RURAL
DEVELOPMENT
The role of structural
development policies
83. The economy of rural
Europe is experiencing a far reaching and relatively rapid change.
In some parts, rural communities have long been growing as urban
commuters choose to live outside major towns and as new small-scale
businesses offer fresh employment opportunities to rural residents.
Elsewhere, there has been a loss of population, increasing difficulty
in maintaining services such as shopping, public transport and
health and education facilities. The sustained and general decline
in the number of people engaged in agriculture is one element
in this transformation. In the 1980s more than three million people
left the sector (Community of 12 Member States) and the process
continues. Agenda 2000 recognises that the considerable
social problems which arise cannot be resolved either within the
framework of a competitive agriculture or of environmental policy
alone. This places considerable weight on its proposals for rural
development policy. Here the detail in the Communication is sparse
but the intentions seem to be to concentrate structural spending
on a smaller percentage of the population, to simplify the operation
of the Structural Funds and to fund part of the existing policy
package from the Guarantee rather than the Guidance section of
FEOGA.
Economic development
and the role of farming
84. A major role for
rural development policy must be to facilitate the increased competitiveness
of agriculture. The changes needed take a variety of forms. A
central element is the enlargement and amalgamation of farm businesses
so that they can attain the economies of scale made possible by
modern farming technology. This process is already underway, farms
are gradually becoming larger and, through shared facilities,
the co-ordination of production plans and precise targeting of
production to market requirements, benefits may be secured without
necessarily changing farm boundaries. The result is not to create
a single system of very large farms but to enhance the ability
of a diverse range of farms in the European Community to survive
in a competitive world. Such developments do not need additional
funding but they will require the removal of obstacles to change
such as quotas and area related payments, which restrict the ease
with which farming can adapt. Agenda 2000 continues rather
than removes these obstacles and the Committee reaffirms its belief
that an adequate adjustment policy cannot be designed as long
as no time limit is set for compensation payments or for the end
of quota restrictions.
Diversification
off the farm and part-time farming
85. The adjustment of
farming cannot be solely dependent upon new arrangements within
the farm business. Part-time farming already plays a major role
in many countries and may facilitate the emergence of a more competitive
agriculture with new, non-farming sources of income, supplementing
earnings from agriculture. In Germany, as Professor von Urff (QQ 349-55)
reminded the Committee, part-time farming has a long history and
has been combined with the development of highly-skilled small
businesses situated in rural areas. The development of business
activities in rural areas can enable some farmers faced with reduced
income to remain in agriculture by becoming part-time farmers.
Such an approach is to be encouraged and should be taken further
in the Agenda 2000 proposals for rural development. A specific
programme to encourage non-agricultural businesses in rural areas
(and so provide job opportunities for a growing number of part-time
farmers) would form a key part of developing a living rural economy.
We note that considerable costs are involved in converting redundant
rural buildings to premises capable of use by other businesses.
This has largely limited such projects to large estates. We recommend
that the Commission emphasises, within its single menu approach,
co-financed support for the costs associated with new small-scale
enterprises in rural areas.
On-farm diversification
86. Adjustment may also
be eased by the development of new non-farm related businesses
on the farm itself. Tourism is one such activity which already
receives some encouragement. However the Committee was told of
difficulties created by planning restrictions, by lack of funds
or of skills among farmers. The scope for developing on farm tourism
should not be exaggerated, but in areas where demand exists and
among farm families who possess the necessary skills and personal
qualities, unnecessary impediments to development should be removed.
Although some of the traditional craft businesses which supplemented
income from farming have disappeared in the face of industrial
competition, there are some worthy new possibilities which can
create new employment opportunities. Modern telecommunications
create the possibility of conducting many varied competitive businesses
within the farm premises but unrelated to the farm itself. Such
developments can make it possible for farm families and former
farm workers to continue to live in the neighbourhood and so preserve
rural communities which might otherwise decay. If such developments
are to take place, an important requirement is likely to be provision
of adequate services. These include not only water, power and
telecommunications (for the provision of which we argue that there
should be Community co-financing) but also, for example, the existence
of car parks, the presence of village shops and of a functioning
system of public transport. In some areas local communities have
shown initiative in developing innovative solutions to these requirements.
The new rural
economy
87. The changes which
are taking place in rural areas are not simply the result of developments
in farming. A new rural economy is being created and economic
and employment opportunities may have no relationship to farming
at all. This development is the result of technological and economic
change which has made a wide variety of industry much less dependent
on large labour forces and urban locations. Many policies affect
development, notably transport and planning policies. As rural
policy responds to changes in agriculture, it should do so taking
full account of the employment and business opportunities associated
with this autonomous process of rural change. An important area
of growth is the development of new enterprises which respond
to the environmental challenges of a modern economy.
The importance
of horizontal measures
88. We note the concerns
expressed by several witnesses that the Commission's proposals
for the reform of the Structural Funds will disadvantage rural
areas and in particular the United Kingdom. The intention to reduce
the proportion of population covered from 51 per cent to between
35 and 40 per cent must mean that some current recipients cease
to benefit. Rural communities in disadvantaged areas which currently
benefit from Objective 5b funding (in 1996 a Community total of
901.6 million ecu), fear that in competition with the needs of
urban regions they will lose out. Provided the Commission's forecasts
for the development of GNP are realised, we believe that a substantial
sum could be set aside for an horizontal rural development policy
within the budgetary guideline of 0.46 per cent of GNP which presently
exists for the Structural Funds. An adequately funded horizontal
measure of this nature would be especially welcome as a response
to the more general problems of agricultural adjustment which
must arise from the need to assist the Community's agriculture
to prepare for international competition. These problems will
affect not only farmers in marginal areas but the whole of agriculture.
Merging urban
and rural Objectives
89. Agenda 2000 proposes
merging the rural Objectives 5a and 5b into the urban and industrial
Objective 2. The rural economy has to grow within the constraints
and opportunities of the economy as a whole. The Committee has
some sympathy with the Commission's proposal. A somewhat similar
issue arises in the United Kingdom with the proposed creation
of regional development agencies which will absorb the local activities
of the Rural Development Commission. Tackling the problems of
rural areas however requires a great deal of specialist knowledge.
This may not be fully understood by agencies based in large cities
and for whom rural populations form but a small part of their
total responsibilities. In the United Kingdom, the Rural Development
Commission has been the national custodian of this specialist
knowledge and a means by which rural concerns have been effectively
voiced as decisions are made at the levels of central or local
government. We underline the need for ensuring that institutional
arrangements make certain that rural issues are adequately represented
in the setting of development expenditure at both Member State
and Community level. Specific rural projects will be required.
Within the context of retraining, for example, there could be
funding for travel to retraining courses, so that programmes currently
available to town dwellers are made equally accessible to rural
workers. Another example might be the provision of local computer
training courses.
Source of funding
for rural development
90. The proposal to
fund Objective 5a and 5b type measures from within the Guarantee
section of FEOGA is broadly welcome. This creates opportunities
for a switch of emphasis from commodity based support to assistance
which focuses on the adjustment of the industry. We are concerned
however that the Guarantee fund's present rules may limit it to
funding solely on-farm development and it is our argument that
rural economic diversification must take a broader approach. The
fund's rules must accommodate off-farm non-agricultural development
as well as the current measures, for example, programmes funding
the conversion of redundant rural buildings into premises suitable
for commercial or light-industrial use. We are also concerned,
however, that there should be no presumption that funds released
by cutting production support should automatically be deployed
on other forms of agricultural or rural expenditure.
Administration
and implementation
91. A recurrent theme
among witnesses was the importance of local initiatives and local
responsibility. One of the Commission's Directors implementing
European regional policy said to us:
"... if you look at the
LEADER Programme ... you find an enormous amount of vivacity,
imagination, interest and commitment, all to spend tiny sums of
money, and then you go into the bigger programmes with massive
sums of money and you think, `If only we can show the same amount
of vivacity, imagination and commitment here, we could really
transform these rural communities'. But the strange thing is that
the bigger you go, the more there is a loss of ownership. We try
to overcome that but it really is surprisingly difficult to duplicate
for huge sums of money the same commitment that you can get for
quite small sums of money ... we used to have a 200 million unit
of account programme in Nord Pas de Calais and a 12 million unit
of account programme in the same area for the coalfield. If you
went into the region they would always talk about the 12 million
programme and not the 250 million programme. Why? Because they
felt more ownership for this small programme and yet the amount
of good it could do for them was obviously much less than could
be done through the big programme." (QQ 332-3).
92. The Committee agrees
that it is important to encourage local initiative and notes the
praise given by many witnesses to the LEADER programme which adopts
a bottom up approach. We also note that there exists within the
framework of local government a considerable wealth of talent
and experience which can be harnessed to promote development.
Agenda 2000 recognises that in rural development policy
there is a strong case for decentralisation. Decisions have to
be made by national or local governments rather than imposed from
the Community level. The Committee believes that within the menu
of measures offered by the Community there should be assistance
to promote small-scale commercial and industrial development,
innovative means of providing services and the expansion of low-cost
housing for rental. A key issue was the extent to which existing
bureaucratic processes, especially the difficulty of integrating
funds which have very tightly defined and different purposes,
were consistent with delivering a coherent and timely response
to local development opportunities. We endorse the principle that
there should be single menus at the Community and Member State
levels, which can be accessed through a single agency, and which
can combine the resources of the various funds and so make an
effective contribution to rural development with the minimum of
bureaucracy.
Planning
93. We were reminded
that the process of economic change raises a number of difficult
issues relating to the planning process. These included the conversion
of redundant farm buildings, the existence of affordable housing
and the decay of some traditional rural services. We note that
the DETR's recently revised planning policy guidance note seven
"The Countryside-Environmental Quality and Economic and Social
Development" is more sympathetic to development than previous
guidance and agree that it is an important step forward. In the
light of future developments in agriculture, however, this guidance
may need further review. Strutt & Parker, in their evidence,
drew attention to the scope throughout the United Kingdom to convert
post-war farm buildings, redundant now because of farm amalgamation
and other causes, to light-industrial use. They noted that financial
limitations and planning delays impeded such developments and
suggested that a national body akin to the Rural Development Commission
could be given the role of providing an opinion on the merits
of applications in order to guide the planning process and ensure
national consistency. The expertise present in the Rural Development
Commission would be especially valuable when decisions have to
be made concerning rural development, for example on providing
support for the conversion of redundant farm buildings, or for
the start-up costs of rural businesses which would provide employment
for those already living in the countryside. These decisions seem
likely to be a responsibility of the proposed regional development
agencies.
The place of rural
development
94. We have examined
carefully the proposals in Agenda 2000 which relate to
rural development. We recognise that development of the rural
economy is taking place and has to be encouraged if the valued
fabric of rural society is to be maintained. We argue however
that the contribution which the proposals in Agenda 2000
make to this process, although generally helpful, can make at
most a relatively minor contribution. Rural development is a diffuse
process influenced by a wide range of circumstances ranging from
the state of the economy to the details of local initiative and
planning. Many factors affect the outcome of which agricultural
policy and policies directed specifically at the rural scene can
form only one part. Whilst welcoming the Commission's declared
intention to give support to the rural economy, rather than to
maintain price support, we recognise that the development of the
rural economy is a continuous process. Policy must be modified
immediately to enable it to cope better with those changes which
stem from adjustment within its major industry, agriculture. The
test of success for such policies however must be that after a
period they become unnecessary. Within the Community the opportunities
and difficulties for rural development vary greatly and we recognise
that in some regions assistance stemming from agricultural change
may be needed for a substantial period. This should not distract
from the more fundamental need to see these measures as temporary
and to remove so far as possible those policies which impede the
healthy growth of the economy as a whole. This is one of the major
reasons for a more far reaching reform of the CAP than Agenda
2000 promises to deliver.
41 
