Rural communities need a diverse range of businesses and work opportunities to flourish including manufacturing, finance, creative industries, tourism, farming, food production, and new green technology based enterprises.

Defra is investing in the rural economy through the Rural Development Programme for England. We are working with the Department for Business, Innovation and Skills (BIS) and the Department for Communities and Local Government (CLG) to make sure measures designed to support business and the economy (such as delivery of business support arrangements and the Regional Growth Fund) are having a proportionate, positive impact in rural areas. Work to re-balance the national economy in favour of private sector-led development needs to be appropriate to those areas. In addition we are engaging with, and facilitating networking between, Local Enterprise Partnerships to make sure rural interests are successfully recognised and advocated.

Rural Economy Growth Review

On 29 November 2011, Government announced a strong package of new measures designed to stimulate sustainable growth in the rural economy and help rural businesses to reach their full potential. This package, led by Defra, was produced as part of Government’s “Growth Review”:

The measures announced in the Rural Economy Growth Review (PDF 425kb) are designed to address the key rural barriers identified in the Review and help rural businesses take advantage of the opportunities available to them. They fall into five main themes.

1. Enabling Rural Businesses to Grow and Diversify (PDF 61kb) – There is no shortage of rural business start-ups and plenty of successful SMEs. However, there is evidence that these are often unable to achieve their full potential. The Government will, therefore, be targeting £100m of funding from the Rural Development Programme for England (PDF 150kb) at rural businesses; launching a competition to support up to six pilot Rural Growth Networks (PDF 60kb), with funding of around £15m, including around £2m for women-led enterprises; consulting on how to make it easier for farmers to put redundant farm buildings to appropriate alternative business uses; and taking further steps to improve rural broadband access by launching a £20m Rural Community Broadband Fund. This is on top of the £530m already being spent on superfast broadband.
2. Supporting Rural Tourism (PDF 70kb) – Tourism is one of the largest contributors to the rural economy and has great potential for further growth. The Government is, therefore, launching a major initiative, totalling £25m, to promote tourism in rural areas, including in AONBs, and to support the development of rural tourism businesses.
3. Expanding our Food and Drink Sector (PDF 53kb) – The agri-food sector is another key element of the rural economy, and the Government will be working closely with it to boost exports, promote innovation and encourage further growth, particularly amongst SMEs. A joint Government / Industry export action plan will be launched in January 2012.
4. Delivering Green Growth (PDF 73kb) – The Government is committed to Green Growth, and is launching a £15m fund to help communities tap into the renewable energy potential of rural areas, and introducing a new initiative to improve skills in the Forestry sector.
5. Reducing Regulation on Farms (PDF 71kb) – Farmers manage over 70% of the countryside, and in order to reduce red tape and stimulate growth in the industry, the Government is acting on specific recommendations in the Macdonald Review of Farming Regulation in relation to the Nitrates Directive and Earned Recognition.

A complete set of the measures can be found here (PDF 425kb). Further information about the Rural Economy Growth Review can also be found in our Frequently Asked Questions document (PDF 50kb). More detail about the individual measures will be published in due course.

In addition, you can contact the Rural Economy Growth Review team.

What is the Growth Review?

The Government’s Growth Review seeks to create the right conditions for businesses to succeed by removing barriers that are preventing them from performing to their full potential. Rural Economy was one of six topics covered in the second phase of the Growth Review – the others were Infrastructure, Logistics, Mid-sized businesses, Education and Skills, and Open Data. The outcomes of these reviews were announced alongside the Chancellor’s Autumn Statement on 29 November 2011. An update on measures announced in Phase 1 was also published.

What did the Rural Economy Growth Review find?

The Review generated a range of evidence about the rural economy in England. It found that the economic structure in rural areas is broadly similar to that in urban areas, and that there are close links and interdependencies between them. However, it also identified some important differences between the economies in rural and urban areas. The significance of small and medium sized enterprises (SMEs) is greater in rural areas, and they also face specific barriers to growth such as poor electronic communications; a lack of premises for businesses to start up, expand or diversify; and limited access to a local workforce with the right skills.

The Review also confirmed that rural areas have a number of comparative advantages, such as space for businesses to develop and expand sustainably and plentiful supplies of natural resources on which key rural industries such as agri-food, tourism and renewable energy depend.

Why a Rural Economy Growth Review?

Rural areas already make a significant contribution to the national economy: an estimated £200bn (19% of national Gross Value Added) is generated in rural economies. The Rural Economy Growth Review provided an opportunity to increase that contribution by identifying actions that the Government can take to remove barriers and enable businesses to maximise existing advantages and exploit new opportunities.

The Review recognised that many of the most significant issues affecting rural businesses, such as access to finance, the effectiveness of training, the cost and supply of housing, and the availability of expert business advice, similarly affect businesses in urban areas. The needs of both rural and urban businesses are, rightly, being addressed through existing Government initiatives, such as the recent Housing Strategy, the National Skills Strategy, Solutions for Business and National Infrastructure Plan, so these were not the main focus of the Review.

Rural economic monitoring

Defra undertakes regular rural economic monitoring and publishes a “Dashboard” of key rural economy indicators.

Quarterly Rural Economic Bulletin