House of Commons - Environment, Transport and Regional Affairs

Select Committee on Environment, Transport and Regional Affairs Seventh Report

RURAL WHITE PAPER

Agricultural policy

46. Agriculture continues to play a pivotal role in the future of rural areas, not least because it remains the biggest land user and is therefore, vital in maintaining the beauty and environmental quality of the countryside. There was, however, general agreement that the policies pursued by the Ministry of Agriculture, Fisheries and Food and since the 1970s furthered by the Common Agricultural Policy of the European Union, are now utterly misplaced, and have done much damage.[89]

47. It is distressing that there has been a consensus about the need for change in agricultural policy for some time, but little change has taken place. It remains the case that the vast majority of agricultural subsidies are paid out in the form of production subsidies which are paid regardless of environmental or social concerns; English Nature suggested the figure was 95%.[90] The Countryside Agency summarised the situation well when they described the existing subsidies as a "drug distorting the agricultural market place."[91] The problems of these subsidies for the environment are soon to be exacerbated, since the European Commission has decided that those farmers who have maintained field margins (uncultivated strips which are often a haven for wildlife) will no longer be eligible for the full subsidy available. This step is intended to tackle fraud but we fear that the main impact in the UK will be to reduce still further the biodiversity of the countryside. The EU Farm Commissioner, Mr Fischler, has agreed to waive the new rule for a year, and has highlighted ways in which UK farmers can continue to preserve hedgerows and field margins for environmental reasons.[92] We recommend that the Government investigate the EU's proposals for preserving hedgerows and field margins under the rural development and 'cross compliance' mechanisms agreed in 1999. Farmers who preserve hedgerows and field margins must not be financially disadvantaged.

48. Agriculture can no longer be considered to be about the quantity of production alone. This may have been a worthy and appropriate aim for agriculture policy in the 1940s and 1950s but the need to shift the emphasis from quantity to quality of production along with the need to incorporate environmental requirements are depressingly obvious. New priorities must be established for agricultural spending so that the money encourages the environmentally sensitive production of food and also is used to aid broader rural development initiatives. What has traditionally been spent on agriculture must start to be used to protect and enhance the countryside and maintain the social fabric of villages. Almost all witnesses agreed with this principle, from the Country Landowners Association to the Royal Society for the Protection of Birds and English Nature.[93] Even the National Farmers Union offered some support for the principle.[94] 77% of farmers responding to a recent MAFF consultation exercise declared themselves in favour of ceilings on direct payments to make more funds available to farmers for agri-environment and other measures.[95] 65% of farmers supported the attachment of environmental conditions to direct payments.[96]

49. One relatively simple method of making rural development and agri-environment spending more effective may be to look towards pooling budgets for schemes which have similar aims. The potential of this approach was noted by the Performance and Innovation Unit:

We urge the Treasury to explore the potential for greater use of pooled budgets for schemes which have agri-environment or rural development objectives. The Comprehensive Spending Review provides a timely opportunity to improve the effectiveness of spending in rural areas.

TAKING 'MODULATION' FORWARD

50. Clearly the failure to secure more radical reform of the Common Agricultural Policy last year was a major disappointment, but the Agenda 2000 reforms did make some improvements. Perhaps the most important development will turn out to be the potential for Member States to 'modulate' their spending on production subsidies away from agriculture and into broader rural development initiatives, covered by the Rural Development Regulation. We are appalled by the term 'modulation' but unfortunately, for the purposes of this report, we are unable to find a way around using it. In the jargon of the Common Agricultural Policy, this 'modulation' will contribute to what most consider to be the desired trend of 'degressivity', that is reducing compensation payments to farmers over time. Although previous suggested versions of modulation have been opposed by the UK Government, on the grounds that they would unfairly punish UK farmers and savings would go to the EU. The new scheme is very different in nature: it allows national discretion over the method of modulation and funds saved remain within the UK. Any 'modulation' of CAP funds must be accompanied by an equal amount of matched funding from the national Government. Member States are allowed to modulate up to 20% of their agricultural spend.

51. We were pleased that the UK was one of the first Member States to take advantage of the opportunity to modulate. On 7 December 1999, the Government announced that it would modulate 2.5% of the CAP spending in 2001 and progressively increase the amount of spend to be modulated up to approximately 4.5% by 2005. In practical terms, this modulation will be applied at a flat rate which means that all direct subsidies to farmers will be reduced by 2.5% in 2001 and this reduction will rise as modulation increases. An alternative method would have been only to reduce payments where they exceeded a given amount, thereby preserving the level of payment to smaller farmers.[98] We are disappointed that the Government did not choose this option: the scheme as it stands risks hitting small farmers already struggling to survive. It has been estimated that this means around £600 million in new funding for agri-environment and rural development initiatives.[99] We were encouraged to hear that the "bulk" of this money will be spent on agri-environment measures such as Countryside Stewardship which have a long history of being oversubscribed to by farmers.[100] We also congratulate those who persuaded entrenched interests at MAFF and the Treasury to apply modulation in practice, but are disappointed that progress has not been greater.

52. We recommend that the Government make clear in the Rural White Paper its intention to switch subsidies to agri-environment and rural development schemes as quickly as Common Agricultural Policy reform permits. It should:

set out a timetable for introducing at least 10% 'modulation' over the period of the next Comprehensive Spending Review with a view to eventually achieving the full percentage allowed under CAP (currently 20%);

make maximum use of 'cross-compliance' mechanisms to ensure that high environmental standards are maintained in return for the payment of subsidies;

make more determined efforts to ensure the long-term reform of the CAP to secure a switch of funds away from production to support rural communities and environmental protection.

A COMPETITIVE AGRICULTURAL INDUSTRY

53. The Ministry of Agriculture, Fisheries and Food appears to have an outmoded view that agricultural competitiveness is synonymous with big farms, capable of mass producing cheap food. As the Performance and Innovation Unit noted:

"if you are trying to compete as a supplier of agricultural commodities as a high volume, low unit cost producer it is going to be difficult, for example, to deal with competition from, say, North America."[

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Much of agricultural policy over the last half-century has directly or indirectly encouraged the creation of larger farms. However, as other industries show, small, niche businesses can be very competitive and efforts to help make farms succeed should focus on enabling them to produce goods which people want to buy, rather than simply increasing outputs. Various measures to help improve the competitiveness of farms were suggested to us and we found merit in most of the suggestions made. The competitiveness of farms will be improved by a number of initiatives: a review of barriers to farmers' markets, assistance with marketing, expansion of the Organic Aid Scheme, provision of small business services to agriculture and the inclusion of agriculture in the development of business clusters.[102] However, small hill farmers will never be able to compete internationally and will need support to ensure their continued role as custodians of the countryside.[103]

FORESTRY

54. We were surprised that forestry was overlooked in most of the submissions to us and in the discussion document, Rural England. Indeed, this seemed to confirm the statement made by the Royal Institution of Chartered Surveyors (RICS) that "forestry in the UK is in crisis but remains on the margins of the rural debate."[104] This appears particularly odd, given that woods and forests cover 11% of England. In this Committee's last consideration of rural issues in 1996, we devoted a section of our report to forestry issues[105] and previous to that, we undertook an inquiry into Forestry and the Environment in 1993.[106] We stand by the recommendations made in these reports. We also agree with the RICS that the main challenge for forestry policy is how to encourage more active management of existing woodlands.[107] We were impressed by the efforts made in East Sussex to expand the range of local wood products available and the scope for marketing these as premium products.[108] Forestry should be a significant feature of the Rural White Paper, particularly if the Government is to achieve the target of doubling the woodland coverage during the next half-century. We stand by the recommendations made by the Environment Committee in its report on forestry in the last Parliament.

Planning and the Environment

55. The role and impact of the planning system was a major concern of the written and oral evidence we received and we heard various complaints about the current system. Amongst the claims made were that the planning system was too complicated in its application to farming practices, that it has been an obstacle to farm diversification and rural development generally but has also failed to protect landscape of high value and has had too little control over the erection of farm buildings.[109] On the other hand, it was argued that the planning system was inevitably a complex one and that many of the provisions made within the system were introduced for good reason and, in most cases, remain valid today. As English Nature told us:

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THE PERFORMANCE AND INNOVATION UNIT'S REPORT AND PLANNING

56. The Performance and Innovation Unit's report made a powerful case for a more rational basis for planning in the countryside, including the proposal that there should be an end to the special treatment of agriculture. Although the report's general approach is a good one, we were less convinced by the practicality of some of the more detailed modifications to the planning system which it contained. These we discuss below.

The Current Planning System

57. The PIU Report rightly points to the limited effectiveness of the various planning designations which are supposed to have protected the countryside from development.[111] Although some designations have been successful at protecting a particular area (eg National

Parks), there has been little emphasis on protecting the wider countryside, outside of those areas. This has led to many local authorities developing their own systems of local designations in an attempt to protect land which they consider to be environmentally important. Such systems often cause frustration because of their variability and inconsistent application and the PIU recognise this to be unsatisfactory.[112] We understand the PIU's frustration with the existing system and sympathise with their wish to develop a better system. However, the report fails to make a convincing case for its proposal to have a new framework of protection. Certainly, the problems of the current system need to be addressed and remedied but the establishment of a new system will not necessarily achieve this. The proposal made in the PIU report is rather vague and it seems likely that the entirely new system proposed would bring large costs and significant upheaval without the promise of major benefits for the countryside. A simpler and more effective approach would be to retain the existing planning framework but for the Planning Inspectorate and the Department of the Environment, Transport and the Regions to adopt a more vigorous policy in respect of development in environmentally sensitive areas. The problem is not the national policy or a particular feature of the planning system, but inconsistent application of planning policy, as many witnesses pointed out.[113]

Agriculture and the Planning System

58. The PIU report makes the case for bringing agriculture and agricultural buildings into the planning system. Witnesses generally agreed[114] that this change was necessary and this we believe to be a common sense recommendation which will ensure that agriculture is treated like any other small business in rural areas. There is no longer a plausible argument that agriculture should be treated as a special case in the planning system. If farm diversification is to be encouraged, then the merits and disbenefits of that diversification and development must be assessed within the usual planning system. It is clearly a matter of concern that large new agricultural buildings are being used for non-agricultural purposes within a few years of erection. We recommend that the Government should review the position of agricultural buildings within the planning system.

59. We also agree with the PIU Report that farm diversification is desirable and small agriculture-related industries should be encouraged.[115] In any discussion of diversification, it must be remembered that this process is not a new one: farmers have been diversifying their activities for the last 20 years. Nevertheless, further encouragement and guidance on the type of diversification is useful. There are various measures which can be taken to assist farmers in this process: small business services, training and a minimum level of regulation are of prime importance.[116]

60. Some witnesses suggested that planning policy also formed an obstacle to farm diversification but we heard little clear evidence that this was the case. Although there are undoubtedly individual cases where this has happened, research into factors which hinder the development of rural businesses show that planning is not perceived as a major problem.[117] In 1995 the Department of the Environment found that 80-90% of applications for re-using traditional buildings for economic activity in remote areas were approved. A study commissioned by the Department from Oxford Brookes University concluded: "The results of this development control analysis show a positive response by local authorities to the guidance in PPG 7 and give no support to the view that local authorities have been unduly restrictive on diversification proposals in rural areas". The PIU's support for changes to the planning regime to make diversification easier was based on research by the Rural Development Commission which has been the subject of much criticism, in particular that its conclusions did not follow on from its evidence. For example it found that "approval rates for planning permissions are running at 90%, and the main reason for refusal is the inappropriateness of the development in the countryside".[118]

61. It is also important to recognise that there are concerns about any changes which might be made: English Nature wrote of their worry that:

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and the Council for the Protection of Rural England argued that planning policy should "protect and enhance the environment and avoid the relocation of footloose industry into the countryside."[120] If farm diversification is given shelter from the planning requirements which apply to other rural development, there is a real risk of a rapid increase in the scale of inappropriate farm diversification. These points were recognised by the PIU in noting that the additional pressures for residential development to accompany the economic growth desired "would need to be carefully managed."[121]

62. We were told that there are many examples of inappropriately sited developments, and which have become major eyesores, which started life as minor, almost insignificant, departures from the planning regime. The problem of incremental development was also noted by the PIU, who argued that it could be overcome by using various conditions, specified as part of the planning consent. However, the Council for the Protection of Rural England noted that such conditions are "weak and ineffectual." Certainly, it is the case that such conditions are extremely difficult to enforce and we are unconvinced of the effectiveness of this approach in ensuring that development is appropriate.

63. Given the ongoing and severe crisis in agriculture, any changes in the development designation of agricultural land could encourage farmers to sell out to commercial interests/developers. The likely consequence of such a trend would be for commercial activities in the farm buildings but with the farmland receiving the bare minimum attention necessary to maintain the designation as a farm. This could have serious implications for the environmental quality of the countryside and would start to quickly erode much of the character of our rural areas. As we noted in the 'Development and Environment' section of the report, rural development of all sorts must aim to build upon the strengths of rural areas.

64. More generally, we believe that the PIU have been somewhat naive in suggesting that relaxations in the planning system are not intended to affect the amount of development but only where it goes.[122] We are concerned that their proposals could lead to rural areas seeing a lot of economic development which would be better located in urban areas. The Government must ensure that sensitive rural landscapes are not blighted by inappropriate development. It is important to retain certainty in planning policy. Any small changes made to planning constraints now could easily lead to pressure for major changes in the future. Planning policy should bring to rural areas development which aims to sustain and enhance the local economy and environment.

Best and Most Versatile Land

65. Since the Second World War, there has been a system in the UK which offered some protection to the highest quality agricultural land which is categorised as 'Best and Most Versatile' (BMV) Land. The PIU argued that this system was now an outdated one, and that it should be replaced with a system which offered protection to the land with high environmental value. Although there is a clear rationale for such a proposal, it is not clear that such a system is necessary. It is very important to protect land of high environmental value, and that there are circumstances where it is better to develop BMV land rather than land of environmental and amenity quality. There are a few instances where land of higher amenity value has been developed rather than BMV land, but elsewhere, for example near Maidstone, development is proposed on high grade agricultural land rather than an area subject to a local landscape designation. Witnesses argued that changes must not give the green light for development of high quality agricultural land. By proposing the removal of protection for land with a high agricultural value, we are concerned that the PIU have not taken account of the ongoing changes in the nature of agriculture and the public's developing concerns over the food production process. English Nature expressed caution over the idea of overhauling the protection of BMV, noting that "we would not want to see most of our best farmland bricked over, because I think that would imply a lack of flexibility, in terms of food demand for the future."[123] Further, if the systems of protection for land of high environmental value are not adequate, we believe that those systems should be improved, independently of any consideration of the future use of the best agricultural land. Indeed, the Countryside and Rights of Way Bill includes measures to improve the protection of designated sites such as Sites of Special Scientific Interest. We see no reason to diverge from our conclusion in 1996 that "on the grounds of sustainability, the release of good quality agricultural land for development should remain exceptional."[124] Farming is likely to become progressively less intensive and the proportion of organic production is set to increase. High quality agricultural land will continue to be a national asset[125] which should be protected. However, there will obviously be circumstances in which it is more sensible to develop grade 1 agricultural land than land of greater environmental or amenity quality. Government must ensure that this can happen.