Rural Economy

Lord Katz Excerpts

Thursday 11th June 2026 Lords Chamber

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I am grateful to the noble Lord, Lord Fuller, for bringing this debate and to all noble Lords who have contributed to it. I certainly want to add to the chorus of cheers for the noble Lord, Lord Roborough, who is back in his place—asking way too many questions for me to answer. On that note, I will attempt to do as good a job as I can in the time I have, but I will also reflect on Hansard and write to any and all noble Lords if I have not managed to address their points.

It is clear from today’s debate that there is a depth of experience and expertise across all parts of the House on our rural life and the rural economy. It is also clear that the strength of feeling expressed today reflects the importance of the rural economy. It is not—and this Government have never considered or would consider it—a niche concern but a vital part of our national picture and prosperity.

In thanking him for bringing the debate, I gently point out to the noble Lord, Lord Fuller, that I prefer to foster the spirit of co-operation and national endeavour that I hear from the noble Lord, Lord Taylor of Holbeach. Language such as political malevolence, class war and spiteful apartheid masks the efforts and challenges that we all face in promoting and supporting the rural economy in all its breadth and depth. This really should not be a partisan issue in the way that some have sought to describe it.

Labour cares deeply about the countryside and those living and working in it, and we want to promote it. In passing, I point out that the Countryside Alliance, no less, has worked out that 190 Labour MPs represent seats that are at least in part rural. So the countryside is not “the other” for the Labour Party and the Labour Government: it is part of who we are.

We recognise the central role that rural economies play in driving growth, supporting jobs and sustaining communities across the country. Since taking office, we have taken concrete steps to strengthen rural economies and back rural communities through sustained investment, targeted support and a renewed focus on ensuring that rural needs are properly reflected across government policy.

As many speakers in the debate noted, the rural economy contributes £259 billion annually in England alone and supports hundreds of thousands of small and medium-sized businesses. These businesses are not peripheral; they are fundamental to our national growth mission. As many noble Lords—particularly the noble Lord, Lord Cameron of Dillington—have pointed out, the sectors that the rural economy encompasses are diverse and broad. Of course, agriculture is important, but it is by no means the only facet of the rural economy. That is why the Prime Minister’s SME plan represents such a significant step forward. It is designed to support over half a million rural businesses, giving them better access to finance, stronger skills and simpler support to help them grow and thrive.

At the same time, we are cutting red tape, tackling late payments and modernising regulation so that rural entrepreneurs can focus on building successful businesses. To those who say that there is nothing in the King’s Speech for rural businesses, I point to the Bill to tackle late payments, the Bill on regulation, and the Bill on the UK-EU reset—which we have already discussed, and which I will come on to in a little bit. All those will, in some part, have a clear impact on the rural economy and rural businesses. Crucially, we are also cutting business rates for the high street, supporting more than 750,000 retail, hospitality and leisure businesses, including the rural pubs and shops at the heart of our communities.

We have already heard how village halls are at the heart of rural life, and I thank my noble friend Lady Pitkeathley for raising the issue so eloquently. If I am ever in her patch and need a breakfast, I will know where to go. I say to her that, in 2026-27, Defra has given a £1.7 million grant to Action with Communities in Rural England—ACRE—which is England’s largest rural grouping of community support charities. One of the priorities for this grant is for ACRE to support village halls and community buildings, which, as my noble friend pointed out, are very much the lifeblood—the warp and weft—of many parts of the countryside. It is important that communities up and down the country can work with ACRE to use this funding.

I add that ACRE manages, on behalf of Defra, the rural community buildings loan fund, which helps community buildings fill temporary gaps in funding, either for specific projects or for urgent work connected with a building. It is a vital resource, and I am very pleased that the Government are making that investment. I hope it demonstrates our continuing support for village halls, of which my noble friend Lady Pitkeathley is such a champion.

A number of noble Lords—particularly the noble Baroness, Lady Coffey—recognised the importance of training and skills in rural areas, and that their shortage remains a persistent challenge. Through Skills England and local partners, we are aligning training with local needs so that businesses can access the workforce to grow. The Post-16 Education and Skills White Paper sets out a more joined-up system, with clearer pathways for young people into work and flexible lifelong learning, so that rural businesses can access the workforce they need to grow and improve productivity.

We are also delivering the youth guarantee, which aims to give young people extra support to access high-quality learning and earning opportunities. We have committed to £90 million of investment in youth guarantee trailblazers in England to test innovative ways to bring together local leadership to tackle youth unemployment. For instance, in rural areas of north-east Somerset, where, as we have heard, people can face transport barriers, the West of England Combined Authority’s youth guarantee trailblazer is facilitating transport solutions, including e-bike loans.

My noble friend Lady Royall raised the Generation Green 2 scheme. That £4.45 million project, which ended last March, enabled more than 26,000 disadvantaged children and young people to experience the benefits of spending time in the great outdoors. I am pleased to tell my noble friend that the Government support the adventures away from home fund—a £4.7 million initiative, delivered in collaboration with UK Youth, to provide free outdoor learning experiences for disadvantaged young people. As my noble friend said—I think this is a belief that all noble Lords share—it is important to give young people from urban areas the chance to find out about, and grow to love, the countryside, and to consider a career and a life in a rural area.

My noble friend Lady Royall also asked about the seasonal worker scheme. In February 2025, the Government announced an extension to the seasonal worker visa route for five more years, giving farms a pipeline of workers and certainty to grow their businesses. Annual quota reviews will ensure that we strike the right balance, supporting farms while gradually transitioning away from reliance on seasonal migrant labour.

We are further supporting rural economies through our commitment to housebuilding, with £39 billion of investment to deliver the homes that this country needs, ensuring that rural areas have access to affordable housing that supports local people, businesses and growth.

Transport and connectivity were certainly recurring themes throughout this afternoon’s debate—and rightly so, because they are key enablers of rural growth. The noble Lord, Lord Cameron of Dillington, talked about the Wheels to Work scheme, and I am glad that the noble Baroness, Lady Coffey, was able to point out that it is still very much in existence in at least parts of the country.

The Bus Services Act 2025 is an important step in addressing the practical challenges faced by rural residents in accessing work, education and essential services. It places powers in the hands of local leaders, protects socially necessary routes, and is backed by over £3 billion of investment. Crucially, funding now reflects rurality for the first time, recognising the realities of delivering bus services in less densely populated areas. It is also worth pointing out the existence of the Rural Transport Accelerator fund, which has awarded £1.2 million to projects to better connect rural communities.

The noble Viscount, Lord Goschen, was absolutely right to say that for many rural residents the car is not a luxury but an essential part of rural life. He was right to point out the importance of proper highway maintenance, and the bugbear of many people across the country, in both rural and urban areas, which is potholes. That is why I am pleased to be able to tell him that the DfT is committing £7.3 billion of capital funding for local highway maintenance for 2026-30, which allows local authorities to shift from a reactive, pothole-filling strategy to more proactive road maintenance, which I hope will go some way to address the concerns that he raised.

Connectivity is not just a physical thing; it is also a digital thing, which is equally essential to rural economies. Through Project Gigabit, over 1.3 million premises, predominantly rural, have already benefited. This is not just about infrastructure; it is about opportunity, enabling people to work remotely, access services and grow their businesses, and indeed have the diverse economy that many noble Lords raised, not least the noble Lord, Lord Cameron of Dillington, who described the rural economy in his part of the world.

Energy infrastructure is also critical to growth, as talked about by the noble Baroness, Lady Grender. The Government’s approach is clear: we must deliver clean power, but we must do so responsibly. We have announced bill discounts for communities living nearest to new electricity transmission infrastructure. On top of this, we are exploring options to ensure that communities directly benefit from the low carbon infrastructure they host.

On the critiques of land use from the noble Lord, Lord Fuller, the total area used by solar farms is very small. The most ambitious scenarios see up to 0.6% of total agricultural land expected to be occupied. It really is a chimera that somehow solar farms are squeezing out good land, to any great extent at least—it is not more than 1% of decent land that could be used for agriculture.

The noble Lord, Lord Howard of Rising, talked particularly about fly-tipping and waste crime. Of course, fly-tipping is a serious crime which blights local communities, both urban and particularly rural. Dealing with it imposes significant costs on both taxpayers and businesses. We have published a new waste crime action plan, which is the toughest ever crackdown on illegal waste, targeting the problem at its root. We will tighten regulation to close loopholes that criminals exploit, enabling tougher enforcement to disrupt and punish them. We have committed to forcing fly-tippers to clean up the mess that they have created, and Defra officials will soon consult on giving local councils powers to issue fly-tippers with conditional cautions, which could include up to 20 hours of unpaid work and paying back the cost of clean-up for waste dumped on public land.

I know the noble Lord felt that the Crime and Policing Act did not go far enough, but we secured powers in that Act to provide statutory fly-tipping enforcement guidance to support councils in consistently and effectively exercising their existing powers and enabling courts to award three to nine penalty points on driving licences for those found guilty of fly-tipping. We understand that it is a burden on landowners. I remember a number of discussions with the noble Viscount, Lord Goschen. I am pleasantly surprised that he decided not to focus on that in his contribution this afternoon, but I know he is committed to the issue and I hope he will agree that we certainly made movement during the passage of that Bill in the last Session to demonstrate our determination to help rural communities tackle the problem.

It would be remiss to close the debate without paying tribute to the vital work undertaken by this country’s farmers. Farmers are critical not just to food production, as we heard from so many contributions this afternoon, but to environmental stewardship and rural livelihoods. They are very much the lifeblood of our rural communities. We recognise the pressures they face, from tight margins to volatility in markets. We heard from a number of noble Lords about fertiliser costs, including the noble Lords, Lord Howard of Rising, Lord Douglas-Miller and Lord Roborough. It is clear that conflict in the Middle East has increased the cost of fertilisers. We are working in Defra to closely monitor the situation and the Treasury is seeking views on whether the suspension of tariffs on certain fertilisers could help farmers cope with the increase. We are, I should add, investing £120 million in grants and environmental land management schemes to support English farmers to adopt practices that are less reliant on artificial fertilisers. We recognise the pressures that farming businesses face and are clear that, while some of the causes of the problems are beyond our control due to international factors, we are working with the industry to address them as best we can.

The Government are taking action through an £11.8 billion investment in nature-friendly farming, including a £200 million investment in the farming innovation programme, and by bringing together industry leadership via the Farming and Food Partnership Board to remove barriers to farm profitability and unlock investment. On that note, I very much want to take the opportunity to thank the noble Baroness, Lady Batters, for her thorough and insightful farming profitability review, which sets out a clear assessment of the challenges facing the sector and the opportunities ahead. We are now carefully considering her 57 recommendations with the sector and will publish the Government’s response to her review alongside the farming road map. I can tell noble Lords that that will be this summer. I hope that goes some way to answering the questions posed by my noble friend Lady Royall and others about the timing.

I am glad that the noble Viscount, Lord Goschen, recognises that 25 years for the road map is ambitious. We need to be ambitious in scale across all areas of growth in our economy, not least for the rural economy and for farmers. When it comes to the farming profitability review of the noble Baroness, Lady Batters, we have already taken on board her concerns around targeting the sustainable farming incentive support towards active farmers, rather than landowners or developers. Under the previous SFI scheme, one-quarter of funding went to just 4% of farms. We have redesigned it to be simpler and fairer, helping more farms grow, boost productivity and protect the natural environment they depend on.

As the noble Baroness, Lady Grender, and other noble Lords noted, we announced today a budget of £240 million for the new SFI agreements, with the first round of applications opening on 30 June for two groups: small farms and farms without an existing environmental land management revenue agreement. A second application window will open in September 2026, which will give all farmers and land managers the opportunity to apply. Some £50 million is available for new Countryside Stewardship higher-tier agreements this year, supporting targeted environmental improvements where they will have the greatest impact. Together, these schemes will help boost food production, strengthen farm resilience, support nature recovery and underpin the UK’s long-term food security.

A number of noble Lords, including the noble Lords, Lord Taylor of Holbeach and Lord Douglas-Miller, raised IHT and APR. As a consequence of the Government’s announcement in December 2025, around 85% of estates claiming agricultural property relief in 2026-27, including those that also claim for business property relief, are forecast to pay no more inheritance tax on their estates. The changes that we made to the policy in December were welcomed by the NFU. I agree with the NFU and others that the balance is now broadly right. For noble Lords who are critical of the scheme, I repeat the words of my right honourable friend the Secretary of State for Defra, Emma Reynolds:

“It’s only right that larger estates contribute more”.


I hate to disappoint the noble Lord, Lord Roborough, particularly on his first outing back on the Front Bench, but he will not be surprised that I will not comment further on any potential or theoretical future direction of that policy.

We spoke about the SPS scheme. We are negotiating a new SPS agreement with the EU to make agri-food trade with our biggest market cheaper and easier. This will cut costs for British retailers and producers, especially farmers. Obviously, I cannot comment on details as the negotiations are ongoing, so I cannot respond to the questions of the noble Lord, Lord Roborough. However, I point out to him that we have published a new strategy on bovine TB, developed in partnership with the industry. We are running a call for evidence to understand what businesses need from guidance on SPS, so that we can take full advantage of it from day one.

A consistent theme throughout the debate has been the need for the Government to understand and respond to the distinct characteristics of rural life. I cannot answer the noble Lord, Lord Roborough, on how many county shows my colleagues in Defra have been to or might be going to, but I undertake to write to him. I say to the noble Lord, Lord Douglas-Miller, that my noble friend Lady Hayman of Ullock has long experience of farming, so she at least can answer his question. This is precisely why we established a Defra-led rural taskforce that brings together partners from across Whitehall and beyond to strengthen our understanding of how best to support rural life, tackle rural disadvantage and unlock the full potential of the rural economy. I am pleased to say that the report based on the findings of this taskforce will be published shortly.

Time is against me. I know that we touched on trail-hunting, and I saw many noble Lords at the drop-in sessions that my noble friend Lady Hayman held on this. We have a manifesto commitment to ban trail-hunting, but we recognise the importance of rural pursuits to the rural economy and community life. That is why this consultation is important. We want to make sure that we have a clear understanding of all the material factors that are relevant in the development of our proposals for the ban on trail-hunting. My noble friend Lady Royall asked about hares. We have committed in the animal welfare strategy to considering how to bring forward a close season for hares, but we are still working on that and so I cannot share any more detail.

We want a rural economy that is dynamic and growing, communities that are connected and resilient, and people who are able to live, work and prosper wherever they choose. We recognise that there is more to do. Rural challenges, from transport to skills, require sustained focus and long-term solutions, but the direction is clear and I assure your Lordships’ House that the commitment is firm. I hope that, in closing, I have demonstrated the strength of the Government’s record to date and our ambition for the future. I am sure that there are points and questions that I have not covered, so I will reflect on Hansard.