Leaving the EU: the Rural Economy

Ian Blackford Excerpts

Tuesday 17th January 2017 Commons Chamber

[The Secretary of State for Environment, Food and Rural Affairs (Andrea Leadsom)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“recognises the importance of the rural economy to the UK, not least the food, farming and fishing sector which is worth £108 billion to the economy and employs 3.8 million people in communities across the whole of the UK; welcomes the continuity and certainty the Government has provided by guaranteeing the same level of funding to the agricultural sector that it would have received under Pillar 1 of the Common Agricultural Policy until the end of the current Multiannual Financial Framework in 2020; further welcomes the Government’s undertaking that all structural and investment fund projects, including agri-environment schemes and schemes under the European Maritime and Fisheries Fund that offer good value and fit with domestic objectives and are signed while the UK remains a member of the EU will be honoured for their lifetime even when this is beyond the UK’s departure from the EU; welcomes the opportunity that leaving the EU will bring to improve the management of fisheries in UK waters and to champion sustainable fishing; supports the continued investment in superfast broadband and the introduction of a Universal Service Obligation; shares the Government’s commitment to securing a deal in leaving the EU that works for all parts of the UK; and notes that one of the best ways of supporting rural communities is by having a strong economy that works for everyone.”

It will not surprise the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) that I do not quite see it in the same way that he does. I thank him for giving us the opportunity to debate the rural economy, which is a vital part of our national economy. Hon. Members of all parties will know how diverse the rural economy is, and much of it is underpinned by our food, farming and fisheries sectors. Those industries have shaped all four parts of the UK and continue to do so. They are central to our heritage, landscapes and economic wellbeing, generating £110 billion for the economy each year and employing one in eight of us in all parts of the UK. We should all be proud of the world-class food and drink those industries produce and the role they play in our national life. The rural economy matters enormously.

Although leaving the EU offers huge opportunities to the farming and fisheries sector, it is vital that we provide the industry with as much continuity and certainty as we can. That is why we have already provided reassurance to all farmers across the UK that they will receive the same level of financial support under pillar one until 2020. For rural development programmes, agri-environment schemes and the European maritime and fisheries fund, we will guarantee projects that are signed before we leave the EU for their lifetime, even when this stretches beyond our departure from the EU.

The Government will also ensure that the devolved Administrations are funded to meet the commitments they have made under current EU budget allocations. Given that the administration of EU funding is devolved, it will be for those Administrations to decide the criteria used to assess projects.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I would like to believe the promises the Government are making, but, of course, the Government have form. If we go back to the convergence uplift criteria, Scotland was supposed to be rewarded with £223 million of funds from the EU, but we are getting only 16%. We were promised a review in 2016—it has not happened. When will it happen, and when will our crofters and farmers get what is due to them? The real question on the devolution of agriculture to the Scottish Government and Scottish Parliament is about making sure we get the correct funding—it is about what happens not up to 2020 but after that.

[Andrea Leadsom]

I do recognise the hon. Gentleman’s point, and it is something I continue to look closely at in my Department. I will keep him up to date with progress on it.

Leaving the EU will give us the chance to develop policies for the rural economy that are bespoke to the needs of this country rather than the different approaches and circumstances of 28 different member states. As Secretary of State, I have made very clear my two long-term ambitions: first, to make a resounding success of our world-leading food, farming and fisheries industry—producing more, selling more and exporting more of our great British food; and, secondly, to become the first generation to leave the environment in a better state than we found it in. These ambitions look far beyond tomorrow; they are about long-lasting change and real reform. They form the bedrock of a balanced approach to policy, and the success of one is integral to the success of the other.

--- Later in debate ---

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I declare an interest as an active crofter.

I congratulate all my hon. Friends who have spoken so passionately about the threat to our rural economy from a hard Brexit and the concern about what the future holds for many of us. For us, Europe and the single market are about opportunities for growth, investment and jobs; the best opportunities to create sustainable economic growth; and playing to our strengths in order to benefit from the single market. Our opportunity to create a vibrant, prosperous economy hinges on access to the single market. It is a foundation stone of our desire to enhance our productive potential and deliver strong, sustainable growth. For Scotland to succeed, we need additional labour—nowhere more so than in the highlands. We need people who want to be part of our story and help us to deliver that modern, vibrant economy. We want free movement of people. Why would we want to remove ourselves from this opportunity?

The Prime Minister should come clean: a hard Brexit means uncertainty for investment, a threat to jobs and a threat to trade for those who trade with the EU. It threatens lower living standards from lower wages and higher inflation. Sterling is down as a consequence of Brexit. Make no mistake: inflation is on the rise, and it is driven by a fall in sterling. Inflation will rise as the cost of imports reflects the fall in the value of the pound. The December inflation report out today showed that inflation that month rose to 1.6%, the highest level since July 2014. We have seen real wages rise over the last couple of years, but rising inflation will choke off any rise in real wage growth.

The Prime Minister talks of wanting to trade with Europe, but the best route to trading with Europe is by retaining access to the single market. We cannot walk away from market access and expect quickly to put a solution back on the table. There will be a cost, and it will come either from higher costs of participation or from lost jobs. Let me take an industry important to Ross, Skye and Lochaber: salmon farming. As members of the single market, we have tariff-free access. Norway pays a tariff of 2% on its salmon sold into the single market as a consequence of its arrangements. The tariff for those who are not members of the European economic area is 8%. That is the threat facing our fish farming sector if our access to the single market ends.

Food exports to the EU in 2015 represented 69% of Scotland’s overall food exports. There is clearly a threat of tariffs being put on those exports. That is not a price worth paying. Why would we willingly seek to disadvantage Scottish seafood producers, farmers and crofters? The Scottish Government have put forward a compromise plan to keep Scotland in the single market even if the rest of the UK leaves. Will the UK Government honour the commitments made to examining options brought forward by the devolved Administrations, acknowledge that Scotland delivered a clear message against leaving the EU, and recognise that we are demonstrating the importance of free movement and the single market to Scotland’s economy?

Our Government in Edinburgh are outward looking, internationalist and secure in seeing Scotland’s destiny as part of the family of nations in Europe. We are open and seek people to come to Scotland to study, work, invest and, critically, enrich our society with the contribution that they can make as new Scots. Scotland is looking outward while the UK wants to pull up the drawbridge. It is a UK where the welcome mat is no longer put out, a UK closed to Europe and European migration. It reminds me of the newspaper headline from the past: “Fog in the channel, continent cut off.” The reality of a hard Brexit is that the UK will be cut off—from the single market and from European trade.

Look at what the Prime Minister said today. [Interruption.] For Conservative Members, this is a laughing matter, but it is a real threat to jobs and prosperity for people in Scotland. Having no access to the single market is the road to self-destruction. We should contrast the inward-looking, “turn your back on Europe” message from the UK Government with the forward-looking document published by the Scottish Government in December, “Scotland’s Place in Europe”—a road map that allows us to work with the UK to achieve a settlement that respects the vote taken in the UK, but that seeks to protect our economic interests; a road map that respects that the UK has voted to leave, but seeks an appreciation of our position: Scotland voted to remain. That is why, when we see a UK Government so driven to take us out of the single market and to damage our rural economy, we say, “Not in our name”.

Let me be clear: Europe has been good for the highlands and islands. Europe recognised the importance of investing in the highlands. Take the convergence fund, which was put in place in recognition of a lower level of support for Scottish crofters and farmers than was in place for most of Europe. Some €223 million of extra funding over four years was granted to the UK on the clear understanding that this would primarily help Scottish crofters and farmers. Sadly, the UK Minister with responsibility for farming took a different view in 2013: Scotland would get only a pro rata share of its normal CAP pillar funding—16% of the total. Put simply, Scottish farmers and crofters were done out of funds by a Westminster Government who failed to pass on what the EU had meant for Scotland. I know who we trust, and it is not the Westminster Government. We were done out of fairness from Europe. Europe wanted to help Scottish crofters and farmers; Westminster once again short-changed us.

The then Secretary of State, the right hon. Member for North Shropshire (Mr Paterson), promised that a review of how the funds were to be allocated would take place in 2016, and the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice), confirmed that this review would begin after the devolved elections last May. There has been no review. The people of Scotland can contrast the behaviour of Europe, which sought to assist Scottish crofters and farmers, with that of Westminster, which denied the funds. We were promised a review, but it has not happened. Little wonder that we worry what will happen to our crofters and farmers after Brexit.

Will the Minister guarantee to protect CAP funding for Scottish farmers after 2020? Support from the CAP amounts to two thirds of total net farm income in Scotland. Between 2014 and 2020, Scotland will receive around €4.6 billion in funding. We need an assurance that funding for farming and crofting will be ring-fenced. In Scotland, 85% of our land is designated a less favoured area, with a reliance on livestock production. We need to reassure farmers and crofters that active farming and crofting will be supported. Powers over farming and fishing must be devolved to the Scottish Parliament, but they must come with a commitment to funding. We cannot be short-changed again.

Creating sustainable communities and empowering communities in the highlands and islands takes hard work. Our region is full of signs saying, “Project funded by the EU.” Roads, hospitals and much of our infrastructure have benefited from EU funding. The revival of the Gaelic language has been aided by EU funding, not least through support for the Gaelic college, Sabhal Mòr Ostaig on Skye. The EU is ready to make contributions of £6.6 million to the highlands this year through the highland LEADER funding programme, to take one funding stream. We need to know that this will be supported.

In summing up, I remind the Prime Minister that the people of Scotland are sovereign; that has been the historical context—not parliamentary sovereignty, but the sovereignty of our people. Will the Prime Minister work with us to protect Scotland’s interest in retaining access to the single market? Failure to do so will mean that the Union that she cherishes will be put to a fresh question. Respect Scotland, or risk the consequence of us seizing the day. A referendum on Scotland’s future may be our only alternative if we are to protect Scotland from a hard Brexit.