Rural Economy Spotlight

December 2017
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andy.dean@sparse.gov.uk
A quarterly bulletin facilitated by your membership of the Rural Services Network highlighting a selection of current rural economic development news, issues and opportunities.
Economic Spotlight

Rural businesses need help to embrace digital
Initial findings from a new study suggest that e-commerce plays a big role in helping rural businesses to export, with 80% using digital tools and services to trade goods and services around the world. However, more than half of rural businesses say recruiting people with appropriate tech skills and accessing training for their workforce is a barrier to digital adoption.
The findings were uncovered in new study undertaken by think tank Rural England – for which the Rural Services Network provides the secretariat – and Scotland’s Rural College (SRUC). The study was commissioned by internet giant Amazon.
A consultation of over 800 rural businesses found that cloud computing is seen as the biggest driver (62%) followed by 5G mobile networks (54%), the Internet of Things (47%) and Machine Learning/Artificial Intelligence (26%).
The final report will be published in 2018. You can read more here.

Industrial Strategy published
Less than a week after the Budget, the Government published its industrial strategy White Paper Building a Britain fit for the future. This set out the “foundations” of economic policy it would target in order to tackle the “grand challenges” – such as advancement of Artificial Intelligence (AI), green technology and an ageing society – it identifies as being crucial for future economic prospects.
These key policy areas targeted by the Industrial Strategy – the “five foundations” – are:

  • Ideas (R&D, innovation)
  • People (skills and education)
  • Infrastructure (broadband, energy, transport)
  • Business environment (support for specific sectors and SMEs)
  • Places (tackling regional disparities)

Partnerships between the government and certain sectors were also announced in life sciences, construction, AI and the automotive industry. The intention is for the number of these “sector deals” to increase. A House of Commons briefing paper on the Industrial Strategy is available via this link.

Rural Post Offices are essential
Despite changing lifestyles, rural communities are significant users of post offices and clearly value them. This conclusion is based on a survey of 800 rural residents and 250 small rural businesses carried out by Citizens Advice, which is the consumer watchdog for post office and postal services.
Key findings from the report on Rural Post Office Use include:

  • Rural consumers still use post offices significantly more often than urban consumers and they are more likely to use many of the services offered
  • Post offices remain embedded in rural life, providing a range of community and retail services
  • Rural small businesses rely on post offices more than their urban counterparts (71% of rural small businesses say that without their local post office, their costs for accessing services would rise)
  • The more rural a community, the more important its post office.

More than half the UK’s 11,600 post office outlets are in rural locations and the number of post office closures has been modest in recent years, assisted by a Government commitment to keep the network at around its current size.
However, in a commentary written for RSN, Brian Wilson suggests that whilst the rural post office network may seem fairly stable, “now is not the time for rural interest groups to take their eye off the ball. Whilst relevant Government Ministers have made some fairly favourable statements, with public finances tight it cannot be taken for granted there will be public funding to help sustain or invest in the network.” You can read Brian’s commentary via this link.

Rural Productivity Plan features in North of Tyne Devo Deal
The Devolution Deal for Northumberland, Newcastle and North Tyneside announced by Chancellor Philip Hammond as part of November’s budget, includes reference to a ‘Rural Productivity Plan’ to be developed and implemented as part of the deal which may become a pilot for other areas to follow. Specific powers for the new North of Tyne authority are reported to include:

  • “an Inclusive Growth Board to take forward skills and employment reforms across the area, including a pioneering North of Tyne Education Improvement Challenge to address disparities and drive excellence in schools across North of Tyne, ensuring that no one is left behind
  • “full control of the Adult Education Budget to allow North of Tyne to shape local skills provision to respond to local needs
  • “collaboration on an Employment Support Framework Agreement to drive better coordination of employment, skills and health services across the North of Tyne, increasing the number of residents moving into work
  • “a Rural Productivity Plan”

Councillor Peter Jackson, Leader of Northumberland County Council, said “This deal will streamline decision making on important issues that affect our growth and prosperity, and give us the power locally to decide how we drive economic growth and create confident and skilled communities.
“There are aspects of this deal which are particularly important to the future of our county. Not only will we benefit directly from very significant investment funds, we will be the first area outside London to benefit from an education challenge fund, giving us extra tools to tackle the need for improvement of our educational standards.
“The government has also asked us to be a pilot area for rural economic growth and rural housing and again this gives us a once in a generation opportunity to make a real difference to the future of many communities across Northumberland.”
You can read more on this announcement here.

Future of the rural economy in Wales
For those interested in the rural economy of Wales and any similarities with parts of rural England, the House of Commons Library published a useful briefing paper ahead of a debate on Westminster Hall at the end of November. This covered headline economic statistics as well as information on agriculture, tourism and the rollout of superfast broadband. You can access the paper via this link.

Brexit: next steps of UK’s withdrawal from the EU
You can read Parliament’s analysis of how leaving the EU will affect different policy areas in the UK via this link. This also contains up to date briefings on negotiations, a Brexit glossary and a summary of recent news on exiting the EU from across the Parliament.

Enterprising East Northants moving up a gear
East Northamptonshire Council continues to drive forward Enterprising East Northants – its new plan for economic growth and prosperity which was launched over the summer with the publication of a new Business Charter to align council services behind the local economy. To support and accelerate the delivery of the Business Charter, the council has appointed two new business account managers, Jacqui Colbourne and James Tennant. Jacqui and James have hit the ground running with a number of business network events and 1-1 meetings with local businesses. Issues discussed have been wide ranging from poor public transport links for workers in remote areas to difficulties with recruitment and securing the necessary funding to grow. Their roles involve working closely with the South East Midland Local Enterprise Partnership’s Growth Hub in order to ensure businesses across the district access the wide range of business help and support that is on offer.
A key priority for James and Jacqui will be to set up a council-wide business support group. This will meet on a quarterly basis to review the challenges and opportunities presented by the interaction between council services and local businesses with a view to driving improvements that support economic growth. Other priorities that will be driven forward under the Enterprising East Northants banner over the coming months include plans for a new Enterprise Centre to support business starts ups and growth, town centre delivery frameworks to help consolidate the position of the district’s towns as centres for community life and commerce, and several skills initiatives to ensure that businesses have the skills they need to grow and that residents are able to access employment opportunities on offer.
Leader of the Council, Steven North said: “Economic prosperity is a key priority for the council and I am determined that we do all that we can to support local businesses in all our communities.
“East Northamptonshire is a predominantly rural district and it is important that this is recognised and celebrated as part of our economic growth plans.”
For more information contact Jacqui Colbourne or James Tennant.

New opportunities & challenges for the rural economy
A House of Lords Library Briefing paper was prepared in advance of a debate in the House of Lords in November 2017, on the new opportunities and challenges for agriculture, fisheries and the rural economy in the United Kingdom. The paper states:
“Although relatively smaller than other sectors of the economy, agriculture and fisheries represent important industries in the UK. The Department for Environment, Food and Rural Affairs (DEFRA) states that the agri-food sector’s contribution to national Gross Value Added (GVA) was £110.4 billion in 2015 and that in Q1 2017 it employed 3.9 million people, or 13.1 percent of national employment.
“On the rural economy, DEFRA stated that in 2015/16 there were 537,000 businesses registered in rural areas, accounting for 24 percent of all registered business in England. These employed 3.5 million people, or 13 percent of those employed by registered businesses in England. The UK’s decision to leave the EU will have a significant effect on agriculture and fisheries, and in turn the rural economy.”
You can access a full copy of this report here.

What’s holding rural business back?
The latest in the ‘Rural Economy and Land Use’ series of Policy and Practice Notes was published by Newcastle University’s Centre for Rural Economy in November. The paper suggests that rural firms have often been a ‘blind spot’ within policy and analysis.
The paper states: “Given their importance to economic prosperity and well-being across the UK, it is imperative that policy makers, business leaders and support bodies recognise the contributions, needs and challenges of rural firms and ensure that their economic and spatial strategies effectively harness the potential of businesses from all places and sectors.”
The paper goes on to make a number of suggestions including:

  • “Central and local government authorities, country, regional and local enterprise agencies and partnerships, and business support and representative organisations need to examine evidence of rural and urban differences and similarities and embed rural business strengths and aspirations in economic strategies, while addressing weaknesses in support mechanisms.
  • “Consideration should be given to providing more targeted information and advice services for rural firms wanting to develop new products or services.
  • “Advice, and perhaps different measures, may be needed to release the large untapped rural potential for exporting, and encourage more rural firms to sell to overseas markets.
  • “Appropriate and accessible training opportunities and recruitment support needs to be made available to rural employers and their staff.
  • “Public sector organisations also need to address wider weaknesses in some rural areas in affordable housing, transport infrastructures, education and services provision that hold back businesses’ ability to recruit and retain employees.
  • “Effective and timely research is required that drills down below headline countrywide economic results to underpin “rural proofing” of locally and regionally differentiated approaches to economic development.”

The Policy and Practice Note was written by Jeremy Phillipson, Roger Turner, Matthew Gorton, Sara Maioli, Robert Newbery and Oak Tiwasing. It draws on secondary analysis by Rural Enterprise UK of the BEIS UK Longitudinal Small Business Survey 2015.
You can read the full paper here.

Latest key economic indicators
The House of Commons Library has published the latest statistics on UK trade performance and balance of payments.
In 2016, the UK’s exports of goods and services totalled £555 billion and imports totalled £595 billion. The EU accounted for 43% of UK exports of goods and services and 54% of imports.
Overall, the UK imports more than it exports meaning that it runs a trade deficit. A surplus on trade in services is outweighed by a deficit on trade in goods. The overall trade deficit was £40.8 billion in 2016 (2.1% of GDP).
Over the three months to October, the trade deficit was £5.0 billion compared with £7.8 billion in the previous three months.
You can read more here.
The latest analysis of wider UK and international economic indicators has also been published: “November was a busy month of economic policy announcements with the Government unveiling its Budget and industrial strategy, and the Bank of England raising interest rates. Economic data confirmed modest GDP growth of 0.4% in the third quarter, while, despite low unemployment, average wages continued to rise by less than the rate of inflation.” You can read more via this link.

Government consults on Industrial Heat Recovery Support Programme
Government plans to introduce a support programme to increase industry confidence in identifying and investing in opportunities for recovering and reusing waste heat from industrial processes and increase the deployment of recoverable heat technologies in industry. This is intended to allow industry to re-use heat on-site or sell it to a third party, leading to the more efficient and productive use of energy, lower fuel bills or a new revenue stream for industry, and a reduction in carbon emissions.
The purpose of this consultation is to:

  • test the proposed design of the Industrial Heat Recovery Support Programme (IHRS)
  • gather additional evidence on the enablers and barriers to recovering industrial waste heat, to ensure the scheme is appropriately designed and maximises value for money
  • start to identify a potential pipeline of projects from across industry sectors

This consultation is open to all and the government is especially encouraging responses from manufacturing/industrial companies, trade associations, technology providers, energy service companies and academics. This consultation closes on 4 January 2018 and you can read more via this link.

Funding launched for Full Fibre Networks
At the end of November, the government launched a £190m Local Full Fibre Networks (LFFN) Challenge Fund to stimulate commercial investment in full fibre networks across the whole of the UK, including rural and urban locations, by demonstrating approaches that encourage additional private investment and by making sustainable commercial deployments viable.
The projects will enable gigabit capable connections to key public buildings and businesses, with the expectation that this leads to broadband providers creating additional connections to local homes and businesses.
Government is now encouraging a broad range of local bodies – Local Authorities, Combined Authorities, Local Enterprise Partnerships as well other local public / government bodies such as health, education or transport bodies, to apply to the fund.
The deadline for the current wave of funding is 26 January 2018. You can find out more here.

Statistical digest of rural England published
Official statistics concerning rural England are published regularly by Defra. The latest November 2017 edition of the “Statistical Digest of Rural England” contains a wide range of useful statistics and is available via this link. These cover:

  • Rural population & migration
  • Rural Economy
  • Rural living

For example, did you know that 34% of people in work in rural areas are home workers compared to just 13% in urban areas?
Defra’s October 2017 “Rural Economic Bulletin” comparing high level economic indicators across rural and urban England has also been published and is available via this link. The four indicators currently used are:

  • claimant count – proportion of working age population claiming unemployment benefits
  • economic activity – proportion of economically active population unemployed and proportion of working age population in employment
  • redundancies – number of redundancies per 1,000 workers
  • house prices – average house prices and annual percent change

Community Branch Fund open for Post Offices
The £20m Community Branch Fund – for Post Offices with no other suitable retailer within half a mile – is now open for applications. These Post Office branches or Outreach and Satellite services play a particularly vital role in the local community. The Community Branch Fund offers investment for sub-postmasters to support the growth of their Post Office business and help to underpin the long term viability of their business.
The fund can be used for a wide range of improvements such as changing the branch format to open plan, new signage, or gearing up for new services such as Click & Collect. Funding is also available for Outreach and Satellite services.
Most applications are expected to be below £10,000(or below £2,000 for Outreach or Satellite Services). The fund will only be open whilst there is still money available. It is anticipated that the fund will not run beyond March 2018.
You can find out more via this link.