Global Policy Forum

By Peter Hetherington

At one time, Labour based its appeal for national unity on the importance of the countryside. When there was a huge, unionised workforce on the land, Clement Attlee was proud of the party's rural roots. His agriculture minister, the Yorkshireman Tom Williams, defended field sports on the grounds that country people had earned the right to be trusted in the management of the animal kingdom and the entire Labour front bench voted for hunting. How times change. Farm workers are now thinner on the ground than pitmen and agriculture accounts for just 1% of GDP. It has taken New Labour some time to realise that it owes a once-thriving industry few favours. Pouring billions into farming, the last great bastion of subsidy, has won Tony Blair little ground. They still vote Tory in the old shires, although the number of farmers has declined by 20,000 in five years to about 350,000. It is certain to fall much lower in the aftermath of the smouldering foot and mouth crisis.

Agriculture is now without a dedicated ministry for the first time and Blair, bruised by skirmishes with farmers over the past few months, wants his new secretary of state for the environment, food and rural affairs (Defra) to bring the industry to heel. Pressure is growing on Margaret Beckett to end the feather-bedding of farmers and support other countryside industries with the potential for growth. Mr Blair's case has been strengthened by the chairman of the government's countryside agency, Ewen Cameron, a Somerset landowner. He believes Britain should take a lead in Europe by pressing for a swift scaling down of EU agricultural subsidies so that more cash can be pumped into the wider, long-suffering rural economy.

Pressure is also coming from other unexpected quarters. The National Farmers' Union might be alarmed by the growing band of country folk favouring widespread reform. But its former chief economist, Sean Ricard, has little sympathy with the complaints of his former employers. Agriculture, he says, has to finally address reality. "After 50 years of subsidies, farming is the most hope lessly inefficient and uncommercial sector of the whole economy," he thunders. What's the point, argues Ricard, of continuing to prop up an industry which - like older (unsubsidised) manufacturing sectors - can never employ more workers and is destined to decline further? Far better, he says, to gradually withdraw subsidies and let farming find its own level in the market place.

Agricultural support accounts for a third of the annual farming income of £15bn. But even that underestimates the real position. Remove unsubsidised sectors, like pigs and potatoes, from the equation and that subsidy is closer to 50%. Ricard, now at Cranfield Business School, is not alone in feeling that other rural businesses, with greater potential for growth, deserve more support. "You could take a fraction of that £5bn annual support the farmers get, say £1bn; put that into another countryside scheme and people would really notice the difference," he says.

In a new analysis, one of the country's foremost countryside institutes, Newcastle University's centre for rural economy, underlines the mis-match between farming subsidy and support for the wider rural economy Tourism, for example, accounts for 4% of GDP, four times more than farming and employs 7% of the workforce, against 1.5% in farming. It stands to lose £5bn this year as a result of foot and mouth. Farming, by comparison, has lost about £775m but could get £1bn in compensation. The tourism industry has been given only £18m so far, although businesses have to cross a bureaucratic minefield before they get any government help. Margaret Beckett at Defra faces one of the most challenging jobs in the government. She must bringing a note of realism to an industry cushioned by the old ministry of agriculture which, in the minds of critics, was little more than an appendage of the National Farmers' Union.

This week she travelled to Luxembourg for her first appearance on the EU stage and began making the alliances necessary to finally bring meaningful reform to the common agricultural policy (CAP), which determines most of the generous subsidies. She has spoken boldly of developing a new strategy for rural England to give people hope. But it is a far cry from the postwar Labour government. Now there is little trust between an industry still crying out for more cash and a government which feels the time is right to change course in the countryside. Beckett's task will not be made easier in the aftermath of a foot and mouth crisis which has punched such a great hole in the rural economy that the government's own tourism quango reckons that about 150,000 jobs and 3,000 smaller firms are under threat.

Beckett's immediate priority must be to begin switching subsidies away from farming - "modulation" in EU jargon - to protect the environment and support alternative rural businesses. Even within the current CAP regime, she has some room for manoeuvre. Ministers can divert up to 20% of farming subsidies to other rural projects. So far - unlike France, for instance - it is well below that level. Nevertheless, Sean Ricard believes it is far more likely that the new department will pursue "modulation" than its ministry predecessor. "In the past, only the Ministry of Agriculture controlled the agenda and while others suggested - pleaded - at the end of the day, Maff and its cosy relationship with the farmers would have prevented it."

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