Defra and Forestry Commission: Spending Plans (Hansard, 23 July 2002)

§ Lord Whitty

The results of the Spending Review for Defra and the Forestry Commission are summarised in Chapter 16 of the White Paper on2002 Spending Review (Cm 5570). The key figures are as follows:

£ million
	2002–03	2003–04	2004–05	2005–06
Department for Environment, Food and Rural Affairs
Resource Budget	2,443	2,765	2,742	2,792
Capital Budget	241	316	344	354
Total Departmental Expenditure Limit¹	2,523	2,902	2,890	2,944
Department of Environment, Food and Rural Affairs¹	2,426	2,808	2,796	2,850
Forestry Commission¹	97	94	94	94
Near-cash spending in Defra DEL²	2,341	2,727	2,710	2,757
¹ Full resource budgeting basis, net of depreciation.
² Consistent with previous control basis.

When Defra was created, the objective was to have a step change in the way environment, agriculture and rural issues were treated in government. The aim was to create a department with sustainable development at its heart—and with responsibility for supporting sustainable development across government. For Defra this means working to achieve a better environment at home and internationally. It also means a food and farming industry working within a prosperous countryside, producing the food that consumers want in harmony with the environment.

For the Government as a whole, sustainable development goes much further. The vital importance of sustainable development for government as a whole underlay the decision to make it a central theme of the Spending Review. As custodian of the Government's sustainable development strategy, I particularly welcome the elements of the settlement, for my own department and for others, which will deliver significant improvements in key policy areas. These include.

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Climate change—where we will invest in innovation to meet our climate change objectives, building on existing funding for renewable energy sources with an additional £38 million in 2005–06 compared with 2002–03, and make further progress towards our greenhouse gas emissions targets;

Health—where we have announced the biggest ever sustained spending growth in the history of the NHS, to improve health outcomes and the quality of care for patients;

Education—where increased spending and further reforms are aimed at getting and helping 16–19 year olds into further education;

And Crime—where extra funding for the police will help them target reductions in vehicle crime, domestic burglaries and robbery, and reduce the gap between the highest crime local areas and the best comparable areas.

In addition, new spending on transport and regeneration will improve the quality of our local environments. For example, capital expenditure on capital transport plans—which includes expenditure on home zones, cycling, walking and local safety schemes—is doubling in real terms from 2001–11 as part of the Ten Year Transport Plan. The neighbourhood renewal fund is being increased from £400 million in 2003–04 to £525 million in 2005–06, in part reflecting an increased commitment to safer and cleaner communities.

Let me now explain how the Spending Review settlement will impact on Defra's programmes over the next three years and will assist the department in pursuing its aims and objectives.

Sustainable Farming and Food

When Defra was created, the farming industry was in crisis. Foot and mouth disease, coupled with the lowest farm incomes in many years, had destroyed farmers' confidence and, in some cases, their livelihoods. The review provides Defra with the resources to make progress—working together with the industry—towards a more sustainable future for the farming and food industries. Investment totalling over £500 million over three years will be available to support the key recommendations of the policy commission chaired by Sir Don Curry, and to improve animal health and welfare.

Action through the England Rural Development Programme, including:

A new broad and shallow agri-environment scheme which will reward farmers for delivering environmentally friendly outcomes to be piloted over the next two years and then rolled out in full in 2005–06;

An expansion of schemes such as the Rural Enterprise Scheme, the Processing and Marketing Grants Scheme and the Vocational Training Scheme to assist people in rural areas retrain, diversify and extend their businesses;

A more efficient food chain;

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Enhanced farm advice; and

Further measures to improve animal health and welfare, including livestock identification and tracing systems, enhanced testing for TSE-type disease (such as BSE); and further action to prevent illegal meat imports.

The additional funding will rise to £200 million in 2005–06, of which £75 million has been specifically allocated to fund, alongside equivalent EU funding, the full roll-out of the new agri-environment scheme in England. Additional funding will also be made available to the devolved administrations to allow them to increase expenditure on their rural development programmes. In return for the investment in their industry, farmers will be expected to play their part in making the industry sustainable, for example by acting to reduce the risks of animal disease. I know they will co-operate with us fully in achieving these joint goals.

The Government will continue to press for radical reform of the common agriculture policy (CAP) in the negotiations on the mid-term review of Agenda 2000 which began earlier this week. But the resources allocated in the Spending Review allow Defra to press ahead with reform and modernisation of the fanning industry now. The department will publish its strategy for sustainable farming and food in the autumn. I am very pleased that Sir Don Curry has agreed to chair a group which will act as a driver and overseer of change in the farming and food sectors through the implementation of the farming and food strategy, to ensure that we move rapidly towards a more sustainable, competitive and diverse farming and food industry which contributes to a thriving rural economy. The group will report to me.

The settlement recognises the need to prevent, control and manage the risk of animal disease, where we are driven by the memory of last year's outbreak of foot and mouth disease as well as the legacy of BSE. The additional resources provided will allow funding of a wide range of work on animal health issues. These measures will be set in the context of a comprehensive animal health and welfare strategy, as recommended by the policy commission. This will address ways in which the industry should bear its share of the costs of animal health controls and services. I am also pleased to be able to announce that we have secured additional funds to deal with bovine TB this year. These will be used to pay for the extra staff and resources already committed to work on the TB testing backlog and control measures, and additional casual staff who will be recruited to supplement this work. Testing is being carried out on the basis of a veterinary risk assessment, with those posing the greatest risk being tested first.

A countryside for all to enjoy

In addition to the new agri-environment scheme, which will play an important role in making the countryside more attractive and in helping to preserve biodiversity, the Spending Review has allocated an additional £5 million in 2004–05 and £10 million in 2005–06 for work in bringing our major wildlife sites into favourable condition. In addition, the extra 55WA funding of £5 million in 2003–04 and £10 million in the two following years to implement the Countryside and Rights of Way (CROW) Act will increase public access and enjoyment of our beautiful countryside landscapes.

Thriving rural economies and communities

The investment in sustainable food and farming, in improving the condition of sites of special scientific interest (SSSIs) and in opening up access to the countryside will benefit the wider rural economy. However, Defra's leadership role on rural affairs goes beyond this and our new rural PSA target reflects this. It commits us to reducing the gap in productivity between the least well-performing rural areas and the English average and making services more accessible for rural people. Defra will work with other government departments and agencies to deliver this and to ensure that the rural-proofing of their policies and programmes helps to deliver real improvements in prosperity and access to public services. The Spending Review White Paper sets out a range of commitments from other departments to deliver key services in rural areas and ensure that rural people benefit from the extra resources delivered through the review. The extra £25 million allocated in the settlement over three years will further increase the additional funds announced in the Rural White Paper to help regenerate in market towns and improve the ability of rural communities and the rural voluntary sector to deliver services in support of the socially excluded and progress towards solutions to key rural concerns in each region.

Protecting our communities from flooding

Government investment in flood defence has increased significantly in real terms since 1997. Additional funding of £15 million a year was made available in the wake of the autumn 2000 floods. The new funds over and above this which have been allocated in the Spending Review will ensure that this growth will now accelerate to reach 8.6 per cent a year in real terms over the SR2002 period. The further allocation to the department of £15 million in 2004–05 and £40 million in 2005–6, together with the amounts available for grants to local authorities and the revenues we expect to be able to raise from new funding mechanisms, will deliver an increase of £150 million in the third year of the review. This level of resources, together with simplification of the administration of flood defences and effective partnership working with homeowners, local government, the Environment Agency, scientists and the insurance industry, will allow us to reduce the risk of threats to life and damage to property from flooding.

Sustainable use of resources: the challenge from waste

The Spending Review settlement takes into account the pressures on local government and provides for spending on environmental, protective and cultural services, including waste management, to rise by £671 million by 2005–06. The funds will also enable them to deal with the short-term problems of fridge disposal and changes to the legislation on hazardous waste. 56WA Final decisions on additional resources for addressing the challenge of growth in municipal waste and moving away from landfill disposal and on other policy measures will be made available when the Performance and Innovation Unit (PIU) publishes its report into sustainable waste management in the autumn. These decisions and those on landfill tax and the future of the Landfill Tax Credit Schemes (LCTS) will deliver a step change in performance. Defra's PSA target of 25 per cent recycling and composting of household waste by 2005–06 demonstrates the Government's commitment to radical reform of municipal waste management.

Science

Evidence-based policy work is central to Defra's approach. I want, at the very least, to maintain the department's expenditure on research in real terms over the Spending Review period. This is consistent with our commitment to the development of a strong and high quality science base. It will ensure that Defra's policy-making continues to be based on the latest evidence and scientific and economic analysis. We will aim to increase science spending in our identified priority areas. These include: environmental horizon-scanning, climate change and extreme weather, a supercomputer to strengthen the UK climate change research capability, non-food crops, organic food production and animal disease. We will also examine the findings of the foot and mouth disease inquiries closely and determine if any additional funding for research is required in these areas.

Investment in the department

A theme of the Spending Review across all departments has been ensuring that they have the necessary capacity to deliver. That has been a primary focus of the developing Defra change programme that was set up after the department was created last year. Additional funding of £140 million over the Spending Review period for investment in the department will enable it to take forward the next phase of the change programme flowing from the recent joint strategic review carried out with the Office for Public Service Reform (OPSR). The investment will give staff the tools they need to change their ways of working, focus on customers and deliver the high quality services that will build Defra's reputation as a respected, high performing, and efficient department.

Forestry Commission

The Forestry Commission is funded on a net basis after taking account of the income it received, mainly from sales of timber from the public forests. Its timber income has fallen significantly in recent years due to a worldwide slump in timber prices. The Spending Review settlement provides additional funding of £5 million a year on top of the 2003–04 baseline to enable the commission to continue to drive forward the Government's England Forestry Strategy despite the reduction in timber income. This new money underlines forestry's important place in England's rural affairs and will allow the commission to extend sustainable forests management, restore more native 57WA woodlands, increase community forests and the role of forests in tackling industrial dereliction. In addition to the funding shown in the White Paper, the commission is also benefiting from special funding from the Capital Modernisation Fund and the Invest to Save Budget amounting to almost £11 million in the next two years.

Conclusion

Spending by the department in 2005–06 will be more than £400 million higher than in 2002–03, supporting a programme of reform. It fulfils the Government's pledge to introduce a significant programme of measures to move the food and farming industries to a long-term sustainable basis, to create thriving and prosperous rural economies and communities and to improve the environment. And it takes full account of the department's lead role in promoting sustainable development across government for the good of our citizens, both now and in the future.