differences between the rural areas so you are not
lumping the whole rural economy into one big pot and saying there
are similarities between rural economies in completely different
parts of the country. I wonder if you could give an answer on
structural differences not just some of the features but the structural
differences, between the rural economy and urban one?
(Mr Edwards) There is a difference between the economy
in the remoter rural areas and the more accessible rural areas
and urban areas.
264. The remote rural?
(Mr Edwards) The remote rural areas which the Commission
designated primarily as its Rural Development Areas. They also
link across very closely to the European Objective 5b areas as
well. In those locations there are some differences between the
way the small and medium businesses operate than they do in more
accessible rural areas and also in urban areas. They tend to be
more labour intensive, they make less use of technology and innovation.
This does have some longer term consequences for the way those
businesses develop. There are skill shortages as well for those
firms, particularly in managers and skilled labours, skilled technical
labour. They do not make a great deal of use of training and business
support services in remoter locations as well. If you are looking
for an area where Government policy perhaps does need to be revisited,
it is the way support through business links should be tailored
to deliver its services better to firms in remoter locations,
whether you do it by having outreach facilities, using IT much
more effectively or I think as the Commission found in the past
when it had its own business advisory service you need to be able
to deal with those firms at their own premises because they are
unable to access services which are away from their location.
I think in that area the way that policy is delivered does need
to be looked at.
265. You are talking about remote rural, accessible
rural and urban?
(Mr Edwards) Yes.
Mrs Organ
266. Okay. You have obviously painted a picture
of a rural environment that is very diverse, we cannot make generalities
about it between remote and accessible rural areas. You painted
the picture of outlining the fact that there is a composition
in rural areas of more elderly population, fewer young people
and the skill level, difficulty with skilling and those that have
skilled jobs tend to be people that have come from outside, are
actually urbanites who have moved to the rural idyll but they
have taken their skill and their job with them. I wonder if you
could give us some details of concrete measures that you have
taken to address this division between the urbanites that are
now living in the rural areas and taken their skill and job with
them and the local people and the imbalance also in the demography?
(Mr Edwards) I will ask Mark Pearce in a moment to
describe a particular measure that we adopted to deal with agricultural
restructuring which is very much about dealing with local skill
problems and reskilling and retraining local people. I think it
is dangerous to talk about incomers, if you like, or people moving
into rural areas as transporting problems. They do not. Quite
often they actually transport business development skills with
them.
267. I know.
(Mr Edwards) This is where there is quite a difference
between remoter rural areas, accessible areas and urban areas.
Lots of the businesses in the remoter areas have been developed
by people who moved in, developed their business locally and then
take on people from the local economy. Not all people who move
into an area bring with them problems.
268. They have brought their skill and their
job with them.
(Mr Edwards) Yes, they bring their skill and their
job with them but also they bring the skill and ability to develop
business as well. A lot of people who have moved into rural areas
have developed businesses which have then created local employment
opportunities. If I can I would like Mark to talk a little bit
about the Countryside Employment Programme which was a particular
initiative.
(Mr Pearce) That was a programme which ran through
from 1992-96 to tackle social and economic consequences of the
CAP reforms in 1992. It was the process that was a particular
success although for five million we generated a good deal of
benefit: 700 jobs, over 3,800 businesses supported and advised,
over 500 people trained. So there was quite a large impact for
relatively small amounts of money. The approach we adopted was
integration so effectively it was a strategic focus but with an
appropriate strategy for local areas and local needs and opportunities,
getting together the requisite partners to work together and then
having the right level of senior people together to bring projects
forward that met the particular circumstances of those areas.
You have picked up the point they are diverse. This was appropriate
for the three areas we picked: The Marches, Lincolnshire and the
Cotswolds. Rather than assume there was a generic programme which
fitted every area we picked up specific projects that met the
specific needs of those areas. We had external evaluation which
proved that local integration was of strong benefit. Effectively
the approach we adopted and the way we found successful was a
broadly based approach so we tried to pick up economic and social
projects: jobs, training, business support as well as the social
impact, services and community facilities, involving integrated
and local partnerships.
269. How successful was that towards helping
with the imbalance of the demography in keeping young people in
those areas, giving them the opportunity of training and skills?
Did you do some evaluation of how effective they were?
(Mr Pearce) Yes, we did. You have to remember the
scale of what we were achieving against the broad brush of major
macro economic factors. We picked up on project specific benefits.
We tried to tackle agriculture, particularly farmers, farmers'
families, we tried to make advice training and job creation appropriate
for the areas they were living in to actually engage them in the
process. I think on a project by project basis we did have some
success.
270. The other thing is we have talked about
creating jobs in the countryside. I wonder if you could say whether
you think if we create jobs in the countryside do you think that
encourages in-migration? If it does, does that create a problem,
do you agree that process happens? If we create jobs in the countryside
it just sucks people in and then we then create problems, planning
problems, housing demand, more commuting, more congestion on our
roads, or do you disagree with that?
(Mr Edwards) I think we would disagree with that sort
of very broad brush assessment of the implications of creating
jobs in rural areas. There has been no large scale rural study
yet of commuting, as it were, exchange of jobs, although we do
have some research in hand at the moment to look at that. The
evidence we do have does not support the commonly expressed view
by certain organisations that rural jobs go to commuters commuting
in from town. There are some localised examples of research. Looking
at the Cotswolds for example, people setting up business in reused
buildings, 61 per cent travelled less than five miles and 92 per
cent no more than 15 miles. You were not getting people in the
Cotswolds commuting out from Cheltenham and Gloucester to take
those jobs. We looked very recently at larger firms in the rural
economy. The Commission used a benchmark of 100 plus employees.
Three quarters of the people employed in those firms lived within
20 minutes travel of business and only about five per cent travelled
more than 45 minutes. Again the majority of people employed in
those businesses are local people. Certainly the average people
travel in rural areas to work is no greater than anywhere else.
A recent survey of SMEs in rural Gloucestershire found that 20
per cent of their employees walked to work and 12 per cent cycled.
This demonstrates that when you create jobs in rural areas they
are predominately taken up by people from those areas and not
by people who are commuting in from outside.
271. You call the Cotswolds part of the accessible
rural areas?
(Mr Edwards) I think that is on the edge of accessible
and not so accessible, it depends where you are in the Cotswolds.
Mr George
272. A quick supplementary in response to the
whole issue of the relative merits of those people moving in versus
the economic potential of the indigenous population, if you like.
I feel there is a fairly glib discourse between and about mobile
professionals like probably all of us present but of course we
are less likely to be self-critical. Some of the studies undertaken
in Cornwall show that in fact there is a semi-retirement atmosphere
amongst the incoming businesses and that tourist businesses are
taken over by people who like to relive their holiday experiences
and have little training in the subject. Increasingly in rural
areas there is a challenge to traditional development policies
of the past to encourage smaller businesses to become medium sized
and medium sized businesses to become larger. I really wanted
to ask you whether the RDC has looked at that as the opportunity
rather than necessarily attracting in new businesses; in other
words concentrating on the skills of those already there?
(Mr Edwards) I think there is a difference between
people who make a lifestyle decision to move to a rural location
and then decide to set up a business while they are there or they
move in and acquire business as a lifestyle decision and people
living in a rural area who decide to establish and create a business.
Again there is this issue about polarisation between incomers
and local people. There is not a great deal of statistical evidence
or hard evidence. We have a major piece of research under way
looking at in-migrants in rural areas, why they make those decisions,
what they do when they get there and the impact they have on the
local population. An issue which applies across the whole of rural
England and probably across England as a whole is whether you
should look at supporting your local business and encouraging
them to grow and develop or whether you should spend a lot of
time and effort in trying to attract mobile, footloose business
into the location. I think the current approach is to look much
more at the former to support the growth and development in the
indigenous business, building supply chains, helping them to develop,
looking at ways in which they can become more effective, more
efficient, more competitive, perhaps rather than looking at attracting
the footloose business with the problems that can bring two or
three years down the line when you get macro economic and global
economic factors which cause that business to contract.
Mrs Organ
273. The large scale piece of research about
in-migration in rural areas and its impact, when do you hope to
have that published?
(Mr Wilson) I think it will be towards next summer
when it is actually published.
Mr Todd
274. You say that "employment in agriculture
has been in long-term decline". The Agenda 2000 proposals
and WTO indicate pressures that are likely to imply that will
continue. Is there plenty of scope for wasting money on policy
instruments resisting an inevitable process?
(Mr Edwards) Policy instruments supporting agriculture?
275. Yes. Supporting employment in agriculture.
(Mr Edwards) As I sketched out in the introduction,
whilst agriculture is a very important employer in many rural
areas, particularly remoter areas, the rural economy is characterised
by both a dynamic and relatively healthy SME sector. I think any
policy instruments that are designed to support the rural economy
or to support rural areas should look much more broadly than purely
at measures to support agriculture. Whilst full exposure to market
forces would have a significant impact on agricultural income
rates and therefore employment in some other more remote and sparsely
populated areas, for example the Rural Development Areas, maybe
we need to look at the way we use the resources in those areas
to support the wider rural economy and the wider rural community
perhaps than just concentrated entirely on agriculture.
276. I think your paper indicates that your
preference is to take that wider view in any regulation that emerges.
Have you looked at the different characteristics of the different
strands of agriculture? We talk about agriculture as being an
industry in this country. In fact it is a large number of different
kinds of industry with very different employment profiles. Have
you looked at how employment trends have moved within the various
sectors of agriculture?
(Mr Edwards) I do not think we have research in that
area, no. We regard that as being the responsibility of other
organisations and departments, not of the Rural Development Commission.
We look at the general impact on agriculture of trends in the
global economy and CAP reform and therefore how the wider rural
economy will need to restructure itself to adapt to those changing
circumstances.
277. You would not then differ from certainly
my impressionistic view which is that actually there are quite
large differences in the impact of loss of jobs in agriculture
between different sectors. For example, in my experience horticulture
has tended to retain employment rather than changing its character
as some other more general farming has in this country.
(Mr Edwards) I think the different agricultural sectors
have reacted differently. We have obviously seen the impact of
BSE on mixed stock farms and some lowland farms. We have now got
the problems in sheep farming which have quite a considerable
impact in upland areas. There are different impacts and different
problems faced by different sectors of the agricultural economy,
not only because of the sectors in which they operate but, if
you like, where they are based. For example, if you are in an
upland area and there is a significant loss of subsidy to hill
farms over the next few years then what impact is that going to
have on the landscape and, therefore, tourism business if you
like? You would then make the link across. Maybe one needs to
look in that sort of context at the way you support those areas.
Do you switch payment from supporting agricultural production
to ones which support environmental benefits? Do you also then
look at switching some of the support in an envelope to supporting
wider economic development in those areas? There are differences
locationally as well as in parts of the agriculture industry.
278. It also depends a lot on what we define
agriculture as being. The various aspects of added value within
the food chain can be seen as legitimately part of an agricultural
industry and there is evidence that this country falls behind
some others in terms of the efficiency of the links in the food
chain and the added value component that can be located on a farm.
(Mr Edwards) Again, this is largely impressionistic,
one does not have hard evidence for this.
279. Would you argue that we need hard evidence?
(Mr Edwards) There is a dislocation, if you like,
between the producer and the user or the purchaser of food. I
think over many years UK agriculture has polarised in a way and
what it is having to do now is to react much more rapidly to what
consumers want and maybe to build supply chains, value added chains,
so they can see a direct link between the production in the marketplace
and—
4 Corrected by witness to 60,000.
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