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The Lord Bishop of St Albans
That this House takes note of the importance of growing the rural economy.
The Lord Bishop of St Albans
My Lords, I am grateful to all those who have signed up to speak in this debate on growing the rural economy, not least because of the breadth of experience and knowledge that is represented in your Lordships’ House which we will be drawing on today. In doing so, I declare my interest as president of the Rural Coalition and as a vice-president of the Local Government Association.
Many people dream of moving into the countryside because of the quality of life that it can offer. I think of the strength of rural communities, the high levels of social capital and the way that people support one another—no wonder it is attractive. We in the Church of England are glad to play our part in that: we are at the heart of many of our rural communities across the country, wanting to contribute to their flourishing and thriving.
Very often in this House, we raise problems associated with living in the countryside, such as rural crime, fly-tipping and the lack of access to services. Today, however, I hope that we can frame our debate in terms of the untapped potential of the rural economy and on the prosperity that it can deliver for our nation—that is, if we can get the right policies and support in place. I note that His Majesty’s Government have committed to making economic growth a top priority, to deliver on
“what matters most to working people in every corner of the UK”.
To start with, it is good to remember that there are many, many working people in rural communities: nearly 20% of the population of this country live in the countryside and over half a million businesses are registered in rural areas, employing 3.8 million people. The rural economy contributes over £315 billion a year to England alone. It is vital, then, that the Government’s missions not only deliver for rural communities but enable the rural economy to play its part in helping to deliver them.
Unlocking the pride and potential of every nation and region across the British Isles will not be possible if our strategies and policies are primarily focused on urban areas, on towns and cities. We need to be strategic and intentional about unlocking the potential of our rural areas too. For many people, the phrase “the rural economy” conjures up pictures of agriculture and tourism. Farming, for example, has been dominating the news lately, and the impact of the Budget on farming communities has been the subject of a great deal of controversy and debate. We need to be clear, however, that the rural economy is diverse and innovative. Farming, as important as it is—I am the son of a farmer—is not interchangeable with rural industry. There are many other aspects to the rural economy.
The recently published report Reigniting Rural Futures, commissioned by the Rural Coalition, of which I am president, shows that the biggest employer in rural authorities is the sector comprising public administration, education and health. It accounts for 30% of workers compared, incidentally, with 33% in urban areas for that same sector. It is significant that agriculture, mining, electricity, gas, water and waste as a sector employs just 2%. The Pragmatix report shows that, in the rural economy, productivity stands at just 82% of its non-rural counterpart, with a continuing downward trend in the future if we carry on with business as usual. However, if we could enable our rural economy to perform at a similar level to that of Scandinavian countries, for example, we could be looking at an additional £19 billion in tax revenue for the public purse, not to mention the associated benefits that such prosperity could bring to the communities themselves.
If we want the rural economy to grow, we need additional capacity. The Government need to recognise that there will be some additional costs associated with delivering services and projects in rural areas where sparsity of population poses so many additional challenges. There is often a lack of access to education and job opportunities, compounded by the lack of reliable and affordable public transport. When you talk to rural employers, one thing that they say is that people very often want the jobs but simply cannot get to them because of the transport difficulties. There is a desperate lack of affordable housing, exacerbated by the huge number of second homes, particularly in the south-west, driving up prices and driving out young people from their rural communities.
But there are some hugely positive aspects of our rural communities too. Over the years, I have been privileged to visit many rural businesses and farms in the diocese in which I serve, covering Hertfordshire and Bedfordshire. I think of my visit to an eco tomato-growing plant in East Hertfordshire, using an anaerobic digester that produces biofuel. The exhaust gases emitted by the engines are cleaned and then used in the greenhouses to support and enhance plant growth. I think also of the very innovative Groundswell festivals in Hertfordshire on regenerative farming systems—I know that some members of your Lordships’ House have been. We are absolutely at the forefront of horticultural and agricultural development across the world; we should celebrate and be proud of that.
Our rural areas also have a big part to play in the transition to net zero. There are already some outstanding examples of investment in renewable energy taking place in the countryside. In addition, some of the best examples of community ownership and co-operatives are to be found in rural communities, safeguarding a range of commercial services and with long-term survival rates. An excellent example of this is the Bathford village shop and café in Somerset, which won an award at the Plunkett’s Rural Community Business Awards. I will not describe it, but noble Lords might want to look at it, as it is an extraordinary initiative.
I welcome the Government’s commitment to doubling the size of the co-operative sector. Some village halls and even some parish churches have been opened up in rural areas, providing spaces for free wifi and offering hubs where people working from home—it sounds a great idea when you start, but after a few months it can be very isolating—can gather together perhaps once a week for half a day to network and build support and friendship. These are just some of the wonderful, innovative projects that are already going on in our rural communities. If we are to see more of these, however, there needs to be a little more early-stage capacity support for initiatives so that they can be self-supporting, robust and, in the long run, transformative. If the barriers are removed, all the signs point to rural communities being up for it—they will realise their potential.
Then there is tourism, which is a significant part of the rural economy, not least in areas such as Devon and Cornwall and in Cumbria in the north-west, which are able to compete with some of the most attractive areas across the whole of Europe. However, to attract tourists, we cannot just leave it to local tourist boards. We need a national strategy that can attract people to come.
With so many opportunities, what are the barriers that rural areas face? Let me just briefly mention three, if I may, although there are many more. The first is poor broadband. As the Pragmatix report shows, only 69% of rural premises have a 4G signal indoors, compared with 90% in urban areas. It hinders home working, home banking, the growth of online businesses, and indeed even tourism. This will probably need different solutions from the ones that work in urban areas. I have recently been involved in discussions, for example, where we are looking at installing 4G equipment in some of our remote village spires and towers in order to bounce signals up into areas that, at the moment, cannot get decent coverage.
A second barrier is access to banking services. The pandemic accelerated the movement away from cash and, with the industry keen to reduce operating costs, the way many start-up businesses and small charities use banking services no longer fits with the business drivers of today’s banking industry. The transition to online banking is happening too fast for many small charities and businesses in rural areas, with little thought or support to aid the transition. Many are now operating in areas where local bank branches have disappeared. We need the convening power of central government to bring together the Department for Business and Trade, possibly the FCA, UK banks, the Charity Commission and community sector organisations to find solutions. Power and co-ordination are the answer in this case, rather than large amounts of extra funding, to ensure equal access to financial services.
Thirdly—I am conscious that time is going on, so I will be very brief—rural public transport is obviously a huge issue for us if we want young people to be able to stay in rural areas and if we want to enable workers to come and work in them.
I will make a few comments on local government funding and access to services. Organisations representing rural communities have been calling for a long time for fair funding for rural local authorities that takes into account the additional costs of delivering key services in sparsely populated areas. I welcome the Government’s announcement that they will be reviewing local government funding next autumn, although it is concerning that the rural services delivery grant has been withdrawn. I note the Government’s commitment to repurposing the money from this grant, which will be going back out in the form of the recovery grant, although the details are unclear. I hope that the settlement will take into account the costs of service delivery in light of the withdrawal of the grant, as well as the factors of rural deprivation, which are often lost in the scale of geographical data that the Government use to calculate deprivation.
Sadly, when one turns to the national and regional level, one finds that the rural dimension of policy and funding is sometimes lost. If funding is targeted towards the largest areas of deprivation, it may well ignore the smaller pockets of rural deprivation that are often hidden in the statistics, or are in fact so small that they are not picked up at all. I remember that the previous rural advocate used to say that if you add up all the tiny pockets of rural deprivation in this country, you get a community the size of Birmingham. It is a significant issue but one that is often not identified.
Deprivation is not the only thing that places demands on services. There is a large ageing population in rural areas, which places demand on social care. Is the Minister able to commit His Majesty’s Government to producing something that we have long asked for: a comprehensive rural strategy? Will the Government undertake to rural-proof all legislation in the meantime? Will they commit to consulting rural organisations and stakeholders when renewing the indices of deprivation next autumn, so that a better interpretation of rural deprivation can be produced?
I am aware that the Minister sits on the Child Poverty Taskforce as the Defra representative. Can she give us an assurance that the forthcoming child poverty strategy will focus on the particular challenges experienced by young people growing up in poverty in rural areas, to ensure that they can thrive?
I am hugely grateful for this opportunity to set out some of the many opportunities that we need to grasp and to highlight some of the barriers that we need to overcome, which I believe are not impossible at all to overcome, as we seek to grow the rural economy. I look forward very much to hearing Members of your Lordships’ House bringing their considerable expertise and knowledge to bear, so that we can strengthen this important part of our national life.
Baroness Shephard of Northwold (Con)
My Lords, I congratulate the right reverend Prelate on calling this very important debate, and on bringing to it his great knowledge, his experience and his insight into the workings of the rural economy and rural people. Today’s debate is timely. The new inheritance tax rules for family farms announced in the Budget have dealt a hammer blow to every rural community in the country. I very much fear that, if the Government do not modify their proposals, as suggested, for example, by the Institute for Fiscal Studies, they really will have damaged any prospect of growth in the rural economy for generations. Because growth in the rural economy depends heavily not only on the prosperity of the farming sector but on its stability. Nicholsons, a farm machinery business in Norfolk, is already facing increased wage costs from national insurance changes and says that the uncertain future for family farms will
“reduce investment in people, infrastructure and technology, if not wipe it out altogether”.
The very essence of the prerequisites for growth will be lost.
These issues were impressively rehearsed in the recent debate on family farms called by my noble friend Lord Leicester. From memory, there was only one speaker in favour of the Government’s intentions. I am sorry to repeat myself from that debate, but I do feel that the Government have got this wrong: their plans may destroy and not grow the rural economy. Rural communities, as described by the right reverend Prelate, already face many challenges. I agree with him that one of the most vital is that of access, getting to work, getting to schools and colleges, getting to health service provision, and of course getting access to broadband internet and phone coverage.
I will give some examples of difficulties of access. Difficult or non-existent transport links can mean that almost all working households in rural areas, whether they can afford it or not, have to have a car, and sometimes two cars—certainly for part-time or shift work. Domiciliary care workers struggle to provide a reliable service to their clients. Travel at night can be difficult for many. Providing school travel, in particular for special needs pupils and for colleges, is an added cost for rural local authorities. A visit to the GP or out-patients’ clinic can take the best part of a day.
There has been a slight improvement in access to internet and phone coverage for rural businesses in the year to September 2023, but it is still not as good as that in urban areas. And, of course, there is our old friend, the power cut. This is a regular occurrence where I live if there are gales, snow, frost or storms—or sometimes, one wonders, just for fun. Having been brought up without either electricity or running water, I obviously have an armoury of candles, torches and storm lights. But this is a serious problem for rural households and businesses.
As in all communities, we face potential conflicts: choices, for example, between providing the affordable housing which would prevent the closure of schools and the hollowing out of our villages, or catering for the thriving second-home and tourist market, with jobs for builders, craftsmen, designers and architects, and in hospitality and retail. Then there is land use: for building, for solar power and wind farms, or for food production.
However, all communities face their own challenges, not just rural communities. We are nearing Christmas, it is the last day of term and I feel I should say that those of us who live in rural areas enjoy some of the most wonderful benefits: a beautiful environment; strong and self-reliant communities, supported by incredible volunteers in every sphere, from the car hospital service to lifeboats, to supporting those isolated by ill health, age or location; our rural schools, nearly a quarter of which in Norfolk are church schools, where teachers strive to nurture and to encourage ambition and aspiration; and our network of churches, a lifeline for many. I have a message of cheer for the Minister. We do not know whether the Treasury consulted Defra, of course, but, if she somehow has the feeling that the Treasury picks on Defra, I can tell her that all her predecessors—several in this House, including myself, whether at MAFF or Defra—felt the same. It goes with the territory—but happy Christmas.
The Earl of Devon (CB)
My Lords, it is a privilege to follow the noble Baroness, Lady Shephard of Northwold. I thank the right reverend Prelate the Bishop of St Albans, not only for calling this debate but for his tireless work on behalf of rural communities. At a time when the Bishops’ Benches are somewhat under assault, it is notable how much work he does. The recently retired Bishop of Exeter similarly did an awful lot of work for rural communities, and the Bishops’ voices are incredibly powerful.
I note my interests as a rural business owner in Devon and champion in this House of a very rural county which suffers from all the problems that have been identified. It suffers from being very beautiful and therefore a place that people imagine is very well-to-do; indeed, many well-to-do people own second homes there—this is Devon. It also has the largest road network in the country, and an ageing population, with all the implications of that. Due to its beauty, it has many crumbling coastal towns built in Victorian and Edwardian times, which cause all sorts of challenges and deprivations.
I also note that I am a supporter of the Great South West, which champions the interests of the rural south-west peninsula. It is focused on three themes: food security, energy security and defence security, which is a good indication of the broad range of services that the rural community provides to us nationally.
In the previous debate, I mentioned that I co-chair the Exeter Partnership. In that capacity, I see myself as a champion and a voice of the rural hinterland of Exeter, within the workings of the city. This brings me to the first point I want to make, which is that this debate and the way in which we look at rural England and the rural economy often seek to draw a line between our rural and our urban communities. I wonder whether that is really that sensible, because what I seek to do within the Exeter Partnership, and what we need to do, is to focus on how wholly dependent upon our rural hinterland is the entirety of our urban population. Perhaps by focusing solely upon rural issues we forget that the urban and the national economy are entirely dependent upon the rural economy for their well-being.
A very wise Minister said recently that
“our biodiversity is in crisis. Without nature we have no economy, no food, no health and no society”.—[Official Report, 11/9/24; col. GC 121.]
The Minister may recognise her words. Our nation is entirely dependent upon the rural economy, so for us to sit here and focus solely upon the rural economy and forget about the rest of our economy is perhaps a false distinction.
I had the privilege recently of meeting Professor Partha Dasgupta, who famously wrote about the economics of biodiversity and reminded us all that there is a vast amount of economic work inherent in the natural capital that resides within our rural communities that we simply do not value and do not identify. Therefore, when we are talking about the contributions of the rural economy to our nation, we need to insist that the Government begin to look much more closely at that natural capital—what is the value of the fresh air and fresh water? Sewage and water companies are being much considered today, with Ofwat’s announcement, but that is all being provided by our rural natural capital—the water that comes into our urban centres and the sewage that departs from them. We really do not think about that nearly enough.
The right reverend Prelate mentioned rural deprivation. On Devon County Council’s behalf, I note that the ending of the rural service delivery grant removes some £10 million from its budget, which is a vast proportion of its budget. Of course, the Government are seeking, perhaps worthily, to redirect those funds to deprived areas but, as has been identified, it is very difficult to identify deprived areas within a potentially wealthy-looking rural county such as Devon. The idea of deprivation requiring a whole area to be deprived is a fallacy; there is deprivation in the most bucolic parts of the country—it is deprivation that is simply not caught or identified by the way that deprivation is currently measured. The county council notes services such as getting children to school, fixing the vast network of roads and simply getting people to doctor’s appointments, et cetera, are incredibly challenging.
I turn to housing and planning in the few minutes that I have left. I take note of the Devon Housing Commission, which reported back in July when we had the change in Government. The provision of affordable housing within our rural areas is in crisis. I know the Government have a plan for 1.5 million new homes, but the challenges of building new homes within variously protected landscapes, the complexity of the planning challenges, the lack of staff within planning departments in rural district councils and particularly the lack of SME builders in rural areas are real limitations, and I hope the Government will look at these.
Lord Wigley (PC)
My Lords, I draw attention to my registered interest. I thank the right reverend Prelate the Bishop of St Albans for introducing this timely debate and I am delighted to follow the noble Earl, Lord Devon, and thank him for the leadership he has given in relation to so many agricultural issues.
I have lived for over 60 of the past 75 years in the same village in rural Gwynedd, since 1947, when my parents moved into a half a farmhouse. I had the huge benefit of living my formative years in close proximity to the next-door tenant farmer, who made a very modest living out of a 60-acre holding.
It may be timely to remember that it was the post-war Labour Government who largely rescued agriculture in Wales, which had suffered massively in the 1930s. Indeed, the Labour Minister of Agriculture, Tom Williams, was tagged “Feather Bed Williams” for giving the farmers too comfortable a time—an accusation which I do not think the present Labour Government are likely to suffer. Agriculture is still the backbone of our rural communities. Its well-being is essential if we believe in producing food from our own resources. I greatly enjoyed a period of 12 years as president of the South Caernarfon Creameries, a good example of agricultural self-help.
The confidence of the industry is vital to maintain the investment needed for our agriculture to work efficiently. The Autumn Budget’s proposed change to inheritance tax rules has undermined that confidence and I urge the Government to reconsider their proposals, so as to exempt modest family farms from a punitive tax regime which will drive small family farms out of business. This will trigger an inevitable outcome: such land will be bought up by rich corporations, pension funds and forestry interests. Ironically, such investment is often driven by tax avoidance strategies, but it inevitably heralds a withering of the food production capacity in rural Wales and elsewhere. Is this seriously what the Government want? There has surely rarely been such a blatant scenario of unintended consequences.
Life is rural Wales is immensely challenging at this time, without being further undermined by government action. Ordinary working families are being driven from rural Wales by a combination of factors. The most fundamental has been the failure of economic policy to deliver a reasonable range of well-paid jobs, leading to a situation where the average income per head in parts of rural Gwynedd is 40% below that of south-east England. This leads to the best of our young people moving away to seek better-paid work, and of those who wish to remain, living in their own communities where they have their roots, they find that they cannot compete in the housing market against those from distant cities with fat chequebooks, buying up local housing stock as second homes.
This is not just a problem for rural Wales; it is equally felt in rural counties such as Cornwall. The effect is to further erode rural life, often leaving villages as ghost communities through the winter. This is exacerbated by the run-down of local services, such as bus services, which makes it increasingly difficult for those on low incomes to travel from rural villages to nearby towns to seek work. Young families are forced out by such factors, leading to declining school numbers and accelerating school closures. We also see rural communities being hit by the loss of facilities, such as banks and post offices, which hits local businesses and older people who are more reluctant to turn to internet banking.
The availability of fast broadband connectivity is very patchy in many rural areas. Surely the UK Government should make it a high priority to ensure that rural areas are not deprived of such an essential part of any modern commercial and social infrastructure.
Some people still believe that tourism offers the solution to the economic problems of rural areas. Of course it can make a contribution, but it is highly seasonal in rural Wales, and any economy which operates at 200% capacity for a few weeks in summer and at 20% capacity for most of the year is, by definition, economically inefficient.
Rural Wales desperately needs capital investment projects, such as the hydroelectric schemes and pump storage facilities which are being considered. The SMR projects at Wylfa and Trawsfynydd should be driven forward without delay, the latter linked to the medical radioisotope manufacturing unit proposed by the Welsh Government.
The loss of young people from rural areas, such as rural Gwynedd, and their replacement by people who move in after retiring has led to a disturbing report this week from Gwynedd council. It projects that, over the next 20 years, there will be an increase of 56% in demand for home help services from the Gwynedd social care department. This emanates from an absence of family living locally to help care for their elderly relatives, and because of an inward migration of retired people who do not have roots in the community into which they move, and in which they have to face the challenges that come with old age.
Unless there is an awakening to the crisis currently hitting rural communities, we shall find the fabric of rural life eroded beyond recovery. I urge the Government to address this issue without delay.
The Earl of Caithness (Con)
My Lords, in our short debate on the 15 October, I was struck by the positivity of most of the speakers for the rural economy and the potential that it offered. In today’s debate, the right reverend Prelate, to whom we are all grateful for introducing this debate so well and so fully, picked up on those ideas of positivity. I so agreed with the phrase that he used: it is time for a strategy for the rural economy. That was the title of the report of this House in 2019, and I was privileged to serve on the committee.
There are undoubted opportunities. The right reverend Prelate reminded us of the gap in productivity between rural and urban areas. It is worth looking at the proportion of gross value added. In England, it is only 16%, whereas in Scotland it is 26% and in Wales it is 28%. Would the Minister get in touch with the devolved Administrations and find out whether there is any potential from up there and over west that could be used in England to improve the productivity and increase the percentage of GVA?
What has changed between now and the debate we had only two months ago? There has been a very significant change: we have had a Budget. The Budget was so beautifully described by Sir James Dyson as
“an egregious act of self-harm”.
The enthusiasm and potential that I thought the rural community had for this Government has been squashed. Small businesses, which the Minister in a recent letter to me described as the beating heart of the high street, were taxed with extra costs, burdens and bureaucracy—the very things that rural businesses do not want if they are going to thrive in the modern world.
A small but very important percentage of people in rural areas are farmers. In our debate on the Budget and small farms the other day, I listed all the extra taxes that the current Chancellor had imposed on farmers. The cumulation of that is the complete lack of confidence in the Government on the part of farmers, and a reduction of the incentives farmers have to plan for the future. It must be a very difficult time for farmers.
Combine that with the fact that climate change is making a third of our clay-based soils in lowland England unfarmable and it is going to have a very large effect on the productivity of farms and the ability to feed ourselves. Food security is one of the things that the Government thought was important before the election. How are the Government going to square the circle of making our food supply more secure, at the same time as berating those who are actually producing it?
In the debate two months ago, I mentioned Project Gigabit, and the right reverend Prelate picked that up earlier. I would add a different aspect to that: the download speed for internet. In rural areas, 5% of the community cannot get a download speed of 10 Mbps, whereas this is only 1% in urban areas. With so much having to be done on the computer now, unless you have a good download speed you are in serious trouble. Could the Minister address Project Gigabit and give us a bit more detail of how she plans to increase the availability of good broadband and social media supply in rural areas?
Another question I asked in our debate two months ago was about the size of Defra staff. Yesterday, I was emailed a written reply. As it is not in the Library, I will quote the first sentence. Our report in 2019 said that there were 60 staff. The reply says:
“It is complex to place a specific figure on the exact number of colleagues in DEFRA who work on Rural policy, given the wide-ranging nature of rural policy and that rural-proofing of Government policy is a cross-DEFRA and cross-Government effort”.
Sir Humphrey would be proud of that.
As the Minister takes her train home for Christmas—I hope she has a lovely, relaxing time—and looks out of the window at all the farms, will she consider that 50% of those farmers earn under £25,000 a year, yet her train driver probably earns three times as much? As she will be on an Avanti train, will she also think, as she looks at the stock farms and the farmers who are working 365 days a year, that these Avanti workers are about to go on strike over rest days?
Lord Harlech (Con)
My Lords, it is a pleasure to follow my noble friend Lord Caithness. I declare my farming and land management interests in Wales and that I am a member of the CLA and the Conservative Environment Network. I congratulate the right reverend Prelate the Bishop of St Albans on securing this important and timely debate.
Much has rightly been made, including by me, on the impact of October’s Budget on the rural economy and, in particular, family farms and rural businesses. However, today I will make my remarks on policies that I believe can grow the rural economy. A lack of housing and opportunities forces young people from rural communities and reduces demand for local services. This situation is only worsened by an urban-rural digital divide, which holds back rural businesses’ ability to grow. The Government were elected with a mandate to grow the economy, and this must include rural areas.
I know from my own experience in Defra that the rural economy is hindered by poor cross-departmental working. Ministers and officials from other departments assume that Defra has sole responsibility for the rural economy. In reality, Defra does not have the economic levers to unlock the countryside’s potential by itself. That power lies in other departments and, increasingly, local authorities, as we heard in the Statement earlier today. Much better cross-departmental working is necessary to ensure that economic policies are designed to generate growth in the rural economy. The Government have thus far failed to address this issue, which is most evident in the industrial strategy Green Paper’s lack of focus on rural issues.
The poor delivery of the rural England prosperity fund by local authorities illustrates the effect of a lack of understanding of the rural economy on devolution and localism in rural areas. There have been breakdowns in communication and misunderstandings of the rules and guidelines of the REPF, and some local authorities have failed to engage with external stakeholders. A future REPF needs to encompass better engagement between central government, local authorities and external stakeholders, and better promotion of such funds to small businesses that could benefit from them.
As we have heard from several noble Lords, the primary barrier to rural economic development is the planning system. In its current state, it does not appreciate the improvements that small-scale development can make to the viability of rural villages. In planning terms, these villages are often deemed “unsustainable”, creating a spiral of decline. In the plan and decision-making process, weight must be given to development that will improve the sustainability of a settlement, whether through the provision of new homes, services or facilities. The Government should follow the mantra of a small number of homes in a large number of villages.
To develop rural planning policy meaningfully, the Government must introduce permission in principle for rural economic development. This would encourage planning applications by reducing the risk of high financial input without the guarantee of consent. The Government should also enable the repurposing of redundant agricultural buildings and sites. Planning applications to repurpose these sites are often rejected, as they are not deemed to be “sustainable development”. In many cases, the development of these sites would lead to economic growth and, through diversification, provide a much-needed boost to a farm’s profitability.
As the right reverend Prelate, the noble Lord, Lord Wigley, and my noble friend Lord Caithness described, the lack of access to sufficient broadband connection is a massive barrier to rural productivity. Mobile connectivity in rural areas continues to be an issue, with the previous Government having allocated £500 million for the shared rural network to fix not-spots in mobile coverage. Will the Minister commit to publishing a road map to improve rural connectivity and provide transparency over how public funds have been allocated?
The proposed £100 million cut to the nature-friendly farming budget is estimated to reduce the amount of nature-friendly farmland by 240,000 hectares in England. This will present significant issues for farmers’ finances, food security and the UK’s ability to deliver its legally binding target to halt species decline by 2030. The Government must restore the nature-friendly farming budget to £2.8 billion in real terms and index it to increase with inflation over the Parliament. This would ensure that farmers have the confidence to adopt regenerative practices and help close some of the funding gaps to achieve our biodiversity goals.
The Government must change course, protect APR and BPR for all rural businesses, and extend them to farm businesses engaged in capital markets. This will ensure that farm businesses engaged in public and private agri-environment schemes can be passed between generations. It will also provide the necessary incentives to continue producing food while restoring farmland and naturally sequestering carbon.
I know how much the Minister cares for the rural economy and the countryside. I hope that she can champion it and stand up to other departments for what is right. I look forward to her reply.
Lord de Clifford (CB)
It is a privilege to follow the noble Lord, Lord Harlech, and I thank the right reverend Prelate the Bishop of St Albans for his passionate work for rural communities and for bringing the future of the rural economy to the attention of the House today. I declare my interests as set out in the register: I live in a rural village, work in a rural market town, and run a veterinary practice that relies on rural businesses and the community for its turnover.
So, what makes up the rural economy’s Christmas list to the Government to enable it to grow and prosper in the coming years? The first item on my list is very similar to that of the noble Lord, Lord Harlech: government thinking to ensure that the rural minority is not forgotten when major decisions are made by government departments.
The farming community is the cornerstone of the rural economy, and is reeling from the recent Budget, as debated recently and mentioned today. This is an example of how the rural community suffers from the lack of joined-up government and policymaking. There appears to have been very little consultation between Defra and the Treasury on this decision. Will the Minister continue discussions with the Treasury, on behalf of the farming community, on the impact of this change to APR and BPR?
The Government can also support farming by monitoring and reviewing the dominance of food manufacturers and supermarkets in the food market. The price that food is sold to the consumer needs to reflect the cost of production for all businesses in the supply chain, and to ensure that farmers are not the ones squeezed to create profit for those dominant companies.
Joined-up thinking between local towns and local district councils would also be of benefit, ensuring that we can maintain and develop town high streets, which are essential for the rural community. In the town of Malmesbury we have a proactive town council that is looking to develop the town, but one of the frustrations of the local traders is parking charges. These are set by Wiltshire Council and are seen as a revenue generator. The result is a frustrated town council, as it wants to encourage the local community to come into the town to support local businesses and maintain a thriving town centre.
Number two on the Christmas list is planning reform, as mentioned by the noble Earl, Lord Devon, and other Peers. We welcome the review of the National Planning Policy Framework, and the delivery of new homes to address the affordable housing crisis in rural areas and the creation and development of rural businesses. The planning process is costly, bureaucratic and painfully slow, especially in rural areas. An example is Cirencester, in the Cotswolds, which has planning for a housing development of 2,350 houses. It initially went into planning in 2017 and building started in the summer of 2021, but as of today, only 65 have been built, 14 of which are affordable. For an area in need of homes and low-cost housing, building 65 houses in seven years is just too slow to meet demand. That begs the question: is the developer controlling the supply to maintain higher house prices? Would the Treasury consider charging large housebuilders a tax on developments that have not sold any property within five years of granting an outline or detailed plan, to encourage home building? Also, I hope that planning reform will optimise the development of brownfield sites in rural areas, especially redundant farm buildings.
Number three on the list is transport. Ours is a medium-sized business in a rural town, and 95% of our 125 employees drive to work; no one uses public transport. Bus services are difficult to run due to the large number of locations that need to be visited, and passenger numbers are relatively low. So again, we welcome the Government’s review of bus services, but the rural economy needs better public transport to prosper. Future bus services must be more flexible to make them efficient for users, and economically viable for bus companies and local councils. There has to be innovation, such as technology that could request pick-ups and drop-offs in villages when required. I appreciate that these ideas present challenges, but my hope is that the Government can address them through innovation—trying new and risky ventures in public transport to resolve this long-standing problem.
Number 4 on the list is communication, which many Peers have mentioned. I have spoken in the past about communication in rural areas and the deterioration of mobile phone coverage with the turning off of 3G. I have read Ofcom’s response to the Minister of State, and it is reassuring that it will continue to monitor 4G and 5G coverage. The 4G network is essential in rural areas, as signal strength is much greater than with 5G. Project Gigabit continues to be rolled out, as the noble Earl, Lord Caithness, mentioned. As a beneficiary of broadband home fibre in a rural area, I know that it brings massive improvements that enable home working and less frustrating domestic internet use.
This sort of connectivity is essential to growing productivity through the use of current available technologies; it will allow a vast array of small businesses to grow and develop in rural areas. But not all rural properties can be connected economically, especially in Wales, by fibre to the home. Will the Government consider supporting extreme locations with subsidies for satellite broadband to enable businesses to develop in these remote areas?
The list of support could be endless, but the opportunities are great. With joined-up thinking between rural communities and the Government, and with innovation, we could reverse the tendency of rural businesses to decline.
Lord Gascoigne (Con)
I declare that I am a member of the Conservative Environment Network, the new Climate Tech APPG and Peers for the Planet.
First, I pay tribute to the right reverend Prelate the Bishop of St Albans, for whom I have great admiration. Alongside the right reverend Prelate the Bishop of Norwich, he adds immense value to discussion of the crucial issues of rural communities and the environment. Like their namesakes on a chessboard, when they are combined, they are formidable, and they bring important views to this Chamber.
I am a proud Lancastrian, born in the constituency of Pendle. The area has two former mill towns and three smaller towns surrounded by stunning fields, hills, reservoirs, forests and scattered villages, with Pendle Hill majestically looking on. Until recently, I was adamant that I am from a rural constituency. My friends and sister agreed with me. However, my good friend the temporary former MP informed me that Pendle is actually classed as urban. I was amazed. I swiftly discovered the rural/urban classification which defines areas. It is based on the census and purely on population.
I understand that funding has previously been available to those areas specifically classified as rural. While I am sure that that is well-intentioned, it can disqualify rural parts of urban-classified locations. For instance, in Pendle, a quarter of the population is still classified as rural. My plea to the Minister, if I may, is to be cautious about using that formula in future.
Obviously, farming is a key part of this debate. I will not repeat the many powerful arguments that have been made already concerning the Budget, but have any departments assessed the effects of these changes on nature, rural economies, food security, economic security and the appeal to young people to become farmers? Are there any steps that the Government will take domestically to promote locally produced food, and what more is being done on better trade deals? Farmers farm land; they know the land; they nurture it; us greenies need to bang the drum for them now more than ever.
I turn to the future and, first, the need for diverse job opportunities in rural areas, which I think has already been raised. Research has found that over a third of rural residents are likely to consider moving to a town or city within 12 months, with 30% citing a lack of jobs. How can we undo that? There is more to the countryside than farming, and rewilding can play its part. There are direct economic benefits of nature, such as through tourism, but also indirect ones, such as tackling flooding and pollution, as we discussed with the Water Bill.
Increasingly, companies and projects such as Nattergal are facilitating these efforts, not only through nature restoration and improving biodiversity, but by maintaining traditional jobs such as drystone walling, hedge growing and coppicing. Yet there is more. A fantastic study by Rewilding Britain found that rewilding projects created over 50% more jobs, with new roles in ecology and forestry and increased revenue from sources such as tourism, weddings and education; and they continue to produce food and support livestock. Yes, farming does not need to stop in the interests of nature. One in three mouthfuls of the food we eat is dependent on pollination. Nature’s benefits are numerous, including economic, and it is essential for life.
Secondly, we need to promote rural life and local agricultural shows. While there are many large events such as the Royal Lancashire Agricultural Show—which I am sure my noble friend Lady McIntosh will agree is arguably the best—there are other smaller, local ones. In Pendle, some have not survived, but others have, such as the Trawden show, which started its life in 1925. My dad used to judge and show, and I remember being dragged along as a kid. Those packed tents would eventually be emptied, the entrances sealed shut. Then, like some strange ritual, my dad and others would meticulously study, cut into, sniff or even taste an assortment of produce that had been neatly laid out on tables, be it flowers, onions, or carrots. After a few mutters, they agreed the best, certificates and rosettes would be left behind, and I would be whisked off to sit in a tractor or see cows being paraded or dogs performing tricks. Not only are shows great family fun, but there you saw pride, love and a sense of community. People had spent all year preparing for that moment, lovingly nurturing whatever was on show. What more can be done to promote these events and rural life? They help tourism, unite communities, support local industry and educate.
This is my final point: my dad showed me much, so my education was not just at school. Across our land, we have amazing farms, and I visited loads when I was younger. I grew to love my surroundings—the countryside, fields, valleys and hills—and I came to respect them but only when they were gone, when I had moved to London; hence I bring up my daughters to do everything to love wildlife, nature and the countryside. This year’s Children’s People and Nature Survey for England showed that, in one week, 62% of children and young people visited a park or playing field and 27% visited woods, yet 15% visited fields and farmland in the countryside and 4% recorded no visits at all. What more can be done to encourage farm visits and outdoor learning, helping farms but also helping children understand where food comes from and the importance of nutritional quality?
In conclusion, as the Rural Coalition says, there are enormous challenges but also opportunities. To me, this is not nostalgia. It is a way of life, now. It is real. It is the food we eat, the walks we take and the breaks we make. Like all things, it needs nurturing and a chance to help it grow, not just for rural communities but for us all.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate the right reverend Prelate on calling this debate and for all his work on rural affairs. I am delighted to sit with him on the rural interest group of the Church of England Synod. I pay tribute to the role of the Church in rural areas in times of crisis, as I witnessed during the foot and mouth outbreak in the early 2000s. I declare my interests: I work with the rural doctors—my father and brother were dispensing doctors—of the Dispensing Doctors’ Association. I am also a patron of Upper Teesdale Agricultural Support Services, honorary president of the Huby and Sutton agricultural show and vice-president of the Association of Drainage Authorities, which have a role to play in preventing flooding in low lying areas.
As a proud Yorkshire lass, I would say that there is lots to celebrate in the rural economy, not least farming, countryside and food—and the best show in town, the Great Yorkshire Show. There is also a role for auction marts, which set the price and have a presence in market towns. They have a role in the rural economy and the community, playing a specific social function. Farmers are fiercely proud and independent, often visiting the auction mart well into their retirement as well as during their active farming lives. When the auction marts closed during the foot and mouth outbreak, there was really nowhere for the farmers to gather and chat. Country shows show the best local farm produce and educate the next generation in the joys of the countryside and farming. The Great Yorkshire Show showed children livestock first hand, and I am delighted to say that I have attended since I was a schoolgirl in Harrogate.
What are the current barriers to the growth of the rural economy? As others have said, the whole rural economy has been impacted by the employers’ national insurance contribution increase—doctor’s surgeries, care homes, hospices and veterinary practices specifically, and every walk of life. The inheritance tax proposals and the revision of agricultural property relief, as well as the removal of capital grants, will severely impact on the farming community. There is also a shortage of farm workers as a result of a shrinking rural population, poor local transport and the cost of housing. All this could be remedied in part by increasing the number of seasonal workers on farms and the length of time they spend on the farms. Rural broadband and mobile phone coverage is still below par, making farm and rural businesses less efficient and competitive. There is less access to banking services, with bank branches and post offices having closed.
The Government should encourage productive farming. We should not build solar farms on grade 2 or grade 3 productive land, as in the test cases currently in Old Malton and east Yorkshire. Tenant farmers have a particular contribution to make, especially in the uplands. Some 48% of farms in North Yorkshire are tenanted, yet their future is bleak and uncertain, given the Government’s Budget proposals.
I pay tribute to the charities supporting the farming community in rural areas; their role is valuable and, sadly, increasing. I am mindful of the mental ill-health and state of anxiety among farmers, which is now sadly also affecting their children. I am also mindful of the levels of farm vehicle theft and other rural crimes, the impact of marital breakdowns, and the fact that farmers are reluctant to visit their doctor and often neglect their own health.
Others have mentioned tourism, hospitality and leisure in the rural economy, and I support their impact. I am delighted to be the honorary president of the North Yorkshire Moors Railway. I hope all noble Peers will take the opportunity to visit it during one of the forthcoming recesses.
The UK is on average only 60% self-sufficient in food, yet only 16% in fruit and vegetables. The power of the supermarkets is great; that of growers and the supply chain is weak. The Groceries Code Adjudicator’s role needs to be addressed to ensure that it can undertake reports on its own initiative and not identify those who seek to make a complaint.
What is the way forward? All government policies should be assessed and rural-proofed. That used to happen in the past; it should happen in the future. We should recognise that farmers are key to growing the rural economy, but they need help in meeting the current challenges, whether climate change, flooding on farmland or the increases in oil prices and in the cost of fertilisers and pesticides. Environmental land management schemes are rolling out at a slower pace than the reduction in basic farm payments, leaving farmers with a huge gap in their income.
I beg the Minister not to play Scrooge, as in A Christmas Carol, but to be as generous as the Government can possibly be to farmers. Farmers face an uncertain future. If you want something done, ask a farmer, but they are asking whether we want them to produce food for us anymore. The future of our food system, our rural communities and even our environment is in question. Their future—for the farmers and for growth of the rural economy—is in the Government’s hands. We look to the Minister to provide answers today.
Lord Rogan (UUP)
My Lords, I also congratulate the right reverend Prelate the Bishop of St Albans on securing this timely debate. Given that it is a UK-wide debate, noble Lords will not be surprised to learn that I intend to concentrate my remarks on the contribution of rural areas to economic prosperity in Northern Ireland.
According to the most recent figures published by the Department of Agriculture, Environment and Rural Affairs, more than half of Northern Irish businesses—58%—are located in rural areas. People living in rural areas are more likely to be employed, with almost three-quarters—74%—in work. Workers living in rural areas are more likely to have high skills and report greater job satisfaction than their urban counterparts; both those figures are at 84%. Finally, between 2001 and 2020, the population of rural areas rose by 20% compared with an increase of just 7% for urban areas. In short, Northern Ireland is highly dependent on a healthy and expanding rural economy for its prosperity. His Majesty’s Government, in collaboration with the Northern Ireland Executive, must do everything they can to support and protect it.
One way the newly elected United Kingdom Government have acted positively was by finally signing off the remaining two growth deals for Northern Ireland. As the House may be aware, the previous Conservative Government announced four city and growth deals for the Province in the Belfast City region, Londonderry and Strabane, Mid South West, and Causeway Coast and Glens.
However, on taking power, the Labour Government chose to pause the growth deals designed for predominantly rural areas in the Mid South West and Causeway Coast, with Ministers resorting to the now familiar excuse of a hole in the public finances. That situation was rectified by the Chancellor in her Autumn Budget Statement, but the level of uncertainty, disappointment and worry felt in those rural areas was palpable and did nothing to build confidence that the new Government have either understanding of or empathy with those seeking to grow the rural economy in the Province.
As I made clear in my remarks in this House last week, the Government seem to have little understanding of the farming community in Northern Ireland, or indeed elsewhere in the United Kingdom. Agriculture provides £6 billion to the Northern Ireland economy. However, the Chancellor’s decision to slap an inheritance tax on farms worth more than £1 million has placed the future of many farms, and indeed a way of rural life, under grave threat. According to analysis by the Department of Agriculture, around half of the 26,000 farms in Northern Ireland could be impacted by the tax changes. This will account for 80% of farmland across the Province, including 40% to 45% of cattle and sheep farms and 87% of dairy farms.
The Windsor Framework, which the current UK Government are fully behind, is making life for the people of Northern Ireland more difficult by the day, and it is having a particularly detrimental impact on local agriculture. A succession of Ministers in this House—I hope the Minister will not be the latest—have habitually fended off concerns about life in Northern Ireland by saying that any particular issue is a devolved matter. However, Budget decisions and responsibility for the disastrous Windsor Framework, agreed in partnership with the European Union, are not devolved. This Government have the power to fix them, thereby helping Northern Ireland’s rural economy. I urge the Minister to heed what I say and act accordingly.
Finally—and I accept that this is a devolved matter—according to the Department of Justice in Northern Ireland, rural crime is costing the Province’s economy £2 million every year. In an effort to combat this, the Rural Crime Partnership has been formed. It is made up of numerous organisations, including the Department of Justice, the PSNI, the Department of Agriculture, the Ulster Farmers Union and the Federation of Small Businesses. The group is engaged in several initiatives to tackle this scourge on the local community, including Rural Crime Week, which runs each September.
As well as people falling victim to petty crime, a sad reality in many parts of society is that rural communities are regularly targeted by organised crime groups. This criminality takes various forms, including waste crime, animal and machinery theft, and illegal puppy breeding and smuggling, and the proceeds are funnelled back into further criminality. Given the organised nature of these activities, will the Minister say whether there is scope for police and security forces across the United Kingdom to work more closely together to tackle this rural crime? Our Prime Minister is fond of telling us about his previous role in taking down gangs. This might present an ideal opportunity to show the country what our Prime Minister is made of.
Lord Inglewood (Non-Afl)
My Lords, I begin by declaring my interests, which are financial, as set out in the register, and also personal, given my actual involvement in things. I congratulate the right reverend Prelate on calling this debate. It may disappoint him, but it seems to me that rural Britain is not really homogenous, and I am afraid I am not really interested in the Home Counties. Rather, my concern focuses on the shires and beyond—what I like to think of as l’Angleterre profonde. They are particularly important to us in this country as a whole, partly because they are part of our collective sense of Britishness and of a perception, from the outside, of what this country is. In their own way, they are as important as, for example, the building where we are this afternoon, or Canterbury Cathedral, or the National Gallery.
Rural Britain is experiencing two revolutions. The first is in town and country planning. The important thing for the countryside is that the underlying thinking behind the settlement of the post-war planning regime is now under challenge. Rural Britain is not only for farming and forestry. Particularly with the development of connectivity, all kinds of possibilities are opening up that are consistent in land-use terms with what was tried to have been protected. Of course, we all know that connectivity is pretty erratic in the countryside, but I hope the relationship between fibre and mobile, with the two—as I understand it—coming together, means it may be possible to achieve an adequate overall system quicker than perhaps was previously thought possible.
Secondly, now that we have left the common agricultural policy, there is a revolution in that area too. It is worth remembering in this context that agricultural policy has always been a distinct specialist phenomenon in politics, going back to the Middle Ages, for rather obvious reasons. Public money and the public goods that the public are going to receive for it are in a state of flux.
The questions that we need to ask are twofold. First, what is rural Britain for? Secondly, how is that aspiration going to be achieved? In my case, much of my thinking is derived from looking at the Lake District, which the Minister obviously knows well. It is 40 years ago that I became a member of the Lake District special planning board and chaired its development control—that is, its planning committee. Subsequently, I have always watched what is going on very carefully. In many ways, it is completely unrecognisable from what it was then.
The point about the Lake District is that it is England’s premier national park. It is the crucible of the Romantic movement, both here and abroad, and relatively recently has been inscribed as a UNESCO world heritage site, both for its landscape and for cultural reasons, and they are equally important. It is not just any old corner of contemporary Britain or just part of our nation’s family silver; it is part of the world’s patrimony. The point of that is that it is much more significant than simply a bean-counter’s analysis of a profit and loss account.
Despite all that, productivity, as it is now measured in this country, means that the Lake District is below the national average. To a degree, that may be to do with the methodology employed. It has always interested me that water, which in very large quantities is exported into what used to be known as industrial Lancashire, does not play a proper part. It is not only that they cannot spend a penny in that area without our water; industry—and everything in society—would simply grind to a halt.
Equally, as a number of speakers have mentioned, housing policy is seriously flawed. There are plenty of houses in the Lake District, but the problem is that people who want to live there and need to work there cannot do so because housing has become a must-have asset for rich, moneyed southerners and international money. If you think about it, the houses are there. The place is a national park, so the solution is not building more houses; it is finding a way of moving the houses that are there into a category which means they will be restricted to people who live and work there. You have to think out of the box a bit, but it is far from impossible to see relatively easy ways as to how that might be done, given the political will.
The visitor economy has been mentioned. It is important, but it is beginning to cause problems along the very general lines of the problems that it is posing in places such as Venice and Barcelona. It requires considerable thought. I was a bit startled the other day when my son said to me, “You know, dad, I think the Lake District is now more famous for food and fine dining than it is for the landscape and what it’s really all about”.
Our economy is dysfunctional. Despite providing and contributing a lot to UK well-being, it still seems to be unable to generate enough money to look after itself. Its liquidity, taken across the piece, is haemorrhaging. That is why the ideas proposed in the Budget for taxing small businesses and farms are, frankly, cuckoo. You must not take working capital out of a series of activities that are losing money.
I suggest that the Minister looks at the system used for dealing with works of art in a similar context. There are all kinds of pointers that seem to suggest that there are ways of both taxing and collecting the money at the time when the asset’s value is realised. That is a much more sensible way of doing it.
The world is changing. We are not yet in a world where the policies and systemic framework surrounding all this are stable. Until just the other day, I chaired the Cumbria Local Enterprise Partnership, which is 50% industrial and 50% rural. I believe that we managed to achieve a harmonious partnership between local authorities, the voluntary sector and industrialists. In particular, industrialists and businesspeople are important, because they are the people who know how things are done. It is very important that, as we go forward, we find a way of making sure that those who do the business take part in and drive the policy.
Lord Carrington (CB)
My Lords, I too thank the right reverend Prelate—or perhaps, in view of earlier remarks, I should say Primate—for tabling this timely debate. I draw attention to my farming and other rural interests as set out in the register.
As most economists and others would agree, if growth is the Government’s priority then their Budget should incentivise businesses to grow, rather than raise taxes on them. This applies throughout the economy but is particularly relevant in the case of rural business, which is dominated by farming and small family businesses. I note, however, that the Government have moved from the growth that they were targeting in opposition to the less ambitious task of raising living standards in the recently announced six milestones. The rise of over 16% in the national living wage—a 40% rise in just five years—together with the increase in employers’ national insurance to 15% will have a disproportionate impact on horticulture, tourism and the hospitality industry. This is not promoting economic growth and creating favourable conditions for investment.
On top of this, as we have heard, there are the changes to APR and BPR. I will not dwell on this, as it has been the subject of much debate already, but will repeat my remarks from a previous occasion. I pointed out that independently verified figures were required for those likely to be affected, in view of the significant differences in the estimates of the NFU, the CLA, Defra and the Treasury. At that point, a sensible government decision on tax could follow. This is particularly important in the light of the 2019 report by the Office of Tax Simplification, which said:
“It is generally understood that the main policy rationale for BPR and APR is to prevent the sale or break up of businesses or farms to finance Inheritance Tax payments following the death of the owner”.
No doubt the Minister or her Treasury colleagues will tell us what has changed since then.
In this debate, I wish to highlight the effect of these tax changes on growth and productivity in the rural economy and how they undermine much-needed investment and innovation. Family businesses of all types will be quantifying their future tax liabilities and avoiding value-adding investments that would increase their tax burden. Long-term resilience, diversification, competitiveness and environmental care will all be affected. On the farming side, this is compounded by rising input prices, the unexpected cuts in BPR and APR, delays in some farming subsidies and poor profitability. This has resulted in farmers reducing investment and not hiring staff. The Government’s claim that they have committed £5 billion to farming rings particularly hollow when inflation is taken into account and after the inheritance tax hike.
Reduced investment affects productivity through new technology, buildings and IT systems. I am a member of the APPG on Science and Technology in Agriculture, where we have focused on the need to attract investment to support farm-level innovation, as the UK is a recognised powerhouse in plant science and agriscience. Robotic equipment, autonomous machinery and the use of AI to advance crop and livestock breeding, together with vertical farming, will improve productivity, efficiency and the environment.
I note that none of these technological advances is covered by the eight areas of focus—that is, the areas that will generate the most growth—identified in the recent announcement of the Government’s industrial strategy. With the right investment climate, we might even be able to emulate the United States in trying to deliver a 40% increase in food production by 2050 and reducing farming’s environmental footprint by 50%. Can the Minister tell us how the Government’s industrial strategy and new tax regime will support this type of productivity investment?
Although noble Lords have mentioned many other important issues, the tax system is the most important factor in the growth of the rural economy and it is far from being fit for purpose. It inhibits growth, not just in farming but in horticulture, hospitality and tourism—I could go on—as well as in family businesses, from builders to butchers and garden centres to timber merchants. Contrast this with the support being given to so-called creative industries producing films, TV and video games. Tax credits for this industry are calculated to cost the Treasury £2 billion a year, compared to the new cap on BPR and APR which will generate the Treasury some £520 million a year. The Government have chosen fun over food security and family businesses.
Lord Fuller (Con)
My Lords, I rise to speak as a council member of the Royal Norfolk Show, which is much better than the other ones that have been mentioned. This is a debate about growing the rural economy. There is so much I want to say but, in the six minutes I have, I will focus on rural governance and show how the Government’s actions are making the country cousins the even poorer relations.
Before we start, there is not even a firm definition of what constitutes “rural Britain”. Yes, it is the rolling countryside, but are our county towns and market towns part of that scene? No one is really sure so, as part of my prep, I thought I would create a definition myself. It is that part of Britain where, at 4 am, you cannot get an Uber within half an hour after a particularly heavy bender or a night on the tiles: “Can’t get an Uber late at night? Well, you’re in the sticks. That’s just how it is”.
The confirmed city dweller looks down on these sorts of places. It is all rather provincial, you see. That is the problem: rural Britain is governed by metropolitan voices who ill serve 70% of the landmass. Even the new mayors are to be called “metro mayors”. When the governance and rural voices are marginalised, it is harder to champion the rural economy.
There are more councillors within the M25 than in all the county councils of England. It is an extraordinary state of affairs. The metropolitan bias is structurally embedded in our nation. The shires are levelled down to London. It takes just 3,109 electors to elect a councillor in London but 15,000 in Essex and 18,000 in parts of Kent. Contrast this with the approach for parliamentary elections, where constituencies must, by law, be of the same value so that everyone has the same weight of voice. Somebody who lives in the shires has between a third and a fifth of the say of the townie. That is a problem for rural democracy, which is not addressed by the devolution White Paper.
As my noble friend Lord Gascoigne mentioned, the closest the Government have to a rural definition can be found in Defra’s local authority districts rural-urban classification 2021 dataset, which classifies local council areas as either predominantly rural, rural with some urban or just urban. It turns out that the Government will abolish all the 84 predominantly rural councils. Another 50 that are “urban with significant rural” are likely to be abolished, with their rurality subsumed into urbanised population units of half a million and their local distinctiveness decorated by the detritus of chicken shops.
Then, of course, there are 175 urban, city, London borough and metropolitan authorities, mostly controlled by Labour, untouched by abolition if they do not want to ask for it. I know it is Christmas, but I think we all know that turkeys do not vote for this kind of thing. Labour denies that there is a war on the countryside, but these announcements prove that there is a war on rural Britain and the lack of Members on the Government Benches rather proves this point. Labour always secretly wished we all lived in big cities and now it gets to pretend that we do.
Labour is slashing £110 million from the rural services delivery grant. I was grateful to the noble Earl, Lord Devon, who is not in his place. He identified that £10 million out of a £100 million will be taken from that county. Norfolk is not far behind and North Yorkshire will be £12 million short. We are being short-changed. Reorganisation will increase stealth taxes to mayors and a levelling-up of council tax where rural people used to live to pay for their urban neighbours. With no money, how can the countryside grow?
The White Paper promises a new fair funding settlement for what is left of local government, but we all know what that means: redirecting money from the countryside to their friends in the city, where social problems can be concentrated. It totally ignores rural areas, where poverty is diffuse. Being spread out does not make it any easier. In fact, isolation can make it worse. The additional cost of delivering services in areas where houses can be miles apart is ignored. I could go on. The point is that short-changing the countryside and diluting its say makes it harder for rural areas to grow in stature and make the economic contributions they should.
At least you can say that rural Britain has resilience—which it needs, with a Government characterised by townies hell-bent on fighting a class war that never really existed. Labour does not understand rural Britain, but rural Britain understands Labour. I almost feel sorry for the 90 Labour MPs representing the countryside. They have been abandoned and sacrificed by their party, unforgiven by those who lent them support. It is not too late to change tack. But, unless there is a change of tack, it will be difficult to grow the rural economy as part of a United Kingdom.
Lord Roborough (Con)
My Lords, this has been a well-informed and wide-ranging debate at a time when the core of the rural community, the farmers, are feeling betrayed by the reduction in inheritance tax relief, putting the long-term survival of up to 75% of working farms at risk. The right reverend Prelate the Bishop of St Albans, to whom we are all most grateful for securing this debate, addressed the importance of growing the rural economy and made many excellent suggestions, alongside other noble Lords. Before I address the rural economy, I will start with the wider economy.
The overall UK economy is challenged by this Labour Government, so how can the rural economy grow? It is deeply depressing that we in government had finally got the economy on an upward trajectory, with inflation falling, GDP growing and real wages expanding after the disasters of Covid and the Russian invasion of the Ukraine. This Government were elected with a commitment to kick-start economic growth, with the explicit statement:
“A new partnership with business to boost growth everywhere”.
Since winning the election, the Labour Government have talked down the economy, leading to two months of GDP shrinking, and then delivered a Budget that disincentivises investment in family businesses and employment. The S&P Global flash UK purchasing managers’ employment index now highlights shrinking employment and was the worst reading since 2009, excluding Covid, when Labour was last in power.
The Government plan to increase spending funded by tax increases, but also underpinned by economic growth assumptions that now look flawed. The UK 10-year gilt has sold off to 4.6%. The last time the yield was so high was also under the previous Labour Government in 2008. Given that we brought inflation down from its highs, this can only be as a result of reducing confidence in the Government’s economic management increasing the Government’s borrowing costs, putting further pressure on the Budget.
Economic growth has been undermined by this Government, whose spending plans look increasingly unfunded by available resources. The Chancellor of the Exchequer recently went on the record saying that there would not be further tax increases in the spring and that, if her fiscal rules are broken, she will cut spending to meet them. From the evidence we have seen of above-inflation public sector pay increases and increased spending, that would seem to be wishful thinking. I ask the Government: what spending will be cut to balance the books? Can the Minister reassure us that this will not impact on Defra budgets and existing spending commitments?
On the rural economy, I declare my interest as a dairy farmer, an owner of rural property and businesses, and an investor in a number of businesses that provide goods and services to farmers and land managers. I also declare my residential and industrial building interests and renewable development interests. The rural economy is reliant on farming and family businesses, where the reduction in IHT reliefs will reduce investment, as the noble Lord, Lord Carrington, amply demonstrated. Without needing to repeat the many arguments against this tax, I will just highlight that CBI Economics estimates that it will reduce economic output by nearly £10 billion, cost 125,000 jobs and lead to a net reduction in tax receipts of over £1.2 billion. I put it to the noble Lord, Lord Livermore—the Minister in the debate brought by the noble Earl, Lord Leicester—that, given the destructive impact of this tax and the misery it brings, it is either ideology or a mistake. I hope it is a mistake and that the Government are big enough to concede that and reverse or heavily revise it.
We left an unspent surplus in the Defra budget in the 2023-24 fiscal year, as farmers were slow in their take-up of ELMS and capital grants. That should have allowed the increased application rate for ELMS and capital grants to be easily accommodated in this year’s budget. However, the Government have now stopped applications for new capital grants in the current year and delayed applications for the Countryside Stewardship higher tier until the middle of next year. The farming community does not believe that this Government really are interested in championing British farmers, no matter that the Minister sitting opposite me is clearly understanding, sympathetic and supportive.
As I have discussed in previous debates, the rural economy has a significant growth opportunity in being part of the solution to climate change and nature restoration. Changes in land management over decades, centuries and millennia are blamed for up to 30% of anthropomorphic carbon emissions in the pursuit of cheaper food. The process of cutting those emissions, restoring nature and turning land back into a carbon sink requires funding. ELMS is an important segue into introducing private capital into these markets, to which this Government have previously restated their commitment. On this point, I thank the Minister once again for listening to my noble friend Lord Gascoigne and other noble Lords and for including greater incentives for nature-based solutions in the Water (Special Measures) Bill. I hope this will be a catalyst for more private sector investment in natural capital.
Private capital will need high-integrity standards to govern its investment in carbon sequestration and nature restoration. Can the Minister update us on the likely timing of the woodland carbon code and peatland carbon code accreditation into the Integrity Council for the Voluntary Carbon Market’s core carbon principles? Further to that, has there been any progress in the consultation around the entry of woodland carbon code units into the UK emissions trading scheme? Encouraging the development of these activities creates significant employment and new business opportunities. The right reverend Prelate mentioned the Groundswell festival and my noble friend Lord Gascoigne mentioned Nattergal, but I also highlight many other businesses developing in this area, such as Forest Carbon and Agricarbon, in which I disclose a shareholding, as well as many others.
Joined-up thinking and policy delivery between the various parts of government, departments and local authorities will be critical for stimulating the rural economy. This was highlighted by the right reverend Prelate the Bishop of St Albans, my noble friend Lord Harlech and the noble Lord, Lord de Clifford. Defra does not have the power to address all the areas that have been mentioned in today’s speeches, but it does seem as though responsibility has been devolved to it from other departments that do have the power. In that light, it is depressing that the over £100 million rural services delivery grant has been repurposed away from rural areas in the draft local government finance settlement, published today.
It is also concerning that the planning statements appear to dramatically increase the rate of housebuilding in rural areas, with urban centres under much less pressure. It seems in vain to ask the Minister how she can reassure the House that the rural economy will be given the support that it needs, when it seems that policies and funding are targeted at towns and urban centres—but I ask anyway.
The House continues to eagerly await the land use framework. Can the Minister update us on timing? The Government’s various commitments will require more rural land to be developed for renewable energy, housing and infrastructure projects. Can the Minister reassure the House that the land use framework is not intended to be prescriptive but to be guidance for changes of land use that will streamline the planning process and help land managers to make good decisions with their land?
When we take together the reduction in IHT relief for family business, delayed capital grants, delayed Countryside Stewardship higher-tier schemes, repurposing the rural services delivery grant and dramatically increased rural housing targets, as well as the cuts in the nature-friendly farming budget, mentioned by my noble friend Lord Harlech, it is hard to dispute the claim of my noble friend Lord Fuller that this Government would appear to be at war with the countryside.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
I start by congratulating the right reverend Prelate the Bishop of St Albans on securing what has been an excellent debate. In the short time I have allocated, I shall do my very best to respond to the various questions and issues that have been raised—and there have been a lot, so I shall follow up any outstanding questions in a letter and write to anybody whose questions I have not answered.
First, I would like to say that the Government have been clear: sustained economic growth is the only route to improving the prosperity of our country and people’s living standards, and this is equally true for those living and working in rural areas. Rural England makes up over 85% of the land mass and is home to 9.7 million people, equal to the number that live in the nation’s capital. We recognise that rural areas offer significant potential for growth and are absolutely central to our economy. The right reverend Prelate referred to untapped potential: over half a million businesses are registered in rural areas, with the rural economy contributing over £315 billion a year—and that is just in England.
The noble Earl, Lord Devon, mentioned the wide range of industries that work and support our rural communities. There is a good example in west Cumbria with Sellafield, a major industry that supports a much larger rural economy. I note that the Lord Bishop is the president of the Rural Coalition, which I have met with in the past, and I know that the Farming Minister, Daniel Zeichner MP, is going to attend a meeting in January. It is important that we work with organisations, and we are keen to do so in government. As we have heard, overall productivity in rural areas is just over 80% of the average for England. As noble Lords have said throughout this debate, there is significant potential to improve this.
The noble Earl, Lord Caithness, asked how we could do this, working with devolved Governments. That is a very good point. I assure him that I meet regularly with devolved Ministers, and this is one of the issues that we pick up and discuss. We are committed to improving the quality of life for all people living and working in rural areas, because we need to reach the full potential of rural business and our communities. While farming, forestry and other traditional land sectors are essential for delivering so much of what we value in our countryside, we know that businesses found in rural areas are just as diverse as those found in urban areas, with 86% operating outside agriculture and related sectors. In fact, the largest contributing sectors to the rural economy include education and health, distribution and hospitality, tourism, real estate, manufacturing and administrative services—and there is so much more. The Government are taking steps to support businesses right across every sector of the rural economy. To achieve this, we are ensuring that the needs of people and businesses are at the heart of our policymaking. As the right reverend Prelate rightly said, we need to be strategic about this, if we are to succeed.
Noble Lords are clearly aware of our growth mission, which includes announcing a series of planning reforms to get Britain building; removing the de facto ban on onshore wind; establishing the National Wealth Fund; announcing a pensions review to unlock growth, boost investment and deliver savings for pensioners; launching Skills England; announcing the Get Britain Working White Paper; and taking the first steps to create Great British Energy.
The industrial strategy will be a significant driver of national renewal and a central pillar of this growth mission. While the industrial strategy’s focus will be on growth-driving sectors and places, it will include addressing cross-cutting challenges and supporting a pro-business environment. The noble Lord, Lord Carrington, made some really good points on that, on innovation in farming and rural businesses and on how that can be used within the industrial strategy; I will feed back those suggestions. All sectors can shape, and will benefit from, wider policy reform through the broader growth mission. We believe that it will create the conditions for businesses to invest and employ and for consumers to spend with confidence.
The noble Earl, Lord Devon, mentioned the importance of natural capital, which is absolutely central to this. I am not sure if he has seen the recent report on that; it is quite big and I am slowly working my way through it. There is a lot of good information out there that we can refer to and use.
The Government have also recognised the specific challenges and opportunities that make rural economies distinctive, acknowledging the importance of direct support to the rural economy through programmes such as the rural England prosperity fund, which provides targeted support to rural businesses and communities. To those who mentioned co-operatives, I strongly support the benefits that can be brought through co-operatives; they have an important role to play in rural communities.
Small businesses are essential to our economic success; that is true not only for our urban centres but for every community up and down the country. In fact, more people are employed in micro-businesses in rural areas than in urban areas, as we have heard in today’s debate. Our plan for small business will hardwire the voice of small businesses into everything we do in government. We will use the levers at our disposal to boost small business growth and productivity. This includes addressing barriers through prompt payment and regulatory reform to improve the business environment; creating opportunities for UK business to compete on our strengths, break into new markets through exporting and attract investment; and helping small business to access the skills and support that they need to grow. Community-owned businesses also play a vital role in rural areas, providing opportunities for communities to come together and access services. We recognise, however, that there are significant challenges facing rural community businesses, and that the Government can play their part in overcoming them.
Although the rural economy extends beyond agriculture—as many noble Lords have said—this Government recognise the vital role that farmers and growers play in national economic growth. Farmers are the backbone of Britain, and we recognise the strength of feeling expressed recently by farming and rural communities. We are steadfast in our commitment to Britain’s farming industry, which is why we have announced that we are investing £5 billion into farming over the next two years. I remind noble Lords that this is the largest amount ever directed towards sustainable food production, rural economic growth and nature’s recovery in our country’s history.
We have already started to deliver on this commitment to restore stability for farmers by continuing the rollout of the Sustainable Farming Incentive. The noble Baroness, Lady McIntosh of Pickering, asked about the slow rollout. I am pleased to say that the uptake has increased in the last year. More than half of farmers now have an agreement, and we will continue to promote it. We need go further by optimising our schemes and grants, ensuring that they produce the right outcomes for all farmers— including small, grassland, upland and tenanted farms—while delivering food security and nature recovery in a just and equitable way.
The noble Lord, Lord Roborough, asked about the Countryside Stewardship higher-tier scheme, which, I am sure he is aware, is going to open next year—we recently made that announcement. The reason for that is that since the Government came in, in the summer, we have been prioritising the rolling out of the SFI and confirming the budget through the spending review, because these obviously affect the largest number of farmers and the largest-scale outcomes in the short term. Also, those with expiring agreements will be offered an extension to give them time to apply for the expanded scheme. Beyond this, the Government have also recently confirmed the intention to produce a long-term road map, Farming 2050: Growing England’s Future, which is to provide a vision for our farming sector into the future. It will outline how the farming system will boost food security, deliver on our environmental objectives and drive innovation, unlocking delivery across our government priorities.
Rural transport is also key. The noble Baroness, Lady Shephard of Northwold, opened the discussion on this and many noble Lords mentioned it. We know that, for a prosperous rural economy, we need to improve rural transport as well as our digital infrastructure and the availability of affordable housing and energy, all of which came up in the debate. We know that people living and working in rural areas often travel further to access work, education and training and other essential services and that this can be not just more costly but more time consuming. We are determined to deliver better bus services and we have set out a plan to achieve this in the Bus Services (No.2) Bill. This is based on the idea of giving local leaders the tools they need to ensure that bus services reflect the needs of the communities they serve. I recognise the challenge in many areas and the need for innovation in this area.
A number of noble Lords mentioned digitisation. The noble Lord, Lord de Clifford, talked about Project Gigabit. That is designed to deliver gigabit-capable broadband to premises that will not be built by the market without subsidy, with the aim of ensuring nationwide gigabit connectivity by 2030. Most premises deemed uncommercial by the market are of course in rural areas, but there are also commercial not-spots in urban areas. The point is that we recognise that these areas will need government subsidy if we are to get the kind of broadband gigabit coverage that we need. We are also determined to ensure that businesses that are still reliant on 3G are not left behind as a result of the 2G/3G switch-off. 4G coverage is increasing, thanks to the Shared Rural Network, which the Government will continue to invest in.
Genuinely affordable homes were also mentioned and are essential to sustain our vibrant rural economy. We know that the housing shortage has been driving high rents and leaves some of the most vulnerable without access to a safe and secure home, so we are reforming our planning laws to build the homes that our rural communities desperately need. At the same time, we must protect our green spaces and our natural environment. As part of this, the Government recently ran a consultation to reform the National Planning Policy Framework. We need to look at how best to build more homes. How we get more growth-focused interventions that will help us build the homes that people need in the places that they are needed is key.
Housing was mentioned by many noble Lords, including the noble Baroness, Lady Shephard, and the noble Lords, Lord Harlech and Lord de Clifford. I reassure noble Lords that the Government are committed to funding the rural housing enabler programme until the end of March next year. Funding allocations for individual programmes for the next financial year will be determined in the coming months through the department’s business planning exercise and we will announce these in due course.
The noble Earl, Lord Devon, asked about affordable housing. We know that there are real issues with unmet demand for affordable housing in rural communities. The Government’s aspiration is to ensure that in the first full financial year of this Parliament, 2025-26, the number of social rented homes is rising rather than falling. We have also asked Homes England to maximise the number of social rented homes in allocating the remaining affordable homes programme funding.
The noble Lord, Lord Inglewood, mentioned the huge challenge of second homes and their impact on places such as where he and I live, in the Lake District.
Permitted development rights were also mentioned, and we recognise the importance of improving and streamlining the planning system to underpin the growth of rural businesses. We are working with MHCLG as it reviews the planning system, to ensure that it supports farm diversification and the provision of affordable rural housing through mechanisms such as permitted development rights.
On energy, it is clear that rising energy costs present a challenge to rural businesses and communities, many of which, like mine, are off-grid—which has its own challenge when we are moving to a low-carbon energy system. We are clear that we want to lower bills, boost energy security and protect our environment, and are looking to do this through Great British Energy, which we are setting up. It is also designed to support local and combined authorities and community energy groups, which are an important part of rural communities, to roll out small- and medium-scale renewable energy projects. The idea is that we will increase local generation across the whole country by eight gigawatts of capacity by 2030.
Another significant requirement for a prosperous rural economy is a skilled workforce. We are planning to extend our childcare and early years system to drive up standards and modernise the school curriculum, and to boost rural and agricultural skills by reforming the apprenticeship levy into a growth and skills levy, to give businesses the freedom and flexibility to upskill their workforce. We also plan to open new specialist technical excellence colleges, to give rural communities the chance to fit the skills they need to their local economies and empower their local businesses to play a bigger role in this skills revolution.
The delivery of health services, such as GPs, dentistry and women’s health services, faces particular challenges in rural areas. It takes longer to access services due to longer travel times, but also rural communities increasingly tend to have living in them people who are going to need the services the most. We have ageing populations in many of our rural areas, so that is a challenge. Integrated care systems will have a key role to play in designing these services.
The issue of community assets was raised. Village halls, pubs, post offices, local shops and banks are all incredibly important, but we have been losing too many of them in recent years. Where they do remain, they often need repair or modernisation, so we are taking this very seriously and looking at how we can best tackle it.
The noble Lord, Lord Harlech, asked about cross-departmental working. I can confirm that Defra is committed to this. One example is the Child Poverty Taskforce, which the right reverend Prelate asked about. I am proud that I am part of that, and we want to ensure that our efforts cover all communities in all areas, because you do not tackle child poverty only in urban areas, but right across the countryside.
The right reverend Prelate asked about the index of multiple deprivation. We are working very closely with the MHCLG, which is responsible for the IMD, to ensure that it works more effectively in rural areas. Work has been commissioned which will specifically feed into the planned review. I also recognise the point concerning hidden deprivation in rural areas, which was raised by the noble Earl, Lord Devon. Noble Lords may not know this, but I used to work in rural Devon, doing outreach into particularly deprived communities in areas where people were very poor, although it was not obvious. I totally understand that point and am always very keen to ensure that colleagues appreciate it as well.
Crime was mentioned, and the National Rural Crime Unit helps people across the country tackle organised theft and disrupt organised crime groups. The neighbourhood policing guarantee is going to deliver thousands of additional neighbourhood police and community support officers.
The noble Lord, Lord Rogan, said that the Government do not understand farming in Northern Ireland. I am sure he would be pleased to know that two weeks ago I visited a dairy farm in County Armagh with the Ulster Farmers Union, which I have been meeting regularly so I can fully understand their specific concerns.
The noble Baroness, Lady McIntosh of Pickering, mentioned seasonal agricultural workers. To underline the Government’s commitment to the horticulture and poultry sectors, on 21 October the seasonal workers’ visitor rate was confirmed for 2025, with a total of 43,000 seasonal worker visas available for horticulture, and 2,000 for poultry.
The noble Lord, Lord Fuller, asked about local government. Yesterday, we launched a consultation on the principles of any reforms to local government funding, which will inform the development of a new local government funding assessment. The recovery grant is not an assessment of relative need and resource in itself. We are proposing this because we must act quickly, given the state of local authority finances, and start to fix the distribution of funding.
I am almost out of time, but the noble Lord, Lord Gascoigne, asked about access to visits. I recently went to the Yorkshire Dales and met children from a deprived area of Liverpool who had come to stay at the youth hostel there as part of Generation Green, a Defra-funded project which is absolutely fabulous. I recommend that everyone get to know about it.
I have to give a plug for the Cockermouth Show, as everyone else has mentioned their show.
I reassure noble Lords that we will continue to talk to the Treasury from Defra, and I will always stand up for the countryside and our rural communities. We recognise the importance of the rural economy and wider rural communities. I will continue to do everything in my power, through Defra, to ensure a prosperous future for them. I end by thanking everyone once again and wishing everyone a very happy Christmas.
The Lord Bishop of St Albans
I thank the Minister for her very comprehensive reply. As the noble Baroness, Lady Shephard, said, we understand the difficulties that Defra has and that, as the noble Lord, Lord Fuller, said, much of what goes on in government is run by the metropolitan elites. I have been grateful for the extraordinary breadth of contributions. I noted, for example, that the noble Lord, Lord Inglewood, helped us understand the diversity of “rural”, and it has been very good that today we have had references to Wales, Northern Ireland, Devon, Norfolk, Lancashire, Yorkshire and all different parts of our nation.
I have to say that I fear that, very often, government is rural-blind. Many of us, for many years now, have been asking for a comprehensive rural strategy and for proper rural-proofing, not because of special pleading but because we believe that this can make a huge difference to our nation.
I will not make any further comments—it is the last day of term and I suspect that we all need to go—but I thank all noble Lords for their contributions. We will be coming back with further debates as we move into 2025; we are not going to let go of this. I add my own best wishes for a very happy Christmas and new year to all Members of your Lordships’ House.