Select Committee on Environment, Food and Rural Affairs Eleventh Report

1 Introduction

The potential Benefits

1.  England's rural districts are home to just under a fifth of the population, but are responsible for 30% of the country's economic activity.[1] They already punch above their weight, but their contribution could be boosted still further. The Rural Advocate's report to the Prime Minister estimated the untapped potential from rural businesses to be between £236 billion and £347 billion per annum.[2] The Department for Environment, Food and Rural Affairs (Defra) commented that, due to the number of variables involved, it does not believe that it is possible to come up with an accurate figure for the unfulfilled potential of the rural economy.[3] We recommend that defra economists make an effort to quantify the potential of the rural economy as this would assist in making a case for the necessary use of resources to fully address the challenges arising from the rural economy that this report and others identify.

2.  If the Rural Advocate's estimate is of the right magnitude, it is clear that tackling the factors that inhibit the growth of businesses in rural areas could make a substantial difference to the performance of England's economy as a whole. Our experience suggests that, although the rural economy is a complicated concept, the problems affecting rural businesses are often simply articulated. They tend to be small scale and specific to a location. They are practical problems requiring practical solutions. However, we have found little to convince us that the Government's present approach to the rural economy will deliver the help that these businesses need.

Background to the Inquiry

3.  Some background to our inquiry is necessary to enable the evidence to be judged in context. The inquiry was launched in July 2006, with a focus on what could be achieved in the rural economy and the barriers to achieving it. The original terms of reference are set out in appendix 1. In June 2007, the BBC radio programme You and Yours held a phone-in featuring the Committee's Chairman, who invited listeners to contribute to shaping our inquiry. The response was substantial: within two weeks You and Yours received 310 phone calls, e-mails and letters. Concerns included farming and agriculture, services and infrastructure, and affordable housing and planning.[4]

4.  Events, however, were already overtaking us. We decided that the floods that occurred in several areas of the country in June and July 2007 warranted an immediate and substantial inquiry. In the meantime, we continued our interest in the rural economy, receiving a briefing from the Commission for Rural Communities (CRC) in November 2007. By then, several key developments had affected the Government's approach to the rural economy. The Centre for Rural Economy (CRE) characterised them as:

the change of Prime Minister and subsequent machinery of government changes in June 2007; the shocks to local rural economies caused by the flooding and animal disease outbreaks of summer 2007; and the Pre-Budget report and Comprehensive Spending Review (CSR) of October 2007. [5]

As a result of the Comprehensive Spending Review, Defra acquired two new Public Service Agreements (PSAs) and eight Departmental Strategic Objectives (DSOs), one of which was entitled "Strong Rural Communities". We decided to refocus our inquiry to concentrate on Defra's objectives for the rural economy and the effectiveness of the structures in place to deliver them.

5.  In February 2008, we announced our interest in Defra's "Strong Rural Communities" DSO and invited additional evidence to address the inquiry's revised focus. Overall, across both calls for evidence, we received submissions from 53 bodies and individuals, in addition to the responses to You and Yours. Between May and July 2008, we held four oral evidence sessions: three in Westminster and one in Hawes in the Yorkshire Dales National Park, during a two-day visit to North Yorkshire. The visit enabled us to appreciate at first hand some of the issues affecting businesses in rural communities, and we are very grateful to the CRC for its help in organising the programme.

The Burgess and Taylor Reviews

6.  While we were conducting our inquiry, two reviews related to the rural economy were commissioned by the Prime Minister. The Rural Advocate, Dr Stuart Burgess, was asked to report on how rural economies could be strengthened, and Matthew Taylor, the Liberal Democrat MP for Truro and St Austell, was asked to investigate how land use and planning could better support rural businesses and deliver affordable housing. Both Dr Burgess and Matthew Taylor gave informal briefings to the Committee. Dr Burgess's report was published in June 2008 and Matthew Taylor's in July 2008. The reports each contain detailed analysis and a series of practical recommendations. The Rural Advocate told us that he would be meeting the Prime Minister to go through the recommendations and said that he was reasonably optimistic that he would be able to persuade the Prime Minister to act on the report's proposals. In a letter to the Committee's Chairman, the Prime Minister stated that a cross-Whitehall working group, chaired by Defra, had been set up to consider the Rural Advocate's recommendations and produce a co-ordinated response. The letter states that the working group agreed that the Government should publish a response to the Rural Advocate's report in autumn 2008.[6] The burgess and taylor reviews are an indication of the government's willingness to consider what further measures could be taken to strengthen the rural economy and address the continuing problem of housing availability for those on low incomes. What are needed are innovative schemes such as community land trusts to build upon the exceptions policy in local development frameworks and to kick start these initiatives. We urge the government to publish detailed responses to both reviews, setting out whether it agrees with their findings, what specific actions it intends public bodies to take as a result, and an implementation timetable. However it is disappointing that an earlier review of housing in rural areas chaired by Elinor Goodman was not acted upon. It is vital that these two reports receive full consideration from the Government.

Understanding the Rural Economy

7.  The CRE told us that poor understanding of rural economies was one of the most significant barriers to realising their potential.[7] Anyone for whom "the rural economy" is synonymous with agriculture, for example, will be surprised to discover that farming constitutes just 2.6% of rural employment.[8] The CRE commented that the employment and business profiles of rural economies were increasingly similar to those of cities. It noted that more than 80% of employment in rural districts was in four key sectors: distribution and retailing; business and financial services; public administration, education, training and health; and manufacturing.[9] Arguably, these similarities could make the distinction between urban and rural seem slightly redundant, as one of our witnesses—Mr David Marlow, the Chief Executive of the East of England Development Agency—agreed.[10] However, people running businesses in rural areas still encounter problems that are unlikely to be experienced by their urban counterparts. For example, the director of one expanding company that we visited wanted to stay in the area, but was concerned that there were no buildings of a suitable size to which he could relocate—a difficulty that he would not experience were he located in a larger town or city.

8.  While we recognise that businesses in rural areas face different challenges from those in urban areas, it is unhelpful to talk about "the rural economy" as if it were homogenous and hermetically sealed. Professor Neil Ward of the CRE stated that "when people use the term rural economy it often implies a unified, single and rather bounded entity, something that is similar in all rural areas and separate from urban economies, and of course it is not that at all."[11] Even within particular rural areas, there is clearly huge variety. One of the things that struck us most when we were in North Yorkshire was the diversity of its rural economy. We visited a business park set within a 3,000-acre country estate, which was home to 51 businesses, employing more than 600 people; a manufacturing and tourist business in the Yorkshire Dales National Park that employed more than 200 people; a family-run farm in a remote location that had diversified into producing preserves; a craft centre, with workshops and retail facilities; a technology company that worked with investment banks in London; a recently converted Victorian station that was home to a conference centre, a cinema, a restaurant, an art gallery and several small businesses; and a business start-up centre on the edge of a town that provided office space for new companies.

9.  These different businesses had different concerns. This may seem obvious, but, as we shall see later, it is a point that Defra's new rural affairs target fails to take into account. Many of the issues were location specific. For example, the businesses we visited within the Yorkshire Dales National Park had particular concerns—many of them related to planning—that were linked to their locale. Councillor John Blackie, who represents the ward of Hawes and High Abbotside, referred to an extension to a business in Hawes that cost £40,000 more to build than it would have done 25 miles down the road, in an area that was not in a national park. This was because of the quality of the materials—for example, a slate roof—required in a national park. He pointed out that, although some people were prepared to pay, many others would decide to go elsewhere. He commented that the National Park Authority "should bear in mind that the aim of the game is to keep the communities sustainable and prosperous."[12] Mrs Ruth Annison, who ran the business concerned—a rope-making company—said: "Nobody wants this area to stay beautiful more than those of us who live and work here," but added that the National Park Authority "must be more familiar with what we are doing and why."[13] Under the Environment Act 1995, the statutory purpose of national parks is to conserve and enhance the natural beauty, wildlife and cultural heritage of the area, but National Park Authorities also have a statutory duty to foster the economic and social well-being of local communities.[14] Under the Act, this duty is given less weight than the conservation element. Based on the concerns put to the committee, we recommend that defra carry out a review of whether planning decisions by national park authorities reflect the correct balance between protecting the natural environment and ensuring that communities located within national parks are sustainable and will survive.

10.  More generally, population sparsity and proximity to large settlements were key factors that determined the nature of the concerns among the businesses we visited. We saw a marked distinction between the problems cited by businesses located in or on the edges of market towns and those cited by businesses in more remote areas. For example, the people working in the business start-up centre that was situated four miles from Richmond in Yorkshire and 15 miles from Darlington regarded their broadband internet connection as crucial and were keen to stress that high bandwidth broadband should be considered a utility in the same way as electricity and gas. In broad terms, the residents of Upper Swaledale in the Yorkshire Dales National Park could be said to have a similar concern: communications. However, their main worry is definitely not the speed of their broadband connection, as Councillor Blackie made clear:

If you go to Upper Swaledale […] there is still no mobile phone contact and party lines are still in use, if you can remember the time when someone said. "Are you on the phone, love? Can I use it, please?" In Upper Swaledale there are still only six telephones lines and they have been patched so many times now that they do not even know where the connections lead to.[15]

11.  The significance of isolation and population sparsity were recurring themes among our witnesses. Professor Ward of the CRE told us that "the population sparsity factor imposing some constraints on service delivery and on economic development is a crucial distinctive feature of the development prospects for rural areas."[16] The Local Government Association told us that it would divide rural areas into three main categories:

  • places that were relatively proximate to a large settlement;
  • places that were not near a large settlement, but that were attractive and that people would go to notwithstanding the challenges of accessibility; and
  • places that were isolated.

It suggested that isolated rural areas might need separate policy approaches.[17] The differences between running a business in a market town and a smaller rural community seem to us at least as significant as the differences between running a business in a market town and a city. Defra should ensure that its rural affairs targets take this into account and that its data enables it to distinguish between different types of rural areas, so that its policies can be tailored accordingly. We return to this point in more detail in paragraph 31.

1   Ev 1, para 2.1 Back

2   Commission for Rural Communities, England's rural areas: steps to release their economic potential; Advice from the Rural Advocate to the Prime Minister, June 2008, p 7 Back

3   Ev 127 Back

4   Ev 212 Back

5   Ev 5, para 2.1 Back

6   Ev 235 Back

7   Ev 1, para 1.1 Back

8   Ev 1, para 2.2  Back

9   Ev 1, para 2.2 Back

10   Q 98 Back

11   Q 3 Back

12   Q 184 Back

13   Q 192 Back

14   The English National Parks Authorities Association gave us several examples of ways in which National Park Authorities aim to support sustainable rural communities. For details, please see Ev 153. Back

15   Q 158 Back

16   Q 7 Back

17   Q 84 Back

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Prepared 29 October 2008