Rural Economy

rose to call attention to the state of the rural economy; and to move for Papers. The noble Baroness said: My Lords, the rural economy is facing a time of tremendous change following the implementation of CAP reform. Like any period of change, it offers threats and opportunities. But I believe that the opportunities are greatest for the country as a whole, while the threats are greatest for those who live and work in rural areas. The opportunities offered by CAP reform—and Members on the Liberal Democrat Benches believe that there are tremendous opportunities—must be taken up. When I tabled the debate, I did so in a spirit of optimism because of the new opportunities offered by CAP reform. However, since then it has emerged that funding for the rural development pillar of the CAP may have been slashed as part of the EU budget deal struck in the dying days of the UK presidency, so I hope that this debate will provide an opportunity to explore whether the rural areas of England will end up bearing the full brunt of the deal—and that depends on a Treasury decision on whether it will co-finance the rural development pillar of the CAP properly. The debate will offer three things. It will offer the chance for the Minister to tell us exactly what the figures are, because I believe rumours are unhealthy, spreading uncertainty and fear, especially among the rural community. There are some pretty wild figures out there—40 per cent, going down as low as 18 per cent. I hope that today the Minister will be able to give some certainty to what, inevitably, looks a pretty grim picture for rural areas. Secondly, the debate will offer a chance to look at ways that the Government could make good that shortfall and how they could finance that, whether through co-financing or modulation of Pillar 1. Thirdly, and perhaps most importantly, the debate will offer an opportunity for the Members of your Lordships’ House to say why the Treasury should be investing in rural areas. I believe that investment in rural areas pays dividends, not only for the rural areas themselves but for the nation as a whole. Given the noble Lords who will be speaking, and the depth of your Lordships’ experience of many aspects of rural life, across a wide range of issues, I believe that we will be able to make an excellent case. I would like to look briefly at the picture from the point of view of those trying to make a living in rural areas—those who live and work in such areas. Socially, of course, there is no reason why just because you were born in one place in England your chances of a decent wage or an affordable home should be so much poorer. In fact, however, that is what the statistics show. In 2005 the average weekly household income for people in urban areas was £367, but for rural areas it was £318; that is, £60 less. We have heard many times in your Lordships’ House that rural housing is already unaffordable and getting more so by the day, with very little provision. Just to put some figures on that, one-third of rural residents spend over half their income on mortgage payments. That figure is somewhere around a quarter for urban dwellers. There is also, of course, the whole question of the provision of rural housing. So, those that live in rural areas are earning less and spending more. I am sure we will have to consider that they spend more on rural transport, for example. For the substantial part of my speech, I move to the rural economy and will look at what it produces for us as a nation, particularly against the issue of climate change, which has sharpened our awareness of the need to conserve and invest in our natural resources. Indeed, at Question Time, that very question came up about water. Rural areas are the reservoir of our natural resources. When I say ““natural resources””, that could mean water, which we discussed earlier, wildlife, land management to prevent urban flooding when we have too much water, energy crops, all sorts of renewable energy and, of course, food. My noble friend Lord Livsey will speak on food production, which is and must remain of prime importance. But we cannot take that for granted because for the food that we can easily grow here, the trade gap is, according to Defra’s own figures, growing. We are exporting less of that food and importing far more. The trade gap in food that we can grow in this country—I am talking of beef and dairy products, vegetables and wheat—is now £11 billion. Why are we importing so much of something we can grow ourselves? What has happened to the effort to reduce food miles and Defra’s ““buy local”” policy? Food from Britain received £8 million in grants from Defra last year. Where is that money is going? I could spend all my time on the subject of food—it is very close to my heart—but I want to move other areas of the economy. To begin with, I would like to divide the areas up into different areas of capital. I will start with environmental capital. It is a plus for the countryside that it is rich in such capital; the quality of the landscape and biodiversity of rural areas are among their biggest assets. That shows in purely financial terms: the tourist industry is worth over £12 billion, with at least 380,000 jobs. Visitors are coming to Britain to look at our incredibly wonderful landscapes: either at the jewels of that landscape, such as national parks, areas of outstanding natural beauty or our coastline; or at the run-of-the-mill—if you could call them that—little villages and bluebell woods; all the things that might seem clichés when you see them on a calendar, but which are wonderful assets. I believe the Government have done a good job in giving people the facility to explore more of those assets through outside recreation. There is another benefit, too, in terms of health. Investment in our footpaths, open access areas, coasts and hills pays off twice: once through tourism, and once through improving the health of our nation. The second area of capital is economic capital; that is, such things as transport, communications, IT connections and work space. That area of capital is in very poor condition. I am sure my noble friend Lord Bradshaw will tell us about rail connections again being under threat from the Government. The broadband IT infrastructure is still in a dire state in rural areas, with only 1,116 out of the 5,500 exchanges offering broadband services. Banks have closed at a phenomenal rate: 4,000 so far, with many more to follow. I am sure noble Lords will touch on post offices. Digital TV and radio are still mainly unavailable in rural areas, as I found out to my cost when I bought my husband a digital radio for Christmas; there is no digital reception in north Devon. There is a direct correlation between poor economic infrastructure and poor economic performance, which is something the Government must address through rural development. Rural areas cannot help themselves if the sort of infrastructure that should be provided is simply not there. Thirdly, there is cultural capital, and I am relieved that the noble Baroness, Lady McIntosh, will speak on this. She is so well qualified, and I am not. The fourth sort of capital is social capital, which includes people’s networks, their communities and their extended families. Historically, this has probably been one of the greatest strengths of rural areas. There is a lot of truth in the cosy picture of village life, where everyone knows each other, and three generations of the same family live around the corner from each other in a very small area of rural Britain. However, that is changing, partly because of the lack of affordable housing. The costs of providing services once provided by social networks are much higher in rural areas because of the greater distances and the lack of economies of scale. According to the National Council of Voluntary Organisations, there is a particular problem caused by sparsity and distance, which create challenges. Will the new Social and Community Programme aim to give full cost recovery to the voluntary sector and enable it to continue doing its job effectively? Of the different sorts of capital, I want finally to mention human capital. That includes education, skills, health and entrepreneurship. Many of the rural economies are low-wage economies, where workers have seasonal and low-paid jobs. One of the things that has been discovered to hamper such economies from becoming higher-wage is a lack of educational skills. Schools in rural areas are still facing problems with teacher recruitment. Children find it harder to take part in after school activities due to transport difficulties. However, the Government’s agenda for schools in rural areas is not helping. Paragraph 97 of the Select Committee report on the education White Paper trenchantly makes the point that real choice in schools is no choice when there is only one school within reasonable travelling distance—that is the case with almost all schools in rural areas. My noble friend Lady Maddock will touch on many of the difficulties of living in very remote rural areas. I am extremely pleased that she will do so. The peripheral areas with the greatest sparsity problems have multiple problems. I was going to say that they lack all five sorts of capital that I mentioned, but they still have wonderful landscapes, so they lack four sorts of capital. However, you cannot eat the view, as I think somebody once said. All those areas need capital investment—that is what rural development is. Everyone expects investment to pay dividends and I am sure that the Treasury is no different, but I hope that our debate will show that rural areas repay investment. We must get the Treasury to look at those facts. On 6 June last year the noble Lord, Lord Whitty, who used to occupy the position that the present Minister—the noble Lord, Lord Bach—now occupies, said:"““We have also managed to enhance the European budget for rural development, perhaps by not as much as we would have liked, but it is still a significant benefit””.—[Official Report, 6/6/05; col. 707.]" I must ask the Minister now, is that position different? My Lords, I beg to move for Papers.