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Rural Businesses

Volume 568: debated on Friday 18 October 2013

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

When this debate was selected, I received a telephone call asking whether it would be more appropriate for the Department for Environment, Food and Rural Affairs or the Department for Culture, Media and Sport to respond. It is all too easy to consider rural businesses as either agricultural or tourism-based and the main issue facing them as access to fast broadband. For High Peak, which is one of the most beautiful constituencies in the country, tourism is without doubt a very important industry. As the Federation of Small Businesses survey found recently, 60% of rural businesses reported that the problem of access to good quality broadband is potentially holding them back, so I do not seek to minimise those issues. But concentrating the debate on just two stereotypical industries and one, albeit important, problem misses the point that the rural economy operates in a diverse range of sectors, as I hope to demonstrate throughout my remarks.

The value of England’s rural economy is about one fifth of the national total. It can therefore make a substantial contribution to restoring the economic strength of the whole nation and is as deserving of support from the Department for Business, Innovation and Skills as any other area, so I am pleased to see the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon) here and I thank him.

Let me make a few points about the rural economy in general. It is worth £211 billion a year. Although rural areas are home to just one fifth of the English population, they support nearly a third of England’s businesses—around half a million businesses. Small and micro-businesses, of which I am very supportive, employ about 70% of employees in rural areas. So it is clear that we need to get the conditions right for all these businesses to thrive. The Government have been quick to recognise that there are real challenges facing our rural communities and businesses. I wholeheartedly welcomed the publication of the national rural proofing guidelines in July, which sought to ensure that rural areas get a fair deal from all Government Departments. They state:

“For people living and working in rural areas there can be challenges and barriers for their businesses, the services they receive and their quality of life.”

That is a massive step towards acknowledging that rural areas matter.

All UK businesses have been through tough times, as we know, but the situation is beginning to turn, largely as a result of the Government’s efforts. Rural businesses, however, face additional problems beyond those faced by others seeking to grow their businesses and provide employment in metropolitan centres. For many years now—for too long, some might say—the effort has been in assisting the redevelopment of our inner cities. I admit that those areas had been overlooked and deserved help, but not at the complete exclusion of rural areas, which face similar issues and where it costs more to deliver or access services.

I am pleased that the Government are taking action to restore the balance, but the gap between rural and urban areas has remained at a similar level since 2006. There have been indications of improvements since the peak of the recession a few years ago, including fewer redundancies and insolvencies in both rural and urban areas, but rural businesses are still facing drops in confidence and investment.

The most recent quarterly rural economic bulletin sets out that the economy appears to be turning a corner, with employment rising and claimant counts falling, which is good news. What makes for slightly more depressing reading, however, is the fact that the figures are not moving in the right direction as quickly in rural areas. In the manufacturing, construction, finance and transport industries, rural communities suffered more redundancies than their urban counterparts.

I regularly speak with small and medium-sized enterprises in my constituency. My background is in small business, so it is close to my heart. I always make myself available to visit as many businesses as I can when they ask me. I am a regular speaker at the business breakfasts organised by the Derbyshire and Nottinghamshire chamber of commerce. In the town of Glossop, a lady called Kathy Ford runs the Glossop Business Network, another organisation that pulls small businesses together to discuss common issues. I visit GBN regularly to speak and, more importantly, to listen to the concerns of small businesses. Having listened to them and to other companies from metropolitan areas, there is no doubt in my mind that there are differences in how businesses operate depending on their location.

I will talk briefly about broadband, although this subject is about more than that. Broadband has become an essential business tool. Without it, or with a slow and unreliable connection, rural micro-businesses are at a competitive disadvantage compared with urban businesses. I welcome the Government’s investment in broadband, but for some in High Peak it cannot come soon enough. As my constituent Mr Steve Otty, who runs his business, Hindlow Technical, from just outside Buxton, has said:

“Here’s hoping that the 21st century arrives for all of us, not just the urbanites”.

I think that he makes a very good point. As I often say, broadband is now the fourth utility for businesses. It is crucial in so many ways to their futures.

Simple geography in rural areas can make hiring staff more challenging. Lack of affordable housing means that many young people cannot remain in the area where they grew up, which starves businesses of young employees to train in their own way. Fewer than half of rural areas have access to a bus service. With limited and scarce public transport, those same young people who cannot drive or afford to run a car—many of us will know how expensive that is for young people nowadays—cannot access available work and employers cannot get the staff they need.

Those planning difficulties and the lack of affordable housing can also affect the ability of businesses to expand. Swizzels Matlow is a world-famous brand—many of us will know it—that makes such sweet childhood memories as refreshers, drumsticks and love hearts. Those of a certain age, like me, will remember having them in their youth. They are loved the world over. Swizzels has been based in New Mills in High Peak since 1928 and is very much part of the fabric of the town. It is a fantastic brand and it is looking to build and expand, but suitable additional premises are hard to come by in rural areas. It would be so easy for companies such as Swizzels to move into urban areas, which I am sure would welcome it. It is to be commended for its loyalty both to High Peak and to the people of New Mills, where it has been based for over 80 years and where it wishes to stay.

I do not want to paint a picture that is completely one of doom and gloom. Nestlé, which markets the famous Buxton water, which I am sure many of us have taken, has recently opened a new bottling and warehousing facility at Waterswallows in Buxton. It implements the latest thinking and best practice in environmentally friendly buildings. It is a fantastic thing to behold. Some £35 million has been invested to minimise the building’s environmental impact, the operation’s running costs and the site’s infrastructure and ecology. However, no matter how much investment firms are able to make in their premises, poor roads, difficult transport links, inadequate signposting and higher delivery costs add to the geographical challenge faced by the businesses who provide these dearly needed jobs in our rural communities.

Because of poor roads and increasing demand for travel, every day in my constituency thousands of commuting cars meet heavy lorries, creating severe traffic jams and pollution, particularly around the A57 and A628 trunk roads. They are ruining some stunning local landscapes and shaking parts of the village of Tintwistle to their foundations. There is also a knock-on effect whereby traffic is being sent through small villages such as Charlesworth, creating further congestion and traffic dangers. Any business man knows that delays cost money and impact on the viability of any business. I have great concerns about this road issue, as the Secretary of State for Transport is well aware. These horrendous traffic problems will choke off the local economy if we do not address them. I have first-hand evidence of a company in Glossop that tries to meet its clients at Manchester airport because it does not want them being delayed in trying to get into Glossop for important business meetings. I am further concerned that such infrastructure issues will deter other businesses from moving to High Peak and Glossop.

On the subject of transport and access, we alight on fuel prices, which have been discussed in this Chamber many times. I am pleased and proud that the Chancellor has taken the steps that he has to cancel the various duty rises that led to my constituency having higher fuel bills. One of the main industries in High Peak is quarrying, and the stone has to be transported. Quarries cannot be built next to the point of use; they have to be where the stone is. Consequently, there is a huge road haulage industry in High Peak which carries tonnes of high-quality limestone around the country. As we know, that industry is facing ever higher fuel bills.

Businesses that are not transport-related also suffer from high fuel costs. For example, while I welcome the recommitment to the universal postal service in all areas, businesses and residents in parts of my constituency can face a 14-mile round trip to a post office, and people may have to go 10 miles for a doctor or dentist. All those journeys have to be made using their own transport. As I have said before, in rural areas a car is not a luxury but a necessity. Rural businesses have to pay for more travel and pay higher prices for their fuel because it is sold at a premium because of the cost of getting it to remote areas. Petrol is always dearer in High Peak than it is here in London. The Government have recognised this problem and, as we heard on the news today, they are acting in certain areas, but regrettably not in High Peak. I understand the difficulties to do with the European Union and fuel derogation. There is also the problem of other fuel costs. Electricity prices are rising. We heard the news about British Gas this morning. On some occasions in High Peak we cannot even get gas, and further costs are incurred as a result.

I mentioned the quarrying operations in High Peak. I would not describe a big quarrying company as an SME, but I know from experience that such a company involves a huge supply chain in its area. From my own business experience, I know how that supply chain works. It supports a variety of small businesses, micro-businesses and even sole traders, many of which would like to be near that customer, because it may not be their only customer but is certainly their most important. It is vital that rural areas can get these big companies so that the benefit of their presence can be felt across the rural economy. Their buying power goes down through the economy through money spent in local retail areas and the creation of jobs and, as I said, the supply chain. We are lucky in High Peak—our limestone means that the quarries have to be there—but like other areas we need to get other businesses that are not as tied to natural features as the quarries.

I would like to return to the point I made earlier. This is not all about agriculture and tourism. In High Peak we have a bewildering range of businesses. I recently visited Selden Research, the UK’s largest independent manufacturer of professional cleaning, maintenance and hygiene chemicals. Based in Buxton, it has invested £250,000 in solar energy to help power the factory. That investment follows a £1 million investment in bulk raw-ingredient storage tanks to minimise levels of in-bound raw material transportation and packaging costs. We have high-tech and manufacturing businesses such as Pressure Tech in Hadfield, which makes high-pressure regulators. It is the highest-quality manufacturing that can be seen: precision stuff. Peakdale Molecular in Chapel-en-le-Frith is a leading company in pharmaceutical, biotechnical and diagnostic sciences. Next week I will be visiting Glossop Cartons, which has invested thousands of pounds in the world’s first production order for the Highcon Euclid digital cutting and creasing machine, no less. I will not go into how that machine works, Mr Deputy Speaker, but I am sure that if the Minister would like to know I could explain it to him afterwards. This investment and this breadth of business is being carried out in High Peak, which is a rural constituency. We should not dismiss it as a farming and tourist area.

I welcome the establishment of the five rural growth network pilots, which focus on small businesses, and understand that they are progressing well. I look forward to them being rolled out and hope High Peak will benefit from them.

Many funds are now available to enable business to access finance, which is a huge problem and not restricted to just rural areas. The Government-sponsored business growth fund of £2.5 billion offers investments of between £2 million and £10 million in return for an equity stake. To qualify, companies must be UK-established, with sales of more than £5 million per annum. That will not help many businesses in High Peak.

On a smaller scale, the Growing Places fund for Derbyshire is a fantastic £17.8 million fund that aims to make funding approvals of between £500,000 and £2.5 million. We need smaller pots, because some of the businesses need just a few thousand pounds here and there to help them expand and thrive.

I want to give the Minister plenty of time to respond. I thank him for attending and am glad that such a high-ranking BIS Minister is going to respond to the debate. As a Government, I think we value the rural economy much more than our predecessors and I welcome that.

In summary, the rural economy relies on businesses and it can be diverse, dynamic and proactive. It can play a huge part in the national economic benefit of our nation. We at our peril dismiss it as based purely on agriculture and tourism. It is a force to be reckoned with and one that we can harness. We are doing well in High Peak: we are punching well above our weight, despite all the challenges I have outlined today. Imagine what more we could achieve if we helped to address some of the difficulties I have highlighted. We should and must provide support in every way possible.

I congratulate my hon. Friend the Member for High Peak (Andrew Bingham) on securing this debate on such an important subject and on the leadership he has shown, both in his High Peak constituency and in Westminster, on small-business issues.

Let me begin by assuring my hon. Friend that stimulating economic growth is the top priority for Government. We want to see rural areas contributing to and benefitting from that growth across the country. We have introduced a wide range of national policies to promote business and deliver growth in both urban and rural areas, delivering new infrastructure, raising skills levels and supporting business, particularly small and medium-sized enterprises, which make up a significant element of the rural economy. For example, we are investing £150 million to improve mobile coverage for up to 60,000 rural premises across the country that currently cannot receive any signal. We are also taking a number of other actions to support the rural economy, including improving competitiveness and skills, investing in rural tourism and supporting micro-enterprises.

As my hon. Friend said, we have established five pilot rural growth networks aimed at tackling the barriers to economic growth in rural areas, such as a shortage of work premises, slow internet connectivity and fragmented business networks. These pilots expect to create up to 3,000 new jobs and support up to 700 new businesses, offering a local approach to local problems. We will share the lessons that they learn with other local enterprise partnerships and local authorities, to help them promote growth in other rural areas.

The rural development programme has invested more than £400 million to date in projects to help grow the rural economy. Completed projects have created more than 8,500 new jobs and safeguarded a further 9,700. The next seven-year rural development programme, beginning next year, is a major opportunity to continue to invest in rural growth and the environment. We are working together with interested groups to design a programme that will make a measurable contribution to improving the environment and economic growth and that will give real value for money.

My hon. Friend referred to a couple of our programmes that provide grants at a higher level, and he rightly identified the issue of getting that financial support to businesses that may require only a much smaller but important amount. In his constituency, the D2N2 local enterprise partnership—the Derby, Derbyshire, Nottingham and Nottinghamshire LEP—has recently awarded local crane manufacturer Street Crane a £152,000 grant towards the £1.5 million cost of building and equipping a new factory to support export growth. This is good news in terms of creating new jobs and developing skills, helping Street Crane to expand to new markets and providing a boost for British manufacturing.

Some of the challenges that are faced by rural businesses are the same as those that are faced in towns and cities. SMEs need to be able to access effective business support and the finance they need to start and to grow. There must be less red tape and better access to public procurement. Although the location of a business is not always the key factor, I recognise that rural areas may be affected disproportionately by the issues that are faced by all SMEs in accessing business support. It is important to ensure that the support for all businesses is simpler, more joined up and easier to access.

A wide range of advice and information for people who want to start and grow a business is available on and the Great Business website. The £200 million GrowthAccelerator programme is available for up to 26,000 SMEs with high growth potential that want to take things to the next level. It provides them with the necessary expertise and networks to achieve sustainable growth.

We recognise the importance of being able to access finance. We have therefore put in place a package of credit-easing measures to improve the supply of affordable credit to SMEs. The funding for lending scheme, which is by far the largest intervention, allows banks and building societies to borrow at cheaper rates from the Bank of England for periods of up to four years. That will significantly reduce the cost of providing credit. The StartUp loans scheme is providing a £117 million funding boost to enterprise. We have removed the upper age cap and the scheme is now available to people of all ages over 18. My hon. Friend might like to know that there have been 15 loans to his constituency so far, with a total value of £97,000. The enterprise finance guarantee scheme continues to be an important source of finance. Since May 2010, it has facilitated additional lending of £1.3 billion to more than 12,700 businesses. Twenty EFG loans have been offered in the High Peak constituency, to the value of £1.26 million. We know that we can do more, which is why we are capitalising the business bank with £1 billion of new money.

My hon. Friend raised some specific issues that affect rural communities. I recognise that broadband connectivity is essential to the ability of rural businesses to compete and contribute to our economic prosperity. I am aware that there are concerns in the rural community about the speed of connections. We are a world leader in the online economy and are in the top three EU member states for broadband coverage, take-up, usage and choice. However, more needs to be done to connect rural businesses so that they can participate fully in the online economy.

The Government, local authorities and the devolved Administrations are investing more than £1 billion to extend the benefits of broadband to rural areas of our country. Our projection is that we will reach our original goal of 90% superfast coverage by early 2016. We recently announced an additional £250 million of investment to extend superfast coverage to 95% of premises by 2017. Together with the industry, we are exploring how to expand coverage further, using more innovative fixed wireless and mobile broadband solutions to reach at least 99% of premises by 2018.

Mobile connectivity is increasingly important in providing rural broadband connectivity and choice. Earlier this year, we saw the successful conclusion of the 4G spectrum auction and nationwide 4G services are now being rolled out. EE, O2 and Vodafone are all committed to rolling out 4G services to 98% of the population by 2014. Through the mobile infrastructure project, the Government are providing £150 million to provide masts covering so-called not spots. The first mast went live last month. We have also streamlined the planning laws, which should speed up the deployment of fixed and mobile infrastructure.

Transport is also central to local economic development. We have announced our intention to devolve funding for local major transport schemes in a way that aligns with local enterprise partnerships. There should be a smooth transition to the inclusion of that funding in the local growth fund, which will provide £1.1 billion of funding to support investments in local transport projects. The D2N2 local enterprise partnership has a local transport board, which is now looking at the delivery of major schemes across its area. We want to see a greater local influence over the delivery of such projects and, while funding will come to the D2N2 area from 2015, the LTB has been set up now in order to agree a programme of schemes and oversee their development and implementation. The D2N2 area has been notionally awarded £46.8 million.

On the work force, it is vital to develop high calibre vocational skills if we are not to be left behind in the global race, and to address the unacceptable position of skills shortages existing alongside high youth unemployment. Businesses in all areas need access to those skills. Local enterprise partnerships have the lead role in developing local skills strategies that reflect local priorities, and I understand that the D2N2 LEP is developing its skills plan to identify priorities and supporting actions to address them.

Since 2010, as my hon. Friend knows, we have given colleges freedom and flexibility to respond to employer and learner needs. We have supported a massive expansion in apprenticeships, with the number of starts increasing by 86% between 2009-10 and 2011-12. We have also given employers the opportunity to shape skills provision through the £340 million employer ownership pilot.

I assure my hon. Friend and the House that the Government are fully committed to supporting businesses across the country, especially those in rural areas, and making sure that we realise our ambition of making this country the best place in the world to start and grow a business.

Question put and agreed to.

House adjourned.