Written evidence from the National Farming
Union (NFU)
EXECUTIVE SUMMARY
1. The NFU represents 55,000 farm businesses
in England and Wales involving an estimated 155,000 farmers, managers
and partners in the business. In addition we have 55,000 countryside
members with an interest in farming and the country.
2. The NFU believes that working in partnership
is the way forward and will work with LEPs to facilitate a strategic
vision for economic development in our rural areas. We expect
our partnerships to be focused, inclusive and effective. To help
generate strong public/private partnerships, we ask for the sub-national
approach to economic development to consider the following:
— Provide a consistent framework to assess
the quality of LEP proposals in the White Paper. This framework
must include the significance of agriculture, the wider rural
economy and the downstream sectors that are reliant on farming.
— Post -RDAs, an alternative delivery mechanism
is required for the Rural Development Programme for England (RDPE).
The aim of any transition must be to minimise disruption to the
programme and it must be recognised that the relatively large
number of LEPs means they are not an appropriate vehicle for delivering
RDPE.
— Promotion of economic prosperity is inextricably
linked with spatial planning. It is essential that LEPs have a
role in both the formulation of development plan policies and
development management, but that this occurs at a suitably strategic
level. The NFU advocates that the industry's infrastructure challenges
must be reflected in the National Planning Framework rather than
being a function developed solely by LEPs.
— If LEPs are to be effective then a funding
regime must be put in place. This should include the costs of
setting up and operating LEPs as well as a fund for supporting
specific activity. This must look beyond the lifespan of the Regional
Growth Fund. A percentage of funding should be dedicated to SMEs
in order that LEP resources do not bypass specific business types
or sectors on the criteria of scale.
— Clear transitional arrangements must
be established as LEPs replace RDAs.
— Whilst it is important for LEPs to respond
to the local circumstances there must be clear guidance to ensure
consistent interpretation and avoid duplication. There must also
be guidance on cross boundary co-operation.
THE FARMING
ECONOMY
3. It is critical that Local Enterprise
Partnerships and agriculture are actively engaged as private/public
partnerships are forged. Farming is a major industry. It responds
to the shifting needs of the market, embraces innovation and,
by using over three-quarters of the UK land area, shapes our natural
environment. Farms across the length and breadth of the country
are the starting point for the majority of food that ends up in
our shopping baskets and on our plates. Collectively, agriculture
and horticulture contribute some £7.1 billion to the GVA
(Gross Value Added) of the UK economy.
4. Agriculture was one of the few strong sectors
as the economy headed towards recession. This highlighted the
long-term investment prospects of agriculture as capable of generating
stable returns: a timely reminder that farming is good business
and good for business. While the solid performance of agriculture
has been good news for the whole economy, it has been particularly
critical to rural areas. The rural economy turns over £300
billion each year, employs 5.5 million people and has farming
at its centre.
5. Agriculture is a significant employer,
with 534,000 people—or 1.7% of the total UK workforce—involved
in primary agricultural production. Approximately 187,000 are
employees while the remainder working in the sector are self-employed
farmers, partners, directors and spouses. This structure makes
farming unique, given that the majority of people working in the
industry invest their personal assets into their business.
6. Looking at the direct economic impact
of agriculture only tells part of the story. To gain an understanding
of the significance of UK farming, it is important to consider
activities beyond the farmgate and look at the food chain as a
whole. Collectively, the agri-food sector accounts for 6.7% of
the total economy and generates some £85 billion in GVA terms
to the UK economy. In addition, an estimated 3.6 million people
are employed, 14% of all employees. Also, the UK food and drink
industry accounts for approximately 5% of total UK exports, with
some £13.6 billion generated through overseas sales in 2008.
7. The potential of agriculture to produce
renewable energy is also vital. Technologies are developing quickly
in the renewables sector, and farmers have been quick to contribute
to the green economy. In future, the UK's farmers will not only
be providing us with the food we eat but with the fuel and energy
that we can no longer afford to take for granted.
THE LEP OPPORTUNITY
8. A commitment to smaller government and
increased local delivery of decision-making is instinctively attractive
to the majority of farmers. Smaller government, for example, offers
the prospect of more streamlined regulation and less burdensome
red tape. This will help to save businesses costs and free farmers
to focus on where the risks really are, and what outcomes are
needed, rather than the processes associated with heavy-duty reporting.
9. Farming makes a major contribution to the
rural economy and cohesive local communities. But localism also
brings a challenge for agriculture; ensuring that farm businesses
play a full role in local economic partnerships, for example,
and—more importantly—ensuring that, as far as the
planning system is concerned, there is robust guidance informing
planning at the "larger-than-local" level. The Coalition
has committed to developing "a simple and consolidated national
planning framework covering all forms of development and setting
out national economic, environmental and social priorities".
It is vital that this national framework and the functions of
LEPs reflect the importance of the sorts of development needed
to meet the food production challenge and increase the competitiveness
of rural areas through diversification and energy generation.
By contrast, any potential divergence across the country in the
approach to planning and economic development could restrict the
future growth of the farming industry and subsequently impact
on the efficiency of downstream sectors.
EXPERIENCE OF
SUB-NATIONAL
DELIVERY
10. It is worth highlighting that the NFU
has taken strong interest in the sub-national activities and effectiveness
of Regional Development Agencies. RDAs are charged with delivering
some £600m of funding to farmers and rural areas as part
of the Rural Development Programme for England (RDPE) through
to 2013. This programme is funded through the Common Agricultural
Policy. Apart from the current uncertainty of future delivery
of this EU funded programme, NFU members have faced a number of
challenges with RDPE as delivered at the regional level.
11. Challenges include the duplication of administration
in RDA offices, a plethora of application forms and guidance,
and huge variation for similar activities in eligibility, project
thresholds and timeframes. What should have allowed better targeting
of the RDPE programme to local priorities appears to have slowed
delivery, hindered on ground activity and execution. Devolving
delivery of RDPE to a lower spatial tier still, creates much anxiety
as this could further exaggerate the costs and time involved in
delivery of a programme funded by CAP. Charging LEPs with such
delivery at the local level appears a contrary shift to "better
regulation" and CAP simplification.
12. Regional inconsistencies mean that each
RDA has interpreted RDPE rules and regulations differently. This
has effectively proved a barrier to cross-functional working.
For example, despite the obvious advantages to developing a multi-regional
or national approach in areas such as animal health or farm efficiency,
collaborative working has proved elusive under RDPE. The reality
is that no projects of significance have come forward that work
across geographic boundaries. These experiences have helped influence
our submission to this Inquiry.
SCOPE OF
LEPS
13. The joint letter from DCLG/BIS inviting
proposals for Local Enterprise Partnerships referred to some functions
that are best led nationally. This included sector leadership.
Given the strategic importance of the farming economy, the NFU
trusts that Government shares our view and considers that agricultural
leadership takes place at the national level. We envisage that
the forthcoming White Paper on sub-national economic growth should
provide more detail on how agriculture can contribute further
to private/public partnerships.
14. That said, the NFU appreciates that LEPs
will be developed to reflect the characteristics of key business
sectors. The response to the DCLG/BIS challenge appears to have
been swift, with many local authorities and business groups already
actively preparing for LEPs whatever form they may take. NFU colleagues
and members are contributing to the LEP discussion in many areas,
but the dash to assemble regional priorities does cause some concern.
It is already apparent that agriculture may not be given appropriate
consideration in LEPs and they are certainly not looking consistently
at rural issues or even inclusion of rural areas. Farming is dominated
by small businesses and is not necessarily represented by business
groups at the local level. NFU member feedback suggests that farmers
recognise the potential wins from being involved in LEPs, but
it remains a challenge for a national organisation to keep tabs
on all the discussions taking place and contribute fully. It should
also be remembered that these formative discussions are occurring
at a critical time of the year for farming businesses.
15. We trust the forthcoming white paper
will outline processes for reviewing initial proposals from LEPs
and recognise that agriculture, especially in rural areas, is
a critical economic driver. Agriculture also shapes the appearance
of the landscape and the countryside provides a huge range of
benefits to us all. It is not just as a place where our food is
produced, but provides leisure, access and tourism, and is, of
course, a home for the stunning and diverse flora and fauna of
Britain. Above all, rural areas and the rural economy should not
fall between the gaps when the geographic and functional scope
of LEPs is being developed.
THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
AND ENSURING
VALUE FOR
MONEY
16. Partnerships are already in the process
of drafting and submitting their outline proposals. Whilst these
proposals will inevitably reflect local priorities, it is likely
that there will be a variety of roles that LEPs across the country
design for themselves.
17. We are aware that Government is working with
RDAs to review all their functions. Given that RDAs have been
integral to the delivery of the RDPE, this is an area where the
NFU is taking a strong interest. At present, it is unknown where
the delivery of the programme will sit post-RDAs but LEPs have
been suggested as a deliverer of at least a proportion of RDPE
funds in the current and future programmes. The NFU has already
written to Defra to express our concern on this issue. We advocate
minimal disruption to the current programme and a greater degree
of centralisation in future programmes to improve consistency
in delivery.
18. The NFU believes that the functions
of LEPs should be considered carefully. We do not expect LEPs
to become "mini-RDAs", especially in their delivery
of CAP rural development support. LEPs should not develop separate
rural development schemes or operate different eligibility and
application procedures as have RDAs. Instead this tier is better
focused on local delivery of a smaller number of national schemes
taking into account local circumstances and priorities.
19. The other major issue for agriculture
relates to LEP influence on the planning regime. Agriculture has
had two or more decades of under investment and we need planning
policies to support modern farming practices and not hinder them.
The need for investment is required in an industry where profitability
has been volatile and some sectors have experienced pro-longed
periods of losses. Farming is first and foremost about food production
and farm efficiency will be a driver of on-farm development. Regulatory
compliance will also feature and drive the need for modernisation.
Appropriate planning policy is not restricted to the farm yard.
The reality is that today's food supply chains need the correct
facilities, be they central grain stores, pack houses or abattoirs.
Invariably, it makes economic sense to site these close to the
raw material supply base ie in rural locations. Planning must
also allow for diversification of the rural economy, not least
the development of initiatives designed to increase renewable
energy supplies or re-use of redundant farm buildings. Farm workers
and farm families must also be able to secure local housing, preferably
on farm. However, it is feasible that some LEPs opt for "countryside
protection policies" that focus on the natural environment
but discount food production and security as key issues.
20. The NFU advocates that the industry's
infrastructure challenges must be reflected in the National Planning
Framework rather than being a function for LEPs to develop. We
know that large scale schemes agricultural developments (such
as extensive areas of polytunnels or "super dairies")
already face challenges from the local community. Localism potentially
exaggerates this, giving rise to emotional rather than rational
opposition. It is a potential threat to modern agricultural development.
There is a very close link between promoting a local economy and
ensuring that the right planning framework is in place to enable
those economic aspirations to occur.
21. It is essential that LEPs have a clear
role in assisting in the development and implementation of planning
policies. It is suggested this includes:
— LEPs outlining the planning policies
needed to achieve the economic aspirations.
— Acting as statutory consultees in the
preparation of development plans, with local planning authorities
demonstrating how they have taken into account LEP views in policy
formulation.
— Being statutory consultees on planning
applications which have potential economic/employment impacts.
22. Given agriculture's contribution to
the green economy, LEP functions relating to renewables and climate
change are another area of interest. The government has an EU
obligation to meet a renewable energy target. Regional strategies
were setting regional targets based on an examination of potential
within their areas. Government guidance now is that local authorities,
should, "help secure more renewable and low carbon energy
to meet national targets." This clearly needs to be elaborated
further in terms of specific targets for LEPs and is another area
where coordination across LEPs is vital.
THE REGIONAL
GROWTH FUND
AND FUNDING
ARRANGEMENTS UNDER
THE LEP SYSTEM
23. The NFU will respond more fully to the
BIS consultation on the Regional Growth Fund. However, we welcome
the recognition in the consultation that the £1 million bid
threshold may be prohibitive for rural areas and trust that appropriate
bid thresholds for rural areas will be established. The flow of
this fund should be to rural growth as well as funding development
in urban areas. Indeed, we believe that all micro and SME businesses
should not be excluded from this fund. On size criteria alone,
there is a risk that such enterprises are likely to be by-passed
by this fund. We would recommend that a proportion of this fund
is earmarked for micro and SME businesses. This would also ensure
availability of the fund for rural areas, given that such businesses
tend to be proportionately more typical of the economic make up
of rural communities.
24. A concern relates to the timeframe involved,
particularly if LEPs are going to be at the forefront of bids
to the fund. An initial bid deadline of December 2010 is referred
to in the consultation. Will LEPs be functional in time and will
they be able to coordinate a "package" to submit as
a bid to the fund? An allied issue relates to any bids where planning
is necessary. Although integration with local planning policies
is desirable, the limited time frame and uncertainty over planning
create issues. It is feasible that first-round bids to the Regional
Growth Fund may involve projects that could be delayed due to
planning issues.
25. We believe that a set of principles
will be necessary in establishing the funding arrangements. The
consultation already suggests some of these, but any funding should:
— have an established approval process;
— give clear guidance to potential applicants;
— involve an efficient approval process
that offers value for money; and
— avoid the creation of a "postcode
lottery".
26. From reviewing agricultural investment
across Europe, state involvement in subsidising loans to agriculture
appears to work well. This has been relatively unexplored in the
UK from an agricultural perspective. Supporting loans for capital
investments means that commercial lenders are involved in assessing
the likely performance of business proposals rather than via approval
based on appraisal panels. This generates a high success rate.
It is certainly a mechanism that the NFU would like to see considered
by Defra as a method of supporting agricultural development in
subsequent policy measures, and may merit consideration as part
of the Regional Growth Fund.
27. Alongside the Regional Growth Fund,
there is the issue of funding LEPs. To an extent, this needs to
be aligned with the functions that they will ultimately undertake.
Regardless, LEPs will need a Secretariat and staff commensurate
with their role. Funding needs to be in place to deliver LEPs
competently and consistently. Again, the NFU's experiences with
RDPE shape our viewpoint. No matter what the "prizes"
on offer, maintaining voluntary support from public and private
sector is a challenge for any initiative. Expectations of LEPs
are clearly high and if they are to fulfil those expectations,
appropriate budget support needs to be in place. However, the
proposed number of LEPs does provide significant scope for cost
comparison and control. With a common framework and structure,
monitoring costs and public sector value for money offered by
LEPs would be relatively straightforward.
GOVERNMENT PROPOSALS
FOR ENSURING
CO -ORDINATION
OF ROLES
BETWEEN DIFFERENT
LEPS
28. It is likely that LEPs will develop
a variety of functions. This creates the prospect of a divergence
in terms of their future role. The exact nature of this divergence
will be apparent once proposals have been received, but a recent
survey by Rose Regeneration of local authorities has indicated
that a gap has already emerged in terms of the core areas of interest
(the full report is available online at
http://www.roseregeneration.co.uk/media/Consultation%20on%20Local%20Enterprise%20Partnerships
%20July%202010.pdf).
29. Post-RDAs, there will be a number of LEPs
picking up the economic development challenge. With a greater
number of partnerships, there is a greater risk of divergence
in their roles. Whatever the final functions of LEPs, the NFU
believes that there should be consistency in terms of their role.
This needs to be defined by Government at the national level.
We believe that this is a pre-requisite for cooperation across
LEPs.
30. The NFU envisage that collaborative
working will be arguably more important than ever across local
areas. Government must ensure that the structure of LEPs does
not limit such opportunities or form barriers to strategic delivery
and cohesiveness. A common framework will facilitate LEPs joining
together where specific projects or functions warrant coordinated,
sub-national actions.
ARRANGEMENTS FOR
CO -ORDINATING
REGIONAL ECONOMIC
STRATEGY
31. By definition, LEPs will be at the heart
of business and civic partnerships. The NFU has been proactive
in spearheading such public/private partnerships. Catchment Sensitive
Farming and the Campaign for the Farmed Environment are just two
high profile examples of where many farming businesses are voluntarily
engaged in the provision of public goods. NFU leadership has been
integral in fostering such partnerships. We envisage that voluntary
initiatives will increasingly be commonplace across all sectors.
32. From an agricultural perspective, effective
coordination amongst LEPs is essential. We believe that agriculture
must be reflected in the sectors and functions identified by many
LEPs. Given this broad geographical coverage, LEPs must work together
to maximise the benefits of public/private partnership. As an
organisation, we would find it a considerable challenge to become
involved in facilitating initiatives at the local level across
multiple LEPs. For example, it is debateable whether or not the
two examples referred to above would have generated the momentum
necessary for them to prosper if left to bottom-up, local development.
Therefore, a system needs to be developed to ensure coordination.
STRUCTURE AND
ACCOUNTABILITY OF
LEPS
33. From our involvement in LEP discussions
to date, the NFU is aware that governance and structure are key
issues for business. Business leadership of LEPs is to be endorsed,
particularly given that "talking shops" are to be avoided
and the objective of rebalancing the economy towards the private
sector. Representing the broad views of the private sector on
LEPs will be a challenge, but this needs to happen. As an industry,
we would expect that the rural economy and the agri-food supply
chain are represented within this.
34. In terms of the structure of LEPs, this framework
must be common to all partnerships. Just as is the case with the
functions, common and consistent structures will facilitate cooperation
and collaboration. This is particularly vital from a private sector
perspective. Many businesses are likely to be involved with more
than one LEP at various times. A standardised approach to their
role and structure means that business does not have to invest
time and effort to understand how they work, identify the correct
individuals, etc with each LEP. As an organisation that has been
involved with the 8 RDAs at various times, a significant drain
on NFU resources has been understanding the structure and working
methods of each agency. This limits the extent of involvement
with them and ultimately delays the roll out of effective business
ideas. If an initiative has worked well with one LEP, transferring
that same initiative to other LEPs and spreading best practice
should occur quickly. The private sector should channel resources
into economic development, not recreating the wheel to comply
with the differing structure of LEPs.
THE LEGISLATIVE
FRAMEWORK AND
TIMETABLE FOR
CONVERTING RDAS
TO LEPS,
THE TRANSITIONAL
ARRANGEMENTS, AND
THE ARRANGEMENTS
FOR RESIDUAL
SPENDING AND
LIABILITY OF
RDAS
35. The pace of change is swift. As indicated
previously, some local authorities appear to be adopting the LEP
challenge with more vigour than others. There are consequent dangers
that some areas or sectors may receive little or not interest.
Partnerships will inevitably seek to develop at their own pace.
In their delivery of RDPE, RDAs similarly progressed at different
timescales. This proved a barrier to collaborative working and
undermined any strategic approach. The NFU feels that it is important
that Government manage and coordinate the process of LEP development.
Establishing cooperation across local areas will be a significant
challenge. Working to disparate time schedules only exaggerates
that challenge and does nothing to generate an environment of
collaborative working.
36. RDPE delivery is an area of residual spending
and liability for RDAs that is of specific interest to farmers.
We reiterate our call for minimal disruption and a greater degree
of central coordination where possible. Although there is little
definition of their likely roles at present, we do not feel that
LEPs will be suitably equipped in terms of skills and personnel
to take on the delivery role for the Rural Development Programme.
Momentum is critical to RDPE and the current programme has been
a particular challenge to get up and running. However, shifting
delivery creates a very real risk of a hiatus in the programme
that would undermine the overall effectiveness of rural development
policy. There is the additional risk that ongoing cutbacks at
RDAs also reduces RDPE delivery capacity before alternative delivery
mechanisms can be established.
MEANS OF
PROCURING FUNDING
FROM OUTSIDE
BODIES UNDER
THE NEW
ARRANGEMENTS
37. There is a risk that excessive administrative
burdens could constrain LEPs in their efforts to procure and deliver
funding, given that they are likely to have fewer personnel and
resources at their disposal. Clear demarcation needs to be made
between programmes that are best delivered at the national or
sector level and those focused at the local level.
38. Notwithstanding the major question of exactly
what funding sources will be available, the opportunity to review
the methods of procurement needs to be taken. A central funding
procurement resource that LEPs use to access external financing
could be an option. Rather than have individuals or teams within
each LEP that have funding as one of their functions, contracting
into a central, dedicated resource would give obvious efficiencies.
The RDAs provide a wealth of experience here. A study of their
relative resourcing costs, total funding awards and success rates
would contribute much to determining the best methods of procuring
funding on behalf of LEPs.
FUTURE OF
LEPS
39. The NFU believes that working in partnership
is the way forward. Any LEP must have a strong local identity
and seek a common approach to ensure access by business is efficient
and reduces bureaucracy. Clearly, the governance structure and
functions of LEPs must not ignore the rural and agricultural economy.
The NFU welcomes the opportunity to work with Government as the
approach to sub-national growth develops. We will continue to
offer the sector leadership that we feel is needed to bring together
the priorities for the agricultural and land-based sectors. We
see a bright future for the local approach. The NFU looks forward
to working with LEPs to facilitate a strategic vision for economic
development in our rural areas and developing partnerships are
focused, inclusive and effective.
13 August 2010
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