A prospectus for Rural Economic Development as part of the UK Shared Prosperity Fund and wider Levelling Up Agenda
July 2021
CEDOS’s membership represent some of England’s more rural areas and have a significant interest in any future activity and programmes to support and grow the rural economy, either under the auspices of the UK Shared Prosperity Fund or wider Government schemes or initiatives.
A total of 11.7 million people live in local authority areas regarded as predominantly rural (21% of England’s population) and these areas contribute £261bn (15.9%) to England’s economy. The rural economy is diverse, with 85% of rural businesses are not related to agriculture, forestry and fishing[1].
Most of our members have actively been involved in developing rural strategies, delivering rural development programmes such as LEADER and the Rural Development Programme for England and supporting rural communities to achieve their potential. CEDOS and our members recognise change in the mechanisms to support rural economy is needed as the UK moves away from a period of EU policy as the key driver of rural development.
We are keen to see that rural areas are not left behind or side lined in the forthcoming UK Shared Prosperity Fund, UK Levelling Up Fund or wider economic development and growth programmes.
Rural Challenges
Our members have highlighted that the rural economy has been severely buffeted during the COVID-19 pandemic, with nationwide and localised lockdowns and social distancing heavily affecting strong local sectors including tourism and hospitality, retail, food and drink, manufacturing and rural services.
The rural economy is still largely characterised in political and statistical terms by population density, partly a legacy from the days of EU structural funds. The rural economy is now far more nuanced and should be based around function, including how rural economic linkages extend into market towns and urban fringes.
Many rural businesses are seasonal and do not have the opportunity to increase earnings throughout the year. Many have been less able to benefit during any spikes in economic recovery when COVID-19 restrictions have eased – which in turn has placed many businesses under considerable strain. This has been compounded by recent restrictions on personal mobility, which have severely restricted access to markets and opportunities in areas of low population density that rely on high numbers of inbound visitors.
Primary industries, including agriculture have been hit by fluctuating prices, turbulent short term export markets (partly as a result of BREXIT) and wider logistics challenges and an uncertain labour market, especially for low and semi-skilled seasonal work.
Rural areas, whilst often not identified as economically or socially disadvantaged by traditional measures, often feature pockets of worklessness and poverty which are frequently far more dispersed in nature than in urban areas and therefore far harder to tackle at scale. Workplace earnings in rural areas are often below overall average earnings and the economy in some areas is typified by relatively low paid employment, juxtaposed with higher costs of living in rural areas – often driven by higher costs of housing. The effects of these issues are usually most keenly felt by younger generations and as a result, social mobility is much more restricted in rural areas.
Rural areas still lack key infrastructure to support their long-term economic growth, which is most keenly felt around transport and wider connectivity. Recent investments in broadband have in part been transformational, but the long term requirements to Gigabit enable many rural areas remains.
Rural Labour Markets and Skills
Achieving effective and flexible labour markets is much more difficult in rural economies, the labour pool is much smaller – partly due to population density, lower labour demand and an ageing population demographic. Opportunities to develop skills are often more limited, especially for career progression, due to a prevalence of lower paid and seasonal employment, lack of access to colleges and issues around digital connectivity. Existing skills and employment programmes often focus resources and function on urban areas and the depth of (and choice of) services are frequently not available to more rural residents. As the economy has moved towards more portfolio-based employment and an increase in part-time working, this is invariably a much harder outcome to achieve in rural areas.
The impact of changing migration restrictions will also be keenly felt in rural areas – with many industries heavy employers of EU labour, especially seasonal labour. Improving productivity is more challenging in rural areas as automation is, for many reasons, often more difficult.
Cornwall Universities
Over an extended period of time, partners have been working to provide University education and research facilities in Cornwall to overcome the areas ‘brain drain’ and to provide a stimulus for economic growth. Falmouth College or Art became a full University in 2012, in 2004 the University of Exeter opened a campus at Penryn and Cornwall College and Truro and Penwith College became partner Colleges with the University of Plymouth. The Combined Universities in Cornwall partnership was set up in 1997 and enabled these organisations (and others) to have a greater impact than individual institutions trying to work alone to attract research, students and innovation projects to Cornwall. The partnership has already managed to attract £260m from the EU and UK governments to transform higher education in Cornwall and led to a number of collaborations. The presence of Higher Education institutions in Cornwall has led to the development of Innovation Centres, key research facilities, business development projects and provision for Higher Education across a range of levels and subject areas.
The responses of active labour market programmes during the COVID-19 pandemic, with the support offer moving online, could remove some traditional barriers for rural communities and overcome some of the demand challenges of sparse populations. However, to make the most of these opportunities, providers need to ensure they continue with a strong online offer and rural disadvantaged individuals and communities need to have the access and digital skills to participate. Rural industries have traditionally been amongst the slower adopters of digital technology.
The pandemic has made homeworking a more viable option for much of the workforce in some sectors and rural areas have a real opportunity as a result to enable access to some higher skilled, more nomadic opportunities and attract a workforce and population that no longer makes a five day a week commute. This needs to be reflected more in rural infrastructure such as formal and informal co-working space, rural business networks, better broadband and access to meeting space and workspace.
Rural Business Growth and Innovation
Within the current ‘key sectors’ approach, there is frequently a focus on stimulating growth in rural areas through the visitor economy, food and drink and hospitality. These are important rural sectors, but there needs to be a significant focus on supporting the growth of sectors that can contribute higher paid employment and an effort to overcome their specific growth barriers relating to rurality. It is also important to acknowledge that not all rural businesses are micro-businesses.
Priority needs to be placed around the strong role rural areas can play in decarbonisation of the economy and energy generation, how value can be added to the food and drink processing and manufacturing industries, particularly given the importance of the sector in the Tourism Recovery Plan, the role of agri-tech in adding value in agricultural supply chains and how new digital and innovative industries can develop and grow.
East Malling Wine Innovation Centre
Viticulture is the fastest growing component of the UK agricultural sector. The East Malling Wine Innovation Centre, partly funded by a £600,000 Growing Places loan from the South East Local Enterprise Partnership, is the UK’s only research vineyard and will support Kent’s wine sector to develop as a global leader and for the sector overall to achieve profitability. The project will create infrastructure, services and high-tech facilities which will generate upwards of £1m million (over 5 years) in additional annual Research and Development spend in the South East. The investment will create four new knowledge based and highly skilled jobs in addition to safeguarding five jobs at NIAB EMR. Longer term the investment is forecast to create 50 jobs across the viticulture sector.
In terms of business growth and innovation projects, there is often not the critical mass of businesses to support high growth programmes across rural areas. Delivery is often frequently skewed towards urban businesses as this is where the institutions, facilities and knowledge are based. To achieve this, some element of ‘rural premium’ that would compensate providers of growth and innovation services to businesses for engaging and supporting rural businesses would be a welcome addition to any future programmes. This could be achieved through either ringfenced resources for rural areas or ringfenced outputs.
It is also important to acknowledge that the needs of rural businesses can also be different from their more urban counterparts. Innovation and knowledge transfer processes are often more elongated, fewer businesses have wide networks and any average grant awards can be smaller and less directly related to job creation – which was frequently the experience of the LEADER programme – which identified a significant gap in the availability of simple grant process for micro-grants. Grants are also needed to support the diversification of farming.
Rural workspace can often support micro businesses to make the leap towards growth and increasing employment. Learning from the pandemic means a focus should be placed on using workspace to enable more co-working, provide short term workspace and provide digital and enterprise hubs. Good practice has included Food and Drink Enterprise Zones, which firstly need an equal status to their urban counterparts and could be further expanded, activity to renovate and utilise redundant rural buildings, should the planning system allow this and co-working space.
Warwickshire Rural Innovation Centre
Developed as part of the Rural Growth Network programme, the Stoneleigh Rural Innovation Centre (outside of Kenilworth). The first phase of the Centre was opened in 2013 and due to continued demand it has now twice been extended. An adjoining building was converted in 2016 to increase the high-quality serviced offices from 16 to 35. A separate two-storey building, which backs onto the original centre, has now been converted to take the total number to 45. The centre is based on Stoneleigh Park, also home to the Royal Agricultural Society of England and the National Agricultural and Exhibition Centre (NAEC). Other facilities include the Children’s Day Nursery, Farmers Fayre Cafe and Farm Shop, Gym and Hotel.
Rural ‘Place’
Rural economies across England are often as distinctive from each other as from urban economies. Years of EU funded rural programmes have shown decision making is best made at a local level where interventions can better match priorities and need. LEADER in particular has shown the importance of bringing a range of key agencies and organisations with an in-depth understanding of rural issues together – and providing them with the tools to identify locally appropriate solutions. The pandemic has shown the ‘place’ agenda is as strong in rural areas and market towns as it is in major towns and cities. Rural areas have provided space for the country to escape the pandemic, have provided leisure and recreation as international travel has been restricted and have provided vital materials including food and energy as international trade has been inevitably disrupted.
Market towns have for many years borne the brunt of the ‘branch closing’ trends in the financial and business services, retail and hospitality sectors. Changing demographics and demand, built more around ‘distinctive experiences’ can present an opportunity for market towns to stimulate further growth in the consumer and business to businesses sectors. To achieve this, a strong balance needs to be struck between providing local services, business to business services and attracting visitor spend. Stronger links need to be facilitated between rural areas and their key market towns. This agenda straddles economic development, planning, wider public services, education and estates and property management and housing.
With the right investment and coordination, there are opportunities to utilise artisan food and drink and craft producers and local culture and heritage to create distinctive products. Moving on from EU Protected Designation of Origin and Protected Geographical Designation, there is scope to look at a replacement UK scheme – and also how this can be disseminated by Local Authorities, partners, the media and Destination Management Organisations.
Rural broadband and mobile data provision have improved significantly over the past decade with the advent of BDUK and roll out by commercial networks. However, demands on the network and the drive to achieve gigabit capability risk some rural areas falling further behind. Some of the gaps have been filled by EU Structural Funds which have supported a range of innovative and locally relevant solutions. The current Gigabit Voucher, whilst a valuable tool, may not support all rural residential and business broadband needs.
Inward investment is important to growing the rural economy and not all rural businesses are small – but major employers in rural areas place a large strain on rural services and the soft landing packages that are commonplace in urban areas are frequently not available in the rural economy.
There could be a much stronger role for local communities in shaping place and local services and meeting local needs. Developing localised and cleaner and greener rural transport is as important as it is in urban areas and the Rural Mobility Fund pilot has been seen as an example of good practice in this field.
Approaches need to utilise community ownership of assets and social enterprise to sustain and grow local businesses and services – especially where there is no direct competition due to limited markets. This is something that should be reflected in future subsidy control policies. The community-based approach has a wide application, covering energy production, conservation and land management and public amenities. There is also scope to utilise some of the skills and expertise of the older population residing in rural areas.
Although not related to rural economic development programmes, a sympathetic and enabling planning system and clear guidance that protects key land uses and areas of significant character but enables appropriate and timely rural growth opportunities to be realised is much needed. This is especially critical in bringing underutilised buildings back into new use, providing for affordable housing, managing town centres and supporting businesses source the right premises.
CEDOS advocate a strong leadership role for Local Government in supporting and enabling future rural growth, working closely with our Local Enterprise Partnerships, HE/FE sectors and businesses and communities. We would like to emphasise the following key features of any future rural programmes, including the UK Shared Prosperity Fund:
- Any activity that focuses on ‘rural’ understands the inter-dependence rural areas have with market towns and urban areas.
- Rural disadvantage is often hidden and any future programmes that allocate resources based on need understands the nature of rural deprivation.
- Expanding innovative networks of rural workspace should be encouraged, especially where it creates opportunities for co-working and can create links to wider innovation and growth assets.
- Across a range of centralised client based business and employment and skills programmes a ‘Rural premium’ would equalise the cost of delivery in rural areas
- A range of options are considered to enable rural gigabit internet connectivity
- Rural Enterprise Zones, including for the Food and Drink sector, are key policy tools.
- Social Enterprise and community ownership of assets are key opportunities to support rural services, businesses and amenity.
- Ensuring appropriate and experienced support to rural businesses has the ability to help overcome the specific barriers to growth and opportunities within rural areas and increase the presence of wider economic sectors.
[1] DEFRA Rural Economic Bulletin, April 2021