Rur al Communities Report by the House of Commons Environment, Food and Rural Affairs Committee July 2013 (England only)
This report assesses how successful the Government has been at championing rural issues since 2010. It also highlights many of the challenges facing rural communities. Some of its key conclusions are: 1. 2. 3. 4. 5. 6.
That the Government is investing heavily on some challenges, such as rural broadband, but on others it could and should do better. The Rural Communities and Policy Unit, which is the Government’s rural co-ordinator, is constrained by lack of resources. That the new powers for rural communities to affect their futures, under the Localism Act and changes in planning rules, are positive but that communities must be supported more to help themselves. The Government needs to recognise that the current system of calculating the local government finance settlement is unfair to rural areas. The Government should support communities developing their own broadband, including using any funding originally intended for the 2MB Universal Service Commitment. Defra should set out what steps it is taking to combat poverty and deprivation in rural areas and how it is ensuring that these often small pockets are not being overlooked in official statistics by Government.
It is an excellent summary of the issues and main policies to address them. It, or this summary, can be used as a framework to challenge all types of government, at national and local levels, on their rural impact.
Rural England’s Key Facts And Figures • • • • • • • •
A quarter of the population (12.7m) live in rural communities Rural areas make up 86% of England’s land area The rural economy is home to over ½ million businesses (28% of England’s total) These businesses contribute over £200billion to the wider economy (19% of the overall total) The untapped economic potential of rural communities could be £347billion (Commission for Rural Communities, 2007) Predominantly rural local authorities receive 52% less per head than their urban counterparts due to the way the Government grant is calculated Tourism is worth £29billion to the rural economy Rural fuel prices are higher, rural dwellers travel further and spend more on transport than urban dwellers
Rural funding It costs more to deliver services in sparsely populated areas; this is often called the ‘rural premium’. However, despite rural communities paying higher council tax bills per dwelling, they receive less Government funding1 and have access to fewer public services than their urban counterparts.
1 Local authorities that are predominantly rural received £147.81 in Government grants per head in 2012/13, less than half that received by urban areas (Rural Services Network). Part of this disparity is due to ‘damping’, a process applied in the spending settlement to ensure no council’s year-on-year variation is too great. Recent technical changes have been implemented which has begun to reduce this disparity.
The Report’s Recommendations Defra should work with DCLG to reduce the rural disparity; the Rural Fair Share Campaign wants the disparity reduced by 40% by 2020. Defra’s Rural Policy and Communities Unit (RCPU) must monitor the impact of the business rates retention policy on rural communities. The Rural Economy The number of rural businesses has not grown as fast in rural areas compared with urban ones since 2010/11 (1.3 v 4.3%). This, with the CLA / Smiths Gore Rural Economy Index2, indicates that the rural economy may be stalling. The report identifies the five main barriers to growth: Barriers to growth
Recent policy interventions with the potential to help rural communities
The Rural Economy Growth Review - a £165million package of measures targeted at helping rural businesses reach their full potential. These measures include: enabling rural businesses to grow and diversify, supporting rural tourism, expanding the food and drink sector, delivering green growth, reducing regulation on farms.
Digital and transport infrastructure
See broadband section below
Access to finance
Business Bank: will be launched in autumn 2014 and, although not specifically aimed at rural communities, should help rural firms
Planning and rates
• • •
Planning reforms: The National Planning Policy Framework (NPPF) encourages sustainable growth and development of rural firms. Small Business Rate Relief scheme: has been extended to April 2014 Rural rate relief scheme: has been introduced to help protect retail outlets and similar services in rural settlements with a population of less than 3000.
Local Enterprise Partnerships, which replaced regional development agencies, have been accused of being too urban-centric; the CLA found only 8 of the 39 LEPs explicitly recognise or refer to rural areas in their objectives. The Report’s Recommendations Local authorities should ensure that businesses get all potential tax reliefs. Planning officers should become advisers helping businesses to grow – not stifling them
Which is referred to in the report. www.smithsgore.co.uk/publication.
Housing The combination of low wages, high living costs and above average house prices is seen as detrimental to the rural economy. Failure to build new homes in rural areas is predicted to have grave consequences for communities which require them to attract young people and jobs. Between 2001 and 2011, house prices nearly doubled, with rural house prices rising faster than urban ones
On average, people working in rural areas earn less than those working in urban areas
Rural homes are more expensive and the influx of urban dwellers into rural parts has put pressure on rural housing
The cost of living has also been rising faster in rural areas (7.7% compared with 4.3% nationally 2012).
Rural dwellers spend £2,000 more a year on essential goods such as fuel, food and home maintenance.
Lack of affordable housing is a key factor that can hold back economic growth. There has been a sharper decrease in social housing in rural areas than elsewhere.
Current Government programmes on housing
Affordable Homes Programme
£1.8 billion to deliver up to 80,000 new homes for affordable rent and affordable ownership. There will also be £3.3 billion for the construction of 165,000 homes after 2015. For the period up to 2015, 10% of approved bids were for rural homes, well below the 25% of the population that live in rural areas.
Affordable Rent Model
Rents are tagged up at 80% of market rent. However, it is believed that this scheme will simply increase rents for the least well off in rural areas.
Right to Buy
The scheme offers discounts of up to £75,000 to eligible social tenants to buy their own homes. Concerns have been raised that this could hinder efforts to meet the affordable housing needs of communities.
Welfare Reform Act 2012
The housing benefit of working-age social tenants will be reduced if their house is deemed too large for their needs. Rural areas, which tend to have a small social housing stock comprised of larger homes, could be affected most.
Rural Exception Sites
Planning permission will be granted for affordable homes for local people on sites that would not usually secure permission. This policy only produces a small number of houses each year – which is better than nothing but only just.
New Homes Bonus
This grant is paid by central Government to local councils for increasing the number of homes. It is paid each year for six years and is based on the amount of extra Council Tax revenue raised for new-build homes, conversions and long-term empty homes brought back into use.
Help to Buy
The Government provides financial support to people who cannot currently afford their first home to get onto the housing ladder. Concerns have been raised that it will create a house price bubble.
The National Planning and Policy Framework gives a more flexible approach to planning in rural areas.
The Localism Act 2011 introduced new powers that allow communities to shape new development in their local areas by developing Neighbourhood Plans. The Report’s Recommendations
A larger proportion of funds should go to rural house building projects. The 10% of homes built in rural areas under the Affordable Homes Programme should be a base minimum. The outcomes of the Affordable Rent Model and Right to Buy must be closely analysed. RICS argue that under-occupation penalties should not apply where affected tenants are unlikely to secure another home in the ‘travel to work’ area. Government should see if more homes can be made available under the Rural Exception Sites scheme. Defra should ensure that support is available for rural communities to develop Neighbourhood Plans.
Broadband and mobile Businesses, schools and households in rural areas have fallen behind in the great broadband race. In 2010, 11% of rural households had no broadband and 12% only had access to slow broadband. Commentators argue that the rural economy is being held back because of this. The Government has pledged to make the UK the superfast broadband capital of Europe by 2015. To enable rural communities to keep up in this race, two funds, the Rural Broadband Programme and the Rural Community Broadband Fund have been set up offering around £550 million between them. Local authorities can also seek funding though the European Regional Development Fund (ERDF). In addition to this, the Government has committed to invest the £300million it will be paid by the BBC over 2 years from 2015 to rural broadband development. Whilst the amount of money available and Government plans for it are welcomed, there are concerns about the time it is taking for proposals to move forward and questions as to whether 2Mbps should be a minimum when there are often so many devices vying for connectivity per household3. One obstacle faced by rural communities is that they must provide upfront funding before any roll out or improvements can occur, whereas urban areas have funding provided throughout the process. Not only is less than 2% of Government spending for rural broadband being allocated to rolling out superfast broadband, but rural communities have to contribute half of the funding. The Report’s Recommendations 2Mbps must be the absolute minimum available to rural communities. The Government should support communities developing their own broadband. The Government should publicise how many households and businesses are not going to be covered by the roll – out of 2Mbps broadband under the Rural Broadband Programme. The Rural Community Broadband Fund should do more to help communities and not just act as a cost recovery after installation. More Rural Development Programme funding should go to this. Empowering communities and the Rural Communities Policy Unit There have been lots of initiatives aimed at giving communities more power over their futures4 . The most popular amongst rural communities so far are Neighbourhood Planning and Community Right to Bid. One of the most significant sources of funding will be the new Rural Development Programme for 2014-20205 . The Rural Communities Policy Unit is the lead rural policy function within Government, ‘championing rural issues across Government’, and replacing the Commission for Rural Communities. The report is concerned that some of the work it does on ensuring that the rural impacts of policies have been properly considered by policy makers has not been adequate enough. The Report’s Recommendations All policies should be subject to rural proofing. Defra should look to review rural proofing annually to ensure it is as up-to-date as possible. RCPU should expand its structured relationships with rural agencies.
Head of Management 01798 345999 rupert.clark @smithsgore.co.uk
Head of Consultancy 01387 274382 matthew.currie @smithsgore.co.uk
David Fursdon Senior Consultant and Chair of the Future of Farming Review 01823 446985 david.fursdon @smithsgore.co.uk
3 In the June 2013 Spending review, the Government scrapped its promise to deliver 2Mbs broadband to 90% of premises by 2015. They now plan to roll out 2Mbps to 95% of premises by 2017. Funding for the delivery plan has also been reduced by £50million to £250million. 4 The Localism Act introduced Neighbourhood Planning, Community Right to Build, Community Right to Bid and Community Right to Challenge. There have also been new planning rules, including the National Planning Policy Framework and changes to permitted development rights. 5 Funding under this programme has been cut to £3.7billion compared with £3.9billion in the previous programme.
Report by the House of Commons Environment, Food and Rural Affairs Committee