Farming in the Uplands - United Kingdom Parliament - Parliament.uk

House of Commons Environment, Food and Rural Affairs Committee

Farming in the Uplands: Government response to the Committee's Third Report of Session 2010–11 Fourth Special Report of Session 2010–12 Ordered by the House of Commons to be printed 27 April 2011

HC 953 Published on 4 May 2011 by authority of the House of Commons London: The Stationery Office Limited £0.00

Environment, Food and Rural Affairs Committee The Environment, Food and Rural Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Environment, Food and Rural Affairs and its associated bodies. Current membership Miss Anne McIntosh (Conservative, Thirsk and Malton) (Chair) Tom Blenkinsop (Labour, Middlesborough South and East Cleveland) Thomas Docherty (Labour, Dunfermline and West Fife) Richard Drax, (Conservative, South Dorset) Bill Esterson (Labour, Sefton Central) George Eustice (Conservative, Camborne and Redruth) Barry Gardiner (Labour, Brent North) Mrs Mary Glindon (Labour, North Tyneside) Neil Parish (Conservative, Tiverton and Honiton) Dan Rogerson (Liberal Democrat, North Cornwall) Amber Rudd (Conservative, Hastings and Rye) Nigel Adams (Conservative, Selby and Ainsty) and Mr David Anderson (Labour, Blaydon) were members of the Committee during this inquiry. Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk. Publications The reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/efracom Committee staff The current staff of the Committee are Richard Cooke (Clerk), Lucy Johnson (Second Clerk), Sarah Coe (Committee Specialist—Environment), Rebecca Ross (Committee Specialist—Agriculture), Clare Genis (Senior Committee Assistant), Jim Lawford and Anna Browning (Committee Assistants), and Hannah Pearce (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Environment, Food and Rural Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5774; the Committee’s e-mail address is: [email protected]. Media inquiries should be addressed to Hannah Pearce on 020 7219 8430.

Government response to the Committee’s Third Report of Session 2010–11

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Fourth Special Report The Environment, Food and Rural Affairs Committee reported to the House on Farming in the Uplands in its Third Report of Session 2010–11, published on 16 February 2011. The Government response to the Report was received on 19 April 2011.

Government response Introduction The Government is grateful to the Environment, Food and Rural Affairs Committee for its Report ‘Farming in the Uplands’ (February 2011) and for its recognition of the economic and social challenges, and opportunities, faced by hill farmers and wider upland communities. The Government has carefully considered all of the recommendations made by the Committee, and this document sets out its response to the Committee’s Report. In view of the wide ranging nature of these policy areas, this response has been compiled with important contributions from the Department of Energy and Climate Change (DECC), the Department for Communities and Local Government (CLG), the Department for Culture, Media and Sport (DCMS) and Broadband Delivery UK (BDUK). The English Uplands are nationally and internationally important for the value of their landscapes, biodiversity, agriculture, recreational opportunities, archaeology, and cultural and natural resources. The uplands face all the challenges that characterise much of rural England, such as a lack of ready access to services (including transport and broadband) and affordability of housing and energy. The Government has recently completed a review of policy affecting the uplands in order “to identify the framework conditions which will enable the English Uplands to become more economically, socially and environmentally sustainable”. The Uplands Policy Review was launched by the Rt Hon Caroline Spelman MP on 10 March 2011. This landmark statement sets a new course for the Government’s approach to the English Uplands, which will involve a very wide range of partners across society: farming and other businesses, local government, statutory bodies like National Parks, or voluntary bodies such as the National Trust and the RSPB. The 23 commitments to action set out in the Uplands Policy Review can only be delivered by all these partners continuing to work together to help create a sustainable future for the uplands.

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Response to Conclusions and Recommendations Commission for Rural Communities 1. We are concerned that, following the abolition of the Commission for Rural Communities (CRC), there is a real risk of a diminution in rural expertise within Defra and across Government. (Paragraph 14) The Government does not accept that the new arrangements for the delivery of the rural policy function represent such a risk. Defra already had a considerable degree of in-house experience and expertise in rural issues, and the new Rural Communities Policy Unit builds on this by significantly increasing the Government’s rural capacity. The new Unit includes 12 staff members from the CRC and 4 from other parts of Government with rural responsibilities. It will act as a centre for rural expertise, supporting and co-ordinating activity of critical importance to rural communities across government, and working to ensure that the needs and interests of rural residents, communities and businesses are fully and fairly addressed in all policies and programmes. In addition, a streamlined Commission for Rural Communities will work alongside and complement the Rural Communities Policy Unit until the CRC is formally abolished, subject to legislation. It will act as a critical friend to the expanded Defra team, assisting in the transition to the department as the single source of rural expertise within Government. This focusing of rural policy expertise will remove duplication, improve efficiency and enable resources to be more effectively targeted on securing practical outcomes for rural communities. 2. The Secretary of State told us that the new arrangement would provide “a stronger champion for rural issues at the heart of Government”. However, we recommend that Defra set out in clear and unambiguous terms how its Ministers and Rural Communities Policy Unit will build their capacity and expertise in relation to rural issues and how they will provide the degree of ‘challenge’ across Government to act as effective advocates for rural communities. We further recommend that Defra’s Rural Communities Policy Unit be required to: • • •

work across Government to ensure policy is ‘rural proofed’, make its work accessible to the public, and continue the data collection and analysis work of the CRC. (Paragraph15)

The Defra Ministerial team, and in particular the Parliamentary Under-Secretary for Natural Environment and Fisheries will champion rural needs and interests within Government. They will work closely with colleagues in other departments, for example through the Parliamentary Under-Secretary’s current programme of rural bilateral meetings, to ensure that the needs of rural residents, businesses and communities are properly understood and taken into account in policy-making. They will also work with Local Government and civil society organisations to encourage and promote improved provision of support and services in rural communities.


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Before summer 2011, the Government intends to publish a Rural Policy Statement which will provide further information about its plans to address rural needs and interests over the rest of this Parliament. This Statement will underline the Government’s commitment to the fair treatment of rural people and places in all of its policies, and outline its aims and objectives for rural communities across a broad range of policy areas, including broadband, housing, health, education, economic development, fuel and energy, transport and services. The important role of localism and the Big Society in addressing rural needs will be suffused throughout. The Statement will also provide further details about how the Rural Communities Policy Unit will operate, including its role in promoting the effective rural proofing of policies and programmes across government; its commitment to operating in a transparent and inclusive manner; and its work to utilise its substantially expanded rural evidence, statistics and intelligence capacity to build and maintain a strong rural evidence base. 3. Fulfilling these requirements should be included in the objectives of the Head of the Rural Communities Policy Unit. (Paragraph 15) The Government agrees that the objectives of the Head of the Rural Communities Policy Unit should focus on the delivery of its rural policy priorities. These will be set out in greater detail in the Rural Policy Statement and an associated business plan, but will certainly include the promotion of rural proofing, the transparency of the Unit’s operations, and success in developing a new consolidated evidence base. 4. Defra should, within six months of the final winding up of the CRC, publish an assessment of the work of its Rural Communities Policy Unit and an analysis of the overall savings achieved in providing Defra’s rural policy and statistical work as a result of abolishing the CRC. Following publication of that report this Committee will wish to scrutinise the work of Defra’s Rural Communities Policy Unit. (Paragraph 16) The Government intends to publish regular updates of the Rural Policy Statement, including details of the work of the Rural Communities Policy Unit and, where appropriate, progress reports on how various government policies and programmes have impacted upon rural residents, communities and businesses. A separate analysis of the savings achieved as a result of abolishing the CRC will also be produced, currently estimated at £4.5m per year. The Government welcomes the Committee’s intention to scrutinise the work of the Rural Communities Policy Unit, as it underlines the importance that is, and should be, attached to the needs of those living and working in rural areas.

Defining the uplands 5. We consider the uplands landscapes and communities to be sufficiently exceptional and distinct to merit particular attention from Government. We recommend that Defra revisit the question of setting out a statutory UK or England-specific definition of ‘uplands’. A clear, statutory definition would assist the department in targeting policy and data collection. Such a definition might use a similar classification to those currently used in European regulations to define Severely Disadvantaged Areas and

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Less Favoured Areas. A Natural Environment Bill, which may arise from the anticipated Natural Environment White Paper, may provide an appropriate legislative opportunity to create a statutory definition for the uplands. (Paragraph 21) 6. We are concerned that, in their current form, the European Commission’s proposals for new criteria to assess Less Favoured Area (LFA) status would exclude significant areas of England from the additional support they currently enjoy and will continue to require. In particular we would not wish the criteria used for any new classification to exclude areas currently designated LFAs, such as parts of the South West of England whether on the basis of altitude, climatic conditions or any other factor. We therefore urge the Government to put up a robust defence of the English uplands in its discussions with the European Commission. (Paragraph 24) There are no plans for a UK or English statutory definition of the “uplands”. The domestic Severely Disadvantaged Area classification is used in England for policy purposes, such as the Single Payment Scheme regions and eligibility for Uplands Entry Level Stewardship. The Government also uses for some monitoring purposes the definition of “Less Favoured Area” (LFA), a European designation currently used to define areas with natural and socioeconomic disadvantages. For example, Defra’s 2009 Upland Farm Practices Survey subdivided the English LFA into nine regions (based on groups of National Character Areas) for reporting purposes, recognising that each region has its own unique characteristics and that agricultural practices can vary significantly between regions. The LFA is also used to determine eligibility for rural development measures in other parts of the UK. The Government is fully engaged with the European Commission review of LFAs, and are continuing to push to ensure that proposals for redesignation criteria are appropriate for the UK and able to capture naturally handicapped agricultural land (including where land is affected by our maritime climate). We are also working with other Member States to identify areas of common interest, ahead of publication of formal proposals for redesignation. However, in the current CAP framework, any changes to the LFA criteria that are agreed would not have a direct impact on the support English farmers receive.

A new national strategy for the uplands 7. Mindful of our witnesses strictures that it is time to “get on with it”, the Government should set out an uplands action plan; setting out its policy objectives, the specific action to be taken to achieve them, by whom, the timescales for implementation and the scale and source of the resources available. The action plan should address the breadth of issues considered in High ground, high potential, allow for flexibility of approach to reflect the variation between upland areas and encompass action to be taken by each Government department. (Paragraph 29) The Government recognised from the moment it took office the critical importance of the English uplands and set out an objective within the Defra Structural Reform Plan (SRP) “to develop affordable measures of support for hill farmers”. Recognising the Commission for Rural Communities’ report High Ground, high potential and a number of other valuable contributions to the uplands debate, in March 2011 the Government published the


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conclusions of its Uplands Policy Review. The Review looked at policy across Government departments and sets out a wide-ranging framework of commitments that are designed to help create a sustainable future for the English uplands. The range of actions identified will be delivered in partnership with others in the public, private and voluntary sectors and recognises the diversity of upland issues across the country. The work will be co-ordinated by the newly formed Rural Communities Policy Unit in Defra, which is developing a detailed implementation plan, part of which will be to address the most appropriate ways of working with stakeholders. 8. If Defra’s uplands strategy is to be successful it is imperative that the department has sufficient influence across Whitehall to ensure that the Government as a whole recognise the importance of the uplands and hill farming. We recommend that a Defra Minister is given cross-cutting responsibilities for the uplands. That Minister should establish an effective advisory panel to provide a breadth of expertise to challenge policy proposals and confront inertia within Government. (Paragraph 32) At the launch of the Uplands Policy Review, the Defra Secretary of State made clear that she and all her Ministerial team were committed to taking forward uplands issues across the whole of Government, as part of their wider role as rural champions. They are now supported in this role by the newly expanded Rural Communities Policy Unit, which has been given specific responsibility for co-ordinating and monitoring progress against the commitments set out in the Uplands Policy Review. The Government will continue to work with existing industry groups and interest bodies to deliver these commitments, and will consider as part of the implementation plan how best to ensure advice and challenge from a range of stakeholders.

Future funding for the uplands 9. Farming should be the primary activity of hill farms. The Government’s forthcoming uplands strategy must address how, as the first priority, farming activities can be enhanced and made more efficient to increase hill farm incomes. We accept that farming will not necessarily provide sufficient income for some hill farms to continue. The Government’s uplands strategy should therefore consider the barriers to diversification and new markets and how best to enable farmers in the uplands to exploit those business opportunities. (Paragraph 38) The Government wants to see hill farmers become more economically secure so that they can continue in future as both producers of food and stewards of the valuable natural resources of the uplands. We recognise that it is harder for hill farmers, who are highly dependent on livestock, to make a living out of agriculture alone than it is for farmers in the English lowlands, who have a wider range of options open to them. Our intention is to support and encourage hill farmers to improve the competitiveness of their core agricultural businesses and to make the most of the opportunities to diversify, whether as managers of the natural resources and ecosystems of the uplands, or through other business opportunities. The Uplands Policy Review, published on 10 March, set out the actions which the Government will take, in partnership with others in the public, private and voluntary

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sectors, to help secure the future sustainable development of the English uplands including hill farming. The Government will: •

Create an “Uplands Theme” within the new delivery arrangements for the Rural Development Programme for England (RDPE) to provide targeted support to upland areas through specific schemes and/or weighting towards the uplands in national schemes. Through RDPE’s Axis 1 and 3, this will support improvements in hill farmers’ competitiveness, skills, professionalism, and ability to diversify.

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Ensure that funding is available within the 2007–13 RDPE to allow all farmers in the Severely Disadvantaged Area to enter Uplands Entry Level Stewardship. We will update the existing guidance to make it even clearer what commoners need to do to ensure their applications can be processed as quickly as possible.

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Natural England will work actively with hill farmers, land managers and other stakeholders in the uplands to explore how they can best work in partnership to deliver the multiple benefits these areas can provide.

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Look for opportunities to bring about greater co-operation and networking between the various demonstration farm initiatives, including those in the uplands.

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Remove unnecessary cost burdens which may undermine the competitiveness of hill farmers, taking account of the forthcoming recommendations of the Farming Regulation Task Force.

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Longer-term, ensure that reform of the Common Agricultural Policy post-2013 supports both the competitiveness of hill farms and makes adequate payment to secure the provision of public goods from the uplands, beyond those the market provides, and that any future redesignation of Less Favoured Areas fully captures the land in England that we consider to be genuinely ‘naturally handicapped’.

Single payment scheme 10. The Tenant Farmers Association advocate a return to headage payments. Successive governments have resisted such a move. We are not convinced by the Government’s arguments for dismissing this option. We recommend that the Government look again at the arguments for and against headage payments and explain the evidence base and grounds for opposing this method of supporting hill farmers in limited and specific circumstances. We recommend that it set out under what conditions it would consider supporting a re-introduction of headage payments. (Paragraph 46) Hill farm businesses need to achieve long-term economic viability so that they can continue in future as both providers of food and stewards of the valuable natural resources of the uplands. Given the scope and scale of demands on the public purse, now and in the future, dependence on income-support subsides does not provide hill farmers with the long-term economic security they need. Farmers themselves would much rather be paid for their agricultural products and the wider environmental services they provide, than have to rely on EU subsidy. The Government’s aim is to provide appropriate support and encouragement to hill farmers so that they can become more efficient and effective at what


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they do, improving their competitiveness through responding to the needs of the market. In this context, the use of subsidies such as headage payments tends to distort their production decisions, reducing the strength of market signals and encouraging a higher stocking rate than would otherwise occur, potentially leading to overgrazing. Recent research by the Countryside and Community Research Institute (CCRI) indicates that the more efficient farms in the Less Favoured Areas will be moving to more extensive low-input grazing systems and a return to headage payments would therefore be a backward step, potentially reducing opportunities for expansion by more economically sustainable businesses and reducing wider structural reform in the uplands. Since the introduction of decoupling in 2005, overgrazing appears to have become much less of an issue in the Less Favoured Areas, on the basis of SSSIs in unfavourable condition, with the evidence suggesting that the grazing reductions have been greater on moorland. When the Single Payment Scheme was introduced in 2005, and following consultation with the farming industry, the Government decided that, in order to limit the redistributive effects of the new scheme, the SPS funding within each of the three payment regions would be kept broadly the same as existed under the old production-linked subsidy schemes. Moorland farms, typically having lower production levels than lowland farms, previously received lower subsidy payments, which the current per hectare payment rate reflects. Introducing new headage payments in the uplands would have knock-on effects of funding being diverted from other areas. Our aim is to support and encourage hill farmers to make the most of all the incomegenerating opportunities open to them, particularly through improving the competitiveness and returns from their livestock businesses, and by making the most of all their other potential assets by diversifying, including through their role as managers of the natural resources and ecosystems of the uplands. Future public expenditure must be well targeted, focusing on those actions which can enable farmers to boost their competitiveness and engagement with the market, and those measures which deliver environmental public goods that the market would not otherwise provide.

Stocking rates 11. We recommend that stocking rate decisions should be based on an agreed environmental outcome, for example achieving a set sward length rather than prescribing the number of livestock and the grazing season. Stocking rate decisions should be taken locally and involve local farmers. (Paragraph 51) The current process for taking decisions about stocking rates allows local factors and farming systems to be taken into account. For example, under Uplands ELS there is a minimum level of stocking required on moorland. This minimum level (and any stocking beyond this) can be achieved with cattle, sheep or ponies that are acclimatised to the conditions of the moor, allowing farmers flexibility to take into account local and regional conditions. Under Higher Level Stewardship (HLS), negotiating stocking levels is a site specific iterative process between Natural England and the HLS applicant bearing in mind the aims of the agreement and the farming system in question.

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However, recent discussions between Natural England and key national and local upland grazing stakeholders have highlighted that while many upland farmers are delivering sustainable grazing for environmental outcomes as part of their farming, some concerns about stocking levels remain. Natural England is therefore engaging with the hill farming sector to understand the issues and work jointly on developing a more locally tailored approach to stocking levels, via local fora in Cumbria and the South West. This local forum approach recognises that each upland area is different, and has its own style of upland farming with its own issues. Natural England is therefore looking to develop local grazing fora with stakeholders elsewhere, building on existing local farming groups wherever possible. In the longer term, we are aware of interest in increasing the use of environmental outcomes in setting desired management under Environmental Stewardship. This is currently being considered as part of work looking at how the Environmental Stewardship as a whole can be made more effective and deliver greater environmental benefits, as part of the follow-up to the Government Spending Review.

Uplands Entry Level Stewardship Scheme (UELS) 12. We recommend that the Uplands Entry Level Stewardship be reviewed before the end of this year. The review should consider the challenges faced by tenants and commoners in accessing the scheme. If the review finds that they are so disadvantaged, we recommend that Defra bring forward proposals to remove the barriers to accessing the schemes, to include a mediation or dispute resolution mechanism accessible to land owners, tenants and commoners. (Paragraph 55) The Government wants to ensure that Uplands ELS is fully accessible to all eligible farmers, including tenant farmers and active graziers who are vital to delivering the benefits we want to see from the scheme. We agree that it is very important to understand whether there are any barriers preventing farmers from entering the scheme and this is why we have put in place a monitoring and evaluation programme which will provide us with evidence of both the environmental benefits and the impacts for different groups of upland farmers, including tenant farmers and commoners. This programme will provide us with ongoing information about performance of the scheme and highlight problems at the earliest opportunity. Initial results, focussing on farmers’ attitudes to the scheme and an analysis of the first six months’ uptake, will be available in Spring 2011. We will consider these results carefully and, if any problems are identified, will consider what action is appropriate. If problems with access to the scheme were identified, we would need to consider a number of factors in deciding what action was appropriate. For example, we would need to consider how we could build on existing discussions with industry bodies (including those which led to publication of Tenancy Reform Industry Group guidance for tenants and landlords interested in Uplands ELS), what solutions would be workable given the range of land management arrangements in the uplands and what is deliverable under a hands-off scheme such as Uplands ELS. However, we are not convinced that a centrally-mandated dispute resolution procedure would meet these requirements.


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Common Agricultural Policy reform 13. The current rules for calculating ‘income foregone’ provide insufficient compensation for uplands farmers and discourage more from joining agrienvironment schemes. We recommend that Defra set out how the definition of ‘income foregone’ can be extended for farmers in Less Favoured Areas only to reflect the costs of running the farm. One of Defra’s aims for the current round of CAP reform should be a more transparent system of paying farmers for the benefits being delivered through agri-environment schemes. (Paragraph 60) The current uptake figures for agri-environment schemes indicate high levels of participation in the uplands which suggests that the payment rate is not a barrier to uptake. [For example: there are now over 4000 live agreements in place covering over 589 000 ha (45%) of SDA land—with an even greater area in the pipeline. This is significantly ahead of Natural England’s target of bringing 505,000 hectares into the scheme by March 2011. The “income foregone” calculations that underpin the payment rates are carried out in accordance with EU Regulations and are compliant with WTO rules. The current methodology has been independently verified and approved by the EU Commission, and reflects the costs of the options relating to specific areas of the farm. The broader costs of running the farm relate to the overall profitability of the business and as such are not appropriate for direct inclusion in the calculations. However, where a portion of these costs can be directly attributed to the option management they can be included in the calculation, as an “additional cost”. We recognises that the nature (and extent) of “additional costs” is less well understood than “income foregone”. Defra and Natural England are currently in the process of procuring a contractor to evaluate additional and transaction costs within agri-environment schemes. This project will look at the scope and extent of these costs and will include an assessment of the changes in fixed costs (broadly speaking, the costs of running the farm) arising from participation in an agri-environment scheme. In addition to this work, the Government welcomes evidence from stakeholders and other Member States that might demonstrate how best to ensure that the calculations take account of additional costs. It is likely that there is little scope for the EU to change the rules regarding the calculation of agri-environment payment rates without their being a change to the WTO rules. However, even in the absence of such a change, the Government is keen to pursue ambitious reform of CAP, including an increased emphasis on delivering environmental benefits via agri-environment measures.

Carbon markets 14. The CRC recommended that the Government establish a functioning carbon market, but appeared to have little to add apart from their enthusiasm. A carbon market is unlikely to be established for some time and therefore Defra should concentrate on the short-term benefits to the uplands first. We do not anticipate carbon markets making a significant contribution to the uplands economy for some

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time. A functioning carbon market operating in the uplands is an important long term goal. We recommend the Department for Energy and Climate Change work with Defra to identify a mechanism by which the uplands could participate in a carbon market, what regulatory barriers need to removed and what the likely return to farmers would be from participating in the market. This work should consider how peatland restoration could be incorporated into a carbon market. (Paragraph 70) The Government agrees on the importance of the carbon storage/regulation services provided by uplands and peat, and we want to see this supported. Defra has a programme of research in place to better understand and quantify the emissions from peat and to ensure they are captured in the UK Greenhouse Gas Inventory, as well as research to understand the impact of restoration on the Greenhouse Gas balance with particular consideration of the potential for increases in methane emissions. However, establishing carbon markets may not be the only or best approach. There are a number of fundamental barriers to this approach around additionality and doublecounting. There are a number of policy areas where supporting carbon storage is being looked at, e.g. CAP reform, to identify the feasibility and potential for land managers in the uplands to receive payment to recognise the carbon benefits associated with good land management. 15. Restoration of peat can contribute to increasing carbon storage as well as having wider environmental benefits. We recommend that Defra explore how peat restoration projects could contribute to Defra’s carbon budget obligations. (Paragraph 71) The Government agrees that peatland restoration can contribute to a range of environmental benefits. There are however, a number of delivery challenges: restoration (for example, the blocking of moorland gullies and grips) is expensive, and both public and private funding will be important in delivering peatland restoration on a significant scale. Our knowledge of peat is also growing, but further evidence is needed to improve our understanding of the greenhouse gas emissions and removals from peatlands, the impact of restoration activities, and therefore the most effective restoration techniques. Better evidence could also enable new policy options and funding streams, such as carbon finance, to be developed. Peatland restoration is also of considerable interest in the context of payment for ecosystem services. In October 2010, Defra published a short introduction paper on payments for ecosystem services. This is being followed up with more detailed analysis, exploring the key analytical principles, challenges and opportunities for its use in England. This will include analysis of the challenges and opportunities for payments for ecosystem services in upland areas, evidence which is also feeding into the development of the Natural Environment White Paper to be published in Spring 2011. To take all of this a stage further, the Government, in its Upland Policy Review, committed to holding an expert workshop later in 2011 to explore and review the opportunities and challenges for the use of payment for ecosystem service approaches, including in upland areas. To ensure delivery of carbon budgets, Government has put in place a Carbon Budget Management framework which holds Government departments to account for their responsibilities to reduce emissions, for example the role of Defra in reducing emissions


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from agriculture. This approach is set out in the Carbon Plan, published on the 8th March 2011, and replaces the pilot of departmental carbon budgets as detailed in the Low Carbon Transition Plan (of June 2009).

Water markets 16. There are a range of water management options that could provide an additional source of income for upland farmers. We recommend that Defra work with the water industry and the economic regulator, Ofwat, to encourage the development of water markets more widely in the uplands. We welcome the inclusion of developing water markets as part of the Ofwat review. (Paragraph 75) 17. There are several examples of water companies working with upland land managers to improve water quality. We encourage the industry, supported by Ofwat, to explore greater use of the natural environment, particularly in the uplands, to improve water quality. (Paragraph 76) 18. We recommend that Defra work with the Environment Agency to identify ways to encourage local partners and land managers to work together on water sequestration schemes with the goal of reducing flood risk. (Paragraph 77) Sensitive management of the uplands to restore natural ecosystems and processes can provide benefits for many parties. The water industry can benefit from better raw water quality and a more sustainable water supply less dependent on carbon intensive treatment, while residents can benefit from reduced flood run-off and landscapes that are capable of supporting a rich diversity of life. Increasingly, water companies are displaying a commitment to developing catchment management solutions that deliver a range of business and environmental benefits. Defra strongly supports such integrated approaches. That is why the Minister for the Natural Environment and Fisheries recently launched a catchment approach to implementing the Water Framework Directive. This would involve delivery bodies, including the Environment Agency and water companies, responsible for different aspects of this water environment, coming together with the local community, to prioritise measures at a catchment level. Such measures might include water sequestration schemes with the goal of reducing flood risk. The Environment Agency is taking a lead role in 10 catchment pilots. Defra is currently exploring the potential for broadening this approach and integrating across flood, water and land management. So we have also asked other organisations, including water companies to come forward with offers to take a leading role in the development and delivery of catchment plans outside of these 10 areas. We will disseminate the learning from these pilots. Defra’s on-going flood demonstration catchment projects will provide further knowledge. We will also work with the water industry, Ofwat, and other interested parties on establishing viable funding options to ensure that multiple benefits from land, including clean water, carbon storage and enhanced biodiversity, are delivered through such partnership approaches.

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The Ofwat Review is not looking at the development of water markets as such. But to support our catchment management approach, the Review is considering whether there are practical and unnecessary barriers to economically justifiable investment in upstream measures including via direct payment to farmers. Defra is also undertaking work in preparation for the forthcoming Water White Paper around abstraction licence trading. The White Paper will outline a direction of travel for future work. We will look to ensure that the rules around trading are clearer and less constraining, that better information, including trade prices, is made available and that unused licences are available to those that can make good use of them. This could potentially form a source of income for farmers who have unused abstraction rights.

Tourism 19. Tourism has the potential to be an additional source of income for upland farmers. Defra’s upland strategy should set out how the Government will support farmers seeking to diversify into business activities that serve those tourists. (Paragraph 80) As the Government set out in its Uplands Policy Review, it is our intention to support and encourage all hill farmers to improve the competitiveness of their core agricultural business. At the same time it is vital that hill farmers grasp opportunities to diversify, whether as managers of the natural resources and ecosystems of the uplands, or through other business opportunities including tourism. To support this the Government will create an “Uplands Theme” within the new delivery arrangements for the Rural Development Programme for England (RDPE) to provide targeted support to upland areas through specific schemes and/or weighting towards the uplands in national schemes. Through RDPE’s Axis 1 and 3, this will support improvements in hill farmers’ competitiveness, skills, professionalism, and ability to diversify. Further details will be announced later in the year. There is already an extensive range of activity underway in the uplands using RDPE funding, including supporting farm diversification, and this will continue whilst the Uplands Theme is under development. Defra and the current Regional Development Agencies will be reviewing what is already offered, learning from experience and talking to industry representatives about customer needs in developing the theme. The Government is also exploring the scope for joint Defra/DCMS opportunities to support rural tourism more generally, including in the uplands. The Government’s recently published tourism policy [Government Tourism Policy: DCMS March 2011] aims to help the tourism industry to achieve its potential for growth by creating a sustainable new model for destination marketing and management, by supporting and promoting domestic tourism and by providing a platform to raise the sector’s productivity and performance. This will be aided by the Action Plans that VisitEngland is developing with partners to support the strategic Framework for English Tourism 2010–2012 including for rural tourism.


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20. Some National Parks contract farmers to carry out specific activities to manage the land, such as maintaining paths and walls. We recommend Defra seek further ways that farmers can generate additional income, for example by being contracted to assist in clearing snow during bad weather. (Paragraph 81) A fundamental shift of power from central government to the local level is taking place. The localism agenda champions the devolution of decision making to the most practicable level, and services better targeted to local priority and need. Local authorities, or National Parks, should not expect central Government to tell them how to run their services or how they should spend their resources. Ultimately, it would be down to local authorities to decide on their own arrangements. The Localism Bill provides the opportunity for local people and communities (and this would include farmers) to challenge the way in which local authority services are run, so they could approach local authorities about such issues as snow clearing. This is part of the drive to ensure that residents have their say at the local level and to allow for innovation in local service delivery, as well as lead to local solutions for local needs.

Future development 21. Improved extension services and demonstration farms, where appropriate, need to be part of the mix of approaches that will need to be deployed to improve the competitiveness of uplands farmers. We recommend that Defra include specific reference in its uplands strategy action plan as to how it will support improving agricultural, business and management skills and schemes that enable diversification. (Paragraph 85) A number of demonstration farms funded by both the public and private sector already exist across the country. The Taylor Review, Science for a new age of agriculture, proposed making use of existing commercial farms rather than creating new facilities. The Government recognises that demonstration farms have a valuable role to play in helping farmers receive practical advice and guidance, and that “farmer to farmer” dialogue is an important feature. At present, the connections between different demonstration farm initiatives are not as good as they could be and, in response to the Taylor Review suggestion that the Government should use and promote them more, we will look for opportunities to bring about greater cooperation and networking between the various demonstration farm initiatives, including those in the uplands. A recent consultation identified that the range of farm advice provision, supplied by commercial, public, levy and charitable funding, is fragmented and in some cases inconsistent. Defra is commissioning a pilot project to develop and deliver farm advice in relation to a wide range of objectives. The Uplands Policy Review outlined plans for an “Uplands Theme” within the new delivery arrangements for the RDPE programme. Through RDPE’s Axis 1 and 3 this will support improvements in hill farmers’ competitiveness, skills, knowledge and information transfer and ability to diversify. Defra is also working with the industry on its Agriskills Strategy: Towards a New Professionalism to improve career structure, skills and professionalism.

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22. Succession is likely to remain problematic until the fundamental issues of low economic viability and high uncertainty of hill farming are addressed. (Paragraph 88) The farming industry needs to encourage people into farming by making it an attractive, rewarding and dynamic career prospect for new entrants. Defra is supporting this aim by working with the industry on its Agriskills Strategy: Towards a New Professionalism to improve career structure, skills and professionalism, supporting productivity growth through the Rural Development Programme for England and encouraging entrepreneurship by reducing the regulatory burden on farmers. As described in the response to Recommendation 9, the Uplands Policy Review has laid out the strategy and actions being taken in partnership with the farming industry and others to secure a sustainable future for hill farming.

Broadband 23. The internet is a critical business tool. The efficiency of upland farming will be enhanced by the ability to reliably access information and transact business online. Defra should set out how and by when the super-fast broadband trial will be evaluated. Defra’s uplands strategy action plan should set out where and by when the super-fast broadband trial will be extended, and what resources have been identified to fund an extension of the trial. (Paragraph 92) Broadband is vital to the economic and social sustainability of the uplands, and the Government is determined to ensure that fast and reliable access is available in upland communities as part of its commitment to have the best superfast broadband network in Europe by 2015. Effective, reliable and secure broadband connections are vital to all communities and the Government recognises the particular importance of broadband in rural and upland communities where distance and geography can make everyday communication and access to services particularly challenging. Superfast broadband can help improve the quality and delivery of public services to people in more rural and remote areas such as the uplands, and help them to become more skilled, productive and earn a higher wage. Deployment of broadband in rural areas is at the heart of the Government’s national Broadband Strategy, published in December 2010, which sets out an action plan to bring superfast broadband to all parts of the UK: http://www.culture.gov.uk/publications/7829.aspx The Government announced in its Uplands Policy Review on 10 March that it is establishing a rural Community Broadband Fund with funding of up to £20m. The fund will draw on RDPE European funds and funding from the £530m available to Broadband Delivery UK. It will provide support to rural communities for small community broadband projects. Further details and how the fund will operate will be made available later in 2011. The £530 million is intended to support broadband rollout, driving superfast broadband into areas where commercial investment alone will not deliver. Broadband Delivery UK (BDUK) is responsible for managing and delivering the roll out.


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As a first step, four rural broadband pilots were announced last year to trial rollout of broadband across the country. These pilots—in the Highlands and Islands of Scotland, Herefordshire Golden Valley, Cumbria and North Yorkshire—are in some of the most rural and geographically challenging parts of the UK and include some upland areas. Procurement for the pilot in Cumbria has begun, with the other pilots expected to begin soon. Government is working to ensure the success of the pilots, and to ensure that any lessons learned for all communities, including those based around the uplands, are applied, as high speed broadband is rolled out across the country. The information from these projects, in addition to initiatives that are already going on across the country, will be used to better target possible government intervention and investment in ‘superfast broadband’ in the future. Lessons learned from the projects is on-going from the start of the process through to final delivery. A report setting out the lessons learned from the pilots is expected to be published by the end of 2011. As set out in the Uplands Policy Review, the first four pilot projects will be followed by the release of the next wave of funding (around £50m) for a further tranche of projects to extend superfast broadband. Local Authorities are being invited to submit a bid for funding and a decision on which projects have been successful is due in May 2011. It is expected that after this round of funding, BDUK will operate a continuous process where local bodies will bid for funding within their own timescales. Local broadband plans will form the basis for bids for BDUK funding. BDUK is currently working with local bodies (local authorities and Local Enterprise Partnerships) on encouraging the production of local broadband plans to set out the approach for improving broadband infrastructure within the whole of the local body’s area. This is likely to involve a multi-phased project to be implemented between now and 2015. This will include both upgrades to superfast access and ensuring that everyone can get a basic level of service. BDUK will continue to work with those authorities whose plans are unsuccessful in the forthcoming bidding round to develop plans for future funding. BDUK will be publishing a detailed delivery model soon on its approach to ensuring delivery of broadband services in rural and hard to reach areas. In order to ensure robust evaluation of broadband projects, BDUK and Defra have commissioned a joint research project to develop a framework for the monitoring and evaluation of the impact of the superfast rural broadband pilots and subsequent projects. The evaluation will focus on the effectiveness of the broadband pilot projects, alongside the economic impact and the learning that they have generated. This project is expected to complete in May 2011. Evaluation of individual projects is expected to take place at various stages after networks become operational.

Planning and housing 24. It is essential that the Government’s national planning framework include policies to mitigate the problems of lack of affordable housing in rural areas. The Home on the Farm scheme may be part of the solution to lack of affordable housing—we seek clarification from Defra as to how the scheme will work in practice. In particular, we expect Defra to clarify whether ‘Home on the Farm’ will be limited to providing

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affordable housing and whether retired farmers and current farm workers will be able to take advantage of the scheme. (Paragraph 98) The Department for Communities and Local Government are promoting “Home on the Farm” which encourages farmers and local councils to work together to secure the conversion of redundant and underused farm buildings to deliver affordable homes for local people. Planning authorities in rural areas with high demand for homes may want to consider amending their local planning polices to support the change of use of farm buildings to affordable homes where these are considered inappropriate for employment use, or take the need for affordable homes into account in assessing individual applications. Affordable homes provided through ‘Home on the Farm’ will provide affordable homes for those eligible, which could include retired farmers and current farm workers. 25. We recommend that Defra work across Government to ensure that the national planning framework has a flexible and less restrictive approach to housing in rural areas. The planning framework should enable local communities to seek innovative and cost-effective solutions to the problem of affordable housing in rural areas, for example through use of defence estate properties that are becoming vacant. (Paragraph 102) The Department for Communities and Local Government wrote to Defra, asking for their suggestions on what priorities and policies Government might adopt to produce a shorter, more decentralised and less bureaucratic National Planning Policy Framework (NPPF). Defra have stated that supporting rural communities in achieving local economic and social development and improved quality of life must be an essential part of the framework. Defra will continue to work with the Department for Communities and Local Government to pursue this objective through the NPPF process. A draft framework will be published for consultation this summer.

National Parks 26. We support the purpose behind the CRC’s recommendation that National Park Authorities have an additional statutory duty relating to social and economic wellbeing. The Authorities duties to the landscape and environment and the people who live, work and cherish those landscapes should have equal status. There appears no reason why the Sandford Principle should not be preserved and applied to a third statutory duty. We recommend that the Government seek an appropriate legislative vehicle to make this change and to introduce greater flexibility. (Paragraph 108) The Government has carefully considered extending the scope of the National Park purposes and has also reviewed the responses to the Governance Review of the National Parks. We recognise that National Park Authorities already have a socio-economic function, which means that they are expected to deliver socio-economic benefits when pursuing their purposes and work in cooperation with local authorities and others who have the prime socio-economic responsibility. We also recognise that National Park Authorities already engage in socio-economic activities, for example running training


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courses in rural skills or advising small businesses. Indeed, it is hard to envisage the existing purposes of National Park Authorities being effectively delivered without their also being active on the socio-economic front. The Government has therefore concluded that there are no overwhelming arguments for adding a socio-economic duty. However, the National Park Vision and Circular are based around the premise of sustainability (each of the National Parks already fund sustainable development), and supporting sustainable development is inherent in what they do. As set out in the Uplands Policy Review, the Government thinks that it may therefore be appropriate to change the legislation to reflect the importance of sustainable development. We will consult widely to seek views on this proposal. 27. We conclude that some Local Enterprise Partnerships (LEPs), that cover rural areas, appear to lack interest in, and knowledge about, rural issues. In addition, significant rural areas are not currently covered by LEPs. We encourage rural and farming representative organisations engage with LEPs. We recommend that Defra engage with the Department for Business, Innovation and Skills about including consideration of rural needs, where appropriate given the geography, as part of the criteria for selection of future LEPs. (Paragraph 113) There are currently 31 LEPs (covering 80% of the rural population and 88% of the urban population) with more under development. We anticipate announcements in the near future for new LEPs which will cover the remaining areas of England. Defra is currently engaging with the Department for Business, Innovation and Skills and the Department for Communities and Local Government on how rural needs can be reflected in the development of, and criteria for, LEPs, including the provision of high-speed broadband. Defra encourages farmers and rural enterprises, and their representative groups, to engage with LEPs and many are already doing so. Five LEPs with significant rural interests have established a “Rural LEPs” community of interest group: These are Lincolnshire; The Marches; Cornwall and the Isles of Scilly; Cumbria; and New Anglia LEPs. Defra has facilitated meetings of these LEPs and the first meeting took place in January 2011 with a further meeting in March to which all LEPs were invited to promote rural interests more widely. Defra will continue to support LEPs in their consideration of rural issues where locally-driven priorities have concluded that this would be welcome. The newly established Rural Communities Policy Unit within Defra will be publishing a Rural Policy Statement outlining Government’s rural policy priorities by summer 2011 which will consider rural economic issues. The RCPU is also undertaking a review of stakeholder engagement that will ensure appropriate channels between the Department and rural stakeholders are maintained and developed. 28. There is a lack of clarity about the current position and how Rural Development Programme for England (RDPE) funding will be provided now and in the future. We recommend that Defra provide a clear and precise description of how funding will be provided across the country, with or without LEPs. We further recommend that Defra produce clear guidance for farmers and rural communities as to how RDPE funding will be administered now and in the future. (Paragraph 114)

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The Government provided a Written Statement to the House on Monday 28 February 2011 that explained that responsibility of the socio-economic elements of the RDPE will transfer from the eight Regional Development Agencies (RDAs) to Defra. This will ensure continuity and consistency of delivery for customers and compliance with the relevant European regulations. In order to ensure a smooth a transition as possible, the Government will be introducing changes to the administration of the RDPE on a staggered basis from 1 July 2011. These will deliver a more consistent national approach and efficiency savings for the taxpayer, including moving away from existing regions as the key governance tier. The Government will engage with stakeholders and customers about changes to the programme, building on the existing programme governance at the regional and national levels. During the transition into Defra, delivery of the RDPE will continue. RDAs and Defra are working together to ensure a smooth transition to the new delivery arrangements which minimises disruption to customers and maintain the momentum of this expenditure to improve agricultural competitiveness and support rural businesses and communities. The Government clarified in the Local Growth White Paper that it did not see a direct role for the emerging Local Enterprise Partnerships (LEPs) in the delivery of the RDPE. The RDPE must comply with complex EU CAP rules and significant fragmentation of the delivery arrangements for RDPE would be likely to increase the risks and costs of the programme, and a national approach to delivery for the remainder of the programme was therefore decided. However, RDPE already includes a strong local element. The Leader approach is focused on community-led delivery of the Programmes priorities, based on local decision-making by community partnerships in rural areas known as Local Action Groups. The Leader approach could provide a basis for further engagement with LEPs and local authorities. Defra has already had positive discussions with some LEPs who have an interest in rural areas. Further discussion is planned to consider how LEPs can have a role in supporting Programme delivery. The Leader approach provides an immediate opportunity for LEPs, and collaboration with the Local Action Groups has been encouraged. The Government has maintained its commitment to Environmental Stewardship, which is delivered by Natural England mainly through Axis 2 of the RDPE. The Government is exploring ways to improve the effectiveness of Environmental Stewardship to strengthen the environmental benefits from the scheme. The Government is committed to rural development in England after 2013 with an increased emphasis on the delivery of public goods and strengthening of the agricultural sector. The Government would like to see ambitious reform of the CAP to ensure that vibrant rural communities grow with a stronger, more competitive, farming industry. It is still too early to say what the detailed legislative framework under a new CAP regime in 2014 will look like, and further work is required on the implications for implementation. The Government will work to ensure as smooth a transition as possible between the current programme and the post-2013 arrangements.


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29. Any confusion about how RDPE funding will be administered compounds the difficulties farmers and local communities encounter in receiving information and accessing funding. We recommend that the Government explore a simpler means of gaining access to rural funding, of all kinds, through a one-stop-shop. (Paragraph 115) As stated in the response to recommendation 28, in order to ensure as smooth a transition as possible, the Government will be introducing changes to the administration of the RDPE on a staggered basis from 1 July 2011. These will deliver a more consistent national approach and efficiency savings for the taxpayer, including moving away from existing regions as the key governance tier. The Government will engage further with stakeholders and customers about changes to the programme, building on existing programme governance at the regional and national level. The Government has in the past looked at developing a rural-specific network of “one stop shops”. However, set up and running costs were deemed prohibitive, particularly in relation to IT and these were judged to far outweigh the benefits that would’ve been received by the customer. Today’s rural funding landscape is much simpler, with greater co-ordination and alignment of RDPE with other local rural programmes (themselves merging previously complex schemes) and also geographically specific initiatives such as EU convergence funding in Cornwall and the Isles of Scilly. Local examples include an RDPE funded initiative called the “Exmoor Hill Farm Project” which signposts livestock farmers to business support funding. There are many Local Authority “one stop shops” providing information, as well as the Business Link online portal and national helpline there to support businesses. Government has also recently launched its Solutions for Business (SfB) package—making support simpler, easier to understand and accessible to companies. There are 13 products designed to help businesses identify and overcome key challenges as they grow and develop. It provides a framework of support and will target activities where a Government lead is required, such as providing access to strategic advice, helping companies reach international markets and supporting innovation. 30. We recommend that Defra only use LEPs as a focus for delivery of RDPE funding in future (after 2013), when they have demonstrated that LEPs have sufficient geographical extent to benefit farmers and in all rural areas and have sufficient skills, local knowledge and interest to assist with rural businesses. In the intervening time RDPE funding is to be delivered by Defra. We remain to be convinced that the department will be an effective and efficient delivery body. We expect Defra to set out how it will administer the fund and what processes are in place to monitor its performance as a delivery body. (Paragraph 116) The Government clarified in the Local Growth White Paper that it did not see a direct role for the emerging Local Enterprise Partnerships (LEPs) in the delivery of the RDPE. The RDPE must comply with complex EU CAP rules and significant fragmentation of the delivery arrangements for RDPE would be likely to increase the risks and costs of the programme, and a national approach to delivery for the remainder of the programme was therefore decided. However, RDPE already includes a strong local element. The Leader approach is focused on community-led delivery of the Programmes priorities, based on local decision-making by community partnerships in rural areas known as Local Action Groups. The Leader approach could provide a basis for further engagement with LEPs and

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local authorities. Defra has already had positive discussions with some LEPs who have an interest in rural areas. Further discussion is planned to consider how LEPs can have a role in supporting Programme delivery. The Leader approach provides an immediate opportunity for LEPs, and collaboration with the Local Action Groups has been encouraged. In order to ensure as smooth a transition as possible, the Government will be introducing changes to the administration of the RDPE on a staggered basis from 1 July 2011. These will deliver a more consistent national approach and efficiency savings for the taxpayer, including moving away from existing regions as the key governance tier. The Government will engage with stakeholders and customers about changes to the programme, building on the existing programme governance at the regional and national levels. During the transition into Defra, delivery of the RDPE will continue. Rural Development Agencies (RDAs) and Defra are working together to ensure a smooth transition to the new delivery arrangements which minimises disruption to customers and maintain the momentum of this expenditure to improve agricultural competitiveness and support rural businesses and communities. It is anticipated that the expertise on delivery of the RDPE, currently within the RDAs, will transfer to Defra before 1 July 2011, which will help ensure a good deal of continuity in delivery. Delivery of the Programme against Government priorities will continue to be subject to on-going performance monitoring through formal Programme governance.

Conclusion 31. In this report we have highlighted issues raised by the Commission for Rural Communities in High ground, high potential that we consider require particular attention. Defra will shortly be producing its uplands strategy. Defra must decide whether farming is to be maintained as the central activity of uplands communities, and if so, explain how this will be achieved. As several witnesses have said there is now a need for action; we have therefore recommended that Defra produce an action plan setting out the Government’s objectives, how it will achieve those objectives, the resources available and the timetable for implementation. (Paragraph 118) The Government recognises the vital contribution made by hill farming to the national livestock industry through the provision of breeding and finishing stock, as its primary purpose. They also recognise the importance of hill farming to providing a wider range of environmental goods and services for public benefit. That is why the Government outlined its intention in its Structural Reform Plan “to develop affordable measures of support for hill farmers”. In March 2011 the Government published the conclusions of its Uplands Policy Review. The Review looked at policy across Government departments and sets out a wide-ranging framework of commitments that are designed to help create a sustainable future for the English uplands. The range of actions identified will be delivered in partnership with others in the public, private and voluntary sectors and recognises the diversity of upland issues across the country. The work will be co-ordinated by the newly formed Rural Communities Policy Unit in Defra, which is developing a detailed


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implementation plan, part of which will be to address the most appropriate ways of working with stakeholders. 32. As farming is central to the uplands, the Common Agricultural Policy is central to the prospects for upland farmers. This Committee is currently considering the European Commission’s proposals for reforming the CAP. In our deliberations on the proposals we have been mindful of the variety of agriculture within the UK—we trust the Government is similarly aware of the needs of all parts of UK agriculture and particularly the uplands. (Paragraph 119) The Government is responding separately to EFRA’s enquiry on the Commission’s proposals on the future of CAP. The Government recognises the critical role of Pillar 2, which (unlike Direct Payments in Pillar 1) provides payments for the delivery of public goods that can be tailored to regional specificities and the variety of farming that exists in the UK, including in the uplands. That is why we are advocating a future CAP that increases the role of Pillar 2, building competitiveness and reducing reliance on subsidies, and supporting the delivery of environmental public goods. Defra works closely with a wide range of agricultural sectors and through these relationships with the industry we work to provide effective representation of UK sectoral interests both at home and also within the EU in relation to our responsibility for managing and adapting the CAP market regimes, in supporting the goals of sustainable, competitive, profitable and market-orientated production in the UK.