Businesses that are hoping to expand and diversify in the rural economy may not find it quite so easy in the future after Defra's Rural Development Service (RDS) announced the end of a number of funding programmes.

Defra claims the changes are essential in paving the way for the next rural development funding programme, and form part of the Government's Rural Strategy 2004 aimed at simplifying funding for rural areas and better targeting it to the needs of rural people and businesses across the Yorkshire region.

In order to achieve their target the RDS announced that a number of social and economic programmes, collectively known as the 'Project Based Schemes', will not be included in the next programme, due to run from 2007 to 2013.

The funding mechanisms affected are the Rural Enterprise Scheme, the Processing and Marketing Grant, the Vocational Training Scheme and the Energy Crops Producer Group Scheme.

However, in some good news for Yorkshire Dales farmers it was announced the cuts will not affect the Environmental Stewardship scheme or the Hill Farm Allowance.

Commenting on the changes, Rural Affairs Minister Jim Knight, said; "We need to develop plans for the most effective use of this type of funding within the new programme running from January 2007 to December 2013".

It is perhaps indicative of some muddled thinking in Government that whilst welcoming the demise of the current schemes Mr Knight also acknowledged that this type of funding can have real and positive outcomes for rural economies.

Mr Knight said; "It is important that the momentum generated by the availability of this type of funding is not lost and from October onwards the Regional Development Agencies are planning to be working on the ground with potential customers on the development of projects suitable for support under the new programme".

Defra claims the new programme will continue to provide funding for social and economic development in rural areas, but with responsibility for implementation and delivery of the schemes planned to transfer from the Rural Development Service to England's Regional Development Agencies (RDA's).

Neither Defra nor the RDA's yet know what type of projects the next set of social and economic funding programmes will be geared towards. Defra is expecting to launch a "major" public consultation exercise in the near future.

Anyone currently in the process of developing an application under on of the affected schemes in the Yorkshire and Humber region should contact Philip Robinson on 0113 230 3979 or email philip.j.robinson@defra.gsi.gov.uk.