Environment, Food and Rural Affairs CommitteeWritten evidence submitted by the National Farmers’ Union (NFU)

The NFU represents 55,000 farm businesses in England and Wales. In addition we have 41,000 countryside members with an interest in farming and the countryside.

Rural Communities

Preamble

1. The NFU is pleased to submit evidence in relation to the Committee’s inquiry focusing on the work of the Rural Communities Policy Unit (RCPU), its ability to act as rural champion in the heart of government, and its effectiveness in delivering rural development. We have structured our submission so that it follows the format of the Committee’s Inquiry announcement and questions.

The approach of the Rural Communities Policy Unit

2. The RCPU has tried to engage with rural communities, by means of publications such as its Rural Economic Bulletins and attendance at local/regional events. Engagement with farmers (other than at one-off events) is likely to be mainly via the Rural and Farming Network (RFN), and much depends on the effectiveness of the constituent members of those local groups in representing the views of their members and then transmitting answers following meetings. The RCPU seems reluctant to keep national organisations informed of the work of the RFN.

3. If the RFN is to perform a valuable role in facilitating two-way communication it will be necessary to ensure that representatives are well-briefed on the matters to be discussed with Ministers (which will mean giving them ample notice of discussion topics and meeting papers, allowing time for evidence collection and consultation). Agreeing an outline work programme for periods of around 12 months may help groups to structure their activities and optimise their usefulness to Ministers and to the people they represent.

4. By its very nature, ensuring that the voices of the hardest to reach can be heard is challenging. It does appear that the RCPU has gone out of its way to ensure that the RFN has broad representation, though it is a little early to say how effective this will be: the first meeting of RFN Chairs was held in April 2012, and no minutes have been published.

5. The NFU believes there is value in having an independent view taken of progress with rural proofing at the national level and other aspects of the RCPU’s work, and continuing, strong rural advocacy; however we do not believe that new State-funded institutions are required. The RCPU can be expected to identify and highlight rural issues, and we welcome the EFRA Select Committee’s scrutiny of the work of the Policy Unit and hope it will continue. The Rural Coalition, of which the NFU is a member, has a role to play in engaging with the RCPU and challenging it where necessary on policy initiatives. The RFN should flag up issues growing in seriousness at a local level and provide an additional channel of communications for Defra Ministers. Individual pressure groups and trade associations such as the NFU will also highlight problems and offer advice, whether directly to the RCPU or via bodies such as the Rural Coalition. All these organisations and backbench MPs, Peers, local authorities and Local Enterprise Partnerships should collectively be able to fill the gap left by the Commission for Rural Communities and rural advocate.

6. It is necessary for Defra to decide whether the role of the RCPU is to be strong and visible champion of all matters rural or the delivery body for a much narrower and shorter agenda. In our view the “champion” role carries risks: positively it promises to have a more significant, beneficial effect on the operation of Government as a whole, provided Defra Ministers wholeheartedly adopt the RCPU’s recommendations, and delivery should be delegated to arms-length bodies such as Natural England and the Environment Agency; the danger is that the RCPU becomes a small, under-resourced faction within Defra’s policy discourse, hardly able to champion rural issues across Defra’s own broad remit, let alone wider government at all scales. Rural expertise is a broad topic, and some prioritisation may help: should the core focus be on businesses, people, natural environment or services? Ministers will need to make clear which of the two paths it wishes the RCPU to take, and ensure that the resources are available for the RCPU to carry out its key functions.

7. Previously, CRC fed in to government consultations in a formal way, as would any other organisation. This made the process transparent and the CRC’s views accessible. Since the RCPU was established, it has not responded to consultations in the same way. It is therefore not known whether the RCPU is offering a valid rural perspective to emerging policy thinking, and their perspective is not shared with other stakeholders. The NFU previously called for RCPU responses to be made publicly available via Defra’s website to counter against a loss of transparency. We maintain that publishing feedback to other government departments and making stakeholders aware of relevant consultations are critical to develop awareness and understanding of the unit’s views and role.

8. Similarly, best practice would in our view include informing stakeholders that the Government’s response to a consultation was about to be published.

9. However, in other respects the RCPU has been transparent. It has for example engaged openly with rural LEPs (primarily via the Round table) and with the Rural Coalition.

10. The effectiveness of the RCPU should be measured against a set of SMART objectives linked to its role; these objectives could relate to, for example, visibility and awareness, engagement with stakeholders, and progress on key rural issues.

11. We see no pressing need for an independent Rural Advocate. His/her functions can be performed by a combination of the bodies mentioned above in paragraph 5.

Rural grants and funding

12. Expectations of the Rural Economy Growth Review are limited because REGR utilised existing RDPE funds and was not the new investment in rural areas that the package headlines suggested. We will address in turn the seven measures that made up the REGR package.

(a)Rural Community Broadband Fund
Some critics have dismissed this scheme as designed to quieten the increasingly strident voices of dissent coming from vociferous people in rural areas: it relies on groups of people having the necessary organisational skills and means to prepare a plan and amass the necessary match-funding. Hence it is said that the money will go to people of means rather than people in need. There may be some substance to the criticism, though we have responded pragmatically and positively by encouraging our members to become involved in local groups to make best use of the limited funding. We explain below (paragraph 16) why much more public funding will be required to deliver faster broadband to people in remote rural areas.

(b)Rural Growth Networks
The NFU is broadly supportive of the plans for Rural Growth Networks, although we clearly need to see what comes of the initiative, maintaining contact with Defra to identify any changes needed before any national roll out. We were pleased to note that Defra invited bids for the evaluation contract at an early stage: it will be important to identify and share best practice from the beginning. The LEP Round Table, which is supported by the RCPU, has a key role to play in this.

(c)Farming Regulation Task Force

(i)The NFU welcomed the report but we are emphatic that implementation of the recommendations remains key with actions needing to match the rhetoric if farming businesses are to benefit.

(ii)With Defra accepting the majority of the recommendations there are many positives. They have agreed to reduce burdensome regulation and promote a change of culture, cutting paperwork and giving greater recognition for high-performing businesses. These cross-cutting themes are consistent with NFU aims.

(iii)The NFU has committed to playing its part in supporting and working with Defra to find solutions and make progress. The NFU has led the industry in advancing proposals to the Task Force (eg without NFU’s development of farm assurance there would be little basis for earned recognition). We have continued working with Defra and Red Tractor Assurance to recognise third-party certification schemes, reducing compliance burdens on farmers with cross compliance identified as a priority. We are now awaiting Defra’s earned recognition plan detailing how they intend to implement it across different inspection regimes. The Committee might wish to enquire about progress.

(iv)We are also committed to establishing closer regional working between industry and regulators and are taking this forward via regional inspection forums. We have also submitted a proposed data-sharing statement to Defra allowing data they collect to be used across the Defra family. This is a crucial first step toward reducing the frequency of repeat data requests.

(v)While progress is being made in some areas we welcome the establishment of an implementation group to support the report’s implementation. A key role of this group is to hold Defra to account on progress to achieve a better-regulated industry, supporting productive and profitable farming. We are also looking to Defra Ministers and officials to champion the industry and lead action within Defra and across Government and in Brussels.

(d)Rural Development Programme for England

(i)Defra has been successful in designing new capital grant schemes, attractive enough to result in considerable over-subscription, and currently appears to be on course to spend the 2007–13 programme money on time. Defra is engaging with stakeholders over priorities for spending the additional £5 million announced in July for the dairy sector. Our main concern at present is that the Skills and Knowledge Transfer Framework is taking longer than expected to be established and the process has been bureaucratic and fraught with difficulty. We need assurances that the necessary steps will be taken to ensure completion of training programmes before the deadline for the RDPE programme.

(e)Rural Tourism
We understand that Visit England already had some funding available prior to the Autumn Statement and has secured more from the Regional Growth Fund. We understand that the RGF money is to be used for marketing whereas the RDPE money will be focused on product development, and look forward to learning more about how tourism enterprises, some of which are run by farmers, will benefit.

(f)Food and Drink Export Action Plan

(i)Food and drink has already achieved notable export success: the sector has recorded its seventh successive year of export growth.

(ii)Clearly any activity that supports the sale of British agricultural produce abroad is beneficial to UK agriculture and is welcomed by the NFU. Whilst very few farmers export produce themselves, the removal of barriers to exporting, such as import bans of British produce, will have a positive impact on agriculture. The plan should also assist those farmers who add value to their produce through on-farm processing, as they will be able to explore export opportunities more easily. A large part of the plan is concerned with bringing together existing activities and organisations, with the intention that these functions become better co-ordinated, but it should also enable the transfer of best practice across sectors.

(iii)A plan for growing exports must however be considered alongside other factors. Currency movements could continue to work against UK export competitiveness. We know that limited red meat supplies in the UK are constraining export growth for beef and lamb. At the same time, UK food imports continue to grow and there remains the opportunity for import substitution. Growing our exports is positive, and needs to be part of a wider goal of growing the UK agri-food industry overall.

(g)Rural Community Renewable Energy Fund

(i)The NFU has for some time been calling for such a scheme (eg under the AD Strategy) to help farmers manage the risk of early-stage investment in renewables projects. This should be particularly suitable for farm-scale AD, for which it is harder to raise finance, as long as farmers can demonstrate a rural community benefit.

(ii)A revolving loan fund will be more effective (ie help more projects) if it has a higher probability of “recycle”: dividing up the loans between a greater number and diversity of projects would probably increase the rate of turnover. This is a welcome development.

(iii)Based on observations of the Scottish scheme, the typical scale of projects (average of 1.3 megawatts) may be larger than many farmers would want. A focus on smaller projects, but more of them, would suit farmer-led projects better. It is not clear to us what stakeholder engagement Defra is undertaking in order to ensure that the scheme is designed to meet the needs of all concerned.

13. Although the NFU welcomed the REGR package, we were disappointed that fiscal incentives remained firmly off the radar of the Growth Review team. Fiscal incentives are a key policy tool that could have been used to encourage capital investment, in turn providing significant wider economic benefits for the rural economy.

Reform of Pillar II of CAP

14. In the NFU’s opinion it is highly unlikely that the legislative framework for the new EAFRD, including implementing regulations and subsequent programme approval will be finalised by 31st December 2013 when the current RDPE is due to expire. Urgent clarification is required from the European Commission as to what will happen should delays indeed materialise and a policy hiatus arises. It is possible that the current programme is rolled forward into subsequent years, but, if this were to happen, on the basis of what budget? It may also be possible for the authorities to operate an un-approved programme on the basis of legitimate expectations of the legal framework. This approach incurs the additional risk of disallowance should the member state be deemed to have approved expenditure to claimants that is later defined as unacceptable by the Commission.

15. Transitional regulations to bridge the current EAFRD to the next are required as soon as possible to articulate the precise course of action for member states.

16. Uncertainty and the lack of clarity as to what will happen may lead to two possible scenarios: the first is that a large number of claimants rush to submit applications to meet the 31st December deadline under the current programme, placing undue pressure on resources to process those applications ahead of the deadline and, as the deadline looms, some may be unsuccessful due to processing time. The second is that projects in the pipeline are left “in limbo” whilst the legal framework is delayed, thereby delaying benefits to the rural economy. Under this scenario, finance, availability of materials and labour to complete the project would all be subject to the uncertainty of delays.

Government Policy

17. The Government’s Rural Statement is expected to cover a range of subjects including the roll-out of faster rural broadband. If anything the digital divide between urban and rural areas is widening: soon we expect to learn of a second tier of cities to be provided with ultrafast broadband (80–120 megabytes per second or even faster), and BT are said to be spending £2.5 billion to bring superfast broadband to two-thirds of UK premises by the end of 2014. Meanwhile Defra struggled to find £10 million to match the same sum provided by Broadband Delivery UK to help communities in the “last ten%” of the population, ie the most rural areas. In August, DCMS Secretary Jeremy Hunt announced that the Government was able to spend an additional £300 million on broadband. We hope that the Rural Statement will make it clear that a large part of that extra sum will be devoted to helping the “last ten%”.

18. In this context “Digital by Default” should mean digital as the primary way of transacting with Government not the only way, and a mandatory digital approach must be avoided at least until the digital divide is significantly narrowed. Defra is among the Departments following HMRC’s mandatory approach to online services. Defra also needs to satisfy itself that state aid rules definitely require that public money is only put into schemes providing superfast broadband; they would help more people if they were offering assistance with schemes providing medium speeds. In our view most rural businesses would be content with around ten Mbps; on present trends, by 2015 most of them will struggle to achieve download speeds of two Mbps (and lower upload speeds), whereas a few rural people will enjoy superfast broadband and many urban residents and businesses will benefit from ultrafast.

19. The NFU believes strongly that the route to sustainable hill farming lies in a profitable and productive extensive beef and sheep industry. While there have been encouraging signs for sheep producers in particular, based on the export markets driven by a favourable exchange rate with mainland Europe, the fundamentals for many upland livestock farmers remain challenging. Defra’s review indicates that wider rural economy measures, diversification and reward for environmental management may provide new income streams. However we do not accept that a focus on measures that do not also substantially bolster core farming actions, will deliver a sustainable upland sector. Thus Defra’s review may have been better placed to have focused on bolstering the actions and applied research of EBLEX, part of the Agriculture and Horticulture Development Board, and ensuring that the European Commission’s proposals to review the Less Favoured Areas classification accurately reflect the nature of agricultural constraint in the UK situation.

September 2012