Jeremy Phillipson (School of Agriculture, Food and Rural Development) considers rural enterprise, in the latest of our Ideas for an Incoming Government. His vision is a Charter for Rural Enterprise, protecting rural economies and allowing them to flourish.

What is the problem?

We should be doing more with our rural enterprises. Rural areas contribute at least £211 billion a year directly to the nation’s economy but have great potential to achieve even more. Cuts in public spending and the need to rebalance the economy means that our expectations of what enterprise can achieve in employment, wealth creation and service provision have increased. We must, therefore, expect to see growth across the whole country rather than only in certain cities or sectors. The distinctive characteristics, business and employment structure and past performance of rural economies mean that they are well placed to meet this challenge. Through a new Charter for Rural Enterprise, we propose that an effective and transparent rural proofing of growth plans and policies be pushed forward across all business sectors and localities in order to tailor measures to rural conditions and assess their applicability to rural economies.

The solution

Rural areas have a number of dynamic features that enable economic growth:

• They have more businesses per head of population than many urban areas.
• Firms started by people moving into rural areas are more likely to sell their products and services on national and overseas markets, thus earning revenue beyond the locality.
• Many manufacturing businesses are located in rural areas and this sector provides a higher proportion of rural jobs and output than are supported by urban manufacturing firms.
• Rural economies have pioneered privatisation and community provision of many local services, fuelled by a combination of delivery and access difficulties and the distinctive nature of rural demand.
• As the economic value and potential of ecosystems services are recognised these will offer increased opportunities for growth.
• Rural economies have demonstrated their potential to provide more growth and employment if given appropriate stimuli and support from national and local business leaders and policy makers.

However rural growth measures have been more fully developed for the land-dependent sectors of farming, forestry, food and environmental services. Whilst these are important for the nation, in many rural areas we need to look to other sectors that are the primary engines for growth, for example in manufacturing, professional, scientific and technical sectors, and wholesale and retail. Through establishing a Charter for Rural Enterprise, rural economies would be treated as cross-cutting and more effectively embedded in mainstream policies and plans for economic development. This should include a commitment to:

• Strategies for growth that respond to local variability of the spatial, sectoral and business size profiles of rural economies, and which drive resources to the local level through an approach that meets local constraints and opportunities of rural places. This would identify and respond to the diversity of growth challenges in rural industries. We also propose a review of the needs and opportunities for rural and home-based micro enterprises that have so far fallen beneath the radar of economic and enterprise policy.
• Spatially-balanced and inclusive economic growth; to this end Impact Assessments should be prepared and published at national and sub-national level for economic plans and policies for areas larger than (lower tier) local authorities (for example City Deals, LEPs’ Strategic Economic Plans and European Structural and Investment Fund Strategies), to demonstrate their impacts on, and inclusiveness of rural areas.  Assessments would identify spatial or functional gaps in, and weaknesses of, policies and programmes, inform future resource allocations and encourage a sense of inclusiveness.
• Demonstrating ways that rural firms can realise the value of the natural environment to their growth, by securing efficiencies and developing new products and services. We also propose a national review of the challenges and adaptation needs facing rural enterprises in responding to the pressures of environmental change.
• Strengthening rural business and community institutions which form the bedrock of our rural firms and bolster their innovative capability and resilience; to this end we should build on the experience of the Rural Growth Networks to extend nationally the network of rural work hubs offering flexible work premises and access to shared facilities.  We suggest support for the establishment of rural business clubs and associations that provide rural business mentoring and strengthen the voice of rural business through establishing a National Rural Business Task Force to ensure that core business, financial and innovation policies are sensitive to rural needs.
• Investment in affordable housing, public transport and local services which are essential for employee recruitment and new business development. In addition to providing meaningful support for building new housing or providing public transport in rural areas, financial help should be provided to small employers with hard-to-fill vacancies due to their area’s lack of affordable housing and poor public transport.  These barriers to employment and growth of small firms are particularly evident in remote rural locations, and local economies with poor connectivity and limited pools of skilled labour, exacerbated by low stock of low cost housing.  The Government should explore how tax reliefs or direct payments can be extended to measures taken by employers to help new employees’ access accommodation or transport to the workplace.

Overall, we need a new commitment to rural enterprise. This would entail more transparent proofing of national and local growth plans across all business sectors and localities. We need better engagement between stakeholders, to strengthen our understanding of rural business potential and to use this to inform strategic commitment to rural economies. Academia needs to play its part in filling the gap in independent rural analysis. This will allow us more firmly to take the pulse of rural economies as they respond to shocks, whether it be flooding, economic downturn or disease outbreak, and to more effectively assist their recovery to full health.

The evidence

• Commission for Rural Communities (2011) Small towns in rural England.
• Defra (2013) Statistical Digest of Rural England 2014
• Defra (2010) Economic Growth and the Environment
• Atterton, J. and Affleck, A. (2010) Rural Businesses in the North East of England: Final Survey Results.  Centre for Rural Economy Research Report.
• Phillipson J et al. (2011) Rural Economies: Incubators and Catalysts for Sustainable Growth. Submission to Government’s Growth Review – Stage 2, Centre for Rural Economy and Relu.
• Phillipson J and Turner R (2013) Rural Areas as Engines of Economic Growth. Rural Economy and Land Use Programme Policy and Practice Note no 41.
• OECD Rural Policy Reviews: England, United Kingdom 2011

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