Rural Economy of Wales

David Hanson Excerpts

Tuesday 28th November 2017 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

I beg to move,

That this House has considered the future of the rural economy in Wales.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful for the opportunity to have a debate on a topic that is of great importance to the people of Ceredigion, whom I serve, and a subject that is close to my heart.

An economic strategy that facilitates growth in rural and urban Wales and forges stronger links between them is sorely needed if we are to avoid building a geographically unbalanced Welsh economy. I hope that we can debate the ways in which the current approach fails rural Wales and how those failings can be addressed. The rural economy is resilient and there is potential for greater development that should not be left unrealised. At the very least, I hope to persuade hon. Members that securing a prosperous future for the Welsh rural economy is not a cause that should be championed only by those fortunate enough to represent rural constituencies; it should be a priority for us all. As such, it is good to see right hon. and hon. Members from urban as well as rural constituencies here, and I look forward to their contributions.

The development of the rural economy should form a key part of an economic strategy for Wales if we are to avoid a national economy unhelpfully concentrated in a few areas or in one corner of the country. We need look no further than the UK economy to understand the consequences of an unbalanced approach to economic development. Page 218 of the “Industrial Strategy” White Paper illustrates all too clearly how focusing attention and investment on urban centres has meant that the productivity of rural areas is consistently below the UK average, in stark and rather depressing contrast to that of larger towns and cities. I am sure that we will hear a great deal in this debate about the supposed successes of the UK’s current economic approach, but who benefits from the status quo? If that approach gives rise to such grotesque regional inequality, can it truly be considered a success? It is not over-ambitious, let alone idealistic, to believe that the prospects for individuals living in the countryside should be just as promising as those for individuals living in cities.

Although I am not surprised, I am concerned that the development of the rural economy is not high on the UK Chancellor’s list of priorities. Last week’s Budget offered no sign of imminent change in the UK’s approach to rural development, and even less promise for the rural economy in Wales. Indeed, one is left to infer from the few policies on offer that the Government’s intentions for the rural economy, at least in England, amount to little more than improving existing connections between the countryside and the cities to ensure that the prosperity of the economic engines and powerhouses trickles to the rural periphery that little bit faster. Yet again, I fear we have a Budget that serves the south-east of England rather well, at the expense of the rest of the UK.

Buried deep in the Budget, however, there was a cautious and no doubt carefully worded announcement about a growth deal for mid-Wales. It does not overwhelm me with confidence, nor am I over-enamoured of the thought of delineating new economic areas without considering whether there are sufficient cultural, economic and social links to justify those new lines on the map. Nevertheless, I appreciate that the growth deal for mid-Wales—or perhaps the Welsh midlands—could be a real opportunity to deliver for some of those rural communities that have suffered chronic under-investment and neglect by successive Governments. It is also a chance to diversify the base of the rural economy to ensure that, just like the economic success stories of the cities, the economy of rural Wales is rooted in a rich mixture of sectors and industries.

Agriculture, the food and drink industry and tourism are at the heart of the present rural economy, as I am sure other right hon. and hon. Members will explain in more detail. A growth deal for rural Wales would need to safeguard those foundations, but it could also enable us to build a more mixed economy on them, and in so doing secure a more prosperous future for rural areas. It is therefore important to stress that if a growth deal is produced for mid Wales, it cannot mindlessly replicate the model used for city deals. The Government must do more than merely pay lip-service to the idea; they should work with the Welsh Government to engage with stakeholders and forge a bespoke package that focuses on addressing the unique challenges and opportunities facing the rural economy.

One fundamental problem that could be addressed by a worthwhile growth deal is the poor connectivity in many rural areas of Wales. Broadband, or rather the lack of it, is by far the most prevalent issue raised by my constituents in Ceredigion, which is among the 10 worst constituencies for broadband speeds—an affliction that also plagues the Minister’s constituency. Wales has the perceived benefit of being able to receive investment from the Welsh Government and the UK Government, but thus far both have failed to outline how broadband will be delivered to some of the most rural parts of the country.

Recently, the UK Government invested significant sums to improve broadband infrastructure in three of the four UK nations, but unfortunately not Wales. They managed to find £20 million extra for ultrafast broadband in Northern Ireland. For the time being, I am confident that residents in Ceredigion would happily settle for superfast broadband. The UK Government also managed to find £10 million for full-fibre broadband in six trial areas across England and Scotland, but what about rural Wales?

According to Ministers, the decision on where to invest that money was based on how likely they believed the investment was to stimulate economic growth. Rural Wales should not be written off as an area that has no potential, that would not be successful even if it had effective digital infrastructure, or that is simply not worth it. Why should shared office spaces and other opportunities afforded to start-ups and small businesses be poorer in rural areas? Why should essential utilities such as adequate broadband and mobile infrastructure be dismissed as luxuries for those who live in the countryside? If we are to make Ceredigion and other rural areas of Wales more practical places for businesses to locate and expand, and if we are to ensure that communities can fully benefit from the opportunities afforded by better digital connectivity, investing in broadband and mobile infrastructure is crucial.

Why stop there? A potential growth deal for the Welsh midlands—sorry, for mid-Wales—could also include an ambitious package of investment in transport infrastructure. Reopening the railway line between Aberystwyth and Carmarthen would help to reconnect north and south Wales. Installing a network of electric vehicle charging points would allow rural Wales to make the most of advances in electric cars. As well as improving connectivity, such investment by the UK and Welsh Governments would send a clear signal to budding entrepreneurs and start-ups that the countryside is open for business. It would be a strong statement of intent and confidence.

I am not alone in thinking that rural Wales is worth such an investment. Ceredigion has almost 9,000 microbusinesses, which account for up to 94% of all businesses in the constituency. They sustain the local economy and make up our communities, yet they are penalised by poor all-round connectivity. Improving that connectivity is key to supporting and sustaining those entrepreneurial, innovative and hugely important businesses while opening the door to new enterprises.

I am conscious that other hon. Members wish to speak, but it would be remiss of me not to speak briefly about the need to secure the current foundations of the rural economy, or about how a potential growth deal could help to steady nerves in what is proving to be a most uncertain time. Food and drink manufacturing contributes £1.5 billion to the Welsh economy, supports more than 22,000 jobs and generates more than £330 million in exports. It sits at the heart of the food and drink supply chain that generates a total of £4.5 billion for the economy and supports more than 240,000 jobs across Wales. Agriculture in Ceredigion directly employs more than 6,000 people. Some £40.8 million is spent on goods and services purchased by farmers, which in turn sustains additional spending of £96.9 million.

Although they are seldom associated with the rural economy, the teaching and research conducted in our universities also make a vital contribution: on Ceredigion’s economy alone, they have an annual economic impact worth approximately £250 million. The uncertainty surrounding Brexit is throwing our higher education sector into uncertainty. Clarifying future funding and visa arrangements would go a long way towards addressing that.

[David Hanson (Delyn) (Lab)]

The hon. Gentleman will know that sheep and beef farming are critical parts of the economy, not just in his constituency but in north Wales. Does he agree that the Minister should give an assurance that those products will eventually be tariff-free post-Brexit? If they are not, we will face potential loss of business and therefore loss of income to the rural economy.

[Ben Lake]

I agree that an assurance that beef and lamb exports will not be subject to tariffs or non-tariff barriers post-Brexit would go a long way towards securing the future of agricultural industry and would settle a lot of nerves across the country.

It is imperative that any growth deal for mid-Wales takes account of the significant burden that leaving the EU places on such sectors. The UK Government’s steadfast pursuit of severing all ties with the single market risks undermining the rural economy. We should strive to build a more mixed rural economy, but we must also secure its foundations. I was therefore glad to learn that my Plaid Cymru colleagues in the Welsh Assembly have helped to safeguard the future of Welsh agriculture by securing £6 million of funding for a grant scheme to help young entrants to establish themselves in agriculture. With Brexit negotiations stumbling at every possible hurdle, such funding cannot come quickly enough. The right hon. Member for Delyn (David Hanson) alludes to the effect of Brexit on tariffs; it looks increasingly likely that any meaningful beneficial relationship with the single market and customs union will be abandoned.

I am deeply concerned that Welsh agriculture will be sacrificed in EU negotiations. We will have to compete with markets with far lower food hygiene and animal welfare standards, while losing unrestricted access to our main export market. Welsh farmers will be hardest hit by the double whammy of cheap imports and new regulatory barriers. A staggering 90% of Welsh food and drink produce, produced mainly in rural areas such as mine, is exported easily, directly and freely to the European Union. Do the Government expect farmers simply to replace 90% of their customers overnight? We desperately need certainty and clarity.

The damaging impact of Brexit uncertainty on the whole rural economy should not be underestimated. The National Farmers Union’s farm confidence survey in April showed that 20% of farmers are likely to reduce investment as a result. Without clarity on trading relationships or the support payments that make up to 80% of farm incomes in Wales, it is hardly surprising that many are postponing further investment in their businesses. That should alarm us all, because for every £1 invested in the farming industry, more than £7.40 is put back into the local economy. Our communities simply cannot afford to lose such investment. Without it, the future of the rural economy looks very bleak indeed.

Tourism is a £2.8 billion Welsh industry that employs 4,000 people in Ceredigion and contributes £70 million to gross value added. It often goes hand in hand with agriculture and is an important contributor to the rural economy. Plaid Cymru has proposed a 15% reduction in VAT for the tourism and hospitality sector, which would generate an estimated 5,500 additional jobs and an economic boost of £166 million. Our proposal is not innovative or pioneering thinking, but simply common sense. It would stimulate investment, create jobs, increase consumer spending and help to ensure that Wales’s visitor economy continues to thrive. Even the UK Government think it is a good idea: the Chancellor announced a review of tourism VAT in his Budget, although of course it applied only to Northern Ireland. If it is good enough for Northern Ireland, why is it not good enough for us? Could it not be included as part of a growth deal package for the Welsh midlands—sorry, mid-Wales? At the very least, it should offer resources to support organisations such as Mynyddoedd Cambria that work to forge closer links between the old market towns of the Elenydd—the Cambrian mountains—and ensure that coastal and inland areas benefit from tourism.

It is deeply frustrating that the potential of the Welsh rural economy was not adequately pursued in last week’s Budget, but a growth deal could be the first step towards correcting that mistake. Offering the support and investment required to sustain today’s rural economy will be crucial, but just as important is the opportunity to change how the rural economy is understood, recast how rural development is pursued, and rejuvenate our aspirations for such development. Such new thinking is already being explored by colleagues of mine, including a former Member of this House. The economic region of Arfor aims to develop west Wales into a more cohesive and connected entity. There is no reason why a growth deal for the Welsh midlands—or mid-Wales—could not support and work in conjunction with such an economic area.

I have already mentioned the importance of the agriculture, food and tourism sectors to today’s rural economy. Let us make the most of the opportunity presented by the growth deal to redefine the rural economy of tomorrow. If done properly, such a deal could begin to address the issues plaguing today’s industries and could implement the conditions necessary to facilitate a more versatile future for the rural economy. It could concentrate on improving connectivity and offering greater support to higher education institutions so that they can build on their expertise and cement themselves as centres for the technologies of the future.

After all, why should rural Wales not be at the forefront of biotechnology and research? It could be the centre of cutting-edge knowledge, tackling global issues such as food security. Aberystwyth University’s institute of biological, environmental and rural sciences is already an internationally renowned research and teaching centre for biotechnology and environment studies. It is leading the work to address some of the most pressing issues facing the agricultural sector, and it has already received support from the Biotechnology and Biological Sciences Research Council for its Aberystwyth innovation and enterprise campus. Just imagine the potential benefits of further investment in our other universities in rural Wales! Such investment could serve as the foundation of a bigger Welsh biotechnology industry, shaping the future of food and farming for generations and increasing the breadth of highly skilled and highly paid careers available in rural Wales. That is just one example that is open to the rural economy if we wish to explore it.

I am in no doubt that the Welsh and UK Governments desperately need to reconsider their approach to economic development and to refocus attention on the rural economy, to ensure that it forms an integral part of any economic strategy for Wales and that it is more than a simple afterthought, an also-ran, a non-essential addition to the real work of developing our cities and urban areas.

People should have a realistic hope of being able to pursue a career, and of being able to afford to settle down and lead a prosperous life in any part of Wales. I hope the Minister accepts the points I have raised in the spirit in which they are offered. The possibilities for a mixed and advanced rural economy in Wales are endless, provided that the potential is unlocked with the right investment and the right growth deal for the Welsh midlands—or mid-Wales.

--- Later in debate ---

[David Linden (Glasgow East) (SNP)]

Tapadh leibh, a Cathraiche. It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Ceredigion (Ben Lake) on securing this timely debate. He is a passionate campaigner and champion for the people of Wales in this House. In the less than half a year that he has been here, he has done an enormous amount to hold both of Wales’s Governments to account, and I have no doubt he will continue to do so in the coming months and years.

The focus on the future of our rural economy is timely, because we stand at a fork in the road, given our Brexit negotiations. The decision of the United Kingdom to leave the European Union, which was rejected in all 32 of Scotland’s local authorities, will have potentially catastrophic consequences for rural communities across these islands—not least in Wales, which has benefited enormously from EU funding. Indeed, in some cases, it is the only money that has come into Wales in recent years. The current negotiating position taken by Her Majesty’s Government is deeply flawed, isolationist and wrong-headed. I will outline one or two areas in which I feel a change in tone and position could help soften the forthcoming Brexit blow to our economy. I will also outline a couple of ideas from a domestic policy perspective that would deal with some of the challenges facing our Welsh colleagues.

First, I will add a bit of context to the scene so eloquently set out by the hon. Gentleman. Given that time is at a premium, and I am conscious that I am something of an intruder on this debate, 1 will focus solely on food and drink. Quite rightly, food and drink is a priority economic sector in Wales, with 170,000 people contributing to gross sales of £17.3 billion. Much like Scotland, Wales is staring into the abyss as we look over the cliff edge of a hard Brexit, to which we have been driven by the Back Benchers of the Conservative party. Although Wales as a whole narrowly voted to leave the EU, it is worth noting that not all areas did. Ceredigion, for example, which is mainly rural, voted 54.6% to remain, and Gwynedd, with a large agricultural industry, voted 58.9% to stay in the EU. If the Minister is serious about being Wales’s voice in Whitehall, and not Whitehall’s voice in Wales, he should immediately commit to joining the Welsh and Scottish Governments in calling for our membership of the single market and customs union to be maintained.

On trade, it is abundantly clear that access to the single market is essential for our agriculture sector. No one wants to see prime Welsh lamb, or any other fresh produce for that matter, stuck on a lorry, in a queue, waiting for customs clearance. I very much echo what the right hon. Member for Delyn (David Hanson) said. I will not get into the battle about whose lamb is better—I think I might lose that one. As it stands, what will happen is that lamb will be stuck in a queue on a lorry.

On labour, it is vital that our sectors retain the ability to recruit staff from across the European Union. That is why free movement of people must be protected, which can easily be achieved by remaining in the single market. Scotland and Wales’s problem has never been immigration; it has been emigration. Just as in Scotland, Wales needs to build a strong rural economy that will encourage young people to stay, and not exacerbate the brain-drain problem outlined by the hon. Member for Ceredigion.

We need action on a domestic front from the Conservative Government in London as well as the Labour Government in Cardiff. It is important that we ensure that the right infrastructure is in place to support the rural economy. That means action to improve broadband provision, and investment in mobile coverage and drastically improving the rail network. To give an example, in Scotland every year we provide more than £1 billion for public transport and other sustainable options. I know from personal experience of visiting and holidaying in Wales—I spent some time in the summer of 2016 in the constituency of the hon. Member for Ynys Môn (Albert Owen) in north Wales and I echo what he says about connectivity—that the rail network is particularly poor and could do with upgrading. The hon. Member for Ceredigion has already outlined why and how that can be done, including a rail link between Aberystwyth and Carmarthen.

Before I conclude, I want to say a word about how we support the most vulnerable and those on low incomes in our rural communities. With respect, my advice is perhaps aimed more at colleagues on the Labour benches, who would do well to take a leaf out of the SNP Scottish Government’s book and axe the bedroom tax and the public sector pay cap, which affects people in rural communities. Delivering for the many, not the few, cannot just be a soundbite. It needs to be backed up with action, because with devolved power comes devolved responsibility, and there is a moral responsibility on the Welsh Labour Government in Cardiff to act here too.

[David Hanson]

rose—

[David Linden]

If the right hon. Gentleman wants to indicate how he is going to lift the public sector pay cap, I am happy to give way.

[David Hanson]

I think the hon. Gentleman will find the bedroom tax is not devolved in Wales.

[David Linden]

My understanding is that the Welsh Government have spent something like 0.44% of what the SNP Government have spent on discretionary housing payments. I am happy to give way again if the right hon. Gentleman wants to correct that. I see he does not want to.

Wales cannot be stuck between an isolationist Government in Westminster and a lethargic Government in Wales. I very much commend the hon. Member for Ceredigion for bringing this matter to the House.