WEDNESDAY 28 NOVEMBER 2007

Ms Fiona Bryant and Mr Ian Baker

  Q363  Chairman: Can I both welcome you and thank you for finding time to produce the written evidence that we have had and for coming along today and talking to us. There is a little formality that I have to go through and explain that this is a formal evidence taking session; there will be a record taken—you will get a copy of it afterwards to correct if any errors have slipped in. We are webcast so that there is a possibility that somebody might hear what you say. I usually make some crack about some sort of insomniac, but we have actually found that the odd person does—and by the use of the word "odd" it does not mean that they are strange, but the occasional person listens to these things. If you would like to make a brief opening statement that might be helpful and then we could get on to our question and answer session around the table. Could I clarify one thing? The paper is formally in the name of the Eastern area RDA but does it represent the views of the RDAs as a whole?

  Ms Bryant: Yes, it does. It was submitted by the East of England Development Agency in their lead role for this agenda, but it is on behalf of all the others.

  Q364  Chairman: It is useful to have that clarified at this stage. Over to you.

  Mr Baker: Just to emphasise the fact that we are here on behalf of all the RDAs. I am here for Advantage West Midlands, which is the West Midlands Regional Development Agency, and both the original evidence and our response to the questions that you have kindly provided for us today have been consulted around the whole of the RDA network. By way of an opening statement, which I will keep brief, one of the things that we most want to see from the Common Agricultural Policy moving forward is not whether we cast it on common agricultural, or rural policy lines but that it does provide a basis for strong, sustainable farming businesses, which make their connections, locally, make their connections to the market, and to those things that society requires of the land in the wider sense. Those things will include things around environmental management, which is a strong component of the current rural development programme, increasingly elements of quality of life and new agendas which will become increasingly important such as climate change. I think particularly with climate change we have really only scratched the surface of what this measure can provide. We want to see the vision of the dynamic mechanism which can foster change within the land based sector, and the Common Agricultural Policy is that mechanism to foster that change because there is no other real way in which we can produce change. Agriculture is a private sector enterprise; regulation plays a strong part but it is not a state enterprise, so that the CAP is the major mechanism. We do see that long term change is required to get farm businesses in the land based sector closer to the market and closer to what society requires, but we need flexibility within that policy. So by way of an opening gambit that is really where we see the Common Agricultural Policy going.

  Q365  Chairman: Do you want to add anything?

  Ms Bryant: No, I am very happy with what Ian said. I should just perhaps say on my own behalf that actually outside of my day and evening job for the RDA I do actually farm and I am in receipt of Pillar I payments, but today I am very much here in my RDA job.

  Q366  Chairman: Thank you very much. Let me start the ball rolling. Your evidence indicates that the RDAs wish to maintain a land based industry that produces—I think the words you use are safe, high quality and wholesome products in a sustainable way, and it is quite difficult to disagree with that, is it not? Could you indicate, looking forward at the industry developing along those lines, how it would differ from the agricultural industry that we have at the moment? What would it mean in terms of farm sizes, the number of people employed and the location of production? How do you see outputs changing?

  Mr Baker: We see that there is potential for farm businesses to operate as much at the local level as they currently do and at the national level because a lot of our farm businesses are feeding into national and international markets and into national and international supply chains. Sir Don Curry and the Curry Commission made it very clear that the future for a sustainable farming and food sector was one based very much on one that made far greater connections, both to the needs of the communities and society as a whole, and making those connections at a local level so that we are talking about reducing food miles and perhaps even talking about food yards in the longer term, where food can be produced in local communities and communities can make much better connections to their local farms. Where entrepreneurship in connection with the land based sector is promoted, so that the sort of opportunities we are talking about with regard to the climate change agenda, where we are looking at management of energy, management of waste, management of flooding, adaptation and mitigation, those can be addressed very largely at the local scale as well as some of the bigger national mechanisms. The farmers have that potential to operate with their local communities and to offer, for instance, energy solutions such as biomass and supply chains, which do support the local school, the local community centre and local sheltered housing. We are just scratching the surface at the moment in terms of what can be produced. In Sweden (we do some work with some other regions from around Europe and take a more farsighted approach to what the current EAFRD measure can produce) the Swedish Farmers' Union are covenanting with the government in return for the payments which are being made to provide 20,000 new jobs to meet the sorts of agendas we are talking about, so be that local energy, be that local food provision, be that services to local communities, I think that potential is here as well in a far more populous country than is the case in Sweden of course. In our region—because as well as talking on behalf of the RDAs of course Fiona and I know our own regions best—37% of our farm businesses are diversified. That percentage—and we have the lowest percentage of any English region—varies widely and so in the southeast you have 73% of all farm businesses are actually diversified. But in the West Midlands, of that 37% who diversified 90% is about hiring out buildings and letting buildings for various uses. So the potential for using land as opposed to the buildings which sit upon land is really unrealised by nine-tenths of our farm businesses in our region, and I would say that it is not far off that in other regions. So we see that the potential of the Common Agricultural Policy to foster change to the needs of society is as yet unrealised. EAFRD has the potential to move land based businesses on. Potentially the land based businesses and the land based sector we see is huge in comparison to what has already been achieved to previous attempts to diversify the sector. We think that the EAFRD can be used in a more flexible way this time than was the case with the ERDP before. There are problems with the way that we have implemented it in this country, we feel, and we can discuss those a little later; but we do see that if we are going to meet these agendas like climate change that the Common Agricultural Policy does need to be made even more flexible than it currently is because it cannot at the European level or even at the national level produce a prescription which is going to apply in all circumstances and which is going to provide you with the best way of developing your potential at a single farm community or a community level. So we are looking for more flexibility from what comes out of the future reforms.

  Ms Bryant: You added to your question a bit about the change in structure. There is an ongoing trend in terms of increase in size. We already in the UK obviously have the largest average size of farm businesses. There is a trend towards and there has been a trend towards particularly increase in size to meet economies of scale, but I think what might be changing in the future is whether that is from the sale of land or whether it is simply from a change in management procedure. We do need to ensure that within the Common Agricultural Policy there is the potential to support better progression both in and out of the industry, but we are looking at the need for businesses to collaborate together more and collaborate with other sectors more to meet market demands, and I think we will see a change in the management potential not only in individually owned businesses getting together to collaborate but in individuals managing larger tracts of land in collaboration where farmers have looked to retire but not sell, for example. In terms of location and production I think we ought to be seeing both location and investment actually on the farm, but also in joint projects with things like communities, as Ian has mentioned, so the actual investment may not be on the farm but the benefit to the industry will be the same as if it were because it will be benefiting what industry is there to look for. In terms of mix and level of output, what we would like to see is an industry which combines its contribution to the production of food, its contribution to the production of environmental products, its adaptation and mitigation to climate change, both challenge and opportunity, but also maximising its contribution to the growth of the communities and the urban areas around it and making that more explicit and making the industry be seen as a bit contributor to the actual growth and the competitiveness and the success of quality of life of those communities around it. So I think in terms of changing the way we look at outputs is actually looking at it as part of the larger areas, and I think there will be a different mix in terms of the types of crops grown, in terms of the livestock, in terms of the market development and that type of thing. I think the industry just needs to move forward and effectively follow what Ian has said, to focus on change to meet a different market in the future. It already is but I think the progression needs to move further.

  Q367  Chairman: What do you think the effects would be—and I use your phrase here—of the land based industry? Would it impact on the number of people employed, looking forward?

  Ms Bryant: I think that the current trend over the last ten years has actually been quite marked in terms of things like machinery and labour efficiencies, meaning reductions in the number of people employed in farming in our region. We have seen a reduction in 10,000 jobs, something like that, over the last ten years. But I think the changing requirements, the move away not just into what might be seen as traditional diversification but actually meeting some major new opportunities in major global markets, major regional markets and local markets means in fact that there is a slowing down of that trend in that actually businesses and jobs are being created both on the farm and on the link locations to farm businesses, and the growth in job creation and the potential growth in job creation in the future and in job security is actually slowing that trend and has the opportunity to do so even more.

  Chairman: Lord Plumb.

  Q368  Lord Plumb: I was interested in your definition of flexibility. The farmers receive payment under Pillar I and the farmers receive payment under Pillar II with their entry level schemes and whatever it may be. Are you suggesting a mix and match between the two? Is this where you are going? And if you are I tend to agree with you.

  Mr Baker: That is comforting. We said in our evidence that we do see a progressive move from Pillar I to Pillar II payments because we have seen through the flexible measures that we are able take advantage of the opportunities that might exist, for instance for creating a new biomass supply chain which will enable a local community to use the local woodlands to provide heat and power to important facilities. You cannot do that certainly through Pillar I and the degree to which we can do that through Pillar II is going to be limited because the resources are so relatively limited if we are going to do that in all the communities where there is potential; so, yes.

  Q369  Chairman: Can I just go on to public benefits? You are pretty hard nosed about the focus of capital; it should be very much focused on public benefit. Briefly, what sort of public benefits do you have in mind? Secondly, is there any other justification for the support of agricultural production other than public benefit?

  Ms Bryant: I think the perception of public benefit normally within this sort of arena is very much seen as the public benefit of stewardship of the land, and I have to say that the RDAs do not take that position; what we are referring to in the public benefit is much wider than that. So it could be a combination of things. It can be management of the land; it can be, for instance the wider need to address mitigation and adaptation to climate change, which obviously is of public benefit, and is not covered by environmental stewardship per se. It can be public benefit in terms of the potential to support local ways of addressing energy and waste management and actually reducing landfill, for example. It could be, looking at the wider amenity, quality of life, recreational ability. But it could also mean in terms of benefit to the public in terms of safe, secure production of food and access to food; it can mean the competitive and successful businesses that are out there in the countryside that are actually producing that food. So I think for us probably yes, the focus should be on public benefit but for us that public benefit can mean a very wide range of things.

  Mr Baker: And that public benefit can also be about the process of change. So, the example I used of creating a biomass supply chain, we would not see the long term support of that biomass supply chain being a role for the Common Agricultural Policy, but it could be the role to put it in place and ensure that people have the right equipment and skills set to get themselves going and then you have a sustainable and viable business to take it forward.

  Chairman: Baroness Sharp.

  Q370  Baroness Sharp: As you have been explaining you have been focusing very much on the business aspects of rural development, indicating that the environmental issues are dealt with, as you say in your paper, by Natural England and the Forestry Commission. To what extent do you anticipate the provision of ecological services—how far will they become a new major output of the farming industry? At the same time, can I ask you if you could expand a little more on your views about the possible contribution towards climate change that you were talking about and the impact that climate change might be having on rural industries in this sense?

  Ms Bryant: I would just like to clarify the wording that we submitted in our written submission, which was not intended to suggest that we were ignoring the environmental side of it. We were specifically referring then to the rural development programme for England, and simply saying that we are responsible for delivering the socioeconomic part of that and that Natural England and the Forestry Commission are responsible for delivering specifically the environmental parts. We have worked very hard together in the regions to come up with single integrated regional plans, and certainly from the RDAs' point of view we already have and continue to recognise the opportunities of the economic potential in environmental assets. What we would like to say is that actually there is already provision of ecological services but we would like to underpin that by saying that ecological should not just mean biodiversity; it is much wider than that in terms of the efficient use of resources, the potential use of carbon capture storage and sequestration in rural development for example. So I think that moves into your supplementary question really, in that actually the rural areas are key elements in meeting and bringing solutions towards mitigating and adapting to climate change potentially in terms of adaptation of the use of land, the move towards crops which are better adapted, for example, to climate change and the ability to use land management in addressing the onset of flood risk or managing flood risk, for example; but also a huge opportunity, whether that is reducing CO2 emissions through waste management, through addressing diffuse pollution, through providing renewable energy and a number of other areas of activity.

  Q371  Baroness Sharp: Do you see the development of the whole concept of food miles, which has been entering into discussions recently, and do you see rural areas meeting local community needs in terms of food to a greater extent?

  Ms Bryant: There are a number of issues around that. There is actually evidence to suggest that it may not always be the right thing to look at the food miles issue, in terms of there is evidence to suggest that there are lower carbon CO2 emissions in a product that may have come from abroad than there necessarily are within the supply chain within the UK at the moment. So we have to be careful in that. On the other hand, I think it is important for the industry to be recognised as innovative and as providing a high quality product in a global market place. But certainly there are huge opportunities which will address not just the business sustainability of the industry but also contribute to quality of life, social inclusion and other things in maximising the potential for those local and regional markets. That is not just about food; that is about energy, it is about other products like construction materials and other products that are produced on a farm that are not necessarily seen by the public at the moment as being linked necessarily to land based industries.

  Mr Baker: Why I made the comment about food yards rather than food miles earlier on, because it is possible to construct a mechanism where you consume a lot more carbon by shuffling around regional produce because you have a lots of little white vans running around, rather than by the very efficient and highly sophisticated approach to food we have at present; and why by making specific connections between farmers and their local communities—where you are not going off to a distribution centre 40 miles away and then back again—that more local connection has a potential. But it does require both parties to sign up to that, and there has to be enthusiasm on both sides. I would like to go back to something in the earlier part of the question about climate change, and about the perhaps hard nosed approach we may take. If climate change is the top priority for the government and for us as a society to address I think we do have a right to see more of a relationship between meeting that agenda and the principal environmental measures which are available to land management. We would say that the environmental stewardship schemes do not address climate change issues; they are primarily to address the biodiversity issues, and I think there is the potential to look at the entry level scheme and the high level scheme in terms of the role we can play in meeting what we see as a very key agenda. But at the moment the biodiversity focus is not really having an impact there.

  Q372  Baroness Sharp of Guildford: You are thinking particularly perhaps of bio fuels there, are you?

  Mr Baker: It is not so much about bio fuels but the production of biomass.

  Q373  Baroness Sharp of Guildford: Biomass for bio fuels.

  Mr Baker: Yes, which is more about going into local production chains rather than the bio fuels, the liquid bio fuels where much bigger global market forces come into play.

  Q374  Baroness Sharp of Guildford: One final question. I come from Guildford, which is in the southeast region and would your move towards rural businesses involve substantial changes in planning law?

  Mr Baker: There does seem to be a clear alignment between the sort of changes we expect to see in rural areas and the planning frames within which they exist.

  Q375  Baroness Sharp of Guildford: In my part of the world the green belt is sacrosanct, as you realise, and there is a lot of feeling about developments that might take place there.

  Mr Baker: The green belt is becoming a bit more of an issue for the lobby groups, is it not, and the CPRE, the National Trust are all thinking a bit harder about the roles that the green belt can play, and indeed I think Natural England is thinking hard about the role it can play. Perhaps as an asset for society it is under-utilised in the sorts of roles it does play, and it is some of the most valuable land in the country in terms of the roles that it can play for the community, for society and yet some of the worst managed and most blighted land in the country at the same time. So we would see this as a role for much more proactive and linked-up planning in development.

  Ms Bryant: In terms of examples that underpin that Ian has outlined, for instance in our region we are currently the leading region for renewables and are in line to meet our targets by 2010. But obviously in terms of meeting climate change we are currently living somewhere in the region of three planets rather than one and we have an aspirational target to reduce that by 60% by 2030 instead of the 2050 that is currently the government target. In order to do that we need to realise our potential in renewables and so far every single planning application for an onshore wind farm this year in the region has been turned down at committee. Rightly or wrongly they were all turned down not on very specific planning reasons; and rightly or wrongly wind may not be the answer to everything but we do need to ensure that the government policy driver for climate change, the use of renewables, the portfolio of energy needs to be backed up by a coherent and a live time framework. We are hoping that sub-national economic development and the development of the single regional strategies, which will have more coherence between the economic development and the spatial planning side, will help to put some of that in place, but obviously there is also work to be done on the national framework side.

  Chairman: Absolutely right but I think for us today it is the CAP Health Check on which we are focused. Lord Cameron.

  Q376  Lord Cameron of Dillington: Good morning to you both; it is nice to see you again. I want to talk about rural development and in particular the European Agricultural Fund for Rural Development, the EAFRD. In your evidence you repeatedly emphasise the need for a strategic approach to rural development. I would like first of all to establish exactly what you mean by that and how you see the rules of the EAFRD clashing with that strategic approach?

  Mr Baker: To start with I think the strategic approach is one which is coherent with the strategic approaches which exist for other sectors and, taking the point that Baroness Sharp was making, coherent with the spatial planning which exists at the local and the regional level. So what we felt—and I think our evidence makes this clear—the previous schemes were a wee bit deficient in that they were national prescriptions which paid very little heed to what was important locally. What we are able to do with the Axis 1 and Axis 3 funds through the new Rural Development Programme is to tie much more closely to what is important locally and what is important regionally. So, take for instance, the biomass developments in our region. We use less than half of the timber growth per annum, which actually goes into any sort of production or any energy supply chain, and through the development of biomass supply chains we see that we can take up much of the rest of that growth. That same circumstance will not exist in every other region—it will be more in some and maybe not at all in others. But we know that that is a priority and an opportunity for our region. You cannot do that from the national level, you have to drive that from the local level. If you are looking at the opportunities that a particular community might have again, for instance, a community may see that it wants to do something very proactive about climate change—and in Woking and Ashton Hayes there are two communities that really want to get hold of that agenda. You can run with the grain of what local communities want to do and it is much, much easier to put that sort of thing in place if you have flexibility and a local strategic approach which can respond to those sorts of opportunities.

  Q377  Lord Cameron of Dillington: So your strategic approach is not a stepping back it is a moving down to more local level.

  Mr Baker: It is getting closer to the things that matter.

  Ms Bryant: I think it is developing solutions to follow what the required need is. It is moving away not from the ideas and innovation and entrepreneurship of individual businesses but it is setting out a very clear steer about what is required in the regions at local level, and it is actually facilitating those projects to come forward and join up, where individuals might have been looking to act before actually joining up to give them a greater benefit as well, and obviously provide better efficiencies in the public sector as well.

  Q378  Lord Cameron of Dillington: How do you see the four Axes of the EAFRD? What change of rules there would you like to see, either in terms of European or even UK government implementation of the same? And what reforms of the EAFRD might you like to see?

  Ms Bryant: If I can start on that? For us the EAFRD gave a better policy steer in terms of taking the four Axes and in terms of emphasising the need to integrate between them and to address sustainable development as a whole, whereas previously there was a much greater division of policy in terms of the environmental, economic and social. I think the RDPE—and, to an extent, this starting at the EU level—the issue has been in matching the policy or not matching the policy within a regulatory framework, which has actually taken a much greater degree of prescriptive-ness in terms of control and implementing measures, in terms of specifying very closely not only what is allowed to happen, which obviously builds on Ian's need for flexibility, but also how it happens and how it is reported on, and that has actually done more damage to send those Axes into their silos than was intended by the policy framework. On top of that, at national level, as Ian has already described, the allocation of the funds and the use of the greater part of it in a very national prescriptive scheme rather than the ability to use the funding flexibly to meet regional needs right across the Axes has actually added to that problem. Whilst we still maintain that we will work with the delivery of these to try and integrate as far as possible it is a much more difficult job than the Rural Development Regulation intended it to be.

  Mr Baker: The EAFRD, was intended to work across all four Axes. Our ability to bring forward integrated sustainable rural development solutions which do bring in the environmental, social and economic together has been undermined—and I use the word carefully—by the decision to put the vast majority of funds into the entry level scheme, where there is no flexibility. Obviously with the high level scheme there is a lot more flexibility and with the HLS you can achieve a lot more in tandem with the Axis 1 and Axis 3 measures—and obviously Axis 4 as well—but the entry level scheme does not give that opportunity. I omitted it from an earlier answer because I focused on the supply side of where we saw the strategic approach going, but it is also about being market led and those markets do operate at the regional, sub-regional level as well. For instance, in our region there is a significant market in the automotive sector and we are working with a Warwick Manufacturing Group and looking at bio composites of plant origin, which could provide a significant niche for new developments and crops going into the manufacturing sector, where they have a much higher value than just going into the commodity market. So those are the other sorts of things where a strategic approach, where we can guide more development in a way that will make a difference.

  Q379  Lord Cameron of Dillington: Presumably both of you would prefer to see more funds going into business development, ie Axis 3—

  Mr Baker: Axes 1 and 3.

  Ms Bryant: There needs to be a balance, there needs to be a recognition in order to achieve not only the results desired by the UK government in terms of increasing environmental management but also the value added to that in terms of the private sector investment, and there needs to be a recognition that you need a sustainable business base to deliver those outcomes that they are looking for.