NICRE – May 2022

Sub-standard infrastructure in rural areas – particularly lack of quality broadband – is affecting businesses’ ability to be resilient and bounce back from adversity, according to a major survey from the National Innovation Centre for Rural Enterprise (NICRE).

Around a third of rural enterprises in the North East, South West and West Midlands, compared to a fifth of urban firms, judged their broadband quality to be ‘poor’ or ‘very poor’, with the survey findings illustrating the vital importance of broadband quality to business resilience during the Covid-19 pandemic.

Rural businesses were also twice as likely than urban firms to rate their transport infrastructure as ‘poor’ or ‘very poor’ with almost six out of 10 having the same perceptions of public transport, compared to 21% of urban firms.

With similarly much lower ratings from rural businesses than urban for the availability of affordable housing and provision of basic services, NICRE’s evidence highlights the importance of addressing the full breadth of rural infrastructure deficits in the Levelling Up agenda.

The findings provide an assessment of the ways in which rural enterprises experience local infrastructure factors and their connections to business networks and community links. It is the second in a series of State of Rural Enterprise Reports from NICRE, established to foster rural enterprise and unlock the potential in rural economies.

It follows the publication of ‘Levelling up the rural economy: an inquiry into rural productivity’ by the All Party Parliamentary Group for Rural Business and the Rural Powerhouse last month, to which NICRE submitted evidence, which said that the urgency of improving infrastructure – particularly the delivery of full-fibre broadband – cannot be overstated.

NICRE Co-director Professor Stephen Roper is Director of the Enterprise Research Centre, which led the report and is one of NICRE’s founding university partners.

He said:

“While evidence shows that access to a range of infrastructures and external resources can improve business outcomes and increase the ability of a firm to adapt and bounce back from adversity, little was known about the link between infrastructure and resilience before our survey.

“Our significant results indicating a positive relationship between broadband quality and firm resilience during the Covid-19 pandemic are particularly important to the Levelling Up agenda, when viewed alongside the issues with access to, and quality of, broadband in rural areas.

“Together they present a strong case for policy intervention to overcome the barriers preventing comprehensive high-quality broadband in rural areas, given its presence is likely to enhance resilience and, in turn, productivity growth of rural firms.

“While our findings demonstrate clear differences in experiences between rural and urban firms, this is not the full picture. Considering variations within rural areas is as important as rural and urban comparisons in understanding the experiences of rural enterprises to develop policies that will truly Level Up Britain.”

While the NICRE survey found overall similar levels of business connections and community engagement among rural and urban enterprises, there were differences depending on where rural firms were located.

Rural firms in villages and hamlets and isolated dwellings, for example. were less likely to report that they know, interact with and feel supported by, other businesses. Those in villages and rural town and fringe locations were more likely to have supported community, social and environmental activities than those in more isolated areas.

‘Complete connection’ opens doors for Northumberland holiday firm

One award-winning rural business which knows first-hand the positive impact of quality broadband and its link to resilience is Laverock Law Cottages and Glamping, near Lowick in Northumberland.

For years, owners Harvest and Dave Harris-Jones struggled with poor broadband, but the situation came to a head during Covid. With their two children home-schooling, Harvest training to be a yoga teacher, increasing numbers of virtual meetings and mounting expectations from guests, they decided it needed to be addressed.

“Connection had always been a problem for us,” said Dave.

“It was a case of one user at a time, a constant juggle and compromise between family and guests and incredibly frustrating. The world changed so much during Covid with online bookings for attractions becoming the norm and guests expecting to be able to stay connected to loved ones, not to mention carry out the odd virtual work meeting. We were on the verge on losing business unless we addressed it.”

With the support of the Rural Design Centre Innovation Project, the couple enlisted rural broadband experts Alncom to install full-fibre broadband to their home and holiday cottages and the change has been transformational. The connections were funded through the Government’s Gigabit Broadband Voucher Scheme.

“Having complete connection and not having to worry about it has made a massive difference,” said Harvest. “To turn what was a threat into an opportunity has opened so many doors for us and made us so much more resilient.

“While we are strong advocates of people taking a break from technology to reconnect with nature for their wellbeing, we fully recognise the need in today’s world for digital connection.”

Dave added: “We’ve just had a family return to stay with us – when they were here a few years ago they said, while they loved the place, they wouldn’t be back unless we improved our connection. That shows how far we’ve come and how vital it is.”

The business won the ethical, responsible and sustainable tourism category in the North East England Tourism Awards 2022.

The NICRE report has been welcomed by the Department for Environment, Food and Rural Affairs, the Country Land and Business Association (CLA) and Rural England.

Lord Benyon, Minister for Rural Affairs, said:

“Rural areas are at the heart of our vision for levelling up, and we welcome this report.

“We want businesses and people in rural areas to do as well as those in inner cities, and we are providing funding to put in place the infrastructure needed. This includes our £1 billion Shared Rural Network, £50 million of projects in the delivery pipeline to connect public buildings as part of the £5 billion to ensure hard-to-reach areas get gigabit connections.

“We have announced over £2.6 billion through the UK Shared Prosperity Fund, and we will say more about rural funding shortly.”

Mark Tufnell, President of the CLA, said:

“The findings of the report reaffirm our view that effective, reliable, and affordable broadband is fundamental to the success of rural business. Whilst it is recognised that significant progress has been made regarding the wider deployment of digital connectivity over the last decade, there remains a substantial rural-urban digital divide and it is essential that this is resolved as soon as possible.”

“The rural economy generates some £260bn gross value added (GVA) per year but rural areas are still 18% less productive than the national average. But if we can remove the barriers to rural economic growth, that include digital connectivity, lack of rural affordable housing and a planning system that is not fit for purpose, then we can begin to properly level up between rural and urban areas.”

Margaret Clark, Chair of Rural England Community Interest Company (CIC) Stakeholder Group, said:

“This report comes at an important time as the Government presses forward with its Levelling Up programme. It provides a better understanding of the challenges facing rural businesses and rural economies which are often lost in national business surveys.

“It also reinforces the need for the metrics, measures and policies to bring about Levelling Up to be sufficiently sensitive and fine-tuned to recognise the particular circumstances and needs of rural businesses if the Government is to achieve its ambitions to unlock the potential across the whole country.”

The Department for Digital, Culture, Media and Sport (DCMS) said that in three years, national gigabit broadband coverage has rocketed from six per cent to 67 per cent. The government is investing £5 billion in Project Gigabit: a national infrastructure programme to ensure hard-to-reach areas are first in line for a lightning-fast broadband connection, and up to £210 million in Gigabit Broadband Vouchers is available to give people in eligible rural areas immediate financial help to get gigabit speeds.

Since conducting this rural business survey in summer 2021, NICRE has teamed up with Building Digital UK, part of DCMS, to seek firms’ views of rural broadband connection and the effect it has on their businesses by inviting them to complete a short online survey.