Levelling up to create living working rural economies?

‘Levelling up’ is a term being used by Government to describe its ambitions for addressing longstanding local and regional inequalities as part of post COVID-19 economic recovery. Much of the focus is on wanting to target places most in need across the UK. Will this approach benefit rural economies and communities? Jessica Sellick investigates.

In April 2019, the House of Lords Rural Economy Committee published its report ‘time for a strategy for the rural economy’.  The Committee argued that “successive governments have underrated the contribution rural economies can make to the nation’s prosperity and wellbeing…[and that they have] applied policies which were largely devised for urban and suburban economies, and which are often inappropriate for rural England”. The Committee called on the Government to develop a rural strategy, ensure improved rural proofing is applied to all policies, and institute a place based approach which takes into account the diversity of the countryside. 

The Government responded to the Committee in July 2019, arguing that developing a rural strategy would not be beneficial and that to do so would “risk rural areas being placed in a silo”. The Government also emphasised the importance of the existing Local Industrial Strategy framework. In March 2021, the Department for Environment, Food and Rural Affairs (Defra) published its report into rural proofing in England in 2020. This reiterated the Government’s commitments to rural England around strengthening the rural economy, developing rural infrastructure, delivering rural services and managing the natural environment. the Government’s ambition is ‘to respect rural communities’ unique ways of life and provide opportunities for them to flourish’. What does doing things differently, more nimbly and better mean for rural communities? I offer four points. 

1. What do the numbers tell us? Defra’s Statistical Digest of Rural England contains a compendium of rural and urban statistics covering economic policy areas. The latest edition, published on 28 October 2021, presents a range of data on the rural economy: 

  • Employment: the percentage of working age people in employment [the employment rate]in 2019 was 75% in urban settlements and 79.1% in rural settlements. This employment rate is based on where people live and not where they work. People living in rural settlements may travel to work in larger urban settlements and vice versa for urban residents.  
  • Unemployment: the percentage of economically active people aged 16 years and over who were unemployed [the unemployment rate] in 2019 was 4.2% in urban settlements and 2.6% in rural settlements. 
  • Economic inactivity: the percentage of working age people who are not available for work or not seeking work [the economic inactivity rate] in 2019 was 21% in urban settlements and 18.8% in rural settlements. 
  • Earnings: in 2020 average residence-based earnings were lower than workplace based earnings in urban areas, whilst average residence-based earnings in rural areas were higher than workplace-based earnings. This is because people living in rural areas may work in urban areas in higher paid jobs.
  • Home working: in 2019 there were 1.1 million home workers in rural areas, accounting for 22% of all workers living in rural areas. There were 3 million home workers in urban areas, accounting for 13% of all workings living in urban areas.
  • Productivity: in 2019, GVA from Predominantly Rural areas contributed 15.3% of England’s GVA – worth an estimated £260 billion. This compares with 44.7% from Predominantly Urban areas (excluding London) (£761 billion), 27.5% from London (£468 billion) and 12.5% from Urban with Significant Rural areas (£213 billion). The proportional contribution from Predominantly Rural areas to England’s GVA declined slightly between 2001 and 2019 (from 16.6% to 15.3%).
  • Businesses: in 2019-2020 there were 551,000 businesses registered in rural areas, accounting for 23% of all registered businesses in England. Businesses registered in rural areas employed 3.7 million people, accounting for 13% of all those employed by registered businesses in England. There are more registered businesses per head of population in Predominantly Rural areas than in Predominantly Urban areas (excluding London). There are proportionately more small businesses in rural areas. In 2019-2020, ‘Agriculture, forestry & fishing’ accounted for 15% of the local units of registered businesses in rural areas. Other prominent sectors in rural areas include: ‘Professional, scientific & technical services’ (14% of businesses), ‘Wholesale & retail trade; repair of motor vehicles’ (13%) and ‘Construction’ (12%).

The rural economy is dominated by entrepreneurs, self-employed people, ‘job jugglers’, home businesses and small and micro enterprises. While many people think of land management industries (e.g. farming, food, forestry) and tourism; in practice these statistics highlight how the rural economy is multi-layered and multi-local – reaching far beyond this into arts and culture, manufacturing, retail, professional and business services. The mix of business size, sectors and performance also varies – with some firms likely to be found close to rural towns and others found in sparser areas. All have an important role to play in creating and sustaining employment and safeguarding the future of rural communities.

2. What impact is COVID-19 having on rural economies? In April 2020, staff at the Centre for Rural Economy and Rural Enterprise UK (both Newcastle University), published a briefing note on COVID-19 and rural economies. On the one hand, the paper highlights how the dispersed population base and established tradition of home working acted as a source of resilience during the crisis. On the other hand, restrictions placed on personal travel for non-essential purposes may have disproportionately impacted on rural areas due to the greater dispersal of workplaces, consumer and business services, and because of the importance of visitor economies to many rural areas. In citing the resilience and adaptability of rural economies to previous crises such as Foot and Mouth Disease and the financial crisis/recession, they advise against this meaning rural communities can fend for themselves to weather COVID-19.  

The OECD Regional Outlook 2021 highlighted how the temporary relocation of urban dwellers to rural areas may have produced some positive consumption effects in some rural areas; but overall they have been vulnerable because they tend to have a much less diversified economy, a larger share of workers in essential jobs (e.g. agriculture, food processing) coupled with limited ability to undertake these jobs at home and poorer broadband infrastructure. Similarly, lower incomes and fewer savings forced many rural residents to continue to work and not seek medical help if they needed it. Shortages of seasonal and temporary workers have also been a significant challenge, creating additional burdens for rural food businesses. The OECD noted how some rural economies in the UK exhibit some of these features. 

The Rural Lives project investigated why and how people in rural areas experience poverty and social exclusion. In May 2021, the project team published an additional report looking at the impact of the pandemic on individuals experiencing financial hardship and vulnerability. Their findings are based upon interviews and focus groups with individuals and organisations in three rural areas: Harris and Blairgowrie and the Glens (Scotland) and North Tyne Valley (England). The team found:  

  • The economic impacts of lockdown periods have been felt in all sectors – with tourism, hospitality and leisure hardest hit. 
  • Seasonal, casual and freelance workers, and some self-employed, people living in rural areas did not initially qualify or indeed benefit from the Coronavirus Job Retention Scheme (CJRS) and Self-Employed Income Support Scheme (SEISS). People in rural areas with several jobs tended to fall through the net. 
  • While applications for Universal Credit increased, people living in rural areas were likely to try and survive on savings at the start of the crisis because of the perceived complexity of the welfare support system. Concerns were also raised about delays in Universal Credit payments. 
  • People citied poor or no broadband connections as prohibiting them from applying for state support during the crisis. 
  • Travel restrictions created additional challenges for rural and island residents unable to travel to larger towns to shop at lower-cost supermarkets. 

Defra’s Rural Economic Bulletin for England is published on a quarterly basis and contains a ‘dashboard’ of indicators designed to provide evidence on the state of the rural economy. The latest bulletin, published on 4 October 2021,includes additional analysis – where possible – of the impacts of the pandemic. The figures show:  

  • Unemployment (as a percentage of those aged 16 years and over) decreased by 0.4% in rural areas and was 2% below urban areas in Quarter 2 2021.
  • The inactivity rate (i.e., those not in employment or unemployed) in rural areas increased by 0.3% and was 4.1% lower in urban areas. Within inactivity, the rate fell slightly in rural and increased in urban areas. 
  • In August 2021, 3.5% of the working age population in predominantly rural areas were claiming Universal Credit or Job Seeker’s Allowance, compared to 6.1% of the working age population in urban areas . Between July 2021 and August 2021 the number of people claiming these benefits decreased by 4.3% in predominantly rural areas compared with a decrease of 3.6% in predominantly urban areas. 
  • In Quarter 2 2021, 9,000 people living in rural areas were made redundant. The redundancy rate in rural areas decreased from 3.5 to 2.3 redundancies per 1,000 workers between Quarter 2 2020 and Quarter 2 2021. In urban areas the rate decreased from 5.4 to 3.9 redundancies per 1,000 workers.
  • A range of support grants have targeted SME businesses that have been impacted by national and local restrictions. As of April 2021, predominantly Rural Local Authorities distributed: 643,000 grants with a value of £1,420 million from the Local Restrictions Support Grant to businesses hampered by local restrictions; 139,000 grants with a value of £370 million from the Additional Restrictions Grant to businesses hampered by national restrictions; and 121,000 grants with a value of £910 million from the Restart Grant to assist businesses reopening after restrictions are lifted.
  • As of the 31 July 2021, 223,000 employments in predominantly rural areas and 918,000 employments in predominantly urban areas had been on furlough – 4% and 5% of total employments respectively. 

Within these figures and dashboards it is important to recognise informal structural effects and the hidden unemployment that exists in some rural areas. For example, some rural residents on furlough may have lost their job and not engaged with the benefits system (e.g. they are living off savings, a redundancy payment, partner’s salary or receiving financial assistance from a family member). Some people have kept their job but may have found their role reduced in scale and/or hours. Some people may have decided to retire and take their pension early. Some people have taken time during the pandemic to plan a new direction such as self-employment, retraining or starting a business. All of these circumstances are difficult to collate within these quantitative measures. 

3. How are rural interests being recognised by Government in its plans for investment and growth? Defra’s policy paper on rural proofing set out how Government will support rural businesses and communities. Around ‘strengthening the rural economy’ this starts with building back better and greener from COVID-19 through the UK Shared Prosperity Fund, Levelling Up Fund and agricultural transition plan. The document also sets out support for rural businesses through growth hubs and international trade support – with bespoke support for those operating in the tourism sector. The report further highlights the establishment of a Rural Impacts Stakeholder Forum to inform Government’s response to COVID-19. 

The UK Shared Prosperity Fund will not be operating until 2022. In the interim, the Government is investing in the UK Community Renewal Fund (UKCRF) to support investment in skills, local business, communities and place, and getting people into employment. The application window closed on 28 May 2021 and funding decisions are expected shortly. The UKCRF is intended to support other Government initiatives, including but not limited to: 

  • Levelling Up: a £4.8 billion fund to support town centre and high street regeneration, local transport projects, and cultural and heritage assets.
  • Community Ownership: this £150 million fund is intended to ensure communities can support and continue benefitting from the local facilities, assets and amenities that are most important to them. 
  • The Welcome Back Fund: £56 million of European Regional Development Fund (ERDF) has been allocated to support the safe return to high streets and help build back better from the pandemic. This builds upon the £50 million Reopening High Streets Safely Fund (RHSSF) allocated to Local Authorities in 2020. 
  • County Deals were announced by the Prime Minister in July 2021. The Deals are intended to take devolution beyond the largest cities, offering the rest of England the same powers metro mayors have. Further detail will be set out in the Levelling Up White Paper due to be published in late 2021. 
  • Plan for Jobs: a package of support to help people back into work and develop the skills they need to thrive as the UK emerges from the pandemic. 
  • Freeports: companies inside the sites are offered temporary tax breaks. These include reductions to the tax companies pay on their existing property, and when they buy new buildings. Freeport employers will also be able to pay less national insurance for all new workers from April 2022.

All of these initiatives are intended to help level up and create opportunity across the UK for people and places. Much of the focus is ‘place based’ in wanting to target places most in need across the UK – including rural and coastal communities; ‘bespoke support’ in being tailored to local need and circumstances; and to lead to a smooth transition away from EU structural and investment funded programmes

In August 2021, the RSN published a report ‘towards the UK Shared Prosperity Fund’, which reveals how only 18 rural districts were placed on the Government’s priority list of 123 local authorities for its Levelling Up Fund. Researchers found that number should have been as high as 27 if low standards of living in rural communities had been properly accounted for. This builds on earlier work calling for a rural strategy. This draws together a number of policy challenges which interconnect and are common to rural places: ageing, living costs, infrastructure, accessibility, delivery and perceptions. Under ‘a thriving rural economy’, the document describes how “businesses of all types, sizes and sectors should be supported to prosper, grow and provide decently paid employment opportunities. This will be of direct benefit to rural communities and will contribute significantly to the national economy”. The RSN is calling for a dedicated rural business support programme, a rural proofed industrial strategy, a re-purposing of Local Enterprise Partnerships (LEPs), a training offer to suit small rural businesses, and a further education system accessible to rural pupils. The RSN has also developed a Rural Economy Toolkit with the Institute of Economic Development (IED) to act as a guide to anyone wanting to raise rural relevance in the economic agenda. 

4. Where next? For me, this work illuminates four ongoing issues. (i) Thinking devolutionary – although Cornwall secured a devolution deal without a mayor demonstrating that deals are not just applicable to urban areas, there is a sense that some rural areas have been left behind because the governance models promoted by Government [i.e., mayoral combined authority] do not work as well for them. The Levelling Up White Paper will supersede policy documents on devolution and we need to ensure rural local leaders are given the necessary tools to fully participate in devolution. (ii) Thinking interventionally, while the focus on the economy pre-COVID-19 channelled funding and interventions through Local Enterprise Partnerships (LEPs), since the pandemic, much of the coronavirus grant funding has been distributed by Local Authorities. From public health and tackling homelessness through to recruiting volunteers to support those shielding and engaging with businesses about decisions on opening, Local Authorities have been vital in making the Government’s national pandemic plans work at local levels. Local Authorities should be central to the Government’s Levelling Up process. This also highlights a continued role for rural proofing to ensure interventions offer the fairest solutions for rural areas. (iii) Thinking connectivity,  if we want a countryside where people can grow up, live, work, socialise and grow old then we need to recognise how rural life can be challenging. For RSN readers these challenges are well rehearsed and ongoing: the need to close the ‘digital divide’; where the debate is not just whether ‘speed’ should be prioritised over ‘access’ but, implementing innovative local solutions to reach the final mile and addressing issues such as cost and affordability; the reduction of bus/public transport in rural areas and condition of the roads; and access to services such as shops, pubs, post offices, village halls, GP surgeries, schools and colleges. If we are to strengthen the rural economy all of these connected issues need to be considered. (iv) Thinking impactfully, we need to collect useful and applicable information about interventions in rural places. The Green Book describes how public sector investment projects are evaluated and assessed. A revised Green Book was published in December 2020. This requires projects to assess their ‘place based impact’ and to ‘consider the differential impacts on different places and the interaction with other relevant strategies, at UK levels, or more locally’. To support these new requirements, the Green Book provides further guidance on measuring local impacts. The revisions also include guidance on assessing projects designed to bring about ‘transformational change’ – stating how the ‘nature of change needs to be transparently explained…with a credible explanation of the change process’. The Government has also said that the revised Green Book approach will apply to future Spending Reviews. We need to ensure this approach and the Spending Review is interrogated through a rural lens. 

Will the Government’s post-pandemic Levelling Up agenda deliver all of the above (and more)? Watch this space…

Thank you to all the RSN readers who contacted me following my rural words on high streets. From asking what residents/shoppers are looking for from their high streets, through to raising issues around community safety and rural public transport, many thanks for all of your insights and feedback. 

Jessica is a senior research fellow at The National Centre for Rural Health and Care (NCRHC) and researcher/project manager at Rose Regeneration. Her current work includes supporting health commissioners and providers to measure their response to COVID-19 and with future planning; and evaluating two employability programmes helping people furthest from the labour market. Jessica also sits on the board of a Housing Association that supports older and vulnerable people.

She can be contacted by email jessica.sellick@roseregeneration.co.uk, Website -  http://roseregeneration.co.uk / https://www.ncrhc.org/, Blog - http://ruralwords.co.uk, Twitter - @RoseRegen


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