Rural Economy

My Lords, I thank the noble Baroness, Lady Miller, for introducing the debate and I declare an interest as an owner of land in the north of England. My remarks today were largely triggered, curiously enough perhaps, by a letter written by the Minister to my noble friend Lady Byford in response to questions raised in the proceedings on the Natural Environment and Rural Communities Bill. Under the paragraph in the noble Lord’s letter referring to the funding of the new agency Natural England and its various responsibilities to deliver agri-environment schemes, the Minister made clear the Government’s intentions to siphon off money from Pillar 1 to Pillar 2 through the process known as modulation. There is nothing new in that. We have known that that was going to happen and indeed is happening. What caught my eye particularly was the use of the words ““Pillar 1 subsidies””. I appreciate that some 20 per cent or so of Pillar 1 funding is still inextricably tied to agricultural production and export subsidies, but the remaining 80 per cent or so is now in the form of the single farm payment, which is open to all farmers subject of course to certain environmental and animal welfare conditions—a process known as cross-compliance. My question to the Minister will not come as a surprise to the noble Lords, Lord Cameron and Lord Lewis, because they sit with me on Sub-Committee D and have heard me raise this before. Did he mean to use the word subsidy and does he acknowledge, as I do, that the single farm payment is in fact a payment to farmers in return for complying with the new environmental and animal welfare conditions? It is worth recalling that the architect of the common agricultural policy reform, Franz Fischler, made it quite clear that it would be unjust for EU farmers to be economically disadvantaged in trade because of those new responsibilities. Subsidy has become a dirty word, a word that conjures up all the distortions of the past. It is important that it is used only in its correct context. I seek from the Minister a qualification as to whether Pillar 1 payments are in his view a subsidy or a payment in return for the delivery of certain environmental goods. We have known for some time that Pillar 1 payments will be cut through modulation between now and 2012, but no one seems to know by how much, which is extremely unsettling for those involved in farming, who are looking for stability above all. It is also clear that the level of funding under the rural development regulations will be reduced. We have heard some pretty alarming figures. Furthermore, it has not been determined how those reduced funds are to be distributed among the member states. Everything seems to be up for grabs at the moment. It is important that the Government fight the UK corner, on the grounds not simply of historical payments but of need—my goodness, there is plenty of that around, especially in disadvantaged areas in my part of the world. It has become increasingly clear that because of the Government’s lack of confidence in securing a healthy settlement, they have committed themselves to the maximum modulation rate to help to fund their rural development projects from the single farm payment. That is another way of robbing Peter to pay Paul. I simply ask the Minister—although it is not a simple question, as he will understand—two specific questions. Will the 20 per cent modulation rate to which the Government have committed themselves be subject to matched funding by the Treasury, as under the rules—and, if not, why not? Secondly, is the Minister satisfied that the Government are likely to have sufficient funds to meet their obligations under the rural development programme—and, if not, where are the cuts likely to be made? As has been said, the European agricultural industry—for want of a better term—has been going through what is probably its biggest revolution since the war. Huge changes are taking place. Some will adapt, some will not. These are difficult times. The people of this country want from our countryside, from our farmers and land managers, safe, traceable food and a countryside of which we can all be proud. But that begs the inevitable question: what is the point of imposing all those conditions and restrictions on our producers if they are undermined by imported goods produced under conditions far short of the standards by which our producers must abide? That presents a real problem, but it is a top priority to be addressed. I would be interested to know whether the Minister shares my concern and, if so, what the Government can actually do about that. What mechanisms are in place to prevent those activities? Returning once again to the payments that our farmers and land managers receive for environmental delivery, it is worth reminding ourselves that if we want a countryside that is well cared for, coupled with a rich array of wildlife, it must be paid for; it does not simply happen. The truth is that there is no real competitive market in environmental management and wildlife conservation, except in special circumstances. Access is largely free at the point of delivery in exactly the same way as is the National Health Service. Green tourism, which is part of our modern culture, comes at a price. That will inevitably fall on the public purse if we are to ensure that the infrastructure of an attractive countryside is to be maintained and managed. Inevitably, that role will fall on those who own, farm and manage our landscapes. It is also important that taxpayers are provided with good value for money. There is no point in throwing large sums of money at conservation schemes if they do not deliver. Far too often, too little scrutiny is applied to the success or otherwise of these agri-environment schemes and habitat restoration projects. A habitat that is restored does not necessarily imply that the associated species will automatically appear. Specific management requirements are often called for and too often discounted. The countryside is changing. Tourism is now the leading industry—as the noble Lord, Lord Cameron, has pointed out—and new businesses are emerging. These are vibrant times. Yes, there are great challenges—there is climate change, and there is rural housing, to name but two—but the backdrop to all this is the landscape itself and the way in which it is cared for. I have said it before, and I will say it again; it is largely the farmers and land managers who have the responsibility to deliver the aspirations of the majority, and we must all acknowledge and rise to that challenge.