Call for ‘radical rethink’ on rural economy

A radical re-think is needed to recognise the countryside’s contribution to economic growth beyond agriculture and tourism, a leading academic has warned.

Different types of rural businesses made a major contribution to the economy, said Mark Shucksmith, director of the Newcastle Institute for Social Renewal.

But these firms often faced constraints as they tried to grow because policymakers were too entrenched in their thinking about rural development.

Professor Shucksmith was speaking in Brussels alongside EU farm commissioner Dacian Ciolos at a Notre Europe seminar on European policies for rural areas.

Calling for a shift in thinking, Prof Shucksmith said: “Too many policymakers fall into the trap of thinking that rural economies are all about farming and tourism.

“This is not true, although of course we must support Europe’s family farmers.”

In the north-east of England, for example, 75% of rural Gross Value Added (GVA) was generated by the public sector, business services, distribution, hotels and retail, and manufacturing.

“These are not business sectors that most people associate with rural areas, but they are hugely important as a potential source of future economic growth,” said Prof Shucksmith.

Growth barriers

Newcastle University’s surveys of rural businesses showed that many of these businesses had potential for growth, even in these challenging times.

But rural firms faced a number of barriers to growth.

Prof Shucksmith said: “Businesses encounter difficulties recruiting skilled staff, and many have trouble finding premises where they can expand.

“This is particularly true for the manufacturing sector, which has the highest growth ambitions but is constrained by inadequate sites in rural areas and inappropriate planning policies.”

Other obstacles faced by rural businesses across all sectors included regulation, lack of finance and slow broadband speeds, said Prof Shucksmith.

“Governments urgently need to address these barriers and help businesses overcome them.

“Without a radical rethink, there is a real risk that rural economies across Europe will be unable to contribute fully to the EU growth agenda – and some rural areas will even decline.”

“These are not business sectors that most people associate with rural areas, but they are hugely important as a potential source of future economic growth.”
Professor Mark Shucksmith, director of the Newcastle Institute for Social Renewal

So-called “top-down” views of rural development had seen infrastructure projects such as power stations or aluminium smelters imposed on rural communities from outside.

“These policies are dictative, destructive and distort rural economies,” said Prof Shucksmith.

But “bottom-up” philosophies, where rural economies were encouraged to develop from within by responding to local priorities using local assets, were rarely given the support needed.

“Neither of these approaches is sufficient or effective and radical action is required, otherwise the potential of rural economies will be squandered.”

Governments should take a “networked” view of rural development, suggested Prof Shucksmith.

This would build local capacity and support asset that already existed without ignoring the vital role of the state in providing the necessary conditions to allow rural businesses to grow.

“Philosophies such as localism and place-shaping, while important, are not enough.

“Governments must seriously consider their regional policies and rural-proof national initiatives to protect non-urban economies.”

They should prioritise provision of high speed rural broadband, simplify the tax regime to encourage entrepreneurship, and provide incubation spaces for rural businesses.

“It is vital that governments recognise the potential contribution rural areas can make to national economic growth and invest in rural development.

“In this age of austerity it has never been more important that businesses that can create jobs and generate growth are equipped and supported so they can thrive.

“Supporting rural businesses is not an unaffordable luxury, it is a necessary investment in our future,” Prof Shucksmith concluded.

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