Rural Economy

Baroness Hayman of Ullock Excerpts

Thursday 19th December 2024 Lords Chamber

[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.