Rural Economy

My Lords, it is a great privilege to speak in this debate today on the rural economy, a debate that was initiated by my noble friend Lady Miller of Chilthorne Domer. We have already heard some excellent contributions, including one from the noble Lord, Lord Cameron. I was very interested in the remarks of the noble Baroness, Lady Prosser, about the social welfare of people in the countryside. I wholly agree with much of what the noble Earl, Lord Peel, has said about the single farm payment and about the production of public goods, for which, after all, the environmental payments are made for the benefit of the whole population. Our fear is how that will be financed. Rural life varies between agriculture, added value to primary produce, farm diversification, contracting, farmers markets, co-operation, countryside pursuits and environmental initiatives. These days, those are all underwritten mainly in the private sector by adequate access to IT, market towns with viable businesses, small businesses, adequate transport, and affordable housing, which has already been mentioned. In the public services, in particular, they are underwritten by primary and further education, and by vital rural services such as GP services, community hospitals, the education provided in play schools, care for the elderly, keeping pubs and post offices open, and a viable police force, which is under threat from amalgamation proposals. That is a very wide canvas and, to be successful, a rural economy has to succeed in many combinations of these facets of rural life. Demography often plays a vital part because it is often skewed in rural areas to the elderly, and young people have left the countryside. It is often a case of whether enough money is circulating in the rural economy, whether businesses and local services are successful, and whether the local authority helps or hinders. Does the local authority have a good economic policy, for example? Are planning policies sympathetic to the development of rural areas, and does the rural development authority assist with progress policies itself? Is the local supermarket so big that it removes cash from the local authority, takes it straight the motorway to the metropolitan areas and we never see it again? We all know that the downward pressure on the primary producer—the farmer—is best illustrated by the depression in milk prices from, for example, the supermarkets. The farm gate milk price has gone down by 30 per cent in the past 10 years. Yet the supermarket margins have risen from 1.3 pence per litre to 13 pence per litre in the same period; there has simply been a transfer within the milk market from one to the other. The Milk Development Council says that 1,500 dairy farmers leave the industry every year. Even the Rural Affairs Minister in the Commons, Jim Knight, accepts that. He says that farm gate prices,"““are too low for many to be able to sustain their businesses””.—[Official Report, Commons, 9/11/05; col. 132WH.]" I would add that in many cases product is being sold at less than the price of production. The situation is obviously different in different sectors, but cereals are still being marketed at exactly the same price per tonne as we were using when I lectured students 20 years ago. The Government must act and get fair play into the market place. We strongly propose there being someone at the OFT who is responsible for policing the practices of the supermarkets that militate against primary producers and are not even in the best interests of the consumers. There are many issues of this kind, including the one of single farm payments. In that respect, I say merely that cash flow for those public goods to which the noble Earl, Lord Peel, referred is vital in order to sustain farming businesses at the present time. Rural regeneration is also very important, and the impact on Pillar 2 of the CAP and the cuts to it will be enormous. I could never understand why the Government argued before Christmas to put CAP funding at 1 per cent of gross national income, instead of the 0.15 per cent in Pillar 2. There is an attempt to haul the GDP of many areas up to the national average from 75 per cent of GDP per capita in, for example, Cornwall, parts of Wales and parts of the north of England, which is 25 per cent less than what the rest of the European Union is achieving for the social programme of Objective 1 funding. There is also Objective 2, of course. Rural disadvantage is enormous. That has been referred to in this debate, and I do not wish to repeat it. I merely add to what the noble Lord, Lord Brooke of Sutton Mandeville, said about the population sparsity funding of the SSAs, in particular, which has been steadily reduced on that formula and has hit services in rural areas very badly. Housing is a crucial issue in areas where the cost of houses averages 15 per cent more than the national average. On the average wage in a rural area, it very often takes eight times the average annual earnings to meet the value of the house that a first-time buyer is trying to buy. These are all factors that push people out of the rural economy and, in so doing, a lot of dynamism is lost in the rural economy. Extraordinarily, the banks are not being socially responsible and are trying to close branches. Indeed, they have closed 4,000. In my area, we had to meet the regional manager at the regional branch and place placards outside his door to keep the branch open, because the next one was 17 miles away. Very briefly, to finish, I have been involved in a number of initiatives both with young farmers and 50 year-old-plus people to start new businesses. Prime-Cymru—a Prince of Wales charity, of which I am a member—has started 1,000 new businesses, created by 50 year-olds with 12 business advisers in the past three years. The businesses vary between finding one’s own family roots, making icecream out of sheep’s milk, dog beauty parlours, making and marketing paintings, making harps, and producing organic chickens. There are many initiatives of that kind, but they need finance, risk capital and market town initiatives in order to succeed. I could go on, but I have no more time. Many initiatives require help, and there is not enough of that at the moment from central and regional government.