Rural enterprise has a fundamental role to play in both the levelling up agenda and our emergence from the impact of the pandemic.
Latest government statistics show areas that are predominantly rural contribute £261 billion to the UK economy. More than half a million businesses – one in four of all those registered in England – is in a rural area. Taken together, these firms employ around 3.7 million people or 13% of the entire workforce of England’s registered businesses. A great performance, but there is an underlying challenge; the rural economy is 18% less productive than the national average.
Closing this productivity gap would add a further £43 billion to GDP and is one of the reasons why policymakers need to recognise rural enterprise in decisions on the levelling up agenda.
A mixed economic landscape
The overwhelming majority of rural businesses, around 98%, are SMEs - small or medium-sized enterprises. The bulk of these are ‘micro’, employing fewer than ten staff. Many operate with modest capital and specialise in providing goods or services needed in their local areas. They include the UK’s 17,000 rural shops, a lifeline for many communities and a collective retail engine that generated £15.8 billion in sales in 2021.
Depending on their activities and sector, other rural businesses serve bigger markets than their immediate localities.
Barriers to overcome
Despite their importance, there are recognised sensitivities and barriers that make life more challenging for rural businesses compared to their urban counterparts. Access to external finance and investment is one. Rural businesses are often at a disadvantage because investors are perceived to favour SMEs in urban centres.
Finding staff with the right skills is a common challenge too, as is a lack of affordable housing. Progress with essential business infrastructure can also lag behind towns and cities, making business more difficult to do in rural areas.
Creating the conditions for sustainable growth in rural areas is a task that has become all the more urgent given the impact of the pandemic on communities, public services, business confidence and people’s income.
Strategy and action in Dorset
The range of Dorset’s rural business activities is vast: agriculture, food and drink production, hospitality, tourism, defence, marine engineering, advanced manufacturing and green technology - just some of the many sectors creating rural jobs and business success.
Research informing strategic economic leadership, such as that undertaken by Dorset Local Enterprise Partnership (LEP), has also identified issues and opportunities that are unique to rural Dorset - such as the importance of its natural capital, environmental assets, market towns, land-based businesses and sectoral activity.
Among the challenges experienced in rural Dorset are how best to resolve a lack of suitable rural broadband speeds and disparities in earnings, productivity, accessibility, competitiveness and service provision.
Luke Rake is Principal and Chief Executive of Kingston Maurward College, a specialist land-based college in Dorchester. He is a Dorset LEP board member and chairs the Dorset Rural Enterprise Group which champions the role of rural businesses.
Luke believes Dorset LEP is ideally placed to deliver on levelling up and act on the interdependence between urban and rural for the benefit of the entire county due to its understanding of rural economic development needs.
“People first have to appreciate that the rural parts of our region are not a unified whole,” says Luke. “You have comparatively well-connected rural communities close to urban centres and, on the other hand, highly isolated, deep rural areas. Dorset LEP has an excellent first-hand understanding of this. Dorset is interesting because it has an almost 50:50 population split between the BCP Council conurbation and the rural areas and rural towns. There is sometimes a perception that urban gets everything because more people will see a dual carriageway being built in Bournemouth than a smaller road scheme near Gillingham. That perception creates an internal marketing challenge for us to show that Dorset LEP is indeed investing in rural areas too.
“What the LEP has to do is face two ways and be a conduit between urban and rural communities. We have convening power, led by business, between the local authorities. We can take a high-level strategic view, fostering links for the benefit of all communities.”
Rural voice
Dorset LEP amplifies the rural business voice locally and nationally. Its Rural Enterprise Group provides a direct route for rural perspectives to be fed into the work of the LEP Board. There is continual engagement with a range of rural interest organisations. They include businesses themselves, further education providers, the National Farmers Union, the Country Landowners Association and the Federation of Small Businesses.
Cecilia Bufton, Dorset LEP’s Chair, is clear that the competition for public funds to enable on-the-ground support for rural businesses has to start with an evidence base of need.
“We look at labour market intelligence to identify trends in productivity and understand skills gaps and vacancies,” explains Cecilia. “This data helped to identify priorities in our local industrial strategy and continues to support us when competing for funding.
“We have a disproportionately large number of micro businesses. Most of these don’t have an HR department or the resources required to apply for finance that larger businesses acquire as part of their development. To help these businesses, we work with partners such as the NFU, CLA and FSB to build awareness of the investment issues rural businesses face. That is essential information which we use to frontload funding bids.
“It is true that a challenge for rural businesses nationally is the lack of geographic proximity to investors. Looking at GVA metrics, there is an apparent weighting towards investment in urban being better. The upshot is that rural is disproportionately disadvantaged. The comparative lack of success for rural investment bids is reflected in recent analysis of small business finance by the British Business Bank. Comparing rural and urban regions in 2021, the BBB found that, because they felt they had no other choice, a greater share of rural business owners turned to external finance, such as overdrafts, leasing, hire purchase and credit cards, or injected personal funds into their businesses.
“To counter that here in Dorset, we encourage and act on local knowledge. We make a genuine effort to argue the case for spreading investment around. Our local authority partners, Dorset Council and BCP Council, are very supportive in this. Together we can say to the government we have vitally important assets in areas such as agriculture, marine and green technologies.”
Agritech
An important sector that is growing quickly in Dorset is agricultural technology, or agritech. This is defined as technology on the farm, or that crosses the threshold of the farm, to support productivity and sustainability in agriculture, horticulture or aquaculture.
Dorset LEP is a member of a steering group, South West AgriTech, which is developing the sector across the wider region. It recently produced a positioning paper on progress and opportunities, putting the current number of agritech jobs in Dorset at around 700 and the sector’s economic value at £108 million.
Among its aquaculture credentials, Dorset is the home of Cefas, the government’s Centre for Environment, Fisheries & Aquaculture Science. This is a world leader in marine science and technology, providing innovative solutions for the freshwater environment, biodiversity and food security.
Dorset Innovation Park, already a cluster of excellence in advanced engineering, also houses an agritech innovation centre focused on the development of farming ventilation systems.
To support the growth of agritech, Dorset LEP provides innovative start-ups and high-growth companies with a fully funded package of help through a One Health collaboration.
Agritech plans include the development of a university centre and business hub at Kingston Maurward College. One of its aims is to incubate and accelerate a pipeline of 40 high-worth, clean-growth businesses by 2030. A prime example of a knowledge exchange project is the Stewarts AgriTech Glasshouse, an educational facility near Wimborne with Kingston Maurward College engaged as a project partner. Under this initiative, the family-owned business, Stewarts Garden Centres, established in 1742, will use the facility to grow and supply a wide variety of plants to its own stores and other south coast garden centres and farm shops. The aims are to reduce the reliance on imports, safeguard rural jobs and become an educational resource for schools and colleges on horticultural practice.
Levelling up: rural investment projects
As the following list shows, Dorset LEP works on many fronts that tie into the levelling up agenda nationally. While rural Dorset has a reputation as an affluent part of the country, it contains areas of considerable economic and social deprivation including in smaller towns and villages and the countryside. Dorset LEP seeks to address this by tackling inequalities between urban and rural, improving overall employment rates, household incomes and individual and community wellbeing. Projects to unlock the rural economy enabled through the LEP support reflect key national priorities in essential areas such as skills, infrastructure, innovation and the visitor economy.
A small selection of flagship investments are:
- Skills: £3.5 million contribution to a university centre and rural business hub at Kingston Maurward College supporting higher education opportunities for young people and enabling growth among small rural businesses through an agritech business incubator.
- Digital: £3.6 million investment in enhanced full-fibre gigabit coverage and ultrafast broadband with particular focus on rural areas where connectivity has been poor.
- Transport: help to deliver a package of transport improvement schemes in Gillingham town centre unlocking the delivery of new homes and jobs.
- Energy: support for the first green hydrogen facility in the South West with a £3 million loan and Dorset's first green national grid connection with a £1.8 million loan.
- Innovation: contributing to the development of Dorset Innovation Park and related on-site initiatives including a £1.7 million investment in a Defence Battlelab and £740,000 towards an Agritech Research and Innovation Centre.
Championing growth and prosperity
Dorset LEP is sensitive to the needs of communities and businesses across the county’s extensive rural areas and an active champion of the policy of levelling up.
That means striking the right balance between creating thriving rural communities and protecting all that is precious about Dorset’s natural capital and cultural heritage.
From progression to higher education for young people to diversifying the range of investors for business, Dorset LEP is continually innovating while targeting support where it is most needed. Working with funders and investors in and beyond the county, the LEP continues to bring and apply a wide range of intelligence on how rural and urban can work together.
The policy of levelling up aims to deliver opportunities for all and Dorset LEP predicts remarkable things in the future for Dorset’s growth and prosperity.
For more examples of how Dorset LEP supports businesses, both rural and urban, and information about our wider activities and strategy, visit www.dorsetlep.co.uk.