More than money
10th October 2018
10th October 2018
Food, Farming and Countryside Commission roundtable discussion paper, October 2018.
This paper is the result of a roundtable discussion that took place in July 2018 at the RSA on the theme of ‘Coordinating the whole resource: achieving greater public value.’ The discussion formed the basis of our thinking about public goods, public value and financial flows through the rural economy. Combined with insights gained from the bike tour and call for ideas, this paper helps to show how we arrived at the content of our progress report, and in particular the proposals in Chapter 5: ‘More than money’.
The debate about ‘public money for public goods’ — how to replace farm payments from the Common Agricultural Policy — is one of the issues informing discussions and consultations of the Food and Farming Commission. One challenge to the discussion on public goods so far has been that it has been dominated by an environmental theme, important as that is. Our approach has been to look also at the other end of the funnel — at the public money and how to maximise its value, aware that there is considerably more public spending pouring into rural areas than farm payments.
So as well as the debate about public goods, we also want to ask where the money is, where it comes from and how it might be used better. This is both a creative, revelatory and, arguably, a pragmatic position. Should the farming sector eventually lose some or all of the £3 billion or so in direct payments to farmers, there are other flows of money that could potentially be bent or corralled to underpin rural communities and the food, farming and countryside sectors.
Shifting the debate from public goods to the whole resource requires us to broaden the definition, both of the effects we want to achieve and how public, private and voluntary sectors can be supported to achieve it. It also means finding ways of being able to see the money flowing to and inside rural areas — and the tentacles of that other hidden resource, social capital. We want to broaden the debate to include the boundaries of what we call ‘the whole resource’.
Let us be clear — we would certainly be in favour of broadening the debate on ‘public goods’. Sustain, for example, has been campaigning for the government to include public health, and healthy eating as a public good, which would include healthy diets, diversifying, healthy agriculture, and sustainably produced food. Other public benefits which have also received less attention, and seem likely to be overlooked, include economic support for traditional farming techniques which preserves skills, livelihoods and increases rural resilience, as well as public access to the countryside. But this paper is mainly concerned with the public money which is already underpinning rural economies, including the huge resources of the Forestry Commission, the Environment Agency’s and, for example, the National Trust, the UK’s biggest farmer. Not to mention the £2.4 billion the public sector spends on procuring food. Nor is it just public sector spending, as we will see.
We call this, and the other money which swirls through rural areas, the ‘whole resource’. It includes at least three other elements, set out below.
The public money that goes to make up the whole resource is often in different fragmented, even contradictory siloes. It includes, for example, flood defence, catchment and agri-environment space, Section 106 payments wrestled by the public sector from the private sector. It also includes tax breaks where public income is forgone. There is also the public money which runs education, health and other services, some of which is earned by people living in rural areas, and which circulates on. And there is the money spent on government or local government procurement of food, some of which ends up in the pockets of farmers. . By 2015, UK public procurement market almost 14 percent of the UK’s GDP. Beyond CAP, procurement is one of the most significant ways that the government can positively impact food systems and rural communities
Another, not inconsiderable example, is the National Grid’s Visual Impact Provision project, which has dedicated funding of £500m to reduce the visual impact of electricity powerlines and pylons in designated areas.¹ This may be strictly speaking private money but it behaves like public money and it derives from private ownership of utilities. It is also possible to imagine other sources of public funding in the future, which might include land value capture — mechanisms that help communities benefit from the uplift in value when land is earmarked for development — and, perhaps, a vacant land tax, currently under discussion in Wales.
It was the former Environment Secretary Peter Shore, in 1976, who talked about ‘bending the main programmes’ of government so that spending in one area could further objectives in another. Government was too siloed in those days, a third of a century ago for this to come to any kind of fruition. But there may be an opportunity here for rural areas to align objectives — if it could be possible to see where the money is flowing more clearly.
The second category of the ‘whole resource’ is the money, mostly from the private sector, that flows into rural or agricultural areas. Current business models organise their production and distribution chains in ways that have impacts on public goods, both positive and negative. Because of this ambiguity, efforts to reward farmers and food producers for benefits to some public goods might be unwittingly be paying them to degrade others.
Among those complex elements that we have not perhaps paid enough attention to — and which would need to be priced into our new models — is the supermarket procurement system, and the international supply chains that they dominate, and the impact that has on the rural economy and the economic sustainability of UK farming.
There is also the largely untapped possibility of what those supply chains can achieve. Perhaps the best example of this is B&Q’s commitment to sustainable timber. As a result of this, most timber in the UK coming from FSC forests. It has become the norm because of retailer commitment. The same is true, for example, of Sainsbury’s influence on the egg market via their Woodland egg range.
On the other hand, we should not assume that all private investment in economic development is delivering public value, but — without at least a model of the whole resource — it will be difficult to make any kind of judgement.
Building private and third sector money into the model of public value means taking a position on how much third sector money (from the National Trust or RSPB for example) came originally from the public sector, for example as farm payments. There is also ambiguity about the water companies, because their investment is driven by regulation and they may leverage public funding — like Higher Level Stewardship — to enhance water storage in the uplands.
There is another resource which rural areas rely on, arguably more than city areas given that country people sometimes need to rely on each other more than city people. This is vital for their financial well-being but is not normally measured in terms of money. In fact, social capital is clearly an unmeasured, and therefore hidden, element in the whole resource. And, because we prefer not to limit what we mean under this rubric, it might be preferable to call this social ‘processes’, because it includes all those elements of what the economist Neva Goodwin calls the ‘core economy’, which underpins the ability of a community to earn money and operate in the economic world.²
The evidence suggests that social processes may be a critical element in making rural economies successful, including economically. This isn’t just about resources that an individual or group can access through their networks. It is also about the ability of individuals and groups to co-ordinate, co-operate and share resources across social divisions. Farmers and food producers who collaborate to share resources and knowledge, or help each other by clearing snow off the roads in winter, will be more likely to reap the economic benefits.
The difficulty for us is that it is hard to put social capital into the same model that tracks the money. Yet there are programmes which have successfully built or rebuilt social capital in rural areas, and which we can learn from to replicate in other places.
Then there is the link between social capital and effective decision-making and democracy in public spending and investment decisions. The purpose of creating a model that allows a certain amount of transparency about the inputs and outputs of rural areas is that it is a way to inform and involve people better, so that we can devolve more of the decisions closer to people in rural areas. Other themes in the Commission’s debate — and a great deal of the feedback from our bike tour of rural areas — have made it clear that there is a gap in the governance structures covering rural areas: LEPs tend to cover urban areas; urban areas have been given devo deals to manage more of their own affairs, but not rural areas.
The reason for repeating this here is that people’s ability to take part in the management of their own affairs is closely linked to the generation, or otherwise, of social capital — both as cause and effect. There is an obvious drift in urban policy towards arrangements that respect local differences better, and away from one-size-fits-all, but rural areas have more distant, less responsive governance arrangements and the evidence suggests that they feel this disadvantage.
There are many opportunities, certainly in England, for getting involved in the governance of countryside institutions, but engagement remains poor. The democratic opportunities are not based on firm foundations of involvement, which is a challenge for rural areas in particular. Perhaps as a result of this, though perhaps also a cause, is the way we create new quangos like LEPs, mainly unelected, but starve our elected local authorities of power and money. Local authorities covering rural areas find it even more difficult to provide the same level of service compared to urban ones, simply because of the lower population levels.
People’s engagement with democratic instruments probably depends on what powers those institutions have — encouraging engagement that isn’t underpinned by the power to influence change appears to drive disenfranchisement. It matters, in other words, when district councils overrule parish council views on housing in their village. There is therefore a risk of alienation because of national targets, for housing numbers for example, which are intended to drive change.
There was a discussion at the round table about the benefits of the French and German systems of local mairie and whether this might be a good model or whether this presents risks of corruption. But then again, any involvement or enhanced local democracy will increase this risk — so it maybe that it is time to experiment with ultra-local democracy, with enhanced powers for parish councils (the UK model), or parish budget meetings (the US model), or local mayors (the continental model).
The whole resource issue has at its heart some important unknowns. We do not know, for example, in any given rural area, how the resources flow in and out, and what they do while they are there. Without a model that helps us understand these issues, and to see the specifics, it will be hard for local institutions to have conclusive debates about what to do as a result.
A decade ago there were pilot projects to gather some of the information about public money flowing to some urban areas, as part of the Total Place initiative. More recently, cities like Preston, Nottingham, Oldham and Birmingham have been estimating how the total procurement of the public sector flows around the area. What makes these projects difficult to repeat in rural areas is the lack of boundaries. We mean ‘boundaries’ here in the sense of the largely invisible edges of a recognisable economy in rural areas, especially where they are dependent on local towns or more distant cities. There is also the question around the boundaries of what we should include in the rubric the ‘whole resource’ and what really belongs in a different category.
But none of these uncertainties need to get in the way of making judgements about the system, either by using the analytical methods set out by system thinkers concerned with ambiguous boundaries, like Werner Ulrich’s Critical System Heuristics.³ Or by organising fuzzier boundaries of responsibility, under the Scandinavian model of rural governance.⁴
Then there are the boundaries of this theme, because there are clear links with other aspects of the debate. In particular:
Critical to this debate is — or ought to be — the question of power in supply chains and who gets to influence global treaties and global standards and global trade? Who gets to decide what land or water resource is used for exports, in whose interest and at what price? How do democratic processes work within the complex, lengthy and often hidden WTO negotiations and dispute settlement processes?
Especially relevant here is the concentration of power in agri-food markets, which has been increasing rapidly over the past few decades. The upcoming Bayer-Monsanto merger for example will give the final company one third of the global seeds market and a quarter of the pesticides market. Five huge corporations control almost all the world’s grain trading giving them huge power over prices, availability and use. Transnational supply chains have been expanding in economic and lobby power since corporations began outsourcing manufacturing to places where low labour standards prevailed or were tolerated.⁵
In the UK, as things stand, parliamentarians will have little say in trade deals. Other debates launched by the Commission are considering whether we could develop and promote a new and better governance — of all supply chains and terms of trade, of sustainable farming systems, of land and water — so farms can survive and thrive and produce the diverse foodstuffs needed rather than fulfilling a global profit driven processed food agenda.
To develop the kind of model of the whole resource that we need, we need to take a position on the local impacts of those elements we have discussed above which are side-effects of centralised or monopolistic retailing or of counter-productive economic signals. We particularly need to know the real costs of poor diet or of low wages in the agricultural sector — and those two issues are linked because agricultural workers are, paradoxically, sometimes the worst sufferers from poor diet, with all the knock-on effects of that in terms of lost production and ill-health.
The whole resource estimate will include a number of equally paradoxical issues. There are real biodiversity networks, and they include those in urban areas, including important ones on the verges motorways, for example. Tourism can funnel money into sustainable development, but it can also lead to degradation? What are necessary externalities that someone should be paying for? What kind of financial infrastructure best suits rural areas — or do we really not need the specialist agricultural banks that are considered so vital on the continent? These are difficult balances to calculate with the old-fashioned economic tools that are easily to hand.
There are other difficulties about conventional payments to farmers. Even capital investment support in productive capacity should be approached carefully, because it has a record of some farmers over-investing in machinery just because the grants are available. This would be susceptible to similar critiques that the CAP has been subject to, especially by the UK. The NFU has also been arguing that farmers need public money to manage volatility. Actually, the UK is less volatile than most competing producers and the funding would hardly be an effective way of managing volatility anyway.
And what about import substitution? This may become necessary under some of the Brexit scenarios. Conventional economics also suggests that free trade should undermine the case for paying farmers to substitute imports with home grown produce. But there is a traditional critique — back to the allotments pioneer Jesse Collings at the turn of the last century — which suggests a public reluctance to waste money or fuel importing butter, bacon or potatoes, when we grow it identically far nearer. So, in horticulture for example, health and environment considerations imply that we might want to concentrate some resources on local productivity.
The issue at the heart of estimating, tracking and visualising the whole resource is about boundaries (see above), between different economic neighbourhoods — if that is a practical concept given how inter-dependent they are — and between what we include in the ‘whole resource’ and what we don’t.
It may also be time to put a financial value on other hidden elements of social capital, like a sense of place. It is certainly time we included them in the picture in some way, using in a more systematic way some of the insights and methods of Asset-Based Community Development.⁶
This commission takes place during a period of unprecedented change, of farm diversification and farmers who no longer farm — but also at a period when, thanks to Brexit, the regulations, payments and fiscal instruments may all be changing. There is a reasonable fear also that rural communities may have the least say over trade agreements which may change them further.
But what is a threat is also an opportunity, especially for those who are aware that, despite the money currently flowing through the system, depletions to the ‘natural capital balance sheet’ costs the country billions of pounds — and at least a proportion of that money ends up in the pockets of the richest.
When we talk about the whole resource, that is the entirety of public, private and social resources that public bodies, businesses, charities and community groups put towards creating public value, we are deliberately trying to open up a debate that has been stymied by the focus on ‘public money for public goods’. While we fully acknowledge that important work has been done pushing for a wider definition of public goods (‘public goods 2.0’), widening the frame allows us to take a broader perspective on the food and farming sector and on what creates a flourishing rural economy.
The key point is that public value can be generated not only through the traditional channels of direct aid, market schemes and rural development measures as currently administered through the CAP. Public value is also generated through government procurement, the private sector, and social processes that emphasize participation and localised decision making.
What follows are not, of course, firm proposals, but they do represent the direction of travel emerging after the whole resource round table. They fall under the two broad headings outlined above:
There are models out there for mapping the total public spend in an area (Total Place). There are methods for measuring where that money goes (the Preston model). There are very basic systems for tracking where the money goes next (LM3). There is information about how much money is lent by the big banks down to postal district level.⁷ There are asset-mapping strategies and Asset-Based Community Development methods for mapping social capital and more of the hidden resource. What needs to happen now is for an experimental model to be developed which brings them all together to make the whole resource visible.
Accuracy may not be possible for such complexity, but could we achieve a general sense — the correct sense — of how money flows through the system? We believe that this is important before any kind of local decision-making becomes possible.
This is the issue that emerges from the third pillar of Michael Barber’s ‘public value framework’ that he called ‘engaging users and citizens’.⁸ He argues, and so do others, that any intervention is more valuable to people’s effects if they believe in and commit to it. How might this best be done, nationally and locally? How does it relate to social capital, and is it one of the outcomes or the pre-conditions of the whole resource?
Only by making the whole resource more transparent can we make the kind of decisions we need to around the kind of effects its element has immediately and via the multiplier effect on wider communities. We can also consider how much of it has the intended effect, how much stays circulating, keeping the local economy alive, and how much simply slips into the pockets of the richest, locally or globally.
Even if we have no tools yet for following the money, we may need a better model for assessing the impact of public spending on individual farms. And perhaps also individual businesses, as well as on the wider farming system as a whole, This would also allow us to make sure that polluters pay for the damage they cause, and these externalities do not fall more widely on the local economy. As things stand, there is no economic case for sustainable farming on business grounds.
What is clear even without these calculations, is that a great deal of the resources is going on access to housing or broadband or transport in the urban areas — especially via the European development funds — rather than the countryside.
Nor is it just the inputs that count, because we also need to be clearer about the outcomes we want as well — perhaps including effective communities, worthwhile democratic feedback, an economic and probably co-operative infrastructure for small farmers, and a proper pipeline for new farmers to set up on the land. The ‘whole resource’ implies a whole system, which must not just be sustainable environmentally, but also socially and economically — if it is going to meet the nation’s food and health needs — and that it will be able to pay its way over time.
There are already a number of projects under way which take on elements of this vital objective, like the pilot work on a Devon ‘heatmap’ of all the public money in a biosphere on a square kilometre basis. Also the IIRC’s six capitals approaches; and the Sustainable Food Trust’s emerging work on ten metrics for farming.⁹ But we need to find ways of bringing the model together so that it can be used simply by any district or parish.
We also need to make sure that our model of the whole resource includes the value of volunteering, of care farms and education, and charitable activity like that of the British Pilgrimage Trust. This does not have to be an estimate of monetary value, but no estimate of the whole should ignore it.
To support the model that we hope will emerge, we will need a better understanding of how the concept of ‘inclusive growth’ works at this scale — bringing together all the elements that make up local life, social, environmental and economic.
This means, for example, a more sophisticated model of economic success, which can see how one-dimensional growth is in practice undermined by its own externalities — by ill-health, pollution, bad air quality or bad diets, for example. None of these decisions may be entirely objective, but — as a route to local and national prosperity — they have to be made. It may be that the rural economy is more vulnerable to this kind of externalities than urban ones, but — either way — there are decisions to be taken before prosperity can be sustained.
Nor is this to suggest some kind of compromise between the economic and the other elements. Inclusive growth is an economic concept: it simply seeks to make these trade-offs more transparent, so that the whole resource can be directed where it can be most effective.
We need to build into our new model how people are already co-ordinating and collaborating to support public goods (co-ops, marketing groups, facilitation groups, collaborations, and shared resources), and they are generating value that way. We need to know what they need, more systematically, to build the social capital that makes this possible.
That implies some kind of inclusive-growth-style visioning exercise for areas and neighbourhoods that are capable of enthusing all the sectors there to feel a sense of responsibility. Something along those lines has been organised in the Brecon Beacons Mega Catchment project, which was initiated by Welsh Water.¹⁰ Another project that is demonstrating what might be possible for multi-sector working is the Green Halo project, which focuses on bringing cross sector organisations from within but also around the New Forest National Park together.¹¹
Transparency is not enough. We also need to be able to draw some conclusions from it about what should be supported and — not just in funds to replace CAP payments — but bending the other programmes, public and private to achieve vital elements.
For example, it may be possible to mobilise private money and investment to create positive change in the countryside, rather as cities like Bristol are managing to do via private funds made available through the mayor’s City Office. There may also be opportunities to create the kinds of public-private sovereign funds which are able to intervene in transformative ways in rural areas.
Some of the sectors that need support from somewhere for rural areas to thrive include, for example:
Not all of these public goods will be included in the beneficiaries of public goods payments based on the whole resource, but they are all necessary for the continued prosperity of rural areas.
These objectives imply some kind of representative, perhaps, elected element of government which can hold this information, collect it and make it available. It implies a representative body which can use it to carry out the process of developing a binding vision for each area — the fundamental building blocks of inclusive growth.
It is hard to draw definitive conclusions about the kind of structures we need. But it is clear that something is necessary. We therefore need some experimentation with any or all of the following:
We will be commissioning research about how to take some of these ideas further, to take us from a way of visualising a broad system to a set of objectives — in such a way that we can find levers to build prosperity in rural areas in a way that is not now possible.
[1] National Grid (2018). Visual impact provision. Available at https://www.nationalgridet.com/planning-together/visual-impact-provision-vip
[2] Goodwin, N et al. (ed) (2008). Microeconomics in Context. Routledge, London. pp 350–9.
[3] Ulrich, W. (2005). A Brief Introduction to Critical Systems Heuristics. Available at http://projects.kmi.open.ac.uk/ecosensus/publications/ulrich_csh_intro.pdf
[4] See for example some of the overlaps in Swedish local government, and the variable unit sizes, in: https://www.vannas.se/default.aspx?di=2056
[5] Grain (2017). New free trade agreements: normalising the brutality of transnational supply chains. Available at https://www.grain.org/article/entries/5800-new-free-trade-agreements-normalising-the-brutality-of-transnational-supply-chains
[6] GCPH (2012). Putting asset based approaches into practice: identification, mobilisation and measurement of assets. Briefing paper. Available at http://www.gcph.co.uk/assets/0000/3433/GCPHCS10forweb_1_.pdf
[7] See for example: https://www.bba.org.uk/news/statistics/postcode-lending/lenders-set-out-levels-of-borrowing-from-across-the-country-4/#.W3PhrOhKjIU
[8] Barber, M. (2017). Delivering better outcomes for citizens: practical steps for unlocking public value. Available at https://tinyurl.com/y7yvjpkk
[9] SFT (2017). Sustainability metrics. Available at https://sustainablefoodtrust.org/key-issues/true-cost-accounting/sustainability-metrics/
[10] Welsh Water (2018). Brecon Beacons Mega Catchment. Available at https://www.dwrcymru.com/en/WaterSource/Brecon-Beacons-Mega-Catchment.aspx
[11] New Forest National Park Authority (2018). About the partnership. Available at http://www.newforestnpa.gov.uk/conservation/green-halo-partnership/about-the-partnership/
Note: this paper was originally published on the RSA website (Royal Society for the encouragement of Arts, Manufactures and Commerce), which hosted the Food, Farming and Countryside Commission between November 2017-April 2020.
