Examination of Witnesses (Questions 60-79)
MR DAVID FURSDON and MR NICK WAY
WEDNESDAY 26 JUNE 2002
60. In defiance of market forces.
(Mr Way) In defiance of market forces. We are not that confident that they will to be able to continue to produce profitably at 13p a litre.
61. In spite of the evidence of the behaviour which is that people are, when pressed, purchasing or leasing more quota to maintain and increase their production levels?
(Mr Way) We are not disagreeing with the facts that you have just stated. We wonder how long this can last.
62. So you think there is a big bang coming?
(Mr Way) I do not know whether it will be a big bang or a steady decline.
(Mr Fursdon) There is a stage at which farmers do not quite know what to do next so they continue to do what they have always done, thinking that that is the way forward.
63. Even though that is in complete defiance of market economics?
(Mr Fursdon) For a while. That is a first reaction, in the hope that the cycle will return.
64. Because the natural process is that when prices fall production falls to force prices up, but of course that means some co-ordination within the sector which is normally lacking. Turning to the regulatory issue, to what extent do you feel that this is a peculiarly British problem, that we regulate in a way which is unhelpful to our sector in contrast to some other EU states, and you drew this out in some of the examples you gave?
(Mr Way) I am not sure that it is uniquely British, to be honest. When we speak to our counterparts in other Member States, lo and behold they complain about regulation too. That is not to say that it is always the same in all Member States. Other Member States are facing similar problems to us in the implementation of the Nitrate Directive and it will be interesting to see how they deal with it. I could mention at least one area where I believe we have differed, which is in promotion of regional local food. The state aid rules we are told inhibit us from giving support through the Rural Enterprise Scheme for projects that promote locally labelled food. We do not think that DEFRA has got to the end of the road in examining how other Member States cope with that problem because we see greater success in other Member States in promoting local food. We are not sure that there has been sufficient ingenuity yet or research done to see how other people get round the problems of regulation. By getting round the problems of regulation I do not mean compromising food safety. I mean looking for ways to play the system in a way that is satisfactory to the European Commission but in a way gets what the British Government and we need to help our producers get a better relationship with their consumers.
65. Is that a failure of imagination or just British obsessions with, "Here is the rule book and we apply it"?
(Mr Way) What have we seen? I suppose over the years we have seen in this country, yes, a dedication to rules, partly because of the structure we have. I am going to go back an awful long way, but the judicial review system means that there is usually somebody around who questions how we implement the rules and it is perhaps a difficulty that we have that we do have less flexibility in this country because there is, for example, the Judicial Review background and the National Audit Office, who want to make sure that the rules are being pursued very properly. However, we do wonder whether the British Government has said, "That has gone far enough", as it might in exploring the scope there is. We are pleased to see, incidentally, that they are looking to increase the flexibility of the rural development programme and the access to make those schemes more accessible to small business. Certainly in this country we find that those businesses have found it difficult to get into those schemes and I think here the government and DEFRA are trying to be helpful.
66. Are there any other Member States who have a departmental structure dealing with the areas that we are looking at this morning which have particularly impressed you?
(Mr Way) I think some of them are struggling to grapple with the problems that our government is struggling with, and they have done it in different ways. I am not familiar with all of them; I freely admit that.
67. But are there any of the ones that you have a degree of familiarity with that could teach us a lesson or two about how we might improve the way that DEFRA goes about its tasks?
(Mr Way) Perhaps it is not in the package of responsibilities that a government department has but the way in which it works with its local organisation. With the French Government I would see closer contact with the industries on the ground and through some of their professional organisations and through their departmental system perhaps a greater contact with industries on the ground. That would, I think, be another example of how government has tried to implement regulation in a way that is compatible with small businesses on the ground in maintaining local markets, for example. I hope that we can succeed in our farmers' markets here because there is the potential threat of regulation there. Otherwise I think that the Scandinavian countries and Austria have been more familiar with rural development policy as an aim of government than we have been here and have done more in that regard. Austria had a record of greater agri-environment and greater rural development incentives for quite a while, and of the links between agriculture, forestry, other businesses and rural communities than we have here. Maybe it is not so much the structures as the connections that they have had. We see it also in Denmark in the use of biomass.
68. I am grateful for that bench marking about DEFRA. Let us move on to what I call the sword of Damocles clause in your evidence. In paragraph 40 you say that the next test for DEFRA will be its response to the two inquiries about foot and mouth and you go on to say: "If that response is positive, for example with a simple and properly funded Broad Stewardship scheme, this will be an encouraging sign . . .", and then you say, "However, if there is a retreat from the recommendations of these reports, this will re-ignite fears that DEFRA has yet understood the scale of the needs of its rural constituency, and that it does not have the commitment to address these needs, and to promote the thriving and well managed countryside that can be enjoyed by the whole population." A triumphant ending. Are you saying that unless DEFRA do all these things, "we, the Country Land and Business Association, wash our hands of you; complete load of rubbish, back to the drawing board"?
(Mr Fursdon) I am glad you liked the paragraph. What I would say is that it is a way of judging the commitment, and of course it is a government commitment, not just DEFRA. What we would like to see is DEFRA, having been closely involved with the Curry report and having then consulted ad nauseam again after the Curry report, being brave enough to nail their colours to the mast and say, "This has been set up. We have come to a conclusion. We would like to see that conclusion implemented", and to be seen to be pursuing that as the way forward and, if not, then what is the alternative, because we have not seen DEFRA come up with an alternative to Curry and, in the absence of an alternative, they have either got to say yes or something else as far as we are concerned.
69. Just to be entirely clear, a sort of virility test of the department would be its willingness to adopt, lock, stock and barrel, Curry or do you think that it can still have credibility as a department if it cherry picks?
(Mr Fursdon) Curry looked into it exhaustively and came up with the idea, and he himself is on record as saying that it needs to be the whole thing, because all the intricate parts that link together are designed to give the answer as he sees it and he has spent a lot of time looking at it. He thinks it all needs to come together. It is our hope that it can be and we do have one or two qualifications, I suppose, in our support for Curry in that we wanted it to be Europe-wide and so on. We feel that to cherry pick it would be dangerous. Yes, okay, there are one or two little things that could be left out but the principle of it isI think "shallow" is always a dangerous word, if you take broad and shallow, but it is certainly a broadly applied scheme.
70. Do you sense that so far they have given a little tick in the box against the food chain activities, they have talked about the collaborative centre and ministers on the cheap end of it have put a tick in the box and waved the flag, saying that Curry has these wonderful ideas, but they are keeping their heads down over the expensive bit? What do you sense is the mood in DEFRA about what they should or should not sign up to?
(Mr Fursdon) What I was coming on to say was that the key to it was the broad application scheme to bring everybody into it. If you are going to look at what is the most important thing and should it be accepted in toto or not, the key to it is that it is a broad scheme. One or two of the other things could be peripheral to that but in general terms that is the key to it and that is how we would judge whether it has been a success or not.
71. Our Chairman is a wise man because he reads the Financial Times and has drawn my attention this morning to an article about the possible mid-term review of the CAP. If on the Brussels grapevine DEFRA are getting the kind of message back that this article in the Financial Times indicates, that the Commissioner is thinking of something far more radical, is it not wise that DEFRA postpones all response to Curry till it does become clear what is happening on the CAP mid term reform, or do you think that whatever happens we ought to go down some route rather than no route?
(Mr Way) I would agree that implementation of the Curry report must take account of what is going to happen in the CAP. We have read the FT report too and what is being described there is more radical. The way that the government system works as we understand it is that there will be a comprehensive spending review announcement before the summer recess and that this will guide spending totals for three years. That must include, from our point of view, resources for a broad stewardship scheme if I am right about the way the system works. I f it does not then we will not have that option. If the Commission's proposals come up with very stiff and strict capping of support to farming businesses then there will be a battle, we would argue, in those negotiations to fight Britain's corner from a competitiveness point of view, but it is too early to say that will rule out a broad stewardship scheme. Indeed, it might well be that a broad stewardship scheme will still be the sensible path to go down once those CAP negotiations/battles have been fought out, so we want to keep the option.
72. In the ante-penultimate paragraph of your submission, paragraph 38, you said that in the creation of a new department there was a major job to do in terms of integrating MAFF and the divisions from DETR and in creating a new culture. What brief observations would you have about any weaknesses in the culture and approach of the old MAFF?
(Mr Fursdon) I think I said a bit earlier on that one of our concerns about MAFF was where it was seen to be coming from in terms of what it was producing. From our point of view the fact that a number of businesses have actually moved rather wider than agriculture, they felt that they could not discuss the development of their businesses more widely than in just a Ministry of Agriculture, so that was one thing. The foot and mouth example also was one where it showed in our view down in the south west that the ministry was without the ability to look broader, and indeed was in need of a cultural change which we hoped by some of the broader remit of DEFRA that it would have and I think I said at the beginning that it hoped that a business element, a wider understanding of the way in which businesses link in rural areas, could be introduced. That was something that we felt the ministry did not always have. It was also this idea that culture could be changed and in dealing with the ministry over foot and mouth there was a lack of understanding of so many basics that one had in rural areas that we felt that it had lost its right to be doing the work; for example, just on little things like it had a preferred contractor scheme under foot and mouth whereby it was trying to deal with the foot and mouth problems with builders rather than with people who were involved. I do not want to go back into all that.
73. That is a reasonably concise summary of your concerns. Moving forward to the objective review to date, at this early stage how successful would you say that DEFRA has been in addressing some of those cultural weaknesses and indeed any with which you are familiar from the former DETR? I realise that you will not necessarily have had a close and continuing relationship with them but how successful has DEFRA been in addressing those problems?
(Mr Fursdon) I think I will let Nick do it on the national basis. On a regional basis there has been an understanding that there is a wider remit and I think one of the difficulties is that, coupled with a change in the staffing arrangements, and we do make reference to the south west in our response, we have difficulties in that there is a greater remoteness of the new department from where we are looking at it. There is a sort of slight confusion between the roles of the government office south west and with DEFRA and the fact that the senior representative with whom we would have dealings is an employee of the Government Office South West who has local responsibilities rather than directly from DEFRA. Perhaps we were spoilt before but we do not have the ability to deal with some of the specifics that we used to on a regular basis. There is a willingness, because of the wider remit, that it is now going to be considered by these forums in the regions, that that could be put right. One fear, I suppose, is that by widening the remit so many other people come in. I have been at meetings there are just too many people in the room to ever achieve anything. Because it is such a broad remit and there are people representing a whole lot of environmental concerns, stakeholders, people trying to get involved in agriculture and so on, you end up going nowhere. That is just from the regional aspect.
(Mr Way) We have seen a change in the culture, certainly from the senior staff at the national end. We have seen a realisation that countryside and rural policy is about more than agriculture, which we would support. Agriculture is important but we think rural policy is about more than agriculture. We have seen an acceptance that government policy in this area must serve a wider constituency than in the rural areas and we accept that too, so that consumers are listened to more than they were before. We have to accept that, that our members, our constituencies, have interests and concerns and ultimately they sell to a wider market place. We have seen that in the way that the Curry Commission was set up, we have seen it in the way that some legislation has been implemented, in the way that the Countryside Rights of Way Bill was not introduced by this department but how the Act has been taken forward by the department. What we have yet to see though is this integration or understanding of the different elements within rural areas, and I realise that I am now talking about rural areas, but within a wider DEFRA remit we have yet to see that understanding and the development of a more coherent rural policy. We have seen the change in culture but not all the way. Can DEFRA win on this? You made an earlier observation about MAFF being perhaps necessarily too focused on the area of agriculture and then you welcomed the broadening of the remit of DEFRA. Mr Fursdon says he has been in meetings where there has been a Tower of Babel in terms of the policy components of that particular group. Is that something that is also shared by your members? You heard some of the earlier evidence given by the RSPB in terms of the one-stop shop. Do your members have difficulty not getting people into one room but getting the right person on the telephone line for a single query, or do they need conference halls every time they go to the DEFRA fount of information?
(Mr Fursdon) We have mixed reactions to that. Some people say that, for example, in the implementation of the Countryside Stewardship Scheme the local project teams on the ground are rather better focused and more accessible. On the other hand, we also get the business of trying to get through on the Rural Payments Agency and trying to deal with queries about IACS and so on is actually much more difficult. I think it is a bit early. There is circumstantial evidence and some people will contact us steaming because they have got absolutely nowhere and other people will be quietly supportive. I do not have a particular view on that. What I do feel is that there are other areas where people would like to have support where they have not yet got support. If you take, for example, rural tourism, I feel that there are people who are saying, "We would like to see what the department with its clearly defined role is supposed to be doing for us if we have branched into on farm bed and breakfast", self-catering accommodation or whatever it may be. "Has DEFRA got something to do for us because we do not see it at the moment?" It comes to this question about the role of the department within Whitehall where DCMS may be taking the lead on tourism. Is there a rural tourism dimension? We believe there is. Does DEFRA believe there is and, if so, how is it going to be dealt with and how are they going to get that message across?
74. My assessment of the interface between, in our case, GOEM and DEFRA is not dissimilar to what you described in the south west and I think that does need attention, but rolling back a couple of years or so, my observations about MAFF in the pre-FMD era was that they were demoralised and poorly led. The annual report of DEFRA makes a very choice observation that it wants to retain and motivate the best quality staff. What organisation does not want that to happen? How would you describe present morale in DEFRA and how would you say that that pretty ordinary objective has been met so far in them getting better quality, highly motivated staff?
(Mr Fursdon) I do not have a wide experience of this other than a temporary job done by my son who was working within the organisation, where he was thrown by the idea of having to deal with a farmer in tears at the age of 18, trying to deal with his clients, which suggested to me, I suppose, that if you have a lot of staff changeover and people being thrown in at the deep end without really, in his case, understanding how to deal with a situation like that when he was straight out of school, which was actually almost beyond him. The high staff turnover, the fact that there have been so many people with changed jobs as a result of foot and mouth and the consequences of foot and mouth and switching around trying to deal with things that are hitting them left, right and centre, has caused a problem and a lack of stability and therefore I suspect that there is a lack of morale as a result of that. It has not been terribly easy therefore, and of course are they then able to attract people? I do not know the answer to that but what I would fear, coming back to something I said earlier, is that to give them an opportunity of somehow getting out and seeing what the front line is like and understanding how things work, what they are trying to achieve and what would help in that morale, I do not know whether that is impossible to try and achieve. I just feel that there are ways to go about it. The moment one gets in there one gets the impression that it is everybody running to stand still; they have had too much on their plate, they have not been able to fully staff up to deal with all the problems, they have got complaints coming in and everybody is worried about handling the complaints and so on, and it is not a terribly attractive thing to attract somebody into. That needs to be addressed. How one does that is not really for me to say.
75. Any initial comments, Mr Way, about this area of morale?
(Mr Way) Yes, we did see signs before the creation of DEFRA that MAFF had demoralised staff, particularly in the regions, and yes, we have seen signs in its first year of difficulties not least because of the different pay levels and IT problems. I have some sympathy with those attempting to run DEFRA. Our organisation is a much smaller one but we have been trying to join up our rural policy and efforts and re-structure them and you can see that in the time in which re-structuring is going on it is difficult; there are problems of uncertainty. What we would hope to do in our organisation, what we would hope DEFRA would do, is provide a clear direction as to where we are trying to get to. I would hope that DEFRA has got objectives, which should be attractive ones for staff, to regenerate rural areas and to take forward the sustainable development agenda in Whitehall. These are objectives that a lot of young people would like to see achieved. It is a question of whether the policies to do that are visible and going in that direction. I am not saying we have got the answers. We have tried to suggest some for the rural areas. On sustainable development I suppose we would put forward something analogous to what we said on working with the grain of business to achieve objectives, to reduce the cost of regulation and to link economic, social and environmental sustainability together in a way to get through what was described earlier this morning as quite a jungle in Whitehall with different policy interests. We have a similar range of interests to deal with because we deal with many different government departments. We see that approach as being the only way to try and get a result which is economically viable and also environmentally sustainable. That would be our rather general suggested way forward.
76. You highlighted some of the legislation that the department has been involved in implementing. One of the ways of assessing the direction of the department is the legislation it chooses to promote. How did you feel about the Animal Health Bill?
(Mr Way) We can see why certain elements of an Animal Health Bill
77. We could all see why some of it needed to be done.
(Mr Way) It needed to be done. We saw gaps during foot and mouth disease control and the Government did not turn out to haveit is still not absolutely clear; I do not think we are the only ones who are not absolutely clear on thisor appear to have the powers that it first thought it had, so yes, on that. We have raised concerns about the speed with which veterinary inspectors can go on to farms even in emergency cases without the farmer being given notice and being given notice of the magistrates' warrant to go and do so. That we think does need to be looked at.
78. I was more thinking of whether this gave some indication of the way in which the department was shaping up in terms of its relationship with its stakeholders and its culture of carrying out its responsibilities.
(Mr Way) Good point. We did say at the time that we felt that the government ought to wait for the publication of the Anderson and Follett reports before implementing an Animal Health Bill so that it would have that wider scrutiny and consultation on what was necessary before going forward and now it would appear that that is what will happen. We are asking it to take considerable notice of what is in those reports.
79. That is not what the department promoted at the start.
(Mr Way) No, it is not what the department promoted at the start.