Examination of witnesses (Questions 540
- 559)
WEDNESDAY 12 JANUARY 2000
RT HON
MICHAEL MEACHER
and MR ELLIOT
MORLEY
Mr Stevenson
540. The new agricultural funding measures that
were announced last month, where does the priority lie with them
between agri-environment measures and broader rural development
initiatives?
(Mr Morley) The bulk of the money that has been announced
by Nick Brown will be going to agri-environment measures. The
total budget is about £1.6 billion over the seven years which
is a 60 per cent increase in expenditure on rural programmes.
The Countryside Stewardship scheme will take a lot of that. Some
measures, such as marketing and processing grants, which were
ended are going to be reintroduced. I think that is all part of
the direction of agriculture in terms of added value, in terms
of mamixising the returns to producers that we want to encourage.
There is £140 million for organic farming which of course
is expanding a great deal. There is money for energy crops, which
is a new area. There is money for education and training which
is very important in terms of skills and changes in the marketplace.
A huge expansion for the Countryside Stewardship budget. It does
fit in with the philosophy of beginning to move away from production
payments to payments which are more transparent and more targeted,
to give producers the freedom to decide in relation to their own
businesses what they want to do and what they want to take on
in relation to the support that they receive.
541. You say the majority of the resources is
going to agri-environment measures?
(Mr Morley) Yes.
542. Could you give us a percentage of the total?
(Mr Morley) It is one billion out of the 1.6 billion.
543. So it is three-quarters at least?
(Mr Morley) That is right.
544. Does that not mean that perhaps it is arguable
that greater emphasis should be placed on broader rural development
measures? After all, there seems to have been a myth that has
grown up over the years that if you look after agriculture then
by some magical formula the rural economy is all right. I think
that has proved to be a myth.
(Mr Morley) I think we have to accept that agriculture
has changed in relation to its role in the rural economy. Agriculture
is about 0.7 per cent of the GDP nationally, about five per cent
of GDP in rural counties, so it does vary regionally and you can
have a bigger proportion in terms of regions. There is a lot of
money that is going into the Article 33 measures which support
the wider rural economy. A lot of that is related to agriculture
in relation to marketing, tourism. What we cannot get away from
is that even though agriculture has declined in relation to its
role in the rural economy, it is still the biggest land user and,
therefore, the influence of agriculture on the environment, on
landscape, is absolutely crucial and plays a very, very big role
within the rural economy in that sense. There is the interface
between other areas like recreation and leisure and tourism and
also some of the specialist foods, added value and new innovation
as well. We want to encourage all of those as part of the broad
based approach to the rural economy.
545. Talking about the 600,000 or thereabouts
that could go to broad rural development measures over the three
years, why should that remain with MAFF? Why should it not go
somewhere else? Why should it not be part of the regional development
on a wider basis?
(Mr Morley) There will be close co-operation between
MAFF and the Regional Development Agencies and, indeed, we are
considering seconding MAFF work and staff to be part of the Government
Office structure. The RDAs have been part of formulating the regional
Rural Development Plans which will be delivering these services.
A lot of these measures are equivalent to the old 5b measures
in the Structural Funds which MAFF has always administered. We
have a network of staff who do that, we have experience within
our regional service centres which are dealing with that. You
are right, we do not envisage delivering these programmes in isolation,
we will be doing it with the other agencies, through the RDAs,
as part of an integrated programme.
546. We need to see how that works. Could I
just move on to the opportunities under modulation. I understand
that this country is entitled to look at 20 per cent of support
payments according to the information we have got, 2.5 per cent
in 2000, 4.5 per cent in 2005.
(Mr Morley) Yes.
547. Why is that? Is that the limit of your
ambitions or is it the assessed demand? What are the plans for
the future? Do you intend to keep to those sorts of figures or
will we see more of this modulation taking place or are we a little
bit worried about the NFU saying that this is a tax on farmers?
(Mr Morley) There is no denying the fact, Chairman,
that modulation has been a controversial approach and there have
been very mixed views on it, particularly from those people who
perceive themselves as losers in this. It is also the case that
we do have to take into account the current economic state of
agriculture and the fact that it is in a down cycle. Therefore,
what you do does have an impact. Nevertheless, it is the way forward
and it is a very clear commitment from the Government in terms
of what we think agricultural policy should evolve into. We argued
very strongly as part of Agenda 2000 that there should be degressivity
within the agricultural policy, that we should start to move away
in this way, move away from the production support, which modulation
is, taking money from production support but putting it back within
the sector and, indeed, with matched funding from Government funds
as well. Every pound that comes off is matched with a pound from
the Treasury. To put that back within the rural economy you have
much more flexibility, as we were discussing, a broader economy,
market processing, agri-environment, it is much more targeted,
it is much more efficient than the production subsidies.
Chairman
548. Getting that money from the Treasury is
going to be difficult?
(Mr Morley) Getting money from the Treasury is always
difficult, Chairman.
Mr Stevenson
549. Does the £1.6 billion include the
matching fund?
(Mr Morley) Yes, it does.
550. How much of the £1.6 billion is pure
modulation and how much is the matching fund?
(Mr Morley) I have not got the figures to hand on
that.
551. Could we have them?
(Mr Morley) Certainly.
552. Because it raises the whole question about
how much has been modulated and how much may be argued as being
new money.
(Mr Morley) That is right.
553. That might be extremely important. Is there
any intention at all at this stage, even though it is early days,
to consider whether or not the 4.5 per cent objective for this
funding in 2005 is likely to be increased?
(Mr Morley) It will have to be reviewed because it
is a seven year programme. When we get towards the end of the
programme there will have to be consideration in relation to how
that programme is taken forward. Within the life span of the Rural
Development Programme as well there will have to be another review
of the Common Agricultural Policy which is going to be reviewed
in six years' time. We will continue to press as part of that
reform exactly this point, that the amount of money going into
production support should be reduced. I make that very clear.
That money which has been reduced from production support, the
savings from that, should certainly be recycled back into the
rural economy in the agricultural sector in the way that we are
beginning to do so within Agenda 2000.
554. Can I just ask one more quick question.
That bothers me considerably, "into the agricultural sector",
because again there is this mind set that if you look after agriculture
then by some magic mechanism the rural economy is okay. That is
purely a fallacy, that is not the case. I do not know whether
you want to qualify what you have just said, Minister, but I think
there would be considerable concern on this very important issue
if the money was to be recycled in the agricultural sector.
(Mr Morley) I understand the point you are making
but when I talk about the agricultural sector, the agricultural
sector will of course benefit from money which is withdrawn from
production support which goes back into a broader based fund.
It is also the case, and I do want to emphasise it, that the way
we envisage change in agricultural support is that there would
be more support for the broader rural economy, support for some
agricultural activities particularly on the marketing and processing
side in terms of its development, in terms of training, which
we are already dealing with. In some ways what we are doing is
implementing our own vision in the UK of the kinds of reforms
that we think should be applied to the CAP. Within the powers,
within the autonomy that we have as part of Agenda 2000, the kinds
of measures that we are introducing, the kinds of changes that
we are introducing under the Rural Development Programme, are
the way that we want the whole CAP to go. We think that it is
the only way it should go. Yes, part of that does mean that the
support for the broader rural economy will be increased.
(Mr Meacher) Can I just give one sentence on that
because I do think it is a very important point and just to emphasise
from the other side of the fence that—
Chairman: Ah, there is a fence.
Mr Stevenson
555. It is a good job it is not a hedge, it
might be difficult to find.
(Mr Meacher) I was making exactly the opposite point,
which you very well picked up. There is genuinely much closer
liaison and joint planning between the two departments. The preparation
of the England Rural Development Plans has been overseen not just
by MAFF but by DETR and several other Government departments including,
for example, DfEE, all the environment agencies, the Forestry
Commission, Government Offices of the Regions and the RDAs. This
is not just a MAFF exercise. It is not just a matter of recycling
it back to the agricultural sector, it is, which is what I think
you want, a much wider exercise in agri-environment.
Chairman
556. After all this good news actually there
still is not enough money for Country Stewardship for all of the
people who would like to be involved in it.
(Mr Morley) I can tell you, Chairman, that the actual
Stewardship budget will double by 2001.
557. I did not ask you that. Is there enough
money for all of the people who would like to do it?
(Mr Morley) At the moment it is certainly true that
as a very rough and ready guide there are about two applications
for every successful application. If we double the budget then
we can move towards accepting the applications received. I should
stress that Stewardship is a bid basis, it is on the basis of
the plan that has been put forward by the farmer or the land owner,
it is not automatic, it is what you are offering.
558. I have had it put to me that people are
discouraged from even making a bid because there is not enough
money.
(Mr Morley) That is certainly the case at the present
time, Chairman. That is why one of our priorities is to significantly
increase the Stewardship budget and I am very glad to say that
it will be doubled by 2001 and then it will be on a rising curve
every year after that.
Dr Ladyman
559. Can we come to rural transport issues now.
Has the Rural Bus Fund been a success and, if so, how are you
going to build on it?
(Mr Meacher) I think it has been a modest success,
yes. As you know, we have put £170 million over three years
into rural transport. That has produced 1,800 new or enhanced
transport schemes which I think is some modest success. There
has been the Rural Transport Partnership Scheme valued at just
over £4 million which has produced something like a further
30 schemes. Compared to what needs to be done in terms of the
paucity of transport in rural areas I accept that it is modest
but I do think it is a useful beginning. Obviously we are looking
very closely at the gaps that still remain and will be taking
further steps. It will be a major part of the Rural White Paper.
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