Leaving the EU: the Rural Economy

Calum Kerr Excerpts

Tuesday 17th January 2017 Commons Chamber

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I beg to move,

That this House is concerned at the possible impact upon the rural economy of the Government’s aim for the UK to leave the EU; and calls upon the Government to present to Parliament a clear statement of its aims for the rural economy in negotiations with the EU prior to triggering Article 50, and to give assurances on the future of agriculture, particularly with regard to funding, and fisheries after 2020.

We want to use this debate to consider the significant and tangible benefits that EU membership has afforded the Scottish rural community through funding, trade and freedom of movement. Those benefits must be acknowledged and the Government must offer, prior to the triggering of article 50, a clear statement on how they intend to mitigate the impact of leaving the EU on rural areas. They must do so now because the combined threat of the loss of direct funding, an end to tariff-free trading and the abolition of the free movement of people could have devastating consequences for rural communities throughout Scotland and, indeed, the rest of the UK.

The Prime Minister set out 12 points in her speech, but people in my constituency are not reassured, because it lacked detail and certainty. We are told that Brexit is about a more global Britain, and that the process will represent a clean break. Well, let me be absolutely clear in stating how far removed from reality that rhetoric is. Under the Government’s current direction of travel, Brexit will not be a clean break for the sheep farmers in my constituency, whose produce could face prohibitive tariffs and whose direct support payments could be wiped out.

Brexit will not be a clean break for the fish processors in Shetland—where in 2015 more fish was landed than in the entirety of England and Wales—whose access to the largest seafood market in the world is now under question. Nor will it be a clean break for the soft-fruit farmer in Angus when the plug is pulled on the seasonal labour that his business needs to function. It will not be a clean break for the most remote highland communities, which are now contemplating the loss of hundreds of millions of pounds of European regional development funding. We again find ourselves facing a combination of Tory indifference to the needs of the Scottish economy, and a dramatic democratic deficit.

[William Wragg (Hazel Grove) (Con)]

The hon. Gentleman and his party are optimistic people and rays of sunshine in this House. Can he see any possible benefit to the Scottish rural economy from leaving the EU? I am thinking particularly of fisheries, the European policy for which decimated the Scottish fishing industry.

[Calum Kerr]

If the hon. Gentleman spends a little more time with us, he will find that we are optimists at heart, but this debate is about the realities and the implications for the rural economy. I will, with great delight, return to fisheries later in my speech.

[John Redwood (Wokingham) (Con)]

Will the hon. Gentleman give way?

[Calum Kerr]

No; I would like to make a little more progress, but I promise to give way in time.

As the many complex challenges of Brexit pile up, we need to remember that real political leadership is about finding solutions, not soundbites.

[John Redwood]

Will the hon. Gentleman give way on that point?

[Calum Kerr]

I promise I will in one moment.

This debate is necessary to ensure that the Government do not overlook or downplay all the possible outcomes of Brexit. They must not walk away from the policy vacuum that is opening up before our eyes.

[John Redwood]

Is the hon. Gentleman telling the House that if we devolve more agricultural powers to the Scottish nationalists, they will not be able to think of a single way in which they could improve policy to help their farmers?

[Calum Kerr]

The right hon. Gentleman, who is highly respected, usually makes excellent contributions, but I am afraid that that was a poor one. There are many ways in which we would be delighted to improve agricultural policy, so long as his Government do not make a power grab as powers are returned from Brussels.

[Mike Weir (Angus) (SNP)]

Does my hon. Friend also agree that something like 70% of farmers’ incomes comes through the common agricultural policy, which is not subject to the Barnett formula, but it may be if it all comes back to the UK, which would lead to a significant reduction in funds available to rural Scotland?

[Calum Kerr]

I thank my hon. Friend for that excellent contribution, which brings me on to one of the first areas that I want to look at. Nowhere is the policy vacuum more apparent than on the issue of farm payments. Whatever its flaws—

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate the hon. Gentleman on making some very compelling points. We have a similar situation in Northern Ireland where 80% of farm incomes are dependent on European resources. Does he agree that there is a fear that that sort of funding is not likely to come from the Treasury, thus undermining our local rural economy and our agricultural enterprises?

--- Later in debate ---

[Calum Kerr]

I wholeheartedly agree with the hon. Lady. It is something on which I would like us to focus in this debate. I am talking about the importance of these support payments to the prosperity not just of farming, but of the whole rural community.

[Jake Berry (Rossendale and Darwen) (Con)]

rose—

[Calum Kerr]

I wish to make a bit more progress. We have two debates squeezed in today.

As I was saying, nowhere is the policy vacuum more apparent than on the issue of farm payments. Whatever the flaws, the moneys invested in Scotland and indeed in all the rural communities in the UK through the CAP are absolutely vital in underpinning the rural economy. As my hon. Friend the Member for Angus (Mike Weir) mentioned, farm payments account for two thirds of total net farm income in Scotland. We have about 8.4% of the population, but 32.5% of the land mass, and our distinct topography means that Scotland received 16.5% of UK CAP funds.

[Jake Berry]

Like farmers in Lancashire, many farmers in Scotland are involved in upland sheep farming, which I am sure all Members will acknowledge is often a very, very difficult business. Does he not think that, if we leave the European Union, there will be an opportunity for the Government to refocus support on those most marginal farms that he is talking about—specifically the uphill farms in Lancashire and Scotland? Farmers in Lancashire are hoping for more from Brexit, just as farmers in Scotland will be hoping for more from Scexit?

[Calum Kerr]

Hill farming—sheep farming—is one of our most fragile industries. I have deep concerns about its support in the future. I want to make a point about the level of funding because we need the Government to step up. I would like to talk about lamb when we look at trade, because it is one of the most threatened trade areas.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

My hon. Friend spoke earlier about the lack of detail in the Prime Minister’s statement. Does he agree that the Government should have taken cognisance of the resulting report of the Environmental Audit Committee inquiry into the future of the natural environment after the EU referendum as summarised in a letter to the Secretary of State—I have it here—from the British Ecological Society, the Chartered Institute of Ecology and Environmental Management, the Landscape Institute and the Institution of Environmental Scientists? These are the people we should be listening to, and these are the details that the Government should be including in their letters.

[Calum Kerr]

My hon. Friend’s point is well made.

Agriculture is already a devolved area. As powers are repatriated from Brussels, it is essential that they go directly to the Scottish Government. Any power grab from a Westminster Government would be totally unacceptable. We absolutely understand the need for levels of commonality, but that is not a justification for a power grab by Westminster.

We need a commitment from this Government that the existing allocation of funds will not be tampered with. The starting point for funds to be delivered to Scotland is once the convergence uplift is added to the 16.5%. Throughout last year’s referendum campaign, the Secretary of State and her farming Minister, the hon. Member for Camborne and Redruth (George Eustice), who is, I understand, in Scotland, argued for Brexit and it is now incumbent on them to take responsibility for the commitments made during that campaign. Last March, the farming Minister said:

“The UK government will continue to give farmers and the environment as much support—or perhaps even more—as they get now”.

Yet this commitment appears already to have been abandoned.

Earlier this month, the Secretary of State, the farming Minister and I were all at the Oxford conference, and both the Secretary of State and the farming Minister refused to confirm that funding would at least match current levels beyond 2020. Will the Secretary of State take the opportunity today to make a clear commitment that, as the farming Minister promised, Brexit will not result in a reduction in the level of funding available for farmers? Or is this another Brexit broken promise?

We acknowledge that the CAP is far from perfect and we recognise that we now have an opportunity to design a new and better system, but we also recognise that there must be a route to sustainable farming without direct income support because there must be an evolution that takes great care over the fragility of the rural economy. It is also important to note that the CAP is about much more than farming. In Scotland, EU funding has helped to support the roll-out of superfast broadband, business development, housing investment and measures to address rural fuel poverty, in addition to improvements in infrastructure and transport through pillar two regional development funds. We need the Government to explain whether they will match the funding for such programmes and, if they will, the more detail we can have from the Secretary of State, the better.

Another area in which the rural economy has benefited massively from EU membership is freedom of movement. For significant portions of the Scottish rural economy, access to a seasonal workforce is a vital factor in keeping their operations sustainable. At any one time, between 5,000 and 15,000 non-UK EU workers are employed in Scottish agriculture alone. We support continued freedom of movement because it is a system that works not just for farming and food production but for a range of sectors in rural Scotland, especially in fragile and often ageing populations.

[Mike Weir]

I represent Angus, which, along with the constituencies of my hon. Friends who represent Perthshire, has the highest number of economic migrants into Scotland, because they work in the horticultural industry. Many industries could not survive without that labour. Members talk about the unemployed taking the jobs, but there are more migrant workers working in that industry than there are unemployed people in our areas, even if all those unemployed people could take up the jobs. We need these people and the Government must take that into account. At the recent Oxford conference, the Secretary of State hinted that there might be some relaxation in that regard and I would be grateful if she gave more detail when she speaks.

--- Later in debate ---

[Calum Kerr]

My hon. Friend’s contribution reinforces the point I was making and gives it a bit more colour.

Given the announcements today and the consensus in Scotland against a hard Brexit, we must have powers over immigration devolved to the Scottish Parliament in order to pursue our own distinct policy—[Interruption.] Government Members might laugh, but I respectfully suggest that they go and read “Scotland’s Place in Europe” —that is what a plan for Brexit looks like.

In the meantime, I know that the Secretary of State understands the importance of seasonal workers, in particular, to the rural economy, so I would like to hear today what steps the Department for Environment, Food and Rural Affairs is taking to ensure that the rural economy does not grind to a halt, because seasonal workers are already beginning to look elsewhere.

One area that Government Members get very excited about, because there are opportunities, is fishing. We welcome the chance to move beyond the common fisheries policy, but we on the Scottish National party Benches will not forget the circumstances in which it was first imposed on Scotland. Ted Heath, a Conservative Prime Minister, sacrificed the “expendable” Scottish fishing industry in order to gain entry to the European Economic Community—[Interruption.] Government Members might not like it, but that is why we are in this position, so we will take no lectures from them.

I note that the farming Minister has just arrived. I welcome him to his place and hope that he enjoyed his visit to Scotland—hopefully he was learning about the importance of honouring the level of payments that Scottish communities currently receive.

The legacy of that deal means that today over half the fish caught in our waters are caught by foreign vessels. Brexit will clearly mean the re-establishment of our exclusive economic zone, but the process is key. As with Norway, the Faroes and Iceland, access to the EEZ should be negotiated on an annual basis and led by Scottish Ministers. Those negotiations must not form part of Brexit talks. Scottish fishermen want to hear a clear commitment from the Secretary of State to the Scottish fishing industry, and indeed to the UK fishing industry, that it will not be just another pawn in the Brexit negotiations?

Finally, I would like to turn to trade and, in particular, the important question of assess to the single market. I think that the numbers speak for themselves. Overall, 69% of Scotland’s overseas food exports go to the EU, and they were worth £724 million in 2015.

[Lucy Frazer (South East Cambridgeshire) (Con)]

On trade, two thirds of Scottish exports go to the rest of the UK and only 15% go to other EU countries, so why is the SNP suggesting that Scotland should stay in Europe but come out of the UK?

[Calum Kerr]

I do not understand why Government Members do not get this. It is as though they think that if we become independent we would float off into the Atlantic. That is not what happens. Are you saying that Ireland will be able to trade freely with the UK and the EU, as the Brexit Minister said, but somehow Scotland would not? I hate to break it to you, but we buy more from you than you do from us.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I cannot let the hon. Gentleman get away with saying “you.” I know what he meant, but maybe he could say it the right way, just to keep me happy.

[Calum Kerr]

Apologies, Madam Deputy Speaker. I am getting rather over-excited, but I will always be passionate when defending my constituency and rural Scotland against those who want to do it harm based on a hard-right, Tory Brexit.

[Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)]

I thank my hon. Friend for giving way; he is being generous. On the subject of trade, does he agree that actually the EU is Scotland’s growth market area? We have seen a 20% increase in the export of goods since 2007, and for services the figure was 50%, so actually the EU is our growth market for the future.

[Calum Kerr]

My hon. Friend makes an excellent point, as always. If we look at the numbers, we see that 68% of Scottish seafood exports that leave the UK go to EU countries, and that 80% of beef and lamb exports from Scotland are destined for the EU.

Outwith the EU, as we hear the Government trying to carve out a policy, those exports will be at risk of tariffs. I want to look at the risk that that poses. Let me take the example of red meat. Quality Meat Scotland has conducted analysis that shows that if we were subject to the current tariffs that apply to non-EU countries, there would be, on average, a 50% increase in costs for importers buying our products.

At the Oxford Farming Conference, the Secretary of State spoke of fields of opportunity but in the press conference afterwards, she admitted that UK exports would decline if tariffs were erected. That is the prospect faced by exporters in Scotland and, indeed, the whole UK. We call upon the Secretary of State to outline which products her Department thinks should be prioritised in upcoming negotiations.

There is no easy way to withdraw from the world’s largest trading bloc, and the search for alternative markets will involve a host of costs and compromises. For example, Canada’s standard tariff on beef stands at 26.5% and South Africa’s is currently at 40%. Do the Government really think that alternative markets, many with lower production costs than our own, can compensate for restricted access to the EU? The recent success of Scotland’s £14 billion—I was slightly taken aback by the size of that figure—food and drink sector shows that we are already an exporting global country. New trade links cannot mitigate the economic vandalism of cutting off access to a market of 500 million people on our doorstep.

Real political leadership is about seeking solutions to combat the impact of leaving the EU not just in Scotland, but all over the UK. If all the tangible benefits of single market membership end up being frittered away in pursuit of a red, white and blue Brexit, or a global Brexit, the Scottish people, who have shown that they want to build, not sever, their links with Europe will recognise a familiar pattern. They will recall that the Heath Government sacrificed Scottish fisheries when we joined the EU and that the Thatcher Government decimated Scottish industry in the 1980s, and they will conclude that this Tory Government, with no mandate for the damage they may cause, will wreck Scotland’s rural economy and ignore our overwhelming wish to retain our links with Europe.

If this Government have already made a calculation that rural Scotland is expendable in order to engineer a clean break with Europe, they can never again turn to the people of Scotland and claim that the Union is a partnership of equals. Will the Government take this opportunity to recognise the potentially devastating impact that a hard Brexit could have on the Scottish rural economy or will they be content to make a desert of rural Scotland in the name of Brexit?