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Speech by Hilary Benn at the Commission for Rural Communities summit on Releasing the innovative potential of rural economies - “Why the rural economy matters”, 5 February 2009

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Good afternoon.

I’d like to begin by thanking ONE North East, the North West Development Agency, Yorkshire Forward, and the Commission for Rural Communities for organising this important event, and Stuart [Burgess] for your report on the economic potential of rural areas, which has brought us here today.

The countryside occupies a special place in our nation’s affections.

Its beauty means so much to us. It is the golden thread which binds together past and present, nature and culture, tradition and invention.

I think we can all understand what the poet, William Cowper, meant when, he wrote that: ‘man made the town, but God made the country’.

It’s great to be here in York. What better place could there be than ‘God’s own county’ to talk about the importance and resilience of the rural economy?

And it’s a soberly appropriate time to be talking about this too.

The recession is of course making life hard for many communities and businesses. People are worried about their jobs and what the future may hold.

That’s just as true of rural communities as it is of our towns and cities. And the Government’s job is to continue to do what we can to help – on bank lending, on support to businesses, and assistance for those who lose their jobs or who are worried about losing their homes.

Stuart is one of those who is monitoring what is happening, and I will continue to work with the CRC, the RDAs and others to look at what the rural economy needs, and how government can best support it in the face of global recession.

Rural businesses play a vital role in our economy, and they will be even more important in future. So we need to be alert to warning signs now.

The CRC reports that unemployment in market towns is higher than they have seen before. And of course the cumulative impact for market towns of multiple shop or factory closures can be huge.

As Stuart’s report indicated, many small rural businesses do not have large loans, and do not rely on the more usual lines of credit. But they are borrowers – often from family and friends, or through overdrafts and credit cards. And the credit crunch may leave them vulnerable.

So we need to ask some important questions.

How can we ensure that we continue to give the right help to businesses and individuals?  How can we provide the right opportunities for training or advice?  And how can we quickly identify any rural problems that require specific action?

I am very grateful for the briefing being provided to me by the Commission for Rural Communities and the RDAs on how the recession is affecting rural areas. I can assure you that I will do everything in my power to ensure that the rural economy is at the heart of the decisions we take in Government as we steer a course through the recession, and that rural businesses are able to benefit fully from the help that government is making available.

So today I am announcing that I will call together all those involved – Stuart Burgess, the chairs of the RDAs and others – to look at the impact of the recession on the rural economy and see what further assistance we can give through the National Economic Council.

And one of the things that will help us to do this is an understanding of the nature of the rural economy and how it has changed. And here I’d like to deal with a few urban myths.

Our rural areas are not economic backwaters. Quite the opposite.

They are not the poor relations of England’s large towns and cities. In fact, Stuart’s report showed us just how the rural economy has been diversifying and just what an important part of the UK economy rural areas now are.

They are home to around a million businesses – a quarter of England’s total – and they provide just over five and a half million jobs.

Together they have a turnover of over £300 billion a year. 

In fact, there are more businesses for every 10,000 people in rural areas than there are in urban areas.

And though they are rural in location, they are not local in their reach. Indeed, these businesses are more likely to sell to national, and export to international markets, than their urban counterparts.

Farming is of course hugely important in rural areas, and to the nation as a whole. Not just in shaping and preserving the landscape, such as our cherished moors, dales and tors, but also in producing our food. 

In fact, when the ONS published figures showing that all sectors of the economy had shrunk over the last three months, there was one exception: agriculture.

That shows its strength. Last year’s wheat harvest was a record. And we want it to continue to thrive and to prosper, especially as the world seeks to feed another 2.5 to 3 billion human beings in the coming decades – and to do so in a way that is sustainable.  We are, of course, putting £3.9 billion into our new rural development programme for England – more than double the size of its predecessor – both to help farmers do that and to support rural businesses.

The rural economy is, however, not just about agriculture – vital though it is. 95% of the rural workforce are employed in other sectors. 

If you look beyond the fields and hedgerows you will see that rural areas boast businesses of all shapes and sizes, producing and providing all sorts of goods and services.

Lift the thatch of a cottage in Exmoor or the slates on a barn in Swaledale and you might find a high-tech start-up business, a consultancy firm, or a design studio.

In rural Kirkbymoorside, not too far from where we are today, you will find a firm producing structural composites for some of the world’s largest companies.

In a converted country house not far from Leeds-Bradford airport, you will find an award-winning healthcare technology company that produces unique fabric strips to replace damaged ligaments.

And last year I visited a company near Evesham that sells jute shopping bags – in huge demand as shoppers move away from plastic.

The company does the designs for the bags in Worcestershire, sends them electronically to India for printing is done. They then import the bags which they sell to retailers – including the major supermarket chains.

These are just three examples – and there are so many others – of thriving rural businesses. I tell you, there’s no shortage of entrepreneurs in rural areas.

You can see this particularly in the growth of high-tech and high-skill businesses. The CRC tells us that last ten years has seen a rise of nearly 300,000 people working in these businesses in rural areas – an increase more than twice that of urban areas.

And new research by Defra and the Office of National Statistics shows that productivity in rural areas is as high as it is in urban areas outside of London.

We are at a point in human history where, for the first time, over half of the world’s population are now living in towns and cities, but in Britain, the growth in population in rural areas has actually outstripped that in urban areas for each of the last four decades.

And it’s not hard to see why rural Britain is so popular.

Average incomes are higher.

Unemployment is lower. So are crime rates.

School results are better.

And rural areas tend to be rich in one of the greatest resources we have as human beings – a sense of community.

I saw that in Ashton Hayes in Cheshire last year which is working hard to become Britain’s first low carbon village. Ordinary people – in their own words – doing extraordinary things.

But not everything is rosy. There is also poverty. Real poverty – not as concentrated as in our cities – but there in homes and communities. That’s why the government has worked so hard to lift children out of it. And I’m glad to say that in recent years, the number of children living in poverty in rural areas has declined faster than the national average.

But, of course, much more work needs to be done. It’s a job for all of us, and I welcome the new £20 million scheme announced recently by the DCSF, DWP and the Treasury that includes specific help for children living in rural areas.

So, what does this picture of the rural economy and the challenges it faces mean for the way we think about it? 

Rural areas are not small cities, nor should they be treated as such. The rural economy isn’t a backwater and it doesn’t need special care. It contributes hugely to the economy, but it is different from urban areas and its needs are different too, just as there are significant differences between rural areas.

My job is to ensure that in Government we recognise and act on those differences – where we need to – and to champion that part of our country where one in five people in the UK live.

This is what we mean when we talk about ‘mainstreaming’ and ‘rural-proofing’ – not brilliantly evocative words, to tell the truth - but it’s about national, regional and local government working to understand the needs and interests of rural residents, businesses and communities, and then incorporating what we have learned into the work we do every day.

Now I must tell you Stuart that your report has done a huge amount to raise the profile of rural affairs across government. And I am delighted today to be able to launch our response to your report.

What we’re saying is this; the rural economy is strong, diverse and resilient, but we need to redouble our efforts. We need to shout about the successes, and the innovation, that we see, to change the way people perceive the rural economy, and to continue to champion its cause across government. And it is vital that we both help the rural economy through the current downturn, and take the right decisions for the future to help it prosper in the recovery, when it comes.

And, in that spirit, I want to look at three important areas: housing, energy, and broadband.

First, housing and development.

There are great pressures on the housing market at the moment. That’s why the government is taking steps to help homeowners and first-time buyers in urban and in rural areas. That’s why we’re expanding the availability of shared equity. And that’s why we’re working so closely with lenders to keep people in their homes, by for example extending the income support for mortgage interest payments to help people when they’ve fallen on hard times.

Decent housing enables people to create communities, and to build the local economy. Now in rural areas, the tensions – let’s be honest – between economic growth on the one hand and quality of life on the other can be a real barrier.

That’s why the Prime Minister asked Matthew Taylor to conduct a review on how land use and planning can better support rural business and affordable housing.

Now, I am a passionate defender of our natural heritage, our landscape, our wildlife and our biodiversity. But in protecting nature we must also recognise people’s need for somewhere to live and for a job.

As Matthew Taylor’s review sets out, small villages can be characterised as ‘unsustainable’ and then denied development to help change that. I don’t think that’s a very sensible interpretation of sustainability.

In my view there is no such thing as an unsustainable place – only unsustainable ways of doing things. Sustainability is not about choosing the environment over development, it is about recognising both and striking a balance.

That’s the CRC’s approach; and that’s my approach.

And I don’t think we should take a nostalgic view of rural areas either – the view that says all development is a bad thing. Preserving beauty and character are really important, but you can do that alongside enabling businesses and innovation to thrive. 

Let’s take a practical example. We all know that rural businesses can find it difficult to recruit and retain staff. And we know that young people often leave to find better opportunities, and better housing, elsewhere.

That’s why good rural housing is so important. That’s why we’re investing in it, and I’m pleased to say that over 5,500 new affordable homes are now scheduled for completion in villages across England over the next two years.

We want to give communities the means to overcome these problems, and we’ll shortly be publishing our response to the Taylor review setting out how we intend to do just that.

The second area is energy.

As we strive to overcome dangerous climate change, the way in which we produce our energy will be increasingly important. There’s a real opportunity here.

Rural areas have some advantages over cities in exploiting renewable technologies.

In the US, for example, it is estimated that the next 20 years could see as much as $1 trillion worth of new investment in renewable energy for rural areas. There’s no reason why we can’t see a big increase too.

And in the UK there’s a lot going on already.

Take anaerobic digestion – using waste to make energy. We’ve doubled the incentives for AD and we’re putting £10 million into demonstration projects. What a way to deal with farm slurry and food waste to generate power.

Take the example of Community Energy Solutions, here in Yorkshire and Humber, and in the North East. This project is delivering mains gas connections and community-based renewable technologies under pilot schemes co-funded with the RDAs.

That’s energy generated in local communities, for local communities, and we’re taking steps – with feed-in tariffs – which will enable individuals, communities and businesses to sell the energy they’ve generated back to the grid.

Or look at Saltash in Cornwall where they’ve just ‘switched on’ the first biomass woodchip boiler in the region, set up by the South West Bio-Heat Programme and funded by the South West RDA.

It will use some 500 tonnes of wood and save around 400 tonnes of CO2 a year, while reducing heating costs by some £40,000 each year.

Third, there’s the information and broadband revolution.

To borrow Professor Neil Ward’s phrase, rural economies are now in the age of ‘the modem and the barn conversion’.

It is technology that has helped rural entrepreneurship to grow.

It is technology that has allowed home working in rural areas to rise to twice that of urban areas.

It is technology that has tempted people to turn their backs on the city, towards a world where the only things that scrape the sky are church spires and great oaks.

And it is a specific technology – broadband – which is transforming lives, communities and jobs today.

Canals were the arteries of our economy in the 18th century, trains in the 19th century, roads in the 20th century.

And in the 21st century it will be broadband.

Broadband is now becoming essential - for individuals, for small businesses and for voluntary organisations.

There are some really innovative projects out there bringing broadband to rural areas. NYnet, in North Yorkshire, which was initially funded by Yorkshire Forward, has made cheap broadband available to over 50,000 rural businesses.

It is estimated to have brought in hundreds of thousands of pounds of investment by enabling entrepreneurs to thrive in areas that might previously have been off limits, while also connecting communities, and public services to the network. The project has become a model.

I know that many rural communities are, however, still unable to access broadband. I know how important it is for rural communities and businesses – the more remote you are, the more important it can be to be connected. And I know about the barriers that still need to be overcome - not just access, but also quality, speed and cost. That’s why last week we announced our intention that by 2012 – in just three years time – broadband, of up to 2 megabits per second, should be a universal service.

I will be working hard to ensure that access for rural areas is a central part of government plans for the future of broadband.

It’s taking steps like these that will best help the rural economy through the recession and best assist it to prepare for the economy of the future.

There’s been a lot of talk this week about 1991 – the last time the country saw such heavy snow. And of course, 1991 was also the last time the country was facing the chill wind of recession. Then, rural areas were unprotected and ill-equipped for what happened to them. But in recent years the support available has been transformed.

When the RDAs were created in 1999, they provided a new kind of help for businesses, based on knowing what was happening on the ground.

And with 30% of that help going to rural businesses, they are in an ideal position to target support where it’s most needed.

In addition, the Rural Development Programme for England will put £600 million in to support small businesses, improve the quality of life, and provide better infrastructure. It will also provide help for diversification, and for tourism. A Visit Britain survey in December found that about one in five people who took a foreign holiday last year plan to save money this year by choosing the UK instead.

So, Stuart, I think the rural economy’s future lies in diversity, resilience, capacity for change, innovation, and a lot of potential waiting to be tapped.

That was what you really said in your report.  And I promise you that as a government we will continue to work with you at the CRC and with all of you to ensure that our rural communities can make their full contribution to the future of this country.

Our rural communities are the roots from which we grew. They’ve shaped our history, they’ve shaped our culture and they’ve shaped the way in which we see ourselves.

And by their efforts, they are helping to shape the future too.

Thank you.

                           

Page published: 5 February 2009

Department for Environment, Food and Rural Affairs