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Lord Chorley: My Lords, in thanking the noble Baroness, Lady Miller, for initiating the debate, I want to talk about the new CAP. Here I greatly endorse the remarks of the noble Earl, Lord Peel, who has much more experience than I do. Between now and 2012, how we adapt to it will have a dominating effect on our rural economies, particularly on our upland areas and their communities. It is on the uplands that I want to concentrate. The future of the upland communities depends on a symbiosis of farming and tourism. Most of our national parks and AONBs are uplands and they are some of our finest landscapes, as the noble Baroness, Lady Miller, reminded us. Their attraction depends on their being actively farmed. I emphasise that without farming they would revert to scrub. But in economic terms they are fragile. Cumbria, for example, has one of the lowest GDPs per capita in England. For decades the farmers have depended on subsidy, and as we all know, a production-based subsidy—a headage-based subsidy. As is well known, the new CAP is now in the main a single-payment hectarage-based subsidy. In the uplands, that is having a dramatic and alarming effect.

Last summer, the National Trust analysed the future prospects of 60 of its tenanted hill farms in the north of England. The analysis showed not just that larger farms, especially those with large areas of moorland, did much better than smaller farms, which was to be expected. The major finding was that smaller farms would under Pillar 1 be loss-making, some seriously so. That was particularly evident in the Lake District, where the average farm size is 900 hectares compared with, for example, 1,500 hectares in the Peak District. A further factor emerged: smaller farms tended to be more intensively grazed—that is, they were overgrazed, so the switch to hectarage has been a double whammy for them. But, environmentally, it was a good thing because overgrazing had been a problem. We now are perhaps likely to face the opposite problem of undergrazing.

What is to be done? Some responses, such as diversification, bed-and-breakfast or part-time farming are not really a true answer. Certainly, amalgamations
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will in particular cases be a possibility, albeit a reluctant solution—an "if all else fails" solution. One is left with the agri-environment measures of Pillar 2 of the CAP, the so-called rural development regulation budget. It seems to be clear that the future of many of these upland farms, and hence the local tourism economy, will depend on how the RDR budget is developed. It would be most helpful therefore to have the Minister's thoughts on that. What, for example, is likely to be the extent of switching funds from Pillar 1 to Pillar 2—modulation, to use the jargon—and over what timetable? The noble Earl, Lord Peel, spoke about that with more authority than I can.

I am told that the Government are consulting widely on this, which is surely to be welcomed. I hope that these consultations are wider than pure farming considerations. I hope that they take on the wider aspects of upland economies and the experience of our national park authorities, NGOs such as the National Trust, the CLA, and so on.

The more that I think about this complicated subject, with its technical Euro-jargon, the more striking I find the contrast of the Euro-bureaucratic world with the real world whose problems it seeks to address. It is a world of farms of all shapes and sizes, of varying characteristics and of different traditions, which are run by people and families who are the custodians of some of our most important landscapes. In our uplands, they underpin a much wider economy. That contrast suggests that we need to come up with a shopping basket of environmental goodies. We need to get away from the blanket solutions; to understand and tackle the issues at a farm level; to provide advice and training; and we may need to provide exit strategies for retiring farmers or as a result of amalgamations.

If we are to ensure the future of our upland landscapes, a good deal of modulation or agri-environment farming will be needed. It will need to be of a rather tailored nature, tailored to individual farms. I am reminded of a European Union Committee report published in November 2002, which warmly commended "whole farm" management schemes, which may be the appropriate way forward.

1.04 pm

Lord Desai: My Lords, we are all very grateful to the noble Baroness, Lady Miller, for initiating this debate. I am particularly grateful because when I saw the topic, I thought that I had better find out something about the rural economy. I do not live in a rural area. I am not even what I might call a townie with a weekend rural property—a twerp, for short. But I have views on agriculture and the rural economy, which I would like to share. I welcome CAP reform. I was against CAP for a long time. The more that we reform CAP and the less we spend on subsidising farming across Europe, the better not only Europe would be but also the world. CAP and export subsidies have done a great deal of damage to the third world. The sooner we can get shot of this, the better.
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I congratulate the Government on trying their best during the UK presidency to link budgetary reform to CAP—even offering the UK rebate for it. Sadly, western interests are very powerful, so we still have some way to go. I hope that eventually we will have an agricultural policy in Europe which is of benefit to Europeans and the world at large.

On looking at the state of the rural economy, I turned to the Defra report on social and economic change published about two years ago, which sort of matched what I thought rural areas were like. Some people who live in rural areas make a conscious lifestyle choice to live far away from it all. Having made a lifestyle choice, they complain that they are far away from it all—that they do not get regular transport or other things. That is precisely why they moved to the rural area. They moved there because there is no traffic, noise or pollution. All of us want to live in a remote area where everything that we need is supplied only for us and everyone else can stay away.

However, the data show that rural areas are not being depopulated: they are being repopulated. There is a higher growth in the rural population than in the urban population. As my noble friend Lord Harrison said, we should make a distinction between the two parts of the rural population. Obviously, where there is good access to towns there is prosperity and few problems. It is in the remoter parts where we have to concentrate our attention and see how we can improve the lives of people. There again, there is a tendency to exaggerate problems, just as when we discuss the National Health Service. We have to say that nurses' morale has never been lower than now. Everyone says that every time it is discussed. Similarly, people always say that rural poverty is terrible, and so on.

Although the numbers may be wrong, they do not bear out any notion of a great deal of rural poverty. The index of multiple deprivation cited in the report states that 94 per cent of people who suffer from multiple deprivation live in urban areas, 29 per cent of the population live in rural areas, and only 6 per cent of multiple-deprived people live in rural areas.

Numbers have been bandied about on earnings. Again, it turns out that in rural areas with access to cities, income is higher than in urban areas. It is only in remote areas where income is lower. But it is not that much lower. The difference is about £3,000: earnings are approximately £23,000 in remote areas, £26,000 in urban areas, and £29,000 in rural areas with access. It seems to me that we are not talking about great deprivation. What is interesting, however, is that people are choosing to move to rural areas, especially retired people and people who want to raise their children in more salubrious surroundings. Given that it is a problem arising from life choice, one ought to respond to it accordingly. The Government ought to provide services that help people enjoy their lifestyle choices, but it is not, in my view—and maybe I am being very complacent—a panic situation. It is not a story of urban deprivation or crisis. People have mentioned that there are all sorts of shortages in rural areas: affordable housing; transport; lack of broadband; lack of post offices, and so on.
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Therefore, I propose that Defra—and I do not expect my noble friend to answer this—should research a proper price index for rural living. Well-being is a different matter, because obviously bluebell woods and so on add a fantastic amount to well-being. I do not begrudge those things. If people want to live there they can live there; it is their business. I would not live there. Given that there are frequent complaints about affordable housing and so on, it would be interesting to see how true this is. If there were a different price index for rural areas, as against urban areas, and remote rural areas as against accessible rural areas, perhaps we could find out if there really is a problem here. I suspect that the problems of real deprivation—such as unemployment—are to be found more in urban areas than in rural areas. Living in rural areas is a lifestyle choice and I congratulate those people who have made that choice. I do not think this is a dire problem.

1.12 pm

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