The Rural Development Programme Experience in the UK 2007 - 2013: focus on England

The Rural Development Programme Experience in the UK 2007 - 2013: focus on England
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This text represents the views of the author and not those of the UK government department that commissioned the evaluation referred to (Defra).

In the UK, a regional approach was adopted for rural development programming in the 2007-13 period, so four Rdps were designed and implemented in England, Scotland, Wales and Northern Ireland. Overall, the UK planned to put the majority of Rdp resources into environmental management and support for marginal areas, with a lower share of funding devoted to competitiveness in agriculture and forestry and to broader rural development and quality of life. Thus, in respect of the formal Rdp structure, the largest share of funding was programmed and spent under Axis 2 - improving the environment and countryside.

Table 1 - UK Rdps, planned total public expenditure (EU and national co-financing) 2007-2013

Source: RuDI project deliverable 4.2 Annex - see [link]
 

The main differences in priorities between the four regions were as follows:

  • In England and Wales, agri-environmental measures dominated the Rdp budgets and focus, and environmental goals were also prominent in the ways in which measures in Axis 1 (primary sector competitiveness) were used (e.g. funding for equipment and training to enhance the environmental impact and improve the efficiency of resource use and soil and water management). In both these territories, the Less Favoured Area (Lfa) supports were ended during the programme period and replaced with specific upland elements within the agri-environmental measures, for each region - England abolished its Lfa aids in 2010, whereas in Wales they were ended in 2014.
  • In Northern Ireland, a significant share - almost one-third - of Rdp resource was devoted to local capacity building measures in axes 3 and 4 (supporting the broader rural economy and quality of life), reflecting the particular success of the Leader approach in this region over the last decade and more.
  • In Scotland, more than half the total budget of the Rdp was devoted to three broadly environmental groups of measure: forestry management, agri-environment measures and Less Favoured Area support, in almost equal shares. This allocation partly reflects territorial character, in that Scotland has a high proportion of marginal and mountainous land as well as the UK’s most significant forestry sector.

England is the region with the largest territory and Rdp in the UK and in many ways, it illustrates well the particularities of UK approaches to rural development under the Cap. We focus the rest of this section on examining the performance of the Rural Development Programme for England (Rdpe).
In England, the objectives of rural development policy 2007-2013 were based on Community Strategic Guidelines1, but with priority for promoting environmental outcomes and sustainable use of natural resources, and a secondary focus upon strong economic performance (notably following the global financial crisis of 2007-8). These priorities were broadly consistent with the UK Government's Sustainable Farming and Food Strategy, published in 2002. The European Union approved the Rdpe with a budget of approximately £3.9bn (€4.9bn, 55% of the UK total)2. The actual spend of Rdpe funding was €4,445 million, with 11% of EU monies spent on Axis 1, 79% on Axis 2, 5% on Axis 3, 5% on Axis 4 and 1% on Axis 5 (technical support).
Axis 1 - Delivered nine measures with three of them, vocational training (M111), Modernisation of agricultural holdings (M121) and adding value to agricultural and forestry products (M123) accounting for over 80% of expenditure. The measures fell into two main categories: advice and training, and capital grants promoting investment in the sector and in adding value. In developing the strategy for the Rdp, both stakeholders and the managing authority (Defra, the Department for Environment, Food and Rural Affairs) identified a common interest in aiming to enhance technical and management skills within the sector, with a particular focus upon improving animal health (combating disease) and reducing damage to soils and water from farming practices. The inclusion of these aims means that economic indicators offer only partial insights into the achievements of measures within this Axis, as environmental and welfare outcomes are also relevant. Modifications during the programming period were also used to respond to particular issues, such as significant flooding in the second half of the period, and particularly low milk prices towards the end of the period. In both these cases, measures were designed to help farmers to cope with the immediate negative impact of these unexpected crises rather than longer-term planning or preventative actions.
Axis 2 - Delivered seven measures with the single largest measure being Agri-environment payments (M214), which accounted for 82% of all Axis 2 funding (representing two thirds of total programme spend). This measure funded the Environmental Stewardship scheme, which provided multiannual payments to farmers to manage land for environmental benefit through a large, two-tier multi-goal approach with an open-access, broad and shallow element (Els), and a competitive, budget-limited narrow and deep element (Hls) mainly targeting areas of high value for wildlife and/or high priority for water quality protection. The area of land entered into both schemes grew throughout the period, although annual uptake of the Hls was affected by budget cuts in response to public financial austerity, in the later years. By 2014, over 2/3 of the total Utilised Agricultural Area in England was under agri-environment agreements, but more than half of this was within Els, whilst Hls covered around 25% of farmland. A programme of ongoing monitoring and evaluation allowed changes to be made to these elements during the Programme, including integration of Lfa aids (M212) into the scheme after 2010, and changes to improve the value for money of the Els, by offering training and advice to aid more appropriate selection of management options by farmers. Axis 2 measures targeted at woodland creation were limited by low payment rates/insufficient market incentives, but woodland management grants were aided by wider policy support for woodfuel (e.g. a variety of energy policies offering tariff-based incentives to those investing in renewable energy generation, among Smes and domestic users).
Axis 3 - Delivered eight measures with the three economic diversification measures, farm diversification (M311), micro-enterprise (M312) and tourism (M313) together accounting for 58% of total Axis spend. A second group of measures focused on enhanced quality of life for the rural population, namely M321 (basic services), M322 (village renewal) and M323 (investments in rural heritage), which together accounted for 39% of Axis 3 funding.
Axis 4 - The Leader approach - accounted for just 5% of total Rdpe spend and was mainly used to deliver Axis 3 (and some Axis 1, in some areas) measures at a local scale.
Rdpe had two distinct phases of delivery for measures under Axes 1 and 3. More than half of the Axis 1 and 3 budget was delivered through England’s 8 Regional Development Agencies (Rdas) in the 2008-2011 period, with a little through Leader over that period. However, after a change of government in 2010 the Rdas were abolished and delivery of these measures passed either to Leader or to new, centrally-designed and delivered schemes. The Rdas thus delivered around half of Axis 1 Rdpe spend, whilst the all-England government agencies Natural England and the Forestry Commission delivered around a quarter of Axis 1 spend, and centrally-run Defra schemes the Farm and Forestry Improvement Scheme and Rural Economy Grant made up the remainder. The Rdas also committed the largest share of expenditure (57%) on Axis 3 measures, and Leader groups had a significant role for some measures, including 44% of all micro-business projects under measure 312. Quality of life measures in Axis 3 were mainly delivered by Leader groups (50%), with 30% delivered by Natural England (a ‘Paths 4 Communities’ scheme with M321, and historic farm building restoration within the HLS agri-environment scheme, using M323), and only 20% by Rdas.
The regional phase of Rdpe Axis 1 and 3 delivery generated a variety of distinct approaches within different territories. In the South West and North West regions in particular, strong stakeholder networks and a positive working relationship with the Rda gave rise to a process of integrated design and ‘commissioning’ of multi-measure projects seeking to achieve significant impacts in particular sectors. Examples include the South-West Healthy Livestock Initiative (Swhli) and South-West Agricultural Resource Management (Swarm), as well as the North-West Livestock Initiative and Cumbria Integrated Tourism Project. Regional stakeholders report that these schemes probably had the greatest impact on sector-level change during the programme period, raising management standards in all these areas. These two regions had previously designed and managed ‘rural renaissance’ national funded programmes to help farmers and rural businesses recover from the significant impacts of the Foot and Mouth disease epidemic in the previous funding period. It seems that this experience gave them an advantage in effective networking and strategic planning with stakeholders, in the 2007-2013 period.
Axis 2 delivery was not affected by the changes and approaches described above. Natural England delivered the agri-environment scheme Environmental Stewardship in Axis 2 and the Forestry Commission ran the England Woodland Grant Scheme (Ewgs) which delivered forestry measures, throughout the programme period. Some funding under Axis 1 of the Rdpe helped to support advice and training linked to these two schemes.

Evaluation

Measures deployed under the Rdpe encompassed most (but not all) of the range available under the Rural Development Regulation; stakeholders generally regarded the measures deployed as consistent with the programme objectives and hence the identified and prioritised needs.  Flexibility within the programme allowed some adjustments to measures in response to evaluation evidence and to meet changing needs and address emerging issues, maintaining relevance in changing circumstances. Examples include the introduction of the Farming Recovery Fund, which assisted businesses to recover from flooding and the Dairy Fund which supported cooperative action to address the dairy crisis.
The Rdpe represented a major source (€4.5bn or £3.6bn) of public funding to influence land use management to deliver on priorities for biodiversity, soil and water quality and climate change, in support of wider policy. It should be noted that non-EU-driven public investment in agriculture is extremely limited, although public support for rural environmental policy goals is slightly more significant. Nonetheless, Rdp support represents a considerable additional source of funds, in both contexts.
In addition, although limited by the scale of actions and the fact that socio-economic measures were not solely targeted towards economic objectives, the Rdpe also contributed around €1bn to the growth of the rural economy. In particular, there was a focus in Axis 1 on resource use efficiency, improving animal health and welfare and nutrient management, in order to deliver improved competitiveness and environmental performance in agriculture. In terms of addressing socio-economic needs, a small but broadly representative sample of programme beneficiaries surveyed (n=196) reported that the majority of Rdpe measures were relevant and addressed their (self-perceived) needs, and their project objectives were fully or mainly met.
Rdpe objectives were set in terms of protecting and enhancing the environment, establishing competitive and sustainable rural businesses and fostering thriving rural communities.  In terms of the environmental objectives, progress was made across all areas including improved biodiversity, protecting high nature value farming, landscape enhancement, water quality improvement and climate change mitigation, as shown by a variety of local studies and ecological assessments.  However, this is not well-reflected in the EU’s Common impact indicators, due partly to the influence of external factors on these measures, but also the scale of environmental challenges as well as the difficulties in evidencing cause and effect.
One key issue for this environmental axis was a high element of deadweight in the Entry Level Stewardship (Els) scheme, as farmers opted for management prescriptions which were most similar to practices that they already used, and independent evaluators noted a need for greater spatial targeting of these management options in order to enhance their benefits. This weakness was partly addressed in programme modifications after mid-term evaluation, and then more comprehensively by a comprehensive scheme re-design, in which the entry level approach was removed and replaced with a more targeted ‘mid-tier’ scheme, for the new Programme 2015-2020.
In respect of socio-economic goals, Rdpe interventions supported job creation and safeguarding to a limited extent, but also increased the variety of rural employment opportunities through economic diversification and improved the quality of existing jobs via investment in technology. Increases in part-time, casual and seasonal jobs were greater than in full-time jobs. In terms of rural businesses and communities, the three Common Evaluation Framework impact indicators relate explicitly to the competitiveness objective: economic growth; employment creation; and labour productivity. While baseline indicators for all these have risen over the programming period it seems likely that these patterns were influenced considerably by external factors (trends would also have been positive in the absence of Rdpe). By contrast, qualitative impacts upon the provision of rural services and quality of life appear to have been significant (as judged by beneficiary survey and interviews with Leader groups and stakeholders). There is good evidence of net Rdpe impact at beneficiary level. The absolute magnitude of gross economic effects of Axis 1 (growth and employment, improving competitiveness of farming and forestry) and Axis 3 (rural communities, rural quality of life and growth and employment in the rural economy) is modest relative to the size of the rural economy and of the agricultural and forestry sectors. This largely reflects the comparatively low sums of Rdpe expenditure devoted to these objectives.
In terms of funding allocation, most targets for spend were revised at intervals but then largely achieved or exceeded. Overall, individual projects tended to be smaller and more numerous than was originally anticipated. Targets were achieved for most result indicators. Efficiency measurement in a quantitative sense is limited by a lack of benchmark figures, especially for Axis 2 (i.e. it is not possible to identify alternative, effective delivery approaches with lower costs). The ex-post beneficiary survey suggested that micro-business start-up support (M312) delivered good value for money in terms of job creation. A Social Return On Investment (Sroi) analysis of Axis 1 and 3 measures highlighted the many wider social impacts of the tourism and farm modernisation aids in particular, where improved social networks, confidence, capacity to act and knock-on business development opportunities were all frequently identified as a result of the funding. Projects delivered through Leader generated notably high Sroi ratios of around 3:1, suggesting this approach was most cost-effective in achieving a wide range of valuable returns, despite widely reported heavy bureaucracy for Local Action Group administrators.
Qualitative evidence suggests that in some Rdas, these organisations’ relative unfamiliarity with the programme and rural groups and needs in the early years of delivery affected efficiency, while in other regions, prior experience working in rural delivery (particularly in response to economic challenges arising from the Foot and Mouth disease epidemic in 2003-6) gave Rdas a much stronger network of trusted stakeholders and local delivery agents to work with, leading to more efficient and effective delivery. The budgetary impacts of the wider financial crisis, and programme changes after 2010, impacted on the efficiency of all delivery bodies. Many beneficiaries reported an impression of heavy bureaucracy associated with drawing upon Rdpe funding, while delivery bodies tended to report that much of this was directly attributable to EU and UK legal requirements.
Cost-efficiency of different delivery mechanisms varied across different measures and schemes within Rdpe. Evidence from regional stakeholder consultations suggests that there was scope to improve efficiency and reduce administrative costs by simplifying project approval processes to improve proportionality between the significance of funding and level of scrutiny. While transaction costs (both for applicants and administrators) can be mitigated by simplifying application processes, and fewer, larger projects offer better process cost efficiency, the relative effectiveness of small and large grants at securing desired outcomes is key. Given the wide range in scale and type of rural firms and of investment needs/opportunities, it is likely that the mixed-scale approach of Rdpe was suitable, encompassing large, transformational (infrastructure) type investments as well as more modest, operational type investments to support individual business competitiveness. Bearing this in mind, therefore, more differentiated approaches to processes for different scales of project may have been warranted but were only partially developed during this programme period.
A range of factors influenced cost-efficiency in programme delivery, which included: engagement with the programme (uptake); changing external conditions (policy, regulation, macro socio-economic and environmental conditions); changing delivery arrangements and mechanisms; and varied pre-existing levels of human and social capital including knowledge, capacity, mutual understanding, trust and credibility between different parties. Evidence suggests that the level of change over the programme period engendered significant short-term disruption and that the most effective approaches take significant time to develop (exceeding the timescale of a single programme).

Results and impacts

  1. Economic Growth: Evaluators used beneficiary surveys recording direct impacts upon businesses, adjusted for estimated deadweight and displacement and input-output-derived multipliers, to estimate that the Rdpe contribution to rural economic growth was €1bn to €1.2bn (c. £0.8bn to £1.0bn).  This represents c.3-5% of the overall real Gva growth seen in rural areas over the period 2010-2015, after the economy moved out of the recession following the financial crash.  These estimates exclude Axis 2 measures and hence may slightly under-estimate the overall Gva contribution, prior studies have estimated modest, net positive impacts on economic growth from similar, previous agri-environment schemes in England.
  2. Employment creation: ex-post scheme data reported over 11,000 new jobs created through Axis 1, 3 and 4, whilst a previous study estimate is higher at around 19,000 Gross jobs3 created.  However, employment creation arising from training effects or from Axis 2 activities is not recorded, hence total Gross job creation may be higher still.  Estimates suggest that deadweight and displacement effects lead to lower Net job creation figures amongst direct beneficiaries, but that multiplier effects compensate for this to give overall higher Net job creation estimates (adjusted) of around 20,000 to 23,000.
  3. Labour productivity: While previous studies suggested a modest aggregate net impact on Gva per full time employee (Fte) of 2% to 4%, the ex-post beneficiary survey suggests a more positive effect of Axis 1, 3 and 4 spending under the programme, averaging a Gross Gva gain per Fte of around €17k (28%), split between increased output and lower costs. The main impact has been from investment in new technologies, processes or products.

Reflecting the relative prominence given to the environmental objectives of EU rural development funding, four of the seven Cmef impact indicators relate to environmental issues.

  1. Farmland Bird Index:  This Cmef indicator for reversal in biodiversity decline has worsened in England over the programme period. However, reference to a wider set of biodiversity indicators suggests that the Programme has supported biodiversity effectively to some extent, achieving short term “stability” for widespread bats, woodland birds and butterflies. Evidencing cause and effect is very difficult at a national scale but there is good evidence of causal linkages and positive net impacts of Rdpe spending at a local scale.
  2. High nature value (Hnv) farmland: The area of Hnv farming in England has yet to be defined, so progress cannot be formally calculated. However, indicators "% SSSIs in favourable condition" and "Area of new native woodland created" show that positive progress has been made to this end. 
  3. Water quality: Water quality indicators are stable but do not necessarily reflect the impact of Rdpe due to wider influences. Modelling the anticipated effect of agri-environment scheme management predicted modest reductions in pollutants from Rdpe-funded changes, while a ‘difference in difference’ analysis of nutrient balances found that the gross nutrient balance may also be lower on in-scheme farms. Other modelling work indicates that Axis 1 measures (through Catchment Sensitive Farming advice, training and capital grants) are contributing to water quality, decreasing Phosphate and faecal matter in water bodies.
  4. Increase in production of renewable energy: This impact indicator for combatting climate change is at best a partial measure of mitigation efforts.  However, targets for the production of renewable energy under Rdpe have not been fully met and the Energy Crops Scheme was closed after the mid-term evaluation judged that it could not operate effectively in the absence of stronger supply chain development. However, other Rdpe Measures will have contributed to reduced greenhouse gas emissions: notably reduced livestock numbers and nutrient use under agri environment schemes, but also Axis 1 actions to improve input use efficiency and promote animal health and welfare. Climate change adaptation actions, such as investment in water storage in drier parts of the country, have been limited but helpful.

The impact of Rdpe interventions is subject to the financial crisis and its aftermath, the imposition of government austerity measures and prolonged poor macroeconomic conditions. Consequently, attributing changes in, for example, overall economic output or environmental change to the Rdpe rather than other influences is difficult.  Nevertheless, expenditure under the Rdpe represents substantial funding to rural England and has generated a range of beneficial results and impacts upon environment, quality of life and economic resilience.

Success and failure factors

The balance of funding across the programme stemmed from a strong rationale for investment in environmental public goods from land use and management, while rural economic indicators suggested lesser relative need for public intervention. There was effective demarcation between Rdpe and European Regional Development Fund (Erdf) programming but perhaps less in terms of European Social Fund (Esf) skills programmes.
Where stakeholder bodies felt a sense of ownership of programme priorities and goals, e.g. through co-design of initiatives in some regions, the benefits of programme funding were more widely recognised and supported across the sector and within rural communities. More investment in scheme design to ensure proportionality and improve clarity/ease of implementation, together with training for potential applicants, could all have helped reduce errors by beneficiaries and reduce administration time.
An integrated approach to measure delivery in locally-designed "packages" can be an effective way to drive behavioural change in farming. Similar benefits were also suggested in respect of small-scale rural tourism providers when seeking to enhance the quality of provision.
There is a case for the Leader approach to engage and deliver at a local scale but it is most effective when Local Action Groups (Lags) have sufficient capacity and authority to do so effectively. This requires strong and trusting relationships to be developed and maintained between rural communities, Lags and those overseeing their actions.
When major change in programme delivery is judged necessary, delivery bodies need to acknowledge the time, information and resource needed for local administrators and stakeholders to cope with new systems and plan transitions carefully and in stages, as far as circumstances allow.
Rdpe evaluation was hampered by a lack of long-term and consistent data capture and analysis. Future monitoring and evaluation could be improved by establishing robust baseline beneficiary and counterfactual samples for all environmental and socioeconomic schemes within the programme.

The implications of Brexit for rural development in the UK

As the UK prepares to trigger Article 50, there remains much uncertainty in respect of future policy for agriculture and rural development. The UK has been a longstanding critic of the Cap but largely in respect of its market management and related Pillar 1 approaches to sectoral support, whereas UK enthusiasm for Pillar 2 has been much stronger, particularly for agri-environmental measures and related initiatives. It therefore seems likely that a UK-led future policy framework will place more emphasis upon the targeting and delivery of environmental benefits from land management, and comparatively less upon basic farm sector support. However, the inter-linkages between these two pillars need to be considered, as politicians begin to talk about the prospect of ‘transitioning’ gradually towards a situation where farming receives a significantly lower level of public subsidy, going forward. The wider trading context will also be critical to future farming fortunes, as well as the sourcing practices and decisions of the UK’s significant food processing and retail sectors.
For rural development, we can anticipate a quite divergent pattern of future support and delivery, reflecting the varying relative socio-political importance of rural areas and the rural economy between the four constituent ‘countries’ of the UK. In England and perhaps even also in Wales, bespoke rural socio-economic support seems likely to be very limited – perhaps some Leader-like approaches will survive alongside a range of voluntary and locally-funded rural partnerships and service providers. In Scotland and Northern Ireland these elements of policy seem more likely to be sustained comprehensively, with Scottish policy focusing especially on crofting communities and Northern Ireland continuing to favour a broad-based coverage of Leader-style operations.

  • 1. Council Decision 2006/144/EC and amended by Council Decision 2009/61/EC.
  • 2. The exchange rate used for planning purposes was €1 = £ 0.8.
  • 3. Before adjusting for additionality, displacement, leakage, substitution and multipliers.
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