Select Committee on Agriculture Second Special Report



Second Report

(1998 - 99 Session) CAP Reform: Rural Development

General Update

1.  During 2000 the government continued to develop arrangements for implementing the Rural Development Regulation (RDR) through the England Rural Development Plan/Programme.

2.  Key activities included:

    (i)  on 1 February 2000, submission to the European Commission of the England Rural Development Plan comprising a national framework document and regional chapters covering each Government Office (GO) Region;
    (ii)   negotiating changes to the Plan with the European Commission;
    (iii)  consulting on the detail of the four new schemes under the Plan and association implementation arrangements to enable launch of the new schemes, following informal Commission approval, on 3 October 2000;
    (iv)   securing formal Commission approval of the Plan as a Programme on 11 October 2000 (Commission Decision C(2000) 3003);
    (v)   on 24 July 2000, announcement by the Minister of Agriculture on the creation of a new CAP paying agency and a new MAFF delivery service (combining FRCA and RSC non-payment functions), and the placement of a senior member of MAFF staff in each Government Office (see paragraph 23).

The Plan for Wales was approved formally on 11 October and the Plans for Scotland and Northern Ireland were approved in STAR[3] on 24 October but the formal Commission decision has yet to be received. Other than where reference is made to UK policy or issues, this response deals with the implementation of the England Rural Development Plan/Programme (ERDP) only.

Specific Action


Recommendation a): We urge the Ministry, and representatives of the farming community, to build on their recent efforts to bring the agricultural sector into the mainstream of rural economies (paragraph 11).

3. The preparation and implementation of the England Rural Development Programme, the development of the Action Plan (announced on 30 March 2000) to take forward government's "New Direction for Agriculture" and MAFF's joint preparation with DETR of the Rural White Paper will all help to bring agriculture into the main stream of rural economies. The introduction under the ERDP of the Rural Enterprise Scheme and the Vocational Training Scheme, and the re-introduction of a Processing and Marketing Grant, will help agricultural and forestry businesses adapt and broaden their economic base, giving real effect to their integration into the wider rural economy.

The proposal's aims, direction and purpose

Recommendation b): As we have commented elsewhere, we believe there is a need for the European Commission to advance certain clear underpinning principles for rural development in the Regulation, while leaving the maximum possible responsibility for determining the character of such policies at the national level. Such principles include notions of decentralisation of responsibility to the localities, and the need for a genuinely participatory and inclusive approach to rural development, involving all sections of the rural community. While these principles are touched upon in the existing text of the Regulation, their full implications are not drawn out with the force and clarity we would like. Furthermore, it is not at all clear precisely what role the Commission foresees agriculture and the farming community at large playing within an integrated rural development policy. The aims of the Regulation are insufficiently clear and no ways of measuring achievement are proposed. These issues must be directly addressed in the final text of the Regulation (paragraph 21).

4.  The Commission is close to finalising detailed guidance on the monitoring and evaluation requirements for Rural Development Programmes and measures, following consultation with member states. These will be used in the mid-term and ex-post evaluations of programmes and should enable the Commission to produce a Community-wide report of the impact of the Regulation.

Co-financing by member states

Recommendation d): If the Government is not to stand accused of failure to deliver on its public pronouncements, sufficient domestic finances must be found to ensure that rural development plans established under the Regulation can make a meaningful contribution to local rural development efforts (paragraph 27).

5. The Spending Review 2000 confirmed the additional Exchequer funding to match receipts from modulation pound for pound to fund ERDP measures for the Spending Review period. (New match-funding for modulation receipts over the Programme period will amount to £303million.)

Eligibility of recipients for funding under the Regulation

Recommendation e): Recognising that the key to successful rural development initiatives may lie with those outside the agricultural community, or in activities wholly unrelated to farming, we ask the Government to press the Commission for confirmation of the wider latitude suggested in Article 31 of the Regulation. Ultimate responsibility for determining how the Regulation is to be interpreted in particular regions of the UK must reside with local partnerships of community interests and key policy makers drawn from the territory concerned, with the decision on whom or what might be eligible for funding under the Regulation made by such partnerships after taking all relevant social and economic circumstances into account (paragraph 29).

6. The regional chapters of the ERDP describe the current situation, strengths, weaknesses, opportunities and threats, the aspiration and objectives for each region.

7. Building on that analysis Regional Programming Groups (RPGs), comprising the key partners who were involved in preparing the regional chapters, will guide the operation of the following measures:

  • Processing and Marketing Grant
  • Rural Enterprise Scheme
  • Vocational Training Scheme.

8. RPGs will be required to consult rural stakeholders in each region on progress in operating the regional component of the Programme.


Recommendation j): We believe that the training provision under the Regulation should be broadened to enable the full range of training and capacity building options to be offered to all sections of the local rural community. For the UK to use this aspect of the Regulation it will need to prepare a rural training strategy. A review of agricultural education and training provision will be necessary (paragraph 37).

9. In the light of responses to the consultation, the government proposes to use the RDR provisions to support training activity to improve the skills of people involved in farming and forestry where that will contribute to the delivery of the priorities within the ERDP. Over the seven-year programme £22 million will be available for a new Vocational Training Scheme. Lantra (the national training organisation for the land-based sector) has been identifying skill needs in the sector. Their most recent study - Skills Foresight 2000 - is currently being updated.

Recommendation k): We welcome the Commission's intention to introduce a Community Initiative for rural areas as an opportunity to reinstate the LEADER approach, urge the Commission to make this Initiative available in all the EU's rural areas, and advise MAFF to consider seriously the implementation of such an Initiative in the UK (paragraph 38).

10. In collaboration with other government departments, statutory agencies and rural interests, MAFF has prepared a draft England LEADER+ Programme involving £65m of EU and national expenditure by the end of 2006. The Programme was submitted to the European Commission for approval on 17 November. The Commission has five months in which to give its approval.

Less Favoured Area proposals

Recommendation l): We share witnesses'concerns about the detail of the LFA proposals. In particular, more than doubling the current UK expenditure on LFAs is difficult to justify when member states still await the precise details of the area-based mechanism from the Commission. Not only would the Commission's current LFA proposals place a burdensome load on MAFF's future expenditure plans: they may also result in serious distributional problems, resulting in the largest LFA farms benefiting at the expense of their smaller neighbours. We strongly advise MAFF to ensure it retains its existing right to determine domestic LFA expenditure through setting its own national payment rates, rather than accepting the notion of minimum payments. We also appreciate the difficulties in establishing a workable area payments system for the UK LFAs, and, while being firmly in favour of the new environmental basis of payments, reserve judgement as to the suitability and practicality of the Commission's proposals until a more clearly defined text has been brought forward. It remains imperative as we said earlier this Session for the UK to develop its own strategy for LFAs (paragraph 41).

11. The ERDP sets out the arrangements for the new Hill Farm Allowance Scheme to operate from 2001. It was drawn up following extensive consultation with interest groups and negotiation with the Commission. The new scheme is targeted at Less Favoured Area beef and sheep producers, who will receive area payments at different rates for four categories of land. In addition farmers will receive enhancements of 10% or 20% for compliance with a range of environmental criteria. During the first three years, farmers whose support payments will fall in comparison with their HLCA receipts in 2000, may receive a safety net addition to cushion the impact of the reduction. A review in 2003 will consider the results of current research into whether a better system of land classification can be devised so that the aid may be better targeted. This outcome represents a fair balance between the social and environmental aims of

the support, with change being introduced gradually so that producers have adequate time to adjust and to benefit from the new opportunities offered under other schemes.

12. The Committee's recommendation refers to the then Commission proposal for a minimum payment rate for LFA support of 40 euro/ha. An exemption was agreed permitting lower payments where the circumstances warrant this and the design of the HFA scheme makes use of this flexibility.

Agri-environmental measures

Recommendation m): The Regulation's mandatory requirement for agri-environmental measures will be less important than ensuring rural development plans strike a good balance between their various objectives. Our view is that local and regional administrations should retain the right to determine which elements should be included in rural development plans, although such plans should be scrutinised by the European Commission to prevent distortion of competition (paragraph 44).

13. All three current agri-environment measures: Environmentally Sensitive Areas Scheme (ESAS), Countryside Stewardship Scheme (CSS) and Organic Farming Scheme (OFS) will be continued under the ERDP with a substantial increase in funding for CSS and OFS. Overall these schemes will utilise just under 60% (£1bn) of the ERDP budget. The final balance between measures in the ERDP reflects the constraint imposed by the size of the UK allocation, the mandatory requirement to run agri-environment schemes, the existing financial commitment to agreements under those schemes, the analysis of current circumstances and the evaluation results from existing schemes.

14. The significant expansion of agri-environment scheme funding is directed mainly towards the Countryside Stewardship Scheme which has been heavily oversubscribed. It is already subject to annual local targeting - which will continue - and, over time, it is MAFF's intention to extend regional discretion over the operation of the scheme.

Processing and marketing

Recommendation t): We recommend the Government consider reinstating the UK Processing and Marketing Grant scheme at the very earliest opportunity, extending it if necessary to provide encouragement to farmers to establish marketing co-operatives along the lines of those in other EU states (paragraph 51).

15. The Commission has approved the re-introduction of the Processing and Marketing Grant, and the new Rural Enterprise Scheme which also supports projects which improve collaboration among farmers, as part of ERDP.

Rural development policy in the UK

Recommendation z): We are concerned that the lack of priority attached to UK rural development policy - and the compartmentalisation of Departmental activities and separation of budget lines which results from it - is still endemic in the British approach to fostering the integrated development of rural areas (paragraph 63).

16. MAFF gave high priority to preparing the ERDP in a way which reflected regional as well as national priorities, and fully involved rural partners in the process. Similar priority is being given to Programme implementation, following Commission approval. Government carried out a cross-cutting review of rural and countryside programmes as part of the Spending Review 2000 which gave rise to a new government aim and rural objectives, and PSA targets to be shared by departments. MAFF was involved fully in the review, and schemes under the ERDP will contribute to national rural objectives and targets. From April 2001, when MAFF joins the

Government Offices for the regions (see paragraph 23), each Regional Programming Group will be chaired by a Director of the Government Office for the region who will be responsible for ensuring that this integrated approach is maintained.


Recommendation bb): In view of the very limited amount of European funds available, we are convinced that some form of targeting will be necessary when the UK implementation of this Regulation comes about. We urge MAFF to work with DETR and the Rural Development Commission in its development of suitable rural indicators of need which, we judge, will play a crucial role in targeting measures under the Regulation to the most deserving areas (paragraph 70).

17. The regional chapters of the ERDP include an analysis of the strengths, weaknesses, opportunities and threats which will provide the basis for targeting the regionally-operated measures. The SWOT was carried out with all the rural partners including staff from the Government Offices in the region, the environmental statutory bodies including the Countryside Agency and English Nature, and the RDAs. The ERDP also sets out national indicators and targets for each measure although those can only be indicative.

Administration of rural development plans

Recommendation cc): We strongly favour the focus on local level decision-making implicit in the model put forward by the UK Objective 5b Partnership, and urge the Government to consider it as a basis for implementing the Regulation in the UK. RDPs will, of course, need to be made fully consistent with the wider regional objectives of RDAs, as well as local authority development plans (paragraph 72).

18. The project-based regionally operated measures: Processing and Marketing Grant, Vocational Training Scheme and Rural Enterprise Scheme, will be managed in much the same way as the objective 5b schemes. Further details of the implementation proposals are set out in Section 12 and Annex VIII of the Programme.

Degree of local community involvement and participation

Recommendation gg): We urge the Government to ensure that truly representative partnerships of local and regional policy makers, as appropriate, are established as soon as possible, with such partnerships having custody for the operation of RDPs (paragraph 78).

19. Regional Programming Groups (RPGs) have been established in each region to oversee the operation of the regional component of the ERDP. The RPGs include the Government Office for the Regions, RDAs, statutory agencies and certain other bodies at local discretion. From April 2001, these groups will be chaired by the MAFF representative in the Government Office. In addition, RPGs will be required to consult newly established Regional Rural Development Consultation Groups (comprising the full range of rural interests) on the strategy for and operation of the Programme. Full details are set out in Section 12 and Annex VI of the ERDP.

Co-ordination of agency responses

Recommendation hh): We believe there will be a requirement for RDAs to have some direct involvement alongside MAFF in the development of agricultural strategies for rural areas, although we recognise that this sharing of responsibilities will require careful forethought and planning. We anticipate that other changes in the current mosaic of institutional and organisational responsibilities will also be needed to encourage greater co-ordination between agencies (paragraph 80).

20. The RDAs were involved both on the National Planning Group for the ERDP and on the Regional Planning Groups. They will also be involved in the implementation arrangements. MAFF's involvement in Government Offices for the Regions from April 2001 will facilitate this.

Institutional change

Recommendation ii): MAFF should assess how the operation of Regional Service Centres can be tied more closely with the activities of Government Regional Offices in future, with the aim of co-ordinating the delivery of the whole spectrum of policies which might impinge on rural development - for example, transport, land use planning, forestry and environmental issues - as well as agriculture. This is not a call for co-location of their very different offices, but it is a call for increased co-operation between the two organisational structures (paragraph 82).

21. The ERDP regional chapters were based on Government Office (GO) regional boundaries and GO representatives were involved fully in Regional Planning Groups. MAFF has now set in hand a restructuring of the work of its regional offices, which will be implemented from 1 April 2001. The delivery of the Programme will fall to a new Rural Development Service which will be managed as part of the Ministry's Environment Group (which is to be renamed Rural Development and Environment Group). Payments will be handled by the new CAP payments agency. MAFF Directors in Government Offices (who will also be appointed from 1 April) will be responsible for ensuring that MAFF policies and programmes are explained to and understood by regional stakeholders and that cross-linkages to other areas of policy are considered within the Government Office.

Recommendation jj): A revision of Planning Policy Guidance note 7 would be welcome if it had the effect of raising the profile of the issue of local planning permission for rural development schemes and clarifying policy. A more co-ordinated approach to Government policy in the regions along the lines we have suggested would, we believe, enhance farm diversification and hence rural development activities (paragraph 83).

22. The issue of the relationship between planning, agriculture, and diversification of the rural economy was raised in the PIU report or "Rural Economies" and will be addressed in the Rural White Paper.

Preparation for the implementation of the rural development Regulation

Recommendation kk): In our opinion, at a minimum work must begin now in four interrelated areas:

    (i) in association with other organisations, including the RDC and DETR, the Ministry must set out clear and succinct guidance as to what integrated rural development might mean in practical terms to local rural communities, specifying its definition in terms of broad economic, environmental and social goals;

    (ii) plans should be drawn up by the Ministry and circulated for consultation as soon as possible on interim arrangements for the formulation and implementation of the first tranche of rural development plans and the involvement of rural policy makers and communities in this process; work should also begin on developing the final arrangements proposed by the Ministry for implementation of RDPs, including the role foreseen for partnerships and decentralised local-regional decision making in this process;

    (iii) indicators of rural need must be developed and finalised and, on the basis of applying these indicators, a preliminary list compiled of UK regions which will be targeted under the regulation; and

    (iv) based on current and past experience of rural development policy instruments, including the RDCs Rural Development Programmes, Objective 5b and LEADER initiatives, and the Ministry's experimental schemes in the Forest of Bowland and on Bodmin, 'best practice' guidance should be distilled to assist with the design, administration and delivery of locally-appropriate rural development objectives through RDPs (paragraph 84).

23. MAFF, in collaboration with rural partners, is preparing further guidance on the implementation of the new schemes and on how their use could be integrated, consistently with Commission requirements on administrative and financial controls.

The Rural White Paper and the Government's review of the rural economy

Recommendation ll): We are concerned that the rural economy review may not be being given due importance and priority by the Government. We urge MAFF and DETR to jointly develop a fully financed, integrated framework for implementing the Rural Development Regulation by Autumn 1999 (paragraph 85).

24. The ERDP sets out the framework for implementing the RDR and the funding arrangements which were approved by the European Commission on 11 October 2000.

The Government has nothing to add to its response in respect of the following:

Recommendation  (c)
Recommendation  (f)
Recommendation  (g)
Recommendation  (i)
Recommendation  (o)
Recommendation  (p)
Recommendation  (s)
Recommendation  (u)
Recommendation  (v)
Recommendation  (x)
Recommendation  (y)
Recommendation  (aa)
Recommendation  (dd)
Recommendation  (ee)
Recommendation  (ff)

Ministry of Agriculture, Fisheries and Food

November 2000

3  Commission Management Committee on Structural Funds and Rural Development Back

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