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Rural Economy

Volume 771: debated on Wednesday 27 April 2016

Question for Short Debate

Asked by

My Lords, I am delighted to have secured this debate on the rural economy and look forward to hearing contributions from your Lordships, the Minister’s assessment of the state of the rural economy and what measures might be taken to improve it.

I grew up in Teesdale, one of the wildest and most beautiful parts of the country, and one with among the lowest farming incomes in the country. As a GP’s daughter, I saw every aspect of rural life. I declare an interest as owner and director of a consultancy company which provides strategic advice on food, farming and the environment, and that one of the clients is the board of the Dispensing Doctors’ Association, which I advise on rural policy matters. I also sit on the Rural Affairs Committee of the Church Of England Synod. It was an honour to represent, initially, the Vale of York and then Thirsk, Malton and Filey for 18 years in another place, culminating in my being elected to chair the Environment, Food and Rural Affairs Committee for five years.

We have to eat, and those living and working in the countryside ensure that we have food on our tables. Today’s debate is a celebration of the countryside, those who live and work there and how departments such as Defra and DECC interact with them in England. More than 20% of the population live in rural areas, contributing a fifth of England’s total economic activity. The agrifood sector is worth £103 billion—6.8% of the gross value added of the national economy. The role of the EU impacts greatly on the rural economy and possibly nowhere else is gold-plating more evident. One example I was involved in as an MEP some 20 to 30 years ago, the abattoirs directive, forced the closure of some small abattoirs in England. At the time of the BSE and foot and mouth crisis this meant that livestock had to be transported further to slaughter, raising issues of animal welfare, as well as animal health.

The rural economy in England is frequently overlooked in government policy initiatives. We hear a lot about city regions, devolution and the northern powerhouse, yet the countryside is crying out for policies specifically aimed at the rural economy, such as more affordable housing, lower rural crime, better rural transport, with more frequent rural bus services, faster broadband—or even just a stable broadband connection—and better mobile phone coverage. Improved access to banks and post offices is also needed.

The key things I would like to explore this afternoon are the importance of farming to the countryside and the rural economy; the importance of food security and the role farmers play; and how Britain is currently only 62% self-sufficient in food production. The Government are rightly seeking to add value through exports and, wherever possible, substitute imports, such as Shepherds Purse Cheeses, from near Thirsk, which competes with Roquefort cheese from France. The Government should enthusiastically support public procurement of British products and we should all be proud to buy and eat British food. Opening up new markets, such as China, to products such as pigs’ trotters and other pigs’ parts that we may not eat in this country, as well as dairy foods, would add multimillion pounds of exports to companies in North Yorkshire and across England.

The impact of late farm payments under the new CAP is great on farming and the wider countryside and rural economy. Given the delayed payments from 2015 and the problems that the Rural Payments Agency has experienced with the new system, the recent announcement of partial payments is particularly welcome. We must not lose sight of the fact that 88,000 applications are due, mostly by paper, since rural areas are simply not yet digitally enabled, or that some farmers have still not been paid from 2015. Farmers are seeking an extension to the deadline for the 2016 application of 17 May, on which I hope the Government and the Minister will look favourably. There is a particular problem for tenant farmers through basic farm payments. Upland farming makes a unique contribution to rural areas in producing livestock, tending the countryside and often providing accommodation for visitors. Basic farm payments should go to the active farmers, in this case the graziers on common land tending sheep, rather than the landowner who earns money elsewhere through shooting rights. We must recognise problems with registration and mapping of common land, with the particular issue in North Yorkshire of a review being undertaken this year, whereby rights not registered this year may be lost, not to be revived. Looking ahead, I welcome and recognise the need for reforms promised by the EU Commissioner, Phil Hogan, in 2017 of a CAP that is simply too complicated.

The six-day rule impacts on farmers. It is a standstill rule imposed after the 2001 foot and mouth disease outbreak. Restricting the movement of livestock, it disrupts trade and affects price. It has been in place since 2003. When will it be lifted? The role of auction marts in rural areas should be recognised, setting prices and having an economic and social role by allowing vital interaction among farmers who often live in isolation. The Groceries Code Adjudicator is doing valuable work but needs greater powers and the ability to investigate of her own initiative malpractice within the supply chain. Of particular concern are low prices in the dairy sector, where currently the adjudicator cannot intervene because this is an indirect supply chain.

Severe flooding of land threatens food security, as well as causing huge economic loss when houses flood. Some £5 billion is the estimated cost nationally of the December 2015 floods. Spending on flood defences is being hampered by not having a total expenditure budget through the merging of maintenance and capital spend into one operational budget. Maintenance spending should match the six-year spend the Government have announced on capital spending. Regular and effective maintenance, where appropriate, by way of dredging, desilting and clearing water channels of weeds reduces the risk of flooding. A whole catchment area approach, retaining water upstream, prevents flooding downstream, as we saw so successfully in the Pickering slow the flow project, demonstrating the effectiveness of more natural flood defences. The Government should encourage the use of greening money under the CAP to reward framers for retaining flood waters temporarily on farm land by reimbursing them for the loss of income in return for the public good they do. Abstraction policy reform will pose challenges for competing users: farmers, industry, rural businesses and other users, such as anglers.

The impact of rural crime on farming and the rural community is huge. There is theft on a grand scale of quadbikes and livestock, poaching and lamping. The cost of rural crime is estimated to be £800 million, which is equivalent to £200 for every household in the countryside. Fly-tipping costs farmers and rural firms up to £150 million a year in removing waste. A more visible police presence and speedier response times are called for.

We must see a greater supply of housing and affordable homes in rural areas. The planning issue, which is very vexatious, must be addressed while respecting the rights of those already living there.

The impact of Brexit on the rural economy, the potential loss of access to the single market, the subsequent imposition of tariffs, depending on what negotiations are in place, and the potential loss of support are causing great concern among farmers. The impact of the CAP on the rural economy has been considerable. The new greening provisions and the impact of graziers on common land must be addressed.

The cost of delivering public services is much higher in rural areas and the per capita funding for patients and pupils is often substantially lower.

Sitting suspended for a Division in the House.

In conclusion, I hope the Minister will realise that we need to spend more to deliver public services in rural areas to ensure that we have GPs who can act as community hubs; that we keep all the community hospitals we have; that farming, tourism and other rural businesses continue to have their roles to play; and that those living in rural areas will not be left behind and will have the same per capita spend on health, education and broadband services as those living in urban communities.

My Lords, I congratulate the noble Baroness, Lady McIntosh of Pickering, on securing the debate and her powerful introduction. I am really grateful for the timing of this debate because I want to speak about the rural economy and the massive part played by EU funds over the past few decades.

It is impossible to think about the rural economy without the part played by EU funds and I fear deeply for the economy of the UK if it votes for Brexit. Do noble Lords really believe that rural areas, with just under 20% of the population, will receive an equivalent sum from the Treasury in the case of Brexit? Some £2 billion in single farm payments, £500 million for environmental measures, and development funds such as LEADER have all been crucial to underpinning and developing the rural economy, whether through infrastructure or particular projects. The Treasury has never been keen to match the European funding even when such funding has been contingent on domestic input. That applies to successive Governments.

Rural businesses and villages, people living in rural areas and farmers themselves—who I think are very seized of the issue—need to understand that the Treasury will never come up with the sort of support that has made rural economies vibrant and healthy over the past few decades. Why not? As I said, it is because only 20% of the population lives in rural areas. It is also because it is hard, long-term work to invest effectively in sparsely populated areas. You get more quick bangs for your buck in urban areas and that is something the Treasury is very keen on.

When the CLA says that,

“the vital financial support provided to farming businesses and the wider rural economy must continue”,

I say to the CLA, “Dream on!”. The Treasury is never going to give the same level of support to lagging rural areas. The CLA really must get off the fence and campaign to remain, like the NFU, which I think has been very brave and clear-sighted and has clearly acted with its head. It is right because there will be a quadruple whammy for farmers: no more CAP; fewer willing seasonal workers; less support for infrastructure helping them to access markets; and much more uncertain export opportunities. Just take tariff export quotas. I ask the Minister: how would the UK negotiate if these had to be shared out? That is not a detail I have ever heard mentioned by the Farming Minister, George Eustice, who, ironically, is so keen on Brexit. I fear for food prices: I think they may rise.

In conclusion, there is so much infrastructure we need to worry about. It is all about how rural areas are going to keep their vibrant economies in the face of a massive lack of funding.

My Lords, I congratulate my noble friend on securing the debate and her forthright overview of the current situation. I remind the Committee of our family’s farming interests, which are on the register.

Successful agriculture, horticulture, forestry and fishing industries are crucial to the health of the nation in terms of locally produced food, the employment opportunities they offer and a countryside that is open to all. Farming is a foundation stone of the UK’s food industry. It is the fourth-largest exporting sector, worth some £97 billion, and in 2013 it provided more than 3.5 million jobs. The UK is the third-largest wheat and dairy producer in the EU, the fourth-largest beef producer and the largest producer of sheep-meat. Some 142,000 businesses are registered as farm businesses.

But all is not well. World commodity prices are low and some farmers are struggling to survive. Their plight is made all the more acute by the failure of the 2015 basic payment scheme and of the consequent queries for 2016. I hope that the Minister will clarify the current position and explain the reasons for the delays. We have received our full payment, and while others are waiting, part payments are at least some form of welcome relief.

We also need to ensure that disease in crops and livestock is kept to a minimum. Last year, the NFU and others, through their Healthy Harvest Report, campaigned for sound, risk-based regulation of plant protection products. The withdrawal of products, especially when there is no satisfactory alternative, risks crop yield losses. UK hop growers may number only some 60, but they are facing just such a scenario. Their crop is worth over £9 million. Hops are sold to brewers and traditional UK beers cannot be produced without hops. The brewing industry is worth in excess of £18 billion. I understand that hop growers do not have effective means to control pests in the way that they need.

Lastly, I continue to encourage more small businesses into rural areas. I welcome the new food and farming degree apprenticeships, the advances in technology, the sharing of expertise and the direct promotion of products. So much has been achieved, but there is much more to be done. There are opportunities to be taken, but in some areas even a minimum provision of broadband is needed and urgently required.

My Lords, my thanks go to the noble Baroness, Lady McIntosh, for securing the debate. I will focus on three areas that I believe are crucial to creating a strong, dynamic rural economy.

First, I underline the importance of affordable housing in creating sustainable rural communities at a time when rural house prices continue to be pushed well beyond the reach of many local residents. A failure to provide for local people and local families to live and work in rural areas leaves the rural economy seriously inhibited. An affordable housing supply, available to local workers on low and middle incomes, is an essential feature of the rural economy, providing homes, and, in many cases, workplaces for those who would work in rural areas. I wonder, therefore, whether the Minister could outline how his department intends to work with DCLG to unlock the affordable homes that are so desperately needed, particularly given plans to exclude smaller developments, which form the bulk of rural development, from starter home and affordable housing requirements.

The second area is one already alluded to by other noble Lords: broadband and mobile connectivity. According to the CLA, nearly 50% of rural premises cannot receive broadband higher than 10 megabytes per second, while only 31% of people living in rural areas can expect to get “all networks” coverage indoors. The Government’s commitment to a universal service obligation on broadband is welcome. Progress is being made, but I hope that similar promises will eventually be made on mobile coverage.

If the aim on broadband is to be achieved, however, investment in innovation is essential. I highlight the excellent example of WiSpire in the diocese of Norwich, which uses church spires in rural villages to transmit and receive broadband. We need lots of creativity about what we can do, yet the problem is that WiSpire is finding it very difficult to access funding and investment. That could make a significant difference. With that in mind, will the Minister tell us whether Her Majesty’s Government have plans to make matched funding and investment for broadband projects more widely available?

Finally, I want to talk about fostering a spirit of innovation. Across rural communities are many thousands of microbusinesses, often operating out of kitchens and on small premises, that form a vital cornerstone of the rural economy and provide opportunities of diversification to more established industries, such as agriculture.

As technology changes and sectors like the “sharing economy” develop—the rise of Airbnb is a good example—we need to ensure that rural communities are well equipped to take advantage of the opportunities on offer. Housing and connectivity are part of this, but it also requires that would-be entrepreneurs have access to the right advice, training and support. I draw Peers’ attention to the Germinate Enterprise course, which has been released by my colleagues in the Arthur Rank Centre and will be run though churches and community organisations. Can the Minister tell us what steps Her Majesty’s Government are taking to encourage entrepreneurs and business start-ups in rural areas?

My Lords, I speak in this short debate to add my continued support of economic growth in our rural areas, which at the moment contribute a fifth of England’s total economic activity, for future job opportunities and improved prosperity.

Promoting a strong rural economy will be enhanced with local neighbourhood plans in place which will encourage and support all types of businesses and enterprise, promoting the development and diversification of agricultural and other land-based small businesses where, on average, 29% of all businesses employ only up to nine employees.

Starter homes for first-time buyers are so important where they can connect the places where young people work with where they want to live. Local services and community facilities in villages, such as small local shops, meeting places, sports venues, cultural buildings, public houses and places of worship are invaluable and must be developed and supported. Where would we be without our village schools, often described as the pulse of a community?

However, there are many challenges facing rural life and one has to look back only a few short months to the flooding that not only affected market towns and villages but had a severe impact on agriculture and the confidence of businesses going forward. An area of importance is connectivity. Superfast broadband plays a significant role in supporting businesses. As leader of North Lincolnshire Council, I am pleased that we will have rolled out broadband by May this year to an impressive 95% coverage. I allude to the speech of the right reverend Prelate the Bishop of St Albans. We use lots of water towers and church spires as well to get that coverage across. It is a lifeline, too, for many people to have access to internet in their homes, helping to combat loneliness, which in turn can be a real health problem as many retired people live in our rural areas.

In supporting the rural health agenda, we have introduced and developed five well-being hubs, such as the one in Epworth where I live. It provides many choices of activities from Cook4life, fitness and singing for the brain to maths, with lunch clubs and GPs so that people can meet and gain support and information—not only to reduce that feeling of isolation but to meet new people and build new friendships.

Connectivity is highly important when it comes to education, and again, we in North Lincolnshire recognise that for many students where they live is a barrier to further education, so we provide free post-16 school transport, giving all our students real choices to further their education and where they wish to study.

Sustainable rural tourism and leisure benefit not only businesses but communities and visitors alike, so we must expand our visitor facilities in appropriate locations, making sure that they are all-inclusive for all to access.

As we embark on our devolution deal, harnessing all of Lincolnshire’s districts, where many have large rural areas, the much-needed extra funding which comes with that deal will kick-start our ambitious infrastructure projects which, I feel sure, aid and accelerate growth and investment. Collectively, we can attract more businesses while helping established businesses expand, bringing those much-needed new jobs to our rural economy.

Finally, there will always be challenges and we have to manage the risks, but local authorities offer significant support in making sure that wealth is created in our rural areas. I thank my noble friend Lady McIntosh for securing this debate, but I must say that I am not very keen on pigs’ trotters.

I thank the noble Baroness, Lady McIntosh, for her excellent introduction to this debate. I declare my interest as a dairy farmer in Cheshire.

Slightly hesitatingly, I have decided to speak today specifically to raise with the Minister his department’s announcement on the average farm gate price of milk for February 2016. The announcement led to an outcry from producers and industry organisations because Defra announced an increase in the milk price for February of an astonishing 10.8%—up by 2.4p to an average 25.57p per litre—when UK farm gate prices have been falling steadily since 2013. They are down 33% to a little above 23p, a price generally recognised to be below the cost of production.

I think I am on very safe ground to say that there has been no such increase. Reporting of this increase came about largely because the department appears to have bundled Arla’s annual 13th payment into the February milk price, despite the bonus accruing on milk produced for the whole of 2015 and regardless of the fact that less than half the money has actually been paid into farmers’ bank accounts as the rest went on paying AMCo farmers’ membership fee to join Arla.

When the industry is facing a crisis arguably much worse than the crisis in 2009, this announcement has given a highly contentious signal from the Government that there is an end to the crisis in the dairy supply chain and retailers. Will the Minister ask his department to reflect on what it is calling the 13th payment and how it is reflected in its reporting of average pricing? Will his department publish its methodology and open it to consultation?

I might question how his department arrives at a credible figure. There is a very complex jigsaw of pricing at the farm gate at present. Many dairy farmers have had their production supply capped so that any increase above the cap is paid at a B price several pence below the A price paid for the set quantity. Is the Minister confident that his department is able to analyse the complexities in the national milk supply and account for these effects in the average farm gate price? At a time when there is a general consensus that the agricultural sector in the rural economy is facing severe difficulties with many knock-on effects to allied trades, it is surprising that the department does not appear to reflect the true nature of the circumstances of one of its stakeholders—indeed, they could almost be called customers, if farmers could be described as such. The Minister’s clarification would be welcomed throughout the industry.

When the rural economy has such wide-ranging issues to address, I recognise that it is somewhat indulgent to bring up such a narrow matter.

My Lords, as a lifelong city dweller, I have no declarations of interest today, other than a non-declarable interest as a proud citizen of the United Kingdom who enjoys the beauty of our rural areas when travelling in England, Scotland and Wales, although I regret that I travel very rarely in Northern Ireland. When I represented Newnham, some residents seemed to believe that they lived in the country thanks to the proximity to the iconic Grantchester Meadows—not the Grantchester in Cheshire, but Grantchester Meadows.

My reason for speaking today is to highlight one of the issues touched on by the noble Baroness, Lady McIntosh, at the end of her introductory speech, namely the importance to the rural economy of British membership of the European Union, and to ask the Minister whether the Government have any idea—not necessarily plans—how common agricultural policy receipts would be replaced in the case of a vote to leave and what impact such a vote would have on agricultural exports and tourism.

Looking first at agriculture, as my noble friend Lady Miller said, under the common agricultural policy the United Kingdom received direct payments of £2.95 billion in 2014. Would the Government commit to replace such funding in the event of a vote to leave the European Union? If so, how, given that those who wish to leave seem to want to spend the money on the NHS? If not, what would the impact be on our rural communities?

Turning to trade, exports of food, drink and animal feed were some £18.9 billion in 2014. Our principal export markets were the Irish Republic at 18%, France at 11%, the US at 10% and the Netherlands at 7.1%. Leaving aside the United States, around 36% goes to European Union states. What assessment have the Government made of the impact on the agricultural sector in the event of a vote to leave resulting in UK exporters being on the wrong side of EU tariffs on agricultural products?

Finally, turning to tourism, at Questions on 18 April, the noble Lord, Lord Forsyth of Drumlean, expressed some incredulity at the idea that after a Brexit EU nationals would be less keen to visit our great country. I believe he is right—indeed, the devaluation of the pound that might follow Brexit may make visiting the United Kingdom even more attractive—but if we are so keen to regain control of our borders that we feel the need to impose visa restrictions on our erstwhile EU colleagues, might that not put people off coming to the United Kingdom simply because it will not be worth the effort? Have the Government any idea what impact that would have on the rural economy?

In the peninsula economy of south-west England connection is vital to ensuring good-quality local jobs and high levels of productivity and that all our communities, particularly those in the rural economy, can achieve their full potential.

What is taken for granted in most urban centres across England—a good road, a decent local bus service, a reliable train and an airport with a hub link—are scarce resources across large areas of Devon, Somerset and Cornwall. For us, the car is a necessity, not a luxury, yet even here services are contracting, as evidenced by the alarming rate of closure of small rural garages faced with competition from multinational petrol companies and supermarkets in never-ending price wars. However, what can rectify all this at a stroke and place businesses great and small, including the sole trader working from his or her third bedroom, on a national or international trading platform is broadband—I make no apology for returning to this—and a 21st century mobile telephone service rather than a 20th-century one.

The economic evidence is very clear indeed. In 2013, digital businesses grew at 12%, compared with growth of 4% for those not connected. Connected businesses are projecting growth four times faster than those that are not connected. By 2017, a lack of digital knowledge will mean that 25% of businesses will lose their market position. Digital access is drastically changing the knowledge economy to a point where 35% of jobs, many in the white collar sector, will be automated.

This problem has been recognised and is being partly addressed. Cornwall has received a superfast network, which means that it has more fibre per head of population than London. This is powering the economy of the poorest county in England by enabling many small and micro businesses to break into new markets and, importantly, by inspiring a new, young generation of entrepreneurs to enjoy exciting careers with a decent work-life balance. Many lower-cost public sector support services are being developed as a result, with huge potential in areas of remote learning. Cornwall has a realistic opportunity to break out of decades of subsidy as a direct result of this technology.

Would that this investment was reflected across the rest of the peninsula. Cornwall has the benefit of a significant European funding package but this does not apply to all areas. Connecting Devon and Somerset has enabled many areas to enjoy a level of digital access that will deliver a minimum of 2Mbps—which is an internet speed—to 90% of the area by the end of 2016. This programme has been funded through state aid, with up to £1.6 billion allocated to subsidise BT’s introduction of a fixed-line fibre network to a target of 95% of the UK. However, this has not silenced criticism about the rate of the rollout and the speed and extent of the service. A 2Mbps service is regarded as no more than a fig leaf when compared with many parts of mainland Europe, as well as with countries that are less developed than the UK. The Prime Minister, thank goodness, has got it and has now announced that access to the internet should be a right in 21st-century Britain secured by law under a universal service obligation regardless of where you live. We welcome this.

My Lords, I, too, congratulate the noble Baroness, Lady McIntosh, on tabling this important Question. I will make two points. The first concerns the economic and biodiversity damage done by the invasive alien species, the grey squirrel. Here I declare my interests as set out in the register; in particular, as chairman of the UK Squirrel Accord, which has 34 signatories comprising the four Governments within the UK, the relevant private sector bodies and the relevant voluntary bodies. The accord has twin aims: first, to promote the survival of the red squirrel; and, secondly, to try to do something about the great damage done to our broadleaf trees by the rapidly expanding population of grey squirrels.

The damage done by grey squirrels is caused by their ring-barking the trees. Trees aged between 10 and 40 years have their bark gnawed away so that the grey squirrels can get at and suck the sap. This kills the trees or, at best, kills them above the area of ring-barking, and causes the rural economy, according to industry estimates, tens of millions of pounds a year of damage to this very large and important industry. It means that for the oak, beech and other broadleaf trees in our country, there are no replacements coming up for the existing stock of old trees. People are stopping planting these trees and it is a big problem. The accord represents a determined effort to co-ordinate UK efforts, involving many scientists and others, to address this. The Minister is highly engaged and knowledgeable about everything and very generous with his time—indeed, Defra is a signatory—but I would like him to affirm his determination on this very difficult issue.

Secondly, I raise the England Coast Path. This admirable initiative of Natural England is going to produce 2,800 miles of coastal path around England by 2020. Last month a 60-mile section in Somerset was opened. It provides enormous benefits to the countryside through people coming to visit. Indeed, the South West Coast Path reports that it generates more than £400 million a year to the local economy. There is a second benefit to the nation in that going for a walk makes people healthier and this reduces costs and burdens on the NHS. There are various estimates of that running into millions of pounds. I ask the Minister to join me in congratulating Natural England on its energetic handling of this tremendous initiative, which benefits not only the rural economy but the health of our fellow citizens.

My Lords, I am grateful to my noble friend Lady McIntosh for securing this important debate today. I declare an interest as a member of the NFU, the Countryside Alliance and other similar organisations, and my younger son is a free-range egg producer in Lincolnshire.

Currently, agriculture is experiencing some of the toughest times seen for very many years. Pigmeat prices are atrocious and dairy prices are shocking, with overproduction of milk and milk products and a seriously depressed world market in which many export outlets have either diminished or been closed to us. Dairy farmers continue to leave the industry at an unprecedented rate, finished livestock prices are greatly depressed and it would appear that one of the very few positive agrisectors is free-range egg production, and that is really only because of cheaper cereals.

In general terms, considerable economic success has been achieved through wide diversification: conversion of redundant farm buildings to accommodation and offices; farm-shop retail businesses, many of considerable quality; equiculture; tourism—the list goes on. Angling and shooting more than play their part. Shooting and fishing are most important sources of revenue to the countryside economy, providing much-needed employment in both full-time and part-time jobs, often in areas where employment is very hard to come by and where land use is, at best, restricted. The benefits of both activities to the countryside are numerous. Both must be treated as tourism and, additionally, as a seasonal harvest of delicious, healthy, natural food for the table. Ever more top-end chefs are extolling the virtues of preparing and serving game products.

Both pastimes are becoming ever more popular. In particular, shooting brings into this country a considerable number of high-net-worth individuals, many from America. Their spend is very substantial indeed. I know: I shoot with them. Without the shooting sports—this is backed up by extensive research by the shooting organisations—investment in conservation, and hence the promotion of habitat in these often less-favoured areas, would simply not happen. For example, without the responsible and selective burning of stale, unproductive moorland areas to promote new heather growth, grasses and reeds would encroach and engulf the hill. Grouse numbers would tumble and a valuable source of considerable income to the rural economy would be lost. Without coppicing, headlands, wildflower meadows, beetle banks and myriad other regimes, habitat is lost to both game and wildlife. Unless we conserve and invest, we cannot reap the benefits.

With respect, I submit that the entire subject of the rural economy is far too diverse and important a matter to be restricted to a few three-minute offerings in a one-hour QSD. I implore my noble friend the Minister to persuade his colleagues to promote a full two-and-a-half-hour debate on this subject very early in the new Session.

My Lords, I rise in the gap very briefly to support what my noble friend Lord Shrewsbury just said. I wanted to put my name down for this but when I saw the list of speakers I thought that that would only delay matters. My noble friend the Minister is Deputy Chief Whip. It is high time the Government allowed time for a full debate on the rural economy, like we used to have. This is such a varied and complex issue. In fact, the noble Lord, Lord Grantchester, said it was a complex jigsaw. It has got a lot more complex in recent years and therefore I plea that we get a decent time for a good full-length debate.

My Lords, I am grateful to the noble Baroness, Lady McIntosh, for tabling this debate today and to all noble Lords, who have brought great insight and experience to it. Of course, if the Government were to be honest in their response, they would have to admit that things are not going very well. It is tough for working people trying to bring up families in the countryside today. Average annual wages are more than £4,500 lower than in urban areas and the gap between the two has grown by £1,000 since 2010. Rural communities have been the worst affected by reductions in public services. Energy, transport and childcare costs, for example, have spiralled. There are GP shortages in many rural areas. Educational attainment is lower than in the urban equivalents and, as we have heard, the housing crisis has hit rural communities hard, with prices rocketing and waiting lists getting longer.

In addition, the 600,000 small rural businesses in England and Wales are feeling undervalued by this Government, despite the fact that they contribute over £200 billion to the economy in England alone. As we have heard this evening, the number one cause of small business complaints is poor or non-existent broadband. It is time the Government got a grip on this. Will the noble Lord confirm that the target of 95% of the country receiving broadband by 2017 will be met? What is the answer to critics who say that the universal service obligation, far from being universal, will add a cost penalty to those living in very rural areas?

Finally, a number of noble Lords raised the economic plight of farming communities and, undoubtedly, it would be worse under Brexit. In addition, the problem of delayed payments from the Rural Payments Agency has come at a particularly difficult time. The recent Public Accounts Committee report makes painful reading, highlighting a failing IT system and a payments fiasco. Will the noble Lord confirm that these problems will be sorted before the next payments deadline?

Meanwhile, the dairy sector is caught in the perfect storm of global market saturation and a plummeting milk price, with a growing exodus from the sector. We all feel alarmed at the implications of this for our rural communities and for longer-term food sustainability. Clearly, one aspect of recovery would be to strengthen the labelling of milk products and to encourage consumers to buy British. Another aspect would be to strengthen the role of the Groceries Code Adjudicator to cover indirect as well as direct suppliers. Will the noble Lord give insight into his department’s longer-term projections for the UK dairy industry? I look forward to his response.

My Lords, I am more than grateful to my noble friend Lady McIntosh for securing the debate. A strong and vibrant rural economy is vital for the health and wealth of our national economy. At the outset I declare my farming interests and my rural background, which are in the register.

What is the current position? Rural areas contribute more than £200 billion to the English economy each year—around 17% of the total. They are home to nearly a quarter of all registered businesses in England and employ almost 20% of the country’s workforce. Some 76% of residents in rural areas are in work. There are more registered businesses per head of population in rural areas than in our urban areas, excluding London. I have to say to the noble Baroness, Lady Jones, that my politest words are that I dispute her accusation that the relationship between small businesses, rural businesses and the Government is poor. It is completely the contrary. My experience of having met many rural businesspeople around the country is that the environment which the Government seek to create for the economy is one that they identify with. Business start-up rates remain strong at 47 per 10,000 people. The rural economy is extremely diverse. Manufacturing represents 13% of gross value added from rural areas and the service sector is significant. Business services now represent 10% of rural output.

But this Government and this department agree that much more needs to be done. We want to help the rural economy achieve its full potential. Indeed, an increase in annual growth of just 0.1 percentage point would add around £500 million per year to rural gross value added. So the Government set out in the rural productivity plan, published last August, a range of measures. This relates to what my noble friend Lady McIntosh said in her wide-ranging speech, because so many of the features of rural life are so wide-ranging and they interconnect. Many areas of rural England are seeing improved broadband, mobile and transport connections. Wearing my former hat as DMCS spokesman, I very much agreed with what my noble friend Lord Arran said about Cornwall and the extraordinary impact that the enhanced connectivity in Cornwall, including the Isles of Scilly, has made. It has made a dramatic difference. Everyone can now access basic broadband speeds of 2 megabits per second—fast enough for online access to every government service, including CAP payments. Some 90% of UK premises now have access to superfast broadband and we are on track to reach 95% by 2017.

A number of your Lordships, my noble friend Lord Arran in particular, referred to the broadband universal service obligation. We and Ofcom are consulting on the introduction of that USO so that we have it in place for everyone by 2020. A broadband USO aims to provide a safety net for those without access to superfast broadband. Our ambition is to set the USO at 10 megabits per second. I am conscious—I declare an interest as I await a better service in my part of rural Suffolk—that we need to extend the mobile phone 2G coverage, allowing access to basic voice and text services to 90% of the UK land mass by 2017. I was reminded by what the right reverend Prelate and my noble friend Lady Redfern said of the use of church spires. The department entirely recognises the appropriateness of using church buildings; it wishes to use them and I hope that we might have a discussion. It might be a topic for one of the rural bishops’ meetings that we have in Defra. That would be extremely helpful.

We are also very conscious—the noble Baroness, Lady Jones of Whitchurch, was teasing this out, and rightly so—of the question of how we deal with the remaining 5% of premises that are in hard-to-meet and difficult areas. That is why we have deployed pilot projects in Wales, Northern Ireland, Scotland, Hampshire, Northumberland, North Lincolnshire, North Yorkshire, Devon and Somerset. These are to test the options of expanding to that final 5% of premises where the commercial case for investment is at its weakest. We all recognise the importance of this service, which is essential for all communities, whether urban, rural or suburban. This is something that we all need to have. Indeed, as entrepreneurship has been mentioned, it is essential for small businesses that rural areas can be part of that.

The Government are also seeking to improve the availability of skills in rural areas through better schools and more apprenticeships. Clearly, ensuring a skilled workforce in rural areas is vital to their future economic success. That is why the Government will increase apprenticeships in rural areas, including tripling apprenticeships in food and farming. The right reverend Prelate spoke of the need to expand the number of businesses in rural areas. In fact, as part of the productivity plan, 15 new enterprise zones in smaller towns and rural areas will give businesses the space to grow and the opportunity to take advantage of tax and planning benefits.

A number of your Lordships raised the issue of rural housing, and I was very conscious of my noble friend Lady Redfern, who is such a great champion of North Lincolnshire. We are committed to increasing the availability of housing in rural areas, allowing rural towns and villages to thrive, while promoting the greenbelt and the countryside. I can express my personal commitment to this. I should perhaps declare that I facilitated a rural housing scheme on the farm at Kimble. I am very much committed to this as a way in which we can assist villages to prosper so that the school roll remains vibrant and the hubs in the village community can continue. Thousands of families will also benefit from the 30 hours of free childcare that will be rolled out from September this year. Three of the eight early-adopter local authorities are in rural areas.

We also wish to devolve more decision-making to local areas, including devolution deals. My noble friend Lady McIntosh mentioned the northern powerhouse and other areas where the Government have been working. We are also seeking to ensure this in the west of England, greater Lincolnshire and the east of England. The Government also recognise the strong part that tourism plays in rural areas, and that is why we have set out measures to support tourism in our five-point plan. The noble Earl, Lord Kinnoull, spoke of the English coastal path. It is clearly very important for our well-being, but it is also important as a catalyst for tourism and all the knock-on positivity for economic growth.

My noble friend Lord Shrewsbury mentioned the contribution country sports make to the rural economy. Shooting alone annually contributes £2 billion and 74,000 jobs. I know my noble friend has experience of it. You only have to go to those very remote areas to see that shooting is one of the major economic contributors, if not the only one. Anyone who does not understand this ought to go to see it before they make observations. It is essential to those remote rural areas. I know many noble Lords would be very pleased to facilitate a visit from any of your Lordships who would like to take the opportunity.

Tourism relies on a beautiful and varied countryside—landscape—and trees play a pivotal role in it. I can confirm that the comments about the grey squirrel made by the noble Earl, Lord Kinnoull, chime with what Defra is seeking to do. There is no doubt that the grey squirrel is the greatest destroyer of trees. The arrival of this species has been a great disaster for our treescape, and we need to do something about it.

I am very conscious of the importance of a vibrant agricultural sector. It is at the core of the rural economy, generating £100 billion and supporting one in eight jobs. I have two minutes and a lot more to say.

It is our ambition to make the industry ever more a world leader. We are very determined to ensure that we have better procurement policies and that we enhance exports. The Secretary of State has just returned from the United States, promoting British food and products. I particularly want to take on board what my noble friend Lady Byford said about beer and hops. The whole basis on which the department works on pests is to receive the best scientific advice available: that is the basis on which we make decisions. We are in the year of great British food. Where there is a contribution that we need to make, including opening up beef exports to America and Japan, there is a lot going on in the department across the ministerial team.

The noble Lord, Lord Grantchester, mentioned the dairy sector in particular. Given the time, I can say only that we are certainly not complacent. I am very glad that the noble Lord raised this, because dairy farming is at the heart of farming in many rural areas, particularly on the west side of the country. We need to work as hard as we can to support the dairy industry. I do not have time to go into Brexit and so forth, but I say to the noble Baronesses, Lady Miller of Chilthorne Domer and Lady Smith of Newnham, that the package received from the European Commission —£26.3 million of aid to the dairy farmers, which was paid out in November and December—is an indication of the sort of community support we receive. Indeed, the new system of tax averaging introduced this month will help farmers. I am very conscious of the need to help the farming industry.

Unfortunately, there is more to say but I will take away all that was said on rural-proofing, which the review by the noble Lord, Lord Cameron of Dillington, was all about. Having once achieved a two and a half hour debate on the countryside, I will take away what my noble friend Lord Caithness and others have said about the need for a debate. The countryside is very important to us. It is in the national interest that we have a vibrant rural economy. We should respect its traditions and its way of life, but surely our objective is to unlock the enormous opportunities that there still are for the rural economy. I am most grateful to noble Lords and I will take back all that has been said and write to them.

Committee adjourned at 7.02 pm.