Work of the Committee: 2010-15 - Environment, Food and Rural Affairs Contents

4  Rural issues

39. A broad swathe of policy issues come under Defra's rural affairs remit and during this Parliament we have scrutinised a range of agriculture and food production and supply issues, alongside rural community issues such as rural broadband provision.


Common Agricultural Policy

40. It would be hard to overstate the importance of the EU's Common Agricultural Policy (CAP) for the UK's agriculture, rural economy and environment. But CAP is not a static set of regulations: since its inception in 1962, CAP has been subject to considerable amendment, with the latest version coming into effect in 2014, to apply until 2020. In our CAP after 2013 inquiry published in 2011 we scrutinised the thrust of the proposed changes in order to influence the Government's negotiating stance ahead of EU final decisions.[65] We were unconvinced that any of the EU options then on the table offered the UK a "good deal" and noted that, at a time of rising populations and pressures on production such as climate change, CAP needed to focus more than ever on food security. Unimpressed by the Department's handling of negotiations thus far, including representing a unified UK view, we urged Defra to engage actively to ensure the reformed CAP encourages more competitive, productive and sustainable UK agriculture whilst at the same time enhancing the nation's physical and cultural landscapes. We shared Defra's ambitions that a reformed CAP should reduce direct subsidies for food production, but were cautious about simply reducing these unless Defra could set out clearly how farmers could be self-supporting with rising input prices and greater competition from third countries.

41. When, in 2013, we subsequently examined the Government's plans for translating the new CAP into English policy we found elements to support. Our Implementation of the Common Agricultural Policy in England 2014-20 report welcomed some of the Government's proposals such as the intention to raise the minimum claim threshold to five hectares and to move money in Pillar I to increase the support for upland farmers.[66] However, we raised concerns about specific aspects of implementation, such as the need to ensure tenants receive appropriate CAP payments in respect of the common land they farm. Our successor Committee may wish to review the Government's progress in tackling current practical problems with identifying accurately both contractual and rights in perpetuity over common land. It may also wish to assess the Government's success in implementing a mechanism for resolving disputes between tenants and landowners over claims. We were also critical of aspects of the EU's 'greening' proposals and the UK implementation of them.

Greening the CAP

42. The overarching conclusion in our CAP after 2013 report was that introducing green measures into Pillar 1 as a compulsory precondition for qualifying for CAP payments would risk creating complexity in implementation without delivering tangible benefits. A greater emphasis on sustainable farming could be derived through incentives rather than farmers being "stifled by regulation". This followed up concerns in our 2012 report on Greening the Common Agricultural Policy that the EU Commission's commendable objective of improving the environmental contribution of CAP was unlikely to be achieved by its current approaches.[67] Whilst much of the detail on the proposals has only emerged in recent months, we noted in 2012 that, given Europe's range of environmental challenges, a single set of prescriptive rules were unlikely to deliver the desired improvements. We considered that the UK has led Europe in taking a holistic approach to environmental protection, with the nation's agri-environment schemes established under the previous CAP "among the best in Europe at delivering meaningful environmental benefits". Our 2013 report on Implementation of the Common Agricultural Policy in England 2014-20 also cautioned that any loss of access to agri-environment scheme funding for those farming in the harshest of environments could leave them worse off overall.

43. Nevertheless, since English farmers lag behind their main European competitors in levels of direct payment, leaving them less able to invest and innovate, we recommended that the Government maintain a CAP transfer rate of 9% from the Pillar I budget to environmental and rural development schemes funded in Pillar II. We recommended that the Government moved to 15% in 2017 only if it could demonstrate that additional funds were required and there was a clear benefit from the projects proposed.

44. Under the new CAP, Countryside Stewardship Schemes replace agri-environment schemes: farmers can apply for these from this year for commencement in 2016.[68] It is too early to judge how the new countryside stewardship approaches will work to protect and enhance the environment whilst balancing the needs of those managing and using the countryside, but in due course a future Committee may wish to assess their impact.

45. A general concern, shared by both the UK Government and many other Member States and highlighted in our scrutiny over the years of the new CAP, was that the scheme is overly "complex and burdensome". The recently appointed EU Agriculture Commissioner, Phil Hogan, has stated that CAP simplification is his aim.[69] Successor Committee scrutiny may wish to focus on how effectively Defra keeps up the pressure on Brussels to deliver this objective. Alongside this overarching concern we have highlighted through a number of inquiries and correspondence with Defra our concerns about specific aspects of CAP policies and their implementation in England. For example, the definition of an 'active farmer' is unhelpful—a matter which the current Secretary of State has undertaken to pursue in Brussels so as to make the test optional for Member States. Crop diversification and permanent grassland measures, hedge-trimming requirements, the mapping of boundaries and the application of Ecological Focus Area requirements are all detailed issues to which CAP applies blunt instruments yet they have sharp consequences on the ground for England's farmers. Defra has achieved some welcome successes on the detailed implementation of the new CAP, such as securing a derogation in certain circumstance from the ban on trimming hedges in August".[70] However we have argued for more tailored approaches to be permitted for CAP delivery at national level; a position that gained much support across other Member States but ultimately has yet to be realised effectively in EU policy. In scrutinising future CAP policy, a future Committee may well wish to assess Defra's success in negotiating the right solutions for the UK.


46. The Government has placed much stock in its deregulation agenda, with a specific focus on reducing regulation of farming through the Red Tape Challenge agricultural theme,[71] and through the Independent Farming Regulation Task Force led by Richard Macdonald.[72] The Government accepted 159 of the Task Force's 200 recommendations on a range of issues from reducing the farm inspection regime through a system of 'earned recognition', to simplifying environmental messages to farmers. We took evidence from Mr Macdonald in June 2012,[73] and again in February this year to review progress on implementing his Task Force's recommendations.[74] Whilst it is clear that the Government has now started to make good progress on reducing the regulatory burden for farmers, many issues remain to be resolved, in particular translating into practice the good intention to reduce the number of inspections whilst still meeting strict EU CAP compliance rules. A review in the medium to longer-term of progress on reducing regulatory burdens on farmers, including on developing effective 'earned recognition' approaches that deliver genuine cost reductions, would be worthwhile.


47. The income levels of England's farmers, particularly smaller-scale farmers, including those who are tenants rather than owners, has been a running theme throughout our work in this Parliament. The economic and technological pressures facing hill farmers formed the basis of our 2011 report on Farming in the Uplands, with falling incomes and the need to maintain upland farmland for farming rather than diversified activities the key themes.[75] One of our final reports, on Dairy Prices, this year dealt with the significant difficulties presently facing dairy farmers, not just in the United Kingdom but across the European Union.[76] Milk prices, in particular, had fallen to levels unsustainable for many small operators by Christmas 2014. Although the long-term prospects for the dairy industry remain positive, a series of frequent and very sharp rises and falls in milk prices had made investment and planning decisions very difficult, and especially so for small-scale farmers unable to withstand recurring collapses in their income. We recommended a package of measures including greater emphasis on export potential and farmers working together to increase their market clout.

48. This built, to some extent, on work previously done in 2011, when our report on EU proposals for the dairy sector and the future of the dairy industry examined EU measures intended to stabilise a volatile sector.[77] The success of that milk package has been mixed: more has been done to identify the problems dairy producers face in a difficult worldwide market than to address the structural problems of the UK's (and others') dairy industry. While we scored a significant success in prompting the Government to examine whether the interests of small-scale dairy producers needed better protection under the Groceries Code Adjudicator regime introduced during the present Parliament, it is beyond doubt that the changing shape of the dairy industry—now containing fewer than 10,000 farmers in England for the first time—will remain high on the next Government's agricultural agenda. A future Committee may wish to press the Government to review the Adjudicator's remit at the earliest possible opportunity in the next Parliament, so as to extend her powers to farmers supplying major retailers indirectly as well as to allow her more freedom to launch investigations on her own initiative.

Rural communities

49. This Parliament has seen a change in the organisational architecture for development of rural policy, with the abolition of the Commission for Rural Communities in 2013 and an enhanced role for the Rural Communities Policy Unit (RCPU) in supporting Defra Ministers who would, it was announced in June 2010, in future lead rural policy from within the Department. We examined how effectively the RCPU was acting as the planned centre of rural expertise, supporting and co-ordinating activity within and beyond Defra, to ensure fair, practical and affordable outcomes for rural residents, businesses and communities.[78] We concluded that too often Government policy had failed to take account of the challenges that existed in providing services to a rural population that was often sparsely distributed and lacked access to basic infrastructure. For example, rural communities pay higher council tax bills per dwelling, receive less government grant and have access to fewer public services than their urban counterparts. We urged the Government to reduce the disparity in local government finance settlements that were unfair to rural areas in comparison with their urban counterparts. To grow the rural economy in line with Government ambitions, rural businesses need better access to finance, more affordable housing and better rural broadband connectivity. We noted that many of the most valuable initiatives had started within rural communities themselves and we supported Government efforts to devolve more powers to local communities. We welcomed the Government's Rural Statement which represents a contract with rural areas, so they can hold the Government to account. A future Committee may also wish to hold the Government to account on its delivery to rural communities against this contract and against the RCPU's ability to ensure all government departments rural-proof their policies.


50. Rural connectivity has been an important issue for us, covered initially in our broad-ranging Rural Communities inquiry and again with this year's inquiry into Rural broadband and digital-only services.[79] While pleased that ensuring all areas have adequate connectivity is high on the Government's agenda, we were disappointed to find that rural areas have consistently poorer provision than urban areas since investment in the necessary infrastructure is lagging behind in rural areas.


51. The Government has committed to ensuring universal broadband to a standard of 2 Megabits per second (Mbps) for virtually everyone by 2016. This goal is being achieved through the rural broadband programme coordinated by Broadband Delivery UK (BDUK)—a Department for Culture, Media and Sport body. The Government has also introduced the superfast extension programme, which aims to deliver superfast broadband to 95% of premises by 2017. The availability and speed of broadband is particularly important as the Government moves towards digital-only delivery of many services, including CAP payments to farmers. We decided to look into this subject because we were concerned that the Government's move towards 'digital-by-default' services was based on an incorrect assumption that universal access to basic broadband had been achieved.[80] We investigated current broadband coverage, the technology being used to deliver broadband, and digital-only services such as the new CAP payments. The focus of the inquiry was on those in the hardest-to-reach areas. We were concerned that BT considered that the present target of 95% of premises receiving superfast broadband by 2017 may slip. Furthermore, national figures for broadband coverage disguise considerable local variation with some rural areas experiencing far lower levels of coverage than the national average: for example 16 constituencies still have zero superfast coverage.[81] We are confident that access to broadband is increasing but not enough is being done to ensure that the hardest-to-reach are not overlooked. A competitive rural economy requires effective broadband and mobile phone services. A future Committee may want to return to the subject of rural connectivity, looking in particular into whether coverage targets are achieved or indeed whether new technologies have been introduced to enable hardest-to-reach areas to get online effectively.


52. Early in this Parliament the Government announced that it proposed to legislate for the functions of British Waterways to transfer to a new body.[82] The Canal and River Trust was subsequently launched in 2012 to take over British Waterways' functions and assets, including some 2,000 miles of canals and rivers in England and Wales. The Trust is scheduled in due course to take over the EA's navigations, although the timescale for this has slipped because of economic circumstances.[83] A key issue for our scrutiny of the proposed Orders for the transfer was the future funding model, including the impact on waterways and towpath users.[84] The new body is a charity but on transfer received 15 years advance funding from Defra. None the less, we received evidence from waterways' users concerned about potential licence fee increases and from those concerned about the Trust's potential use of its property assets for income generation. We have not had the opportunity during this Parliament to revisit the issue in detail and a successor Committee may wish to do so to assess how effectively the new Trust is able to balance the interests of all users of the waterways.

65   Environment, Food and Rural Affairs Committee, Fifth Report of Session 2010-12, The Common Agricultural Policy after 2013,HC 671 Back

66   Environment, Food and Rural Affairs Committee, Seventh Report of Session 2013-14, Implementation of the Common Agricultural Policy 2014-20, HC 745 Back

67   Environment, Food and Rural Affairs Committee, First Report of Session 2012-13, Greening the Common Agricultural Policy, HC 170 Back

68   See Defra's December 2014 CAP Update Back

69   See for example European Commission press release Speech/14/2343, Simplification a top priority in 2015 Back

70   Q385 [Elizabeth Truss]. Under CAP cross-compliance rules, without a derogation, hedges may not be trimmed between 1 March and 31 August. See Defra, The guide to cross-compliance in England 2015. See also "Farmers frustrated by hedge-trimming ban", Farmers Weekly, 13 June 2014 Back

71   See Red Tape Challenge webpages accessed 17 March 2015 Back

72   See Report of the Independent Farming Regulation Task Force, May 2011 Back

73   Oral evidence given on 13 June 2012 to the Independent Farming Regulation Task Force inquiry, HC 308 Back

74   Q166-218 Back

75   Environment, Food and Rural Affairs Committee, Third Report of Session 2010-12, Farming in the Uplands, HC 556 Back

76   Environment, Food and Rural Affairs Committee, Fifth Report of Session 2014-15, Dairy prices, HC 817 Back

77   Environment, Food and Rural Affairs Committee, Eighth Report of Session 2010-12, EU proposals for the dairy sector and the future of the dairy industry, HC 952 Back

78   Environment, Food and Rural Affairs Committee, Sixth Report of Session 2013-14, Rural Communities, HC 602 Back

79   Environment, Food and Rural Affairs Committee, Seventh Report of Session 2014-15, Rural broadband and digital-only services, HC 834 Back

80   As above Back

81   Fixed Broadband: Policy and speeds 2014, Standard note SN06643, House of Commons Library, December 2014 Back

82   See Defra, A new era for the waterways, consultation, March 2011 Back

83   In July 2013 the then Defra Minister, Richard Benyon MP, stated that the review of the transfer of Environment Agency navigations scheduled for 2013-14 would be deferred until economic circumstances allowed. HC Deb, 3 July 2013, col 54WS Back

84   See the Committee's inquiry webpages on the draft British Waterways Order 2012 Back

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Prepared 24 March 2015