Westminster Hall
Tuesday 24 March 2009
[Mr. Peter Atkinson in the Chair]
Rural Economy
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Watts.)
9.30 am
Mr. James Gray (North Wiltshire) (Con): Although I am glad to have this important opportunity to discuss the rural economy as it faces the dreadful recession that our nation is collectively facing, the title of the debate is, to some limited degree, misleading in the sense that I am not sure that an absolutely clear, easily definable difference can be spotted between the rural economy and the urban economy, so, to some degree, it is a slightly false dichotomy and even risks being, in a way, patronising to our rural communities. It seems to indicate that the rural economy is all about farming, food production, tourism and rural crafts—that kind of thing—whereas by far the largest part of employment in the countryside today is manufacturing. Therefore, to a significant degree, the rural and urban economies are similar. I will come back to the stricter part of the rural economy in a moment.
I am glad to see that a large number of my hon. Friends have joined me. A second Liberal Democrat Member has arrived, so I am glad about that, too. There are one or two Labour Members present as well. This is a good turn-out to discuss these important matters.
Without being unduly constituency-minded, I thought I might use some examples from North Wiltshire, which is predominantly rural in terms of acreage—although most of the people tend to live in market towns and villages—to show how the national recession is affecting rural areas. North Wiltshire is not as rural as some parts of Cornwall or other parts of the west country, or other parts of England; none the less it counts as a rural or semi-rural constituency. Therefore our experience in North Wiltshire may be indicative of the kind of thing that is happening elsewhere.
Many people in my constituency who live in the depths of the countryside are deeply concerned about the announcement yesterday that Honda in Swindon is to cut its production and wages further and will be laying more people off. Who knows what the future of Honda is? It is astonishing to see the biggest employer in Swindon—Honda—shut down entirely. No cars are being produced at all until May. Many of the people in my constituency who work there are concerned about what will happen after May. Will we see an improvement?
Dolby Systems, the computer people in Wootton Bassett, chopped 70 people recently; the Faccenda chicken factory in Sutton Benger closed and lost 200 people; Hygrade meats in Chippenham lost 750 jobs; and the St. Ivel dairy in Wootton Bassett closed, with 250 job losses. It is only some 10 years ago—it is history, in a way—that James Dyson moved his manufacturing capability offshore, leaving Malmesbury in my constituency
and going to Indonesia, saying that it was impossible to manufacture vacuum cleaners in a rural area such as mine and preferring Indonesia instead. The net result of all that is that, between June last year and January the number of jobseeker’s allowance claimants in Wiltshire jumped from just under 3,000 to just over 5,000. In six months that figure has nearly, but not quite, doubled and is showing every sign of growing further in the months to come.
Business confidence, which is crucial to the whole thing, has collapsed. Some 66 per cent. of businesses in my area expect turnover and profits to be down in 2009, 50 per cent. are experiencing worsening cash flow and 33 per cent. expect to have reduced their staffing levels further by the end of the year. Whether rural or urban, those businesses are symptomatic of what is happening elsewhere in the economy, both in towns and in the countryside.
Angela Watkinson (Upminster) (Con): My hon. Friend will be aware that even London constituencies have rural parts. Upminster, for example, is 50 per cent. green belt and has farms on its border, where it has a boundary with rural Essex. The local economy depends on many very small businesses that are struggling in the current downturn.
Mr. Gray: My hon. Friend is right. The difference between rural and urban is often blurred, as it is in her constituency. I am glad that, as she inspired me to ask for this debate this morning, she has taken the trouble to come along and contribute to it. I hope that the decimation of the businesses in her constituency is less bad than she is predicting at the moment.
The figures being produced by the Office for National Statistics in respect of elsewhere in rural England are grave: they show that there is more economic inactivity in rural than urban areas and that unemployment is growing faster in rural than urban areas. Some 22 per cent. of firms surveyed in Cumbria have reduced staffing levels and 11 per cent. have made redundancies. The number of people applying for the JSA in Craven has increased by 66 per cent. In the constituency of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the shadow Foreign Secretary, which is probably one of the most prosperous, leafy areas in England and which has one of the largest Conservative majorities of any constituency, the number applying for the JSA has increased by 67 per cent.—just look at the increased unemployment in the most leafy part of England.
I am most grateful to the Country Land and Business Association, and particularly to John Mortimer of the south-west region who has done a good job in helping me to prepare for today’s debate. He says that there has been a 106 per cent. increase in redundancies in rural areas compared with 57 per cent. in urban areas. Of course, in rural areas the sparser employment patterns mean that job losses are felt even more keenly. In a village with a small number of jobs a relatively small number of redundancies feels like an enormous number compared with an urban area where even a large number might disappear into the background, as it were.
Stuart Burgess of the Commission for Rural Communities—the excellent rural tsar—has said it all in his latest report called “Rural Economies Recession Intelligence”:
“Communities and businesses across rural England face increasing deterioration—business closures, job losses, reduced working, lower consumer demand, and difficulty in securing bank funds. Bad news far outweighs the good.”
If that is what the rural tsar appointed by the Prime Minister is saying, he cannot be accused of exaggerating the case.
Before the Minister leaps to her feet and says, “Never mind all that, farming is doing remarkably well,” I remind her that people are saying that it is doing well. The Minister is shaking her head, so I hope that she will not say that. However, there are people who would say that farming is doing remarkably well. By comparison with the last 10 desperate years, farming is slightly better than it was. Nevertheless, the Minister should remember that input prices mean that arable profitability is now looking shaky, that milk is some 8 per cent. down from its high last year and that the average hill farmer’s income is £15,000, which is less than the Government’s official threshold for poverty—so they are below the Government’s poverty level. Lowland farmers are at about £20,000 profitability, which is only just above the Government’s poverty level. So farming may be off its low point, but it is by no means profitable.
There is a worrying development in people’s purchasing habits, and I plead guilty in that regard. My income has not changed at all due to the credit crunch—as Members of Parliament we are paid precisely the same as we were before all this happened—but I have stopped going to Waitrose; I am going to Lidl and Aldi. It is all in the mind and there is no reason to do that, but I am doing it. Lidl and Aldi are reporting booming profits and are doing incredibly well, but they mainly buy their food from overseas. That is worrying for the future.
Dr. Andrew Murrison (Westbury) (Con): I expect that my hon. Friend will, like me, be distressed by the state of the British pork industry, which provides a good example of where imports have increased dramatically in recent years thanks to the Government’s maladroit handling of differential animal welfare standards. Does he agree that one way around that might be to improve labelling so that people at least have the choice to buy British pork, which is reared to extremely high welfare standards, because at the moment that are unable to do so as they do not know what they are buying?
Mr. Gray: My hon. Friend and parliamentary neighbour makes a good point. He could easily have quoted from the Select Committee on Environment, Food and Rural Affairs inquiry into the pig industry, which, among other things, concluded that it is simply absurd that pork sausages, for example, can be labelled “Made in Britain”, when in fact they come entirely from Danish pigs. He makes a good point. The situation that he mentions will make farming ever worse. We are merely exporting our high standards of animal welfare elsewhere. We buy our chickens from Thailand and our beef predominantly from South America.
The Minister of State, Department for Environment, Food and Rural Affairs (Jane Kennedy):
I want to bring the hon. Gentleman back to the subject of where he shops, because I wonder when he last shopped in Aldi. Far be it from me to champion a particular supermarket—I
shop in many—but my experience is that one can buy British products, apart from bacon, in Aldi if one is prepared to look for them and be discerning.
Mr. Gray: The Minister is right. I last shopped at Aldi last Saturday. There is a good new Aldi, and also a Lidl, in Melksham, which is in the constituency of my parliamentary neighbour, my right hon. and learned Friend the Member for Devizes (Mr. Ancram), 2 miles from my house. My other half religiously sends me to Aldi and Lidl in Melksham, despite not having a reason to do so because we could happily afford to go to Waitrose, and should be going to the local farm shops. I shall tell her that when I next speak to her, because we have three or four local farm shops, and we should pay that little extra to support local farmers. Lidl in Melksham will not see me coming through its door as a result of this debate, so I am grateful for the Minister’s intervention on that front.
What about the other great urban myth that prosperous rural people live in quiet, prosperous, comfortable market towns? The Commission for Rural Communities—bless it—says that unemployment in market towns is higher than ever before and that the recession is taking a stronger grip there than elsewhere. The Daily Telegraph recently reported that one in six high street shops will be empty by the end of 2009, and that “retail deserts” are a real risk in most of our semi-urban, semi-rural constituencies. Ofcom recently announced that 15 per cent. of households in the country—the vast bulk of them being in rural areas—have no access to broadband. My constituency office cannot have broadband, which makes it difficult to operate, and small businesses, which are the backbone and the life blood of our rural areas, depend on broadband, and if they cannot have it, they cannot compete with bigger, urban-based businesses.
Compounding all that is the historic inequality of rural areas’ access to essential services of all sorts. In rural areas, 1.6 million people live below the poverty line. The image is of rich people living in the leafy countryside, but 1.6 million of them live in poverty, much of it grinding poverty. Many of them have no car, and they live in terrible conditions and are extremely poor, but because of the image of leafy, green and pleasant countryside the presumption is that areas such as mine are prosperous. That is simply not true. Stuart Burgess described rural poverty as
“a forgotten city of disadvantage”.
Rural poverty and our “retail deserts” are made much worse by the loss of local services such as surgeries, post offices, pubs, village shops, village halls, churches and public transport. All are progressively disappearing from our villages, which makes the poor who live there even more disadvantaged because they rely on those essential services, and the Government have done nothing to support them.
One in 13 rural primary schools has closed since Labour came to power. Only about half of rural households are within 2.5 miles of an NHS dentist or jobcentre, and this year the Government have closed down 20 per cent. more jobcentres, most of them in rural areas such as mine. There is a chronic shortage of affordable rural housing. Not only that, local government in rural areas is among the worst-funded in Britain. Wiltshire receives the lowest revenue support grant of any local authority in England, with the net result that it is difficult to break even on its budgets.
What is the solution? I was somewhat encouraged when I glanced at a recent press release from the Secretary of State for Environment, Food and Rural Affairs on 5 February 2009 which said:
“England’s Rural Businesses will be vital in helping the country through tough economic times”.
I thought that that was good news and sounded interesting. He went on to pledge
“Government support for rural communities and businesses”
“determined to ensure that rural businesses benefit fully from Government help during the economic downturn.”
It sounds pretty good if the Secretary of State is absolutely committed to helping rural businesses, treating the matter seriously and doing something to help our countryside. I looked forward to reading about radical solutions and real action, but this is what he plans to do:
“So today I am announcing that I will call together the Rural Advocate Stuart Burgess, the chairs of the RDAs and others to look at the impact of the recession on the rural economy and see what further assistance we can give through the National Economic Council.”
Hooray. Goodness, he is going to call together the rural advocate and see what can be done. Thank goodness we have the Secretary of State. Gosh, he really is concerned. But what is he going to do? He is going to report to the National Economic Council. Will that great champion of rural England, the Prime Minister, take great strides to help out my community in Wiltshire? Lord Mandelson of north London or wherever he is from is not exactly the biggest ever champion of rural areas.
Mr. Roger Williams (Brecon and Radnorshire) (LD): Herefordshire.
Mr. Gray: The hon. Gentleman corrects me and says that Lord Mandelson might have gone there once, perhaps on his bicycle, but he is from north London. I have no confidence that he and the Prime Minister have any commitment to doing anything to help our rural communities, and I do not believe that the much-lauded press release on the subject from the Secretary of State for Environment, Food and Rural Affairs stands for much more than yet more talking, yet more websites and yet more focus groups, so there will be more discussions, but no action.
Mr. Williams: I congratulate the hon. Gentleman on securing this important debate. He drew attention to the parlous state of rural businesses, but one issue that he has not touched on and which the group that the Secretary of State is getting together might consider is business rates, which will rise by nearly 5 per cent. next year because the retail prices index was 5 per cent. in September. It is likely to be minus something today. Is it not ludicrous to put up business rates by 5 per cent. for this year and put an added burden on rural businesses?
Mr. Gray:
That is an extremely good point. Business rates in areas such as mine are having a grave effect, and the increase when we are facing deflation rather than inflation in real terms is worrying. In addition, the rates on empty properties, although now reduced thanks to
the Government’s late announcement, are still much more than they would have been had buildings simply stood empty.
Another good example is the increase in council tax. It is claimed everywhere to be only 3 or 4 per cent. and even that is quite a lot, but in areas such as mine villages are being brought into towns—Chippenham and Calne—and the increase in council tax resulting from that local government boundary change is 20 per cent. Such factors have a real effect on ordinary people, many of whom fear for their jobs.
I shall try to keep my contribution short, because I know that other hon. Members want to speak. Conservative Members have long called for real, practical, sensible and workmanlike actions that would have an effect on the sort of economic downturn that I have described. We have long called for a national loan guarantee fund to help businesses, particularly small businesses, and we have called for help by deferring VAT bills, cutting tax and national insurance, and cutting red tape for businesses and farms. Those actions would have immediate and real benefits for our wrecked rural economy.
The reality is that in towns and villages alike there is a terrible social price to be paid for the wreckage of the British economy. In Wiltshire, 77 per cent. of residents have reined in their spending in some way, 27 per cent. have seen an increase in their levels of debt, 24 per cent. are concerned about losing their jobs, 10 per cent. believe that they will struggle to pay their mortgage or rent, and 5 per cent. fear repossession of their homes. Rural areas and rural dwellers are facing just as much of an economic disaster, and perhaps a greater one, as urban ones, but our local economy and services are less well poised to survive it. These are grim and gloomy times for our market towns, our farmers, and our villages and country areas alike.
9.48 am
Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to take part in this debate, not least because I have been trying for some weeks to obtain a debate on the rural economy, but I foolishly used the words “and the role of social enterprise”, which do not seem to fit the selection criteria, but I shall say something about that. I welcome my fellow member of the Select Committee on Environment, Food and Rural Affairs, the hon. Member for North Wiltshire (Mr. Gray), but I was a wee bit concerned that he did not mention our excellent report on the potential of England’s rural areas.
Mr. Gray: I left that to the hon. Gentleman.
Mr. Drew: The hon. Gentleman is leaving that to me. The report is a good starting point, and I do not deny many of the problems that rural Britain is facing, but I want to examine some other issues and where we should be going in dealing with current problems.
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