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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 714-i
House of COMMONS
TAKEN BEFORE the
Environment, Food and Rural Affairs Committee
Wednesday 7 November 2012
Dr Adam Marshall and Paul Johnson
Gillian Eliot, Helen Wright and Councillor Keith House
Evidence heard in Public Questions 1-87
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Taken before the Environment, Food and Rural Affairs Committee
on Wednesday 7 November 2012
Barry Gardiner (Chair)
Ms Margaret Ritchie
In the absence of the Chair, Barry Gardiner was called to the Chair.
Examination of Witnesses
Witnesses: Dr Adam Marshall, Director of Policy, British Chambers of Commerce, and Paul Johnson, Chair, Swindon and Wiltshire Local Enterprise Partnership, gave evidence.
Q1 Chair: Good morning, gentlemen. First, let me apologise on behalf of the Chair that she is not with us today; instead, you have me in the Chair. If you would like briefly to introduce yourselves, that would be helpful. We are very grateful to you.
Paul Johnson: Paul Johnson. I am currently Chairman of the Swindon and Wiltshire Local Enterprise Partnership, formerly in manufacturing as my career.
Dr Marshall: I am Adam Marshall. I am Director of Policy and External Affairs for the British Chambers of Commerce, representing about 104,000 companies with five million employees.
Q2 Chair: Thank you both for giving up your time to the Committee today. We are very grateful to you. Can I begin by just posing a couple of general questions? What do you see as the barriers to growth for businesses in the rural economy? Do those barriers vary depending on the size of the business? If you were trying to identify those sectors that had most potential for growth at the moment, what would they be?
Paul Johnson: If I could perhaps paint a picture of the Swindon and Wiltshire LEP area and the geography, that will help towards the answer. Wiltshire is, by any definition, a rural county. It has an average density of 141 persons per square kilometre, but the density within the county varies between over 2,000 persons per square kilometre in Salisbury and, in south Wiltshire rural areas, fewer than 55 persons per kilometre. There is, then, a wide diversity, first of all, in a rural economy.
There are four principal settlements with populations of around 40,000, and there are 13 market towns with general sizes ranging between 10,000 and 25,000. The county has the large Salisbury Plain in the middle-I always say we have as many tanks as tractors in the middle of the county-and we have three areas of outstanding natural beauty, 250 sites of special scientific interest, and 1,500 county wildlife sites and so forth. It meets the rural definition but, if you take that as a blanket definition across a rural area, it does not apply to any specific area.
One of the difficulties with the rural agenda and your question about what the particular growth areas in a rural economy are, is that at one level they are the same as they are anywhere else, in that we are looking for growth industries and entrepreneurs with good ideas to support those directions. The county has 11% of its businesses in manufacturing. I am one of those businesses that are located there. There are many major businesses; names like Dyson will be familiar to everyone.
These businesses have grown up in an environment which is, in fact, a series of townships and market towns, which perform a historical role of servicing the rural hinterland around them, though many without a market now. They still provide opportunities for growth and hub centres for development. Around them is a rural hinterland. One of the difficulties with the rural agenda is the assumption that ‘rural’ means ‘farming’. It does not mean that; it means that there are large open spaces, which, largely, are like visiting the farmers’ manufacturing shop-floor. However, we have an ideal that that needs to be attractive countryside that we are driving through for other purposes, rather than seeing it as a manufacturing environment.
First, there is a need not to generalise the rural agenda. If you look at the different definitions of the rural area, we talk about towns of perhaps 10,000 or smaller, which is not, on its own, helpful. The big issue about towns in a rural environment is the transit time, the access time and the connectivity between them. Businesses that locate in small towns or more isolated towns have accessibility issues. Broadband is a huge issue throughout the whole LEP environment and it is no different in a rural environment; it is a strong lever towards opportunities in a rural environment. Businesses grow up in towns and areas based on entrepreneurs, their interests and their ability to access skills, importantly, and the market. Food and food manufacture is just a small part of that marketplace.
My first, prime point, then, would be that there is a difficulty in understanding the rural agenda, and I believe that the recognition of localism and the need to have treatments in local areas that are different, depending on their natural geography, is a potential strength of the LEP structure. That is not best served by a national rural strategy that is cascaded down onto those quite different regions. We could go into a lot of discussion about the difference between Cornwall and Wiltshire, for example. They are both rural but they have completely different issues and quite different opportunities.
Q3 Chair: You said they have different issues. You identified three potential barriers to growth that you have experience of in Wiltshire: transport, connectivity and broadband. Are they not shared more widely in other rural communities?
Paul Johnson: There is a need to understand what is happening in the rural community. There are a lot of not poor individuals in the rural community who are choosing to retire there or who enjoy being in that area, but they are not providing a contribution towards that local economy. There is an issue about serving isolated rural communities. If I keep my LEP hat on, we are about the economy and growth, so we do not really have an agenda about some of those isolated rural communities on their own, because they do not, frankly, offer opportunities in terms of economic growth, and we are looking at leveraging economic growth. We are looking at market towns and small towns as being essential parts of the economy, and the connectivity between those, which is extremely important.
Integration of transport is another huge issue. The move towards local transport bodies gives opportunities to deal with some local issues in the rural economies, but there is a conflict between some of the national rail objectives and those that we would want in a region that assistance and focus on would help. I have often referred to Wiltshire as a drive-through county, in that most of the road and rail networks go through the county rather than to the county, which is why we have made proposals and are on the way to getting a linkage of our principal communities with TransWilts Rail in a new franchise for the area. The point is that what is good connectivity regionally in the area, servicing those communities, is not aiding fast transit through to Cornwall in terms of access from London to Cornwall. We are, however, still in a position in those communities where it is easier and quicker to get to London than it is to travel from the north to the south of the county. Because of the road systems, it just takes longer. The connectivity between communities and the quality of the road systems-which some communities see as a defence against growth, I might say-are dilemmas and local issues that need some understanding.
Dr Marshall: I can agree with a lot of what Paul has just said. The very first thing that came to mind when you asked about the barriers specific to rural communities was, in fact, our findings from 2010-2011 that many of the issues are generic issues facing business communities, whether they are urban or rural. So I would start with a point of agreement on that. When the Treasury and Defra decided to do a Rural Economy Growth Review as part of the Growth Review in 2011, half of me asked, ‘Why, because the issues you are going to come up with are the same?’ Indeed, when we took, with the aid of Shropshire Chamber of Commerce, for example, civil servants from Whitehall into the county to look at the issues facing businesses, on the train on the way back, of course, they remarked, "We hear a lot about these issues in other places too". There are some generic barriers to doing business, which are perhaps accentuated in rural areas, but are common to all.
If I was going to raise five-I will do it very quickly-points, complete agreement on digital and transport infrastructure would be the first one. It is not always just broadband either; it is as simple as mobile-telephone services for businesses, and particularly smaller businesses that are dependent on constant movement; and transport links, of course, making sure that the infrastructure is in the right place at the right time.
The second is business premises-a massive issue: planning permissions for businesses, and growth businesses in particular, that want to expand. Also the change-of-use issue: when people have outbuildings on rural land that they want to convert into business premises, and some of the difficulties they have had with that. I think, whilst we would recognise the Government’s efforts to make that particular process easier, there are still plenty of local authorities up and down the land that have absolutely no interest in making that process easier, so I would raise that, as well as business rates, in terms of speculative business premises in these areas. Because of empty property rates, introduced by the previous Government and continued under this Government, you are not seeing some of the speculative space being built that could either be incubator space or follow-on space for some of the businesses of the future in these areas.
The third issue is access to skills and labour. So many rural businesses report to us constraints in terms of the labour market they are able to access. Some of that is down to the transport links; some of that is down to long distances people have to travel to work.
Quite a lot of it, however, links into my fourth barrier, which is affordability of housing. For so many of these private-sector businesses, in areas where the public sector has often paid better, being able to get access to a workforce locally that can afford the housing locally has been a major issue. I think the housing element of this is one that we ignore at our peril.
The fifth and final point-and perhaps the most difficult one under current circumstances nationally-is access to finance. I do not detect that a lot of the issues facing rural businesses are particularly different from those facing urban businesses in this context, but there is a sense in rural areas that it is just that little bit more difficult, because of lack of proximity, because of scarcity of particularly specialised personnel who deal with business banking on the ground. Getting access to finance can be a more difficult issue in some rural areas than it is in urban areas.
We asked the question to colleagues in the Chambers in Suffolk, Norfolk, Dorset, the West of England, Lancashire and Shropshire, so it is a composite view from across the country, and whether the area in question was particularly successful, middle of the range, or struggling a bit, those were the uniform barriers that certainly came through.
Q4 Chair: It leads me on very nicely to the next question I wanted to put to you, which is precisely about that access to funding. Looking at a quotation from the British Bankers Association, David Dooks said that, "While the banks continued to maintain approval rates of more than 8 out of 10 lending applications, they received 20% fewer borrowing applications than in previous quarters, as business concerns about the economy and trading conditions persisted". I am just wondering: is it that the finance really is not there for good projects that are coming forward, or is it that there is a reluctance in a recession, in a time of economic privation, for people to be willing to go to their banks and put forward schemes that, obviously, entail some element of risk to what capital they still have? Are the funding for lending and the forthcoming business bank schemes enough, in your view, to increase the availability of reasonably priced finance for rural businesses? What more could be done here? Where do you sit on this divide between "We are not getting the applications" and those who say "We are putting in the applications but nobody is giving us the money"?
Dr Marshall: Chair, the place I would start is with your question about supply and demand, and then I will come on to the schemes in a moment. The answer is both: there is both a supply problem and a demand problem. I can sit before you today and confidently say that, as the representative of a business organisation, which has been extraordinarily careful not to bash banks when talking about access-to-funding issues, there is an issue with demand, of course, because the cycle is at a low point, because there is uncertainty amongst many businesses. What the banks’ own research shows nationally, however, is that about one in eight businesses represent a form of discouraged demand. Those who want to go forward to borrow to grow, or to gain access to finance in order to grow, feel somehow that they do not want to go through the door of the bank, because they will either be refused or see some terms and conditions changed on their existing facilities.
There are plenty of businesses out there that are incredibly frustrated about this issue, particularly new and growing businesses. For those businesses, this is a supply issue. Those without a borrowing track record or those who are in a period of very quick growth are facing a true supply constraint. In many other parts of the economy, it is a demand issue. When demand does pick up again, the test will be whether the banks are willing to accommodate an increase in the flow of credit. I can understand the position the banks are in: they are being asked by you, by us and by others to expand the flow of credit; they are being asked by the regulators, both domestically and internationally, to shore up their balance sheets. They are in a very difficult position.
That brings me on to your second question, which is around the various Government schemes. We think this is where a business bank has an incredibly important role to play, and I think a business bank could do a lot of good, not just for businesses in urban areas but for businesses in rural areas as well. I do not expect it will have branches in the high street, whether in urban or in rural areas, but it will be a construct that enables businesses to have recourse to an alternative lender, if they do not get an answer or do not get the answer they wanted from their primary bank or facility. I think there is, then, potential in the business bank idea. The key here is implementation and delivery, and what I would want to be sure of, for the purposes of this Committee, is that access to that route is just as strong for businesses operating in rural areas as it would be for businesses operating in urban areas.
Q5 Chair: Do you think that the fact that banks are often operating in a monopoly environment in rural areas, where there are not the same six banks all located on the same high street that you would have in major conurbations, also tends to colour the way in which bank managers are going about lending?
Paul Johnson: I certainly think that a lack of competition in any local market creates great disquiet amongst businesses in that market. We see it in various places in various areas up and down the country. That is why, on the basis of members’ concerns, we advocate greater competition. It is a good thing, for example, when new entrants come into the market. I think that this Committee has something very interesting to investigate if it looks at the new challenger banks that are emerging and whether they are able to provide some of their services to businesses in rural areas as well as they are able to provide those services in urban areas, because, if you look at some of those new challenger banks that are coming together now, many of them are focusing-obviously, as a new and emergent business-on the biggest pool of business lending available to them, which would be in an area with bigger business concentrations.
Chair: Very good. Thank you very much. I want to turn now to one of the elements that I think we probably expected you to have raised in your hit list of barriers but that was not raised, and that is regulation.
Q6 Ms Ritchie: This is a question to both of you and it is about reducing regulation. The Government have identified cutting red tape as one of the key drivers to delivering growth in the economy. Therefore, are there any regulations that you consider to have a disproportionate impact on rural businesses?
Paul Johnson: I will start in a particular way. Just to carry on the assumption that there is no competition in the banking area, this reflects this area on policy. The problem locally is not that there is no competition, but a lack of local knowledge and risk. In terms of the old model of local bank managers, who understood their businesses and understood when there were real risk environments and not, and were better able to take reasonably small funding judgments with businesses, that flexibility has gone, so it is not a regulation issue but the lack of availability to understand small risk locally has been an issue. I am not sure that there is an immediate solution to that, but it is quite clear that risk-taking is not part of the general banks’ view centrally. The banks tend to centralise more and, again, this understanding of the rural economy is poor.
In the question about planning regulation, there are lots of small things that can be done. Again, I would like to put to the Committee just a thought about City Deals and the response in terms of Rural Deals. Having been fortunate to be now in negotiation for the Swindon part of the Swindon and Wiltshire LEP in terms of City Deals, it struck me very much that the type of initiatives that were being talked about there could be brought into a local rural economy, understanding the differences in the different parts of the economy. I do not think there is one overall regulation part. One of the responses we have had locally is that the front-end planning regulations have been eased, but, when you get right down to it, the ability to deal with planning applications in a timely manner, with the resistance that comes from the different areas in the rural environment-campaigners, and more of that going on now-makes it a very difficult environment. Those checks and balances are necessary for the economic agenda, so we have to accept that, but some of them still look inordinately difficult. I think I would look more towards some innovations in particular areas that could be brought into parts of the agenda.
Just at this point, some clarity about national agenda issues for rural areas as against ones that could be taken locally, I would suggest, is something that the Committee could look at. If you take the Department’s title, I think the sub-sections are very well met in terms of there being a separation between food and farming, rural affairs and the environment. I think some mixed messages and conflicts are appearing in the policy and reactions in these areas, which are making it more difficult to deal with them, certainly at an economic level. The planning conflicts, for example, that come from those are quite difficult to resolve.
If I could just expand on that slightly, if you take environment, the majority of the farming direction seems to be towards managing the landscape rather than delivering high-volume food generation. You may argue with that, but I am saying a lot of the areas are seen in terms of landscape management, and the funding and support goes in that direction. There is a whole landscape/countryside-access/wildlife agenda and the addition of the local nature partnerships that are all dealing in this area, which is quite separate from the farming and food-chain agenda items. There, we would be looking for farming technology and a difference in approach perhaps. Denmark joined the EU at the same time as we did, but everyone knows about the Danish bacon branding, so those are central farming initiatives-
Q7 Chair: Sorry, Mr Johnson, could you just perhaps try to focus your answer in response to the question, which is specifically about regulation? We will cover other areas, obviously, in further questions, but it is important that we try to hear what your view is in relation to the burden of regulation on rural areas.
Paul Johnson: There are some planning-regulation issues, on which I am not an expert. I get a lot of reactions from the local authorities and from businesses about that. Those are usually around the ability to develop existing rural locations that have an impact on others, and that process is difficult. I am not sure that you can handle that at a national level, but I think that the local level needs some better flexibility than it currently has.
Dr Marshall: May I just raise three points on the regulatory agenda specifically? The first follows on from what Paul was just saying with regard to planning. Getting planning permissions from district councils is a source of immense frustration to many businesses operating in rural areas. I would be interested to know if our colleagues in the local authorities in the devolved Administrations do a better job of this than they do in England, particularly in the south of England, where those complaints are most voluble, in part because the businesses concerned are facing multiple tiers of Government and quite a bit of frustration in terms of getting their applications through. A supply of suitable employment land is also a major issue that comes up under the planning bit of the regulatory agenda, and that also needs to be addressed on many occasions.
The second is around compliance, inspection and confidence when it comes to the relationship between regulators and the regulated. So many businesses tell us that, when they are visited by a regulator-and I think this is more pronounced in a rural setting sometimes than it is in an urban setting-they tell them they are doing something wrong or somehow follow through on a tick-box inspection that is required to take place, and that is their only interaction with regulators. On that basis, Leicestershire Chamber of Commerce and Birmingham Chamber of Commerce have engaged in an initiative with local regulators in recent years, the point being to improve confidence and relationships between the business being regulated and the regulators themselves, to remove this adversarial, tick-box sort of relationship and to get to one where the regulator is an adviser helping the business build its confidence and its prospects. That has been working very well, so I think that is something that can be taken up as an approach in other rural areas.
I guess the third issue around regulation is not specific to rural areas: it is the general gripes you would expect from business about regulation. Business people up and down the land will call anything regulation that stops them doing what they need to do to grow their particular business at any moment in time. Some of it is genuine regulation; some of it is other parts of the legal system, like health and safety law, for example. On things like employment law, however, rural businesses will bring up difficulties. On things like health and safety, they will bring up the difficulty that, when they go above five individuals in their employment, the requirements that they have to follow change. Given that rural businesses are overwhelmingly microbusinesses, that does come into effect on a number of occasions.
Those, however, are more general concerns that could be just as applicable to an urban context as to a rural context. I think the one about planning is the one that comes forward first and foremost on pretty much every occasion and in every county we visit.
Q8 Richard Drax: Down in South Dorset, in my constituency, planning is a huge issue. Can I just ask you, from your experience, Dr Marshall, about what I call "quasi-judicial"? How many times have I heard that word-"it is quasi-judicial"? Then the councillors often make decisions that are based on either politics, envy or whatever it may be. It does not follow, despite being advised perhaps by their officers, who are often, themselves, confused by the rules. Is there some way we can get round this, do you think, to make it simpler and more judicial, perhaps, so that there is more guidance and less room for misinterpretation?
Dr Marshall: The issue that you raise is certainly one that I would recognise and I have heard about from Chambers of Commerce literally across the country. We did a planning survey, which, I believe, attracted responses from over 5,000 businesses, just last year. We found an enormous number of businesspeople who said that councillors made decisions for political reasons rather than on the advice of their officials, who are specialists in the area; that they were regularly asked for reams and reams of additional and costly information, at really inappropriate and awkward times during the process; that it was, effectively, meant to dissuade them from bringing the application forward; and then a range of reasons, like "we are in a quasi-judicial set of circumstances; I cannot have this discussion with you right now" in order to solve what is really a commonsense problem, came up over and over again. I entirely recognise that situation.
I entirely recognise as well the efforts that the Government has made over the past two years in order to try to slim down the amount of guidance involved in the planning process in England in particular, and to try to circumvent some of these processes taking an extraordinarily long time and being so difficult and frustrating for businesses. However, the proof of the pudding is in the eating. We are still in the early stages of that reform process. What I would like to see and what I hope the Committee would help us to do is to hold both local authorities and Government to account in making sure that that streamlining happens on the ground. Paul mentioned the difference between the headline of a policy and what happens at the coalface; unfortunately, whether it is access to finance, planning or a range of other things, at the coalface you still hear the same complaints coming through, so the planning reforms have yet to bite in such a way that businesses would feel comfortable.
Q9 Ms Ritchie: The next issue that impacts on rural economies is broadband. Soon after the current Government took office, it pledged that the UK would have the best superfast broadband network in Europe by 2015. I have a question plus a supplementary for both of you. Do you believe the Government’s broadband strategy, as it currently stands, is enough to satisfy the demands of rural businesses?
Dr Marshall: It is a pretty easy answer to that one: no.
Paul Johnson: I would say yes, if we could get the first stage implemented. There is an enormous frustration-I know you will have no doubt have heard it from other LEPs-that we have had a string of promises on the resolution to get broadband implemented and, coming from the private sector, we get constantly frustrated by timescales. We hear about the technology changing again and, as I have said, in a rural context, the broadband rollout that the Government have put forward would make a huge difference, clearly. I do not think it is the whole solution but, goodness me, it would make a huge difference. The difficulty in rolling that out in a timely manner is becoming more and more of a concern. We are seeing the rollout of the private networks into the areas that make it viable for them; other areas are reliant on initiatives. There is one in Wiltshire, which is going to be a year away before we see the impact of that, based on the current difficulties around whether we can proceed with those rollouts on the European competition basis.
The broadband issue is incredibly important, I think. It helps small, isolated businesses get access to information and their marketplace, and to market themselves. It is clearly important. It also impacts on quality of life for those doing schoolwork at home, and businessmen who do business at work and then want to complete work in the evenings. If you are going back into a location that looks attractive but has no broadband access, it is incredibly frustrating as a place to settle and work. I would take the first rollout as rapidly as we could get, and then discuss what should come after that.
Dr Marshall: I do not believe that the ambition, however, is strong enough in terms of the Government’s broadband strategy, or any UK Government’s broadband strategy.
One of the things on our infrastructure more generally that businesses are concerned about is short-termism of policy initiatives and the lack of a several-decades-long view, whether it is transport networks or broadband networks etc. If you go to France, Australia or some other countries that are leaders in this particular area, they have 20-30-year strategies. These are countries that often have lower population densities than we do and bigger natural difficulties to overcome in terms of the rollout. No, then-our strategy is not adequate.
I want to raise just a couple of issues that rural businesses-and also some urban businesses-in particular mention. The Government’s target only refers to download speeds. A lot of rural businesses are creative businesses, and it is the ability to get information up the pipe and to clients anywhere in the world that is just as important as bringing information down the pipe and into your farmhouse, hamlet or wherever else it might be that you are doing business. It is simply not good enough if you cannot get your intellectual property and your product or service out to the world and export it. The Chambers of Commerce overwhelmingly spend most of their time helping businesses to export, and that frustration comes to the fore over and over again.
The opening-up of infrastructure comes up repeatedly. Very often, the infrastructure in some of these areas is in the hands of a monopoly provider. On making sure that, if someone else is willing to make the investment, the infrastructure is open so that that can happen, I know there has been some progress on that, but it is certainly an important issue. So is the use of mobile technologies-4G and things like that-to provide broadband-like services in rural areas. What a lot of businesses in these areas recognise is that they do not have a God-given right to a subsidised form of access to the broadband network if they are the only business for many miles around. Many of them would be more than willing to pay for a better service, or through their monthly bills etc, if they could be assured that the quality of that service, its reliability and its consistency were adequate. What they do not have right now is either a structure to get that service or that quality, reliability and consistency; hence the frustration that boils over so often.
Colleagues in South Yorkshire reported one initiative where a major business was trying to grow and one of these local broadband initiatives nearby stopped half a mile down the road, yet they could not extend it that much further so that this new and growing business, with quite a lot of employees coming on board and quite a lot of export potential, could get access.
Q10 Ms Ritchie: Through the Chair, I have a supplementary to Dr Marshall, not for Mr Johnson: how have rural businesses without broadband access coped with the increasingly digital-by-default approach of Government? Perhaps you have already addressed some of those issues.
Dr Marshall: I have in my hand a survey that was done. When we were asked to give evidence to this Committee, my very enterprising colleagues at the Shropshire Chamber of Commerce and Industry did a survey of their members for me. 190 rural businesses responded, which is a pretty good sample in a week. I am sitting looking at a phrase here that says, "What are the main issues that concern rural businesses in preventing them from growing? Communication difficulties, poor mobile networks and broadband speeds". What I think, and other comments here show me, is that it is not just an inconvenience to doing business for many of these companies; it is, in fact, a barrier to growth, a barrier to hiring and a barrier to investment. Seeing that on so many occasions multiplied around the country is really a massive concern for us.
Here is another one: "Broadband is key to development"-again, this is in Shropshire. "Businesses should receive a dedicated broadband facility line to avoid the drop in speeds that happen when schoolchildren get home from school". You can tell that, for a lot of these businesses that stop at five employees or that stop when they reach a lifestyle-size turnover, that is clearly an issue that will stop many of them from getting to the level of growth that they could otherwise achieve, so more does need to be done. I think businesses are more than willing too to come forward and say, "We will co-invest. We will do whatever it takes in order to get the service right", and you see enterprising groups of companies in some places coming together, often with local residents, in order to do that. We need more of that, but we also need a longer-term strategy for the country as a whole. If we are a services-based economy, which we are, vastly, then we need to have the infrastructure to compete.
Q11 Neil Parish: My question is to both of you, and this is about transport and fuel. 42% of households in rural areas are likely to get some sort of bus service, whereas you have 96% in urban areas. You have the mileage that businesses have to travel sometimes to get inputs in and out, so what effect has the price of fuel had and how should this be addressed in rural areas?
Paul Johnson: It is a fact of life in rural areas that you have the distance and the connectivity, which is either going to be done by road and the whole of the road transport for business and for private households, yet 25% of the population are without cars and are wholly dependent on the public-transport linkage. Clearly, the difficulty of getting reliable transport links to a town centre or a market town which offers employment and services is a critical issue. You have a rural-isolation impact, which is largely unavoidable and traps a potential workforce in, as I said, a rural, isolated environment. The costs have constantly risen on the transport side, and various measures have been taken on adapting those fuel costs. Services are under threat constantly. There is a balancing in the transport area, if you take our own area, with the use of revenue from car-parking to try to offset some of those bus services to keep them in existence. It is, however, clear that there is a significant cost burden and a reduction in access to services and employment if you are living in a rural environment because transport is not available at the right times to get you into work, out of work and to your day-to-day business.
Q12 Neil Parish: Could I put a supplementary to that? The trouble is we want more bus services, but if they are very rural areas and not enough people are going to use these services, you will end up with a huge per-head subsidy to keep those bus services running. Do you see a place for the charitable sector in some places to fill gaps? We have to be realistic in this world about how we are going to provide some of these services.
Paul Johnson: I would like to come back to when I was talking about these market towns and significant townships of 20,000-30,000. Again, if you take the situation in our own LEP area, we have looked at rail connectivity and the provision of rural services to connect to those centres. We have seen that, with some judicious use of additional stations, you get to 75% of the population coverage with rail services. There is insufficient work still being put in on the transport stage for regional rural transport with multimode approaches. The need is perhaps not constant bus services, but ones that connect to railway services at the right time, and some form of very local service for isolated rural areas to get them on to that bus route. A programmed transport system which takes account of the bus/rail linkages and the major road linkages, I think, would be quite successful. As I said, it conflicts at times with the national rail programme in terms of the services, and so the balance between the regional needs and the intercity needs of the UK as a whole clearly has to be taken into account. An integrated approach, however, would offer a lot of opportunity.
We have also looked at stations as being a hub for car hire, electric vehicles and cycle parks etc. There is a transport-hub approach that enables the local rural area to find its own solutions for getting towards that hub, provided that the transport timing and the connection between the various modes line up with the needs to reach service places and places of work.
Dr Marshall: I was an adviser to the Local Transport Minister on the Local Sustainable Transport Fund, and quite a lot of the issues that came up during that process were around precisely the question you have raised, which is: how do you maintain labour-market access in particular in areas where bus services are very expensive to subsidise or continue? Business tells me that it is not asking for loads of things that we cannot afford, but for stability of whatever service is available, and having it running at the right times. If we are operating with a constrained budget for bus subsidies, changes at 56 days’ notice and scheduling of buses to arrive and depart at 10 o’clock in the morning and three o’clock in the afternoon, rather than eight and 5.30 to accommodate the working day, provide some of the biggest issues for people on the labour-market side.
There is a place for community-based transport and on-demand services, and a lot of that has been shown to be cost-effective. None of it will run without subsidy altogether, however, but I think there is a place for it and perhaps it can run at subsidy levels that are lower than the bus in some areas.
The other side of this, of course, is the logistics side. Rural businesses that are heavy fuel-users tell us over and over again that the endless rises in the price of fuel are causing them the greatest level of business uncertainty, because it is not a variable cost that is easy for them to control in terms of the running of their companies. Their level of resentment is strongest when they look at the disconnect between the oil price at any given time and the relentless march of fuel-duty rises over and over again. If they felt that that money was being ploughed back into transport, they might feel a little better, but they know full well it goes to the Treasury’s bottom line, and God knows where it goes from there, so there is a lot of disquiet about that. A number of businesses in rural areas, whether they are food-and-drink-based businesses, tourism-based businesses or others, say to us, "The logistical challenges that we face are not insurmountable but they are difficult enough without constant rises in our cost base". It is making things more difficult for them.
Q13 Neil Parish: The FSB has called for the introduction of a Fair Fuel Duty Stabiliser to stop the volatility in fuel prices. Do you support that idea? Also, a point that I would make-and I am sure you would agree-is that the problem with the rural population is that car transport in particular is not a luxury; it is absolutely essential. In a way, because much of that fuel duty is used to pay for the National Health Service and whatever else, because of the levels of taxation on fuel, they are being disproportionately taxed.
Dr Marshall: I will take that in two parts, if I may. I will take the second provocative question first. You could make the same argument about winners and losers on just about any tax in the land or any kind of income stream or revenue stream in the land.
Q14 Neil Parish: There is, however, no choice on this one. It is not income-related. They have to pay the price of fuel, whatever their income is.
Dr Marshall: I do not think there is a choice on many of them. Council-tax rates are set in the same sorts of ways-or in bands in any case. In terms of the question about the Fair Fuel Duty Stabiliser-
Q15 Neil Parish: I could disagree with you there, because there is housing benefit. There is a whole system as far as council tax is concerned. There is not, as far as putting fuel in the tank of your car is concerned, if you have to get somewhere.
Dr Marshall: I think businesses are most concerned in this about greater stability. Going back to the first part of your question, I do not know if the Fair Fuel Duty Stabiliser is, in fact, a workable proposition. There are many in the Treasury who suggest that it is not. The issue that we need to deal with is removing the spikiness from fuel prices facing so many businesses in rural areas, and also workers in rural areas, because, as you say, very often we see a huge amount of what I would call the "motoring poor": people who really probably cannot afford to be running a car under some circumstances, but who are forced to in order to access employment opportunities or anything else. Greater stability in fuel prices would, therefore, be a great goal; whether we have the mechanism to get there, I am not sure.
Q16 Neil Parish: We talked a bit about the next point in the question that Mr Drax put to you about planning. There is a problem with planning, I believe: does it hold back rural growth and businesses?
Dr Marshall: I believe the answer is yes, just like broadband holds up many rural businesses. I mentioned before the problems that many businesses face in getting permissions, in particular from district councils. I mentioned as well the fact that many business people are concerned that there is no suitable designated employment land available upon which to build. The conversion of space is another area where I think the Government has tried to do something to make it easier to change uses of buildings in rural areas so that they can be used for business purposes, but I still do not believe that, at the coalface, that is going in a particularly easy way. If I had an outbuilding on a rural property and wanted to convert it into an office, I think a lot of business people out there believe, rightly or wrongly, that that will still require a planning application of some considerable specificity and depth, but also a lot of expensive consultancy fees. The part of the planning process that is not taken into account through policy is that businesses are often forced to acquire very expensive advice services simply in order to get their application through. It is not the cost of the application itself; it is the cost of all of the associated work that goes along with it, and you get a sense of intense frustration in many areas. It does vary from place to place. Some local planning authorities have been absolutely exemplary in trying to create this sort of space, but others have not been, so we do hear those worries and constraints.
Q17 Neil Parish: Do you see localism as a help or hindrance in this drive to have more barn conversions, and buildings for industrial and light-industry use?
Paul Johnson: It should be a help. I do not recognise some of the resistance to building diversification. It is clearly on the farming agenda, and a lot of farm-buildings opportunities produce attractive places to work that are local to the community, so you get a diversified job availability. These are areas diversifying out of farming or spreading. The number of employment opportunities is relatively low out of those, in the main. They are starter units to give an opportunity for local entrepreneurs to get away from the kitchen table or the back bedroom into a small environment. I think that is recognised, as I said, in our own area, and there is a lot of effort in facilitating those types of applications.
As I said, there is also an environmental picture that comes with many of these applications. They are sometimes easier in small towns, but you then have costs involved in regeneration in small towns and town centres, which is a whole series of issues as well, which have to be dealt with locally. There is a lot of difficulty between the planning regimes of the large supermarkets, for example, and their potential damage to small market-town high streets in comparison with the costs that are involved in stimulating business there alternatively. That is a constant dialogue in a lot of the market towns.
Q18 Neil Parish: Again, to both of you: in 2011, Defra launched the Rural Economy Growth Review. Most of the package appeared to be aimed at very small businesses and start-ups, rather than helping more established businesses to take the next step. Is this the correct approach to growing the rural economy?
Dr Marshall: I am not surprised that, given the limited resources available for that Growth Review, there was a focus on smaller and start-up businesses; however, we have several major businesses in membership that happen to be located in rural areas-I think about places like Shropshire and Lincolnshire, where, in fact, some of those businesses are rather large indeed. A lot of the established businesses in rural areas face particular difficulties around planning, transport and the skilled labour that they require to meet their growth needs. It is less about the levels of Government support available and more about the facilitation of some of those enablers, as it were.
When you look at the Rural Growth Review, you see a lot of initiatives that the Government was already doing, packaged in a slightly different way. You also see a lot of very small pots of funding pointed in different directions. Some of those have the potential to be successful-building networks, building up some of the broadband services that are required etc-but I do not think that that, in and of itself, is a comprehensive approach to some of the issues facing businesses in these areas.
Q19 Neil Parish: When businesses start up, you can get business rate relief and what have you. Do you think perhaps that there ought to be a phasing-in of business rates? Very often, you talk to businesses and they say, "It is al right when you start up-you get all this help and then suddenly it is cut off", and sometimes those businesses then fold. Is there a way we can ease them into those business rates?
Dr Marshall: Rates are a huge issue across the board. I would not want to forget the fact that Small Business Rate Relief is overplayed by the Government, because, if your business, colloquially, is larger than a double garage, you are not likely to be eligible for it. It starts to bite very soon for many business people. The biggest constraint around business rates is not necessarily the phasing-in, but the constant rises: in 2010, a 4.6% rise; in 2011, a 5.6% rise; and another 2.6% rise for next year coming up. That relentless increase in cost base feels very difficult to many businesses in terms of growing into new and additional space, because they are acquiring new fixed costs. That is a major problem. I think they find it especially cynical that business rates are going up at a time when the council tax has been frozen. While a political decision has been taken to freeze property taxes elsewhere, business-property taxes have been allowed to go up relentlessly.
Q20 Richard Drax: Mr Johnson, this is aimed at you. It may be because of your LEP area that these next three questions are aimed at you. As I say, if you would like to come in, Dr Marshall, please put up your hand. Defra expects the £1.9 million that it is investing in the Swindon and Wiltshire Rural Growth Network to create 200 jobs and support 450 businesses. What sectors of the economy will benefit from this investment?
Paul Johnson: The military sector is an interesting one that I should come back to, having mentioned it before. The investment is going into a series of rural growth hubs and satellite locations. They are to provide incubator and grow-on units for local businesses to be able to locate in. The hub location is alongside the military, not far from Tidworth, where you have a very large population of military employees and spouses who are potentially relocating in that area and need local job opportunities. The hub is locating there.
The advantage of the hubs is to provide an opportunity, as I said, to get off the kitchen table into a small incubator unit that has a series of other businesses around you-a network. We know the evidence in terms of businesses that succeed being those that have the ability to work together in groups, network, rather than working on their own. They grow better in a conglomerate or in a cluster, so these networks give the opportunity to draw on those skills. We are looking at providing some business-mentoring in key sectors in the different locations, so that like businesses will locate there and gain from some business-mentoring support as well.
Q21 Richard Drax: Can you just say what sectors of the economy? I know you are talking about how you would envisage it; what in particular are you looking at-IT, or what sectors of the economy?
Paul Johnson: The sectors are where businesses want to develop. Some of them will be in local food-and-drink sectors, with the whole localism agenda of niche businesses there. Some are potentially looking at security in terms of military and security-provision there. Down in the south of Wiltshire, we have been grateful to get a Regional Growth Fund award to develop the life-sciences sector at Porton Science Park on the back of Porton Down Dstl and the HPA facilities there. There is, then, a whole life-sciences section in the southern part of the county, which has the right knowledge and skills to benefit from the skills that are coming out of the military and to develop another level of knowledge-sector capability that is beyond low-grade rural-farming jobs.
Richard Drax: Mr Johnson, can I ask you to keep your answers little bit shorter, if I may, please?
Paul Johnson: Sorry.
Q22 Richard Drax: What might prevent you from achieving the projected levels of growth that are forecast in your RGN?
Paul Johnson: We come back to infrastructure and broadband. Those areas need the broadband connectivity. Part of the concept is on a virtual network, and we need that broadband connectivity to make that happen.
Q23 Richard Drax: From the evidence that you have gathered so far on RGNs, what advice would you give the Government from your experience?
Paul Johnson: I would keep going in that direction. I do not think it is a unique model. We come again to the fact that rural businesses have certain needs, but the success model is about growing businesses and entrepreneurs with good ideas, and getting them to grow and develop their businesses successfully. We have seen the incubation and moving on in networks as successful in other parts of the county. Irrespective of the business type-we have some successful media companies as well-they are all developing in that environment and they do better in a clustered environment than they do individually.
Q24 Richard Drax: That is not so much the Government’s responsibility, is it? Is there anything that Government can do? Obviously, the Government can give loans-it could give money in this case. It could put in broadband or pay for that.
Paul Johnson: There is a lot of money that is being directed-I was just adding up some from the Rural Statement, and there is £90 million odd-at a top level into particular areas. Small sums of money can make significant differences to some of these businesses and their progress. We are looking at capital investment of shared equipment in some of these areas, for example. I personally would rather see the money directed towards local initiatives supporting areas like the Rural Growth Network, rather than determining at a more central level where that money is going to go, and then hunting for schemes in those areas. The flexibility to respond and do things locally would make a lot of difference.
Q25 Richard Drax: I will move on to the impact of LEPs. In written evidence to us, Wiltshire Council argued that giving responsibility of the RGN to the LEP caused delay in getting started, and that "the LEP is reliant on the local authorities to implement and deliver the project. It has few resources of its own, and no team of capable officers to make the investments or develop the services". Is that fair criticism?
Paul Johnson: I think it was fair criticism at the start of the LEP. Clearly, decisions have been taken to provide funding into LEPs that were not there previously. You are looking at a private, business-led, volunteer group of businesses who are prepared to put their time in to build the relationship between the local authorities. There was, clearly, initially an expectation that the local authority can do everything themselves: they have done it before; why should they not win the award? Indeed, the officers did that work. There was no structure within an LEP to deliver it at that time.
What the LEP has been successful in, however, is providing some longer-term views, some policy direction and some vision questions, and brought business thoughts to the directions in which they are heading. I think that, if you asked the questions again of Wiltshire, you would get a much more positive response than at the time that those responses were made initially. We have certainly seen, as a result of the LEP, a much stronger relationship developing between Swindon Borough and the Wiltshire local authority that clearly was not there in the same way before we started working together in that LEP geography.
Q26 Richard Drax: In the sense that businessmen and women are coordinating now with officials in the LEP, which did not happen before, it is a big strength of it, is it not?
Paul Johnson: It has strengthened. It has strengthened with businesses and with officers. There are supply-chain opportunities with large businesses in Swindon or similar cities, and small companies and SMEs working in the hinterland. The opportunity to develop those relationships is clearly coming. The officers are working together on some of the transport issues that we have identified locally too, with the LTB coming forward. So there is a positive direction, but it is certainly true that the expectation that somehow businesses would be able to provide their own resources and a commitment that would make the difference is, practically, not going to be realised, and putting in resources was the right decision.
Q27 Richard Drax: Can I quickly move on to small and rural businesses? I know you have touched on them. This is a question to both of you: are they able to access support through the Regional Growth Fund?
Paul Johnson: Yes. As I mentioned already, we had a successful application for the Porton Science Park. It is very rural in terms of location, with Porton, a very small village, alongside. There is some isolation, obviously, for reasons in the past. It is a clear case of where, I think, we made a difference as a LEP in terms of getting involved and focusing on solutions and opportunities, and a good business case was made and we got the funding. I think our attitude is that we are quite prepared to compete for funding that is right for-
Chair: Gentlemen, we are going to be called for a vote in six minutes, so please keep your answers very brief.
Dr Marshall: The issue with the Regional Growth Fund is around its implementation. Decisions were taken on projects, and funding is not being released quickly enough. I think that is an issue common to urban and rural businesses, who are told that they are going to receive an award and then it takes very many months for that money to be released. The only other thing I would say, though, is this, and I think this would benefit rural businesses tremendously: a more demand-led type of funding would help smaller businesses, and rural businesses in particular. Something we have called for is a Growth Voucher scheme. We have called for perhaps a portion of the Regional Growth Fund to be used to enable that scheme. You could take £100 million and give a number of very small and growing businesses about £5,000 each in Growth Vouchers, which they could spend on public-sector-provided or private-sector-provided services. If you are a small and growing business in a rural area, that might be just the sort of support that you need to take your next investment steps and your next growth steps. That might work better than a top-down process.
Q28 Neil Parish: The Government has recently taken steps to make the Small Business Rate Relief automatic. Dr Marshall, are local councils doing enough to ensure that businesses receive the appropriate business rate relief?
Dr Marshall: We still do hear cases of small businesses that do not feel that they are being treated as they should be treated. We still hear about difficulties in the implementation of that promise to make Small Business Rate Relief automatic, but, on the specifics, I would have to come back you on another day.
Q29 Neil Parish: Also, is it in the interests of the local authorities to facilitate this? I rather fear it is not. Should we, in Government, be doing more to encourage them?
Dr Marshall: This is another one of those issues that I believe falls on the "good policy, needs to be implemented thoroughly" side. If that means implemented from central Government right through to the local-authority level, then so be it. I do feel that, if businesses are entitled to relief, that should be facilitated as swiftly, efficiently and completely as possible.
Q30 Chair: Gentlemen, in September, the Government launched its Rural Statement. I want to ask you whether you think it is a coherent strategy. Will the action plan encourage growth in the rural economy? What measures should be used to hold Government to account for that statement?
Paul Johnson: If I could take the first point-and you hauled me back earlier, Chair-there needs to be some clarity about the rural agenda. I saw, just coming from an outside world, from a private-business world, a lack of clarity in some of this direction, I have to say. I assembled four areas, which are landscape management and the environment; farming and the food chain; the rural economy, which is market towns and small towns; and innovation and technical lead. My feeling is that it is very difficult to deal with a single rural agenda. There is an assumption that everyone is living in a rustic environment, and that we do not have hi-tech companies working in rural environments; we do, very successfully, in towns. There are some real conflicts in the policy in terms of what you are trying to create.
I would like to see a lot more strength in deciding what the food-sector national agenda is: are we trying to be self-reliant or are we trying to export? What are we trying to do there? Landscape management, the environment and local nature partnerships-there is a whole series of areas that one could talk about, but they are different issues, and tourism sits in there as well somewhere. The rural economy is around town-centre attractiveness, dormitory-town problems, connectivity and those sorts of issues. I would like to see more on innovation and technical leads. Where we could make a difference and get some real economic growth is in the green economy, innovative sustainability and waste management. You would expect the rural agenda to be there.
Q31 Chair: Thank you for that, Mr Johnson. Can I just press you on the measures that you believe should be used to hold Government to account for its statement?
Paul Johnson: You need some clear, visible targets of what you are trying to achieve as the policy first; then it would be apparent which measures you should be looking at for what is being done to achieve them.
Dr Marshall: I read the Rural Statement this morning; it was my first opportunity to do so. I think that, in and of itself, is a problem, because it has not been very widely communicated by the Department responsible for it around the business community. I have to be very honest with you: I do not feel that the level of engagement between Defra and the business community outside the farming sector is as strong as it should be, and I think that extends to documents like this one. When I read through it, there is very little to disagree with, because there is a combination of things that the Government is already doing, and a combination of aspirations that we would all share, but those of us who work in the policy field see very many of these sorts of documents. I think what rural business people would be much happier to see is something very specific on rural-broadband issues, for example, something very specific on planning and business-rates issues that they face, and something very specific about housing and access to skills. If it was on the specific barriers, that would be great.
Q32 Chair: Thank you. You will appreciate that is the bell calling us to a vote. In a word, therefore, can I ask you just to say what level of engagement you would have with the Rural Communities Policy Unit inside Defra-marks out of 10, 10 being full engagement, one being very little.
Dr Marshall: One. I suspect I am getting myself a lot more work by saying that.
Paul Johnson: I would say three and growing.
Q33 Chair: Thank you very much, gentlemen, for your time this afternoon and your very helpful answers to this Committee. The Committee will stand adjourned for a quarter of an hour and we will come back after the vote. Thank you very much.
Examination of Witnesses
Witnesses: Gillian Elliott, Acting Assistant Director, Economic Development, Cumbria County Council, Helen Wright, Rural Policy and Partnerships Manager, East Riding of Yorkshire Council, and Councillor Keith House, Deputy Chair, Environment and Housing Board, Local Government Association, gave evidence.
Q34 Chair: I am very sorry we have kept you waiting for so long. We will try to press on and conclude as quickly as we can. Would you care to introduce yourselves to the Committee? Thank you very much.
Gillian Elliott: Gillian Elliott; I am the Acting Assistant Director for Economic Development in Cumbria County Council.
Helen Wright: I am Helen Wright; I am the Rural Policy and Partnerships Manager at East Riding of Yorkshire Council.
Councillor House: Councillor Keith House; I am the Deputy Chair of the Local Government Association’s Environment and Housing Board and the Leader of Eastleigh Borough Council in Hampshire.
Q35 Chair: Thank you very much. Can I start off by asking you what you see to be the key barriers to growth for the rural economy? In particular-I am sure you will have heard some the responses our earlier witnesses gave to us-what role do local authorities have in driving that economic agenda?
Helen Wright: Who would you like to start?
Chair: Whichever one of you feels most qualified.
Councillor House: We are not rehearsed, Chairman, on the basis that we come from different organisations and we were invited separately. Perhaps I will kick off and colleagues can chip in if that is helpful.
"Barriers to growth in the rural economy" is such a broad compass to try to work through; I picked three. The first is access to money and skills, as far as businesses are concerned: money in terms of bank lending; skills in terms of getting the right skills that are for the jobs, as opposed to the skills that educational providers provide based on student demand. The second is, broadly, connectivity: connectivity is both physical transport and also virtual communication. Your previous panel talked about broadband; I am sure we can continue on that line-transport likewise, although you cannot draw broadbrush across rural economies. Thirdly, I would pick on lack of affordable housing and getting a balanced housing supply in rural communities.
As to what councils can do, broadly speaking councils will do what is best for their local patch. Our core argument from the Local Government Association would be that local authorities are often better placed to do that than central agencies, because they are by definition responsive to the individual needs of different areas. That picks up that broad range of things. In simple summary, on broadband we would love to spend the money the British Government has allocated if the state aid issue can be resolved. There is a crying need from businesses to get broadband rolled out; with the sums of money available that is pressing. On housing, the biggest issue is access to finance. Local authorities having full use of prudential borrowing powers to invest in housing, rather than the cap imposed by Treasury could, broadly speaking, wipe out the problem of housing supply over the course of a Parliament or two.
Helen Wright: Perhaps I could add a couple of things to that. We really feel the size of enterprise is an issue. In the East Riding, 87% of our rural businesses have one to 10 employees. On the basis of that it is very important that the model of business advice adopted most suits the type of business. On that particular issue, the Council funds a dedicated rural business support officer for this very purpose. In particular, they work with farmers on getting through diversification in terms of planning elements and generally give support to those small enterprises.
The second thing we have cited is tax regimes and regulations. These small enterprises face the same sort of regimes as bigger ones. What often happens is that compliance with these regimes leaves them little time for business expansion and growth. Those are two I would add, but I would certainly concur with the colleague on my left on the other issues.
Gillian Elliott: That leaves me very little, but barriers include lack of market, an issue over access to certain services, corporate services, corporate lawyers, financiers. Scale of development is also very difficult in rural areas. Additional transport costs are problematic. There is a premium plus that goes onto any rural growth required. Then local government holds a lot of the drivers that can facilitate growth around education, skills, transport, planning and housing.
Q36 Richard Drax: Mr House, you all mentioned affordable homes. It is a huge issue; everyone talks about it. I am hearing from developers-as I am sure many of my colleagues and everyone else are-that the ratio of social homes is getting so large that developers are saying they are not interested because they cannot make it pay. What is the solution so far as trying to get this balance right and attracting developers, rather than the opposite?
Councillor House: We do want to attract developers. There has been a lot of discussion around the planning system being a barrier when it is more of a solution than a barrier. In terms of the ratio between affordable and market sale housing, the important thing is to understand that different communities have different needs. In many rural areas, the crucial issue is getting any housing built. From a local government perspective, that is the case we have been arguing: local solutions are better. The viability issue is obviously pressing, but most councils are very happy to sit down and work with developers to ensure that the right schemes come forward. Again, we have heard a lot about councils as blocks in this area: that is not our experience. We would like to have feedback if there are examples of that that we can unpick ourselves as a sector. Viability is an issue in some places; as to the ratio, that is best set by the market.
Q37 Chair: Can I just ask all of you, with respect to the Rural Statement the Government has produced, what you think could usefully be added to it and what powers do you feel it provides for you and your communities to hold the Government to account in delivering it?
Helen Wright: First, we welcomed the Rural Statement. Certainly from a rural profile perspective, to have some sort of rural statement, rural strategy, is encouraging. We would like it to have gone a little further. Certainly some of the issues identified in paragraph 40 that have not been included are things that we are certainly focusing on in the East Riding and we would have liked to have seen them included. I would also add health and social care to that. We have just prepared our own rural strategy and certainly a lot of input from our consultees has been around that particular issue. So there are omissions.
Q38 Chair: If I may interject, Ms Wright, you anticipate my next question to you. If you want to bundle it up together, I was going to ask you about the difference between your own strategy and the Rural Statement. We are aware that in the East Riding you have produced your own, so do please feel free to adumbrate the differences.
Helen Wright: I could probably talk for a long time on this, but I will be brief. What we have to bear in mind is that the Rural Statement is a rural statement. Our rural strategy is evidence based; it goes on to identify the needs, challenges and opportunities. It looks at what constitutes a sustainable development. It includes desired outcomes and objectives. Perhaps most importantly, it has an action plan. That action plan is in its early stages, but it is actually the vehicle through which we will be able to do solid rural proofing and monitor progress. If you look at the Rural Statement, I have to say it lacks a bit of lustre, a bit of vitality. A lot of issues are covered in it, but it does not have that rigour; it is not quite robust enough for us to be able to really use it as a rural proofing vehicle across Government Departments, or indeed to look how we are progressing. However, it is a statement, not a strategy.
Gillian Elliott: I would reiterate the same points there, that for us it gives the commitment but not the implementation, the "hows". That is really important for us. The other thing that we felt was missing was the funding aspect, which said there is a commitment to rural areas, but then is there also the funding that backs up the fact that there is a rural premium.
Councillor House: I would be very wary of committing local government to holding Government to account; your Committee is the best route to do that. So far as the statement is concerned and following on from there, it is a good start; we are very supportive. We would like the Department to commit to an annual review of performance with measurable targets that can be reported back on; otherwise we are not going to see progress. On the roles of the Department and the Committee, if Defra is going to be a champion for rural Britain, it has to be prepared to reach out across other Departments and argue the case rather than be insular, which any Department can tend to be.
Q39 Mrs Glindon: I would like to ask Ms Elliott. You bid successfully to be a Rural Growth Network; congratulations on that. What might prevent you from achieving the projected levels of growth forecast for your Rural Growth Network?
Gillian Elliott: I am hopeful that there will not be much that will get in the way of us being able to do it. We want to be able to build on the whole process of the Rural Growth Network. For us, it has been a very positive start to being able to implement development in a cohesive way in rural areas. Cumbria is what we would call a truly rural area: there are not any real city drivers that we can use. It has to be market towns that help to drive the economy in our area. 95% of our businesses are SMEs; that is again enormous. The Rural Growth Network allows us to get under the issues that we have: women’s network, the consultation network that we are setting up. There are a whole host of things that we believe will drive our businesses and growth from the bottom up.
Q40 Mrs Glindon: What input does your LEP have in the rollout of the Rural Growth Network?
Gillian Elliott: We are absolutely hand in glove with the LEP on this one. The LEP has been supportive; we have a project sponsor who is one of our LEP board members. The Chamber of Commerce and the county council have pulled this bid together. We have partners from across the rest of the business community that are fundamental to the delivery of this programme.
Q41 Mrs Glindon: If the RGNs were to be rolled out further, what advice would you give the Government from your experience of the process so far?
Gillian Elliott: If anything, it is the bureaucracy at the beginning that is potentially our problem. It has taken us from March to October to get our offer letter. We have had approval, but we have just had the offer letter now to start running with a Rural Growth Network. That is the bit that I would say: it is the bureaucracy that needs to be taken away. We have been given a Section 31 grant, which is absolutely superb. It means we will now be able to drive the programme forward, but it has taken six months away from a three year programme.
Q42 Mrs Glindon: So things have been on hold, then?
Gillian Elliott: Absolutely.
Q43 Mrs Glindon: Thank you, that is really useful. Could I ask you, Ms Wright: Rural Growth Networks have preferential access to new RDPE schemes; has this had an impact on rural development in areas such as East Riding that are not covered by a Growth Network?
Helen Wright: It is still early days; to date probably not. We were certainly disappointed. It went through the North Yorkshire LEP, but East Riding was included. We were disappointed that we did not get one. I know the North Yorkshire LEP had some concerns about the guidance behind the Rural Growth Networks and where it was coming from, but that is history. We have a very heavy focus on rural issues in the East Riding. We have a dedicated rural team, a rural strategy and a reactive rural partnership. Things have been flowing quite positively for many years now. We try to achieve things, even where we have not got external funding, although we would very much like to get it. We have been doing things through the LEADER programme, through the European fisheries programme. We are doing things with small amounts of money around local food. We are very much basing local activity on natural resources.
However, I know there is a concern that rural areas that do not have Rural Growth Networks-in particular rural areas that are part of a hinterland to urbanbased LEPs-are going to fall through the gap on funding issues. Gillian made the point earlier: they are very much a rural LEP, so activity is very much rural based. We have a Humber LEP, as well as the North Yorkshire one, which is estuary based. There is a big danger that, if we are unable to access RDPE monies and perhaps the Regional Growth Fund, rural areas could suffer; I am not saying they will, but they could do.
Q44 Richard Drax: Can we move on to the Rural Community Broadband Fund? Could I start with you, Ms Elliott? Your county council has just warned that the process of getting the money is complex, bureaucratic and a large amount of capital is needed upfront and negotiated with internet service providers. Is it your view and perhaps your experience that there is a concern that areas that really need things like this Rural Community Broadband Fund will miss out when they are competing with others who can put together better bids?
Gillian Elliott: One of the problems is that the process is not devised for small, communitybased organisations. That is a real problem: the fact that you have to understand state aid issues and procurement. You have to be able to cash flow: you talk in six figure numbers when you are trying to say, "Can you as a small organisation cash flow?" It has been very difficult. Some of our communities are warweary in trying access the funding. That is problematic. We have others who have very robust local partnerships in place and know how they are going to deliver programmes, but I would suggest it has not been devised for communities.
Q45 Richard Drax: How do you mitigate that? How do you solve that problem? How do you help the smaller organisations?
Gillian Elliott: As a local authority, we are really working hard with our communities to try to facilitate where possible. We have it included in our Connecting Cumbria proposals to try to help them.
Q46 Richard Drax: Ms Wright, would you agree with that answer? Have you got anything further to add on that?
Helen Wright: Yes, I would fundamentally agree. There are a number of issues around value for money. When you get into the hardest 10% to reach, the whole thing is going to be too expensive to deliver. These people are going to fall off the end. I very much agree that the process was not userfriendly and not particularly clear. This can be very challenging for small rural communities. There are also issues around capacity in the voluntary sector. Certainly within the East Riding, the Rural Community Council was brought in to promote this. We had big challenges in getting this demandled response back from communities and from rural people, even though we know the problem is there. Just the sheer resources needed to go out and bring the people in is challenging. Our feeling is that if there is a third round of funding, could the whole process be clarified a little further and be a little simpler? Could the application window be longer? One of the things I feel very much about a lot of the issues today is that, as local authorities, we have a lot of knowledge about our rural communities. Most of us come from sparselypopulated authorities, big geographical areas; just getting to the people, getting to the hard to reach, is quite resource intensive. We are happy to do it, but we cannot do it in a two-week turnaround.
Q47 Richard Drax: Quite. Thank you, Ms Wright. Mr House, anything to add?
Councillor House: Local flexibility is the real key with this. Local authorities want to get on and spend this money. There is always a tendency for national programmes to be driven out on a uniform basis. Rural communities are not uniform; they are different, and they are different between different areas. Therefore flexibility locally to determine how that works is best dealt with locally, rather than centrally.
Q48 Richard Drax: Lastly, and very briefly from each of you please, if I may, one of the downsides the CLA feel about this scheme is that it only applies to superfast broadband. Would you, Mr House, agree that that is a problem? Should it apply to other forms?
Councillor House: I would defer to Gillian on that point.
Gillian Elliott: For any community that currently has access to less than one megabyte, then two megabytes is double it, thank you very much.
Q49 Richard Drax: Ms Wright, do you agree with that?
Helen Wright: Certainly the evidence we have from a lot of our community is that they would rather have something than the superfast.
Q50 Neil Parish: Further on with broadband, to what extent have local authorities’ ability to proceed with the rollout of superfast broadband been hampered by the lack of competition in the procurement process? In Devon, we basically only have BT; not that there is anything wrong with BT, but there was no real competition. How have you found it?
Gillian Elliott: We had competition, and we have negotiated for a long time to ensure that we got the best package for our communities. We were probably very fortunate that there was competition there.
Q51 Neil Parish: Also, do you think these big procurement processes will go for the lowesthanging fruit? Going back to Mr House’s answer, a lot of these areas are small, very rural pockets and will be missed out of the delivery of rural broadband.
Gillian Elliott: At what point does something like access to broadband become a very crucial utility? I think it is. There was a comment in the earlier session about the digital divide: we have so many services that are being delivered online that it is a utility and we have to recognise that our communities require access to broadband. Is it always superfast that is required? No, it is not. It is just faster than what we have at the moment. In rural areas it is very difficult to access.
Councillor House: I refer back to my opening point on access. Given that funding for transport is inevitably tight and is going to get worse in terms of funding public transport, there is a perfect storm in how costs are rising. Therefore, services are less viable commercially and there are fewer services and there is less money to fund them. The best answer to that has to be to reduce the demand for travel. From a business perspective, that has to be broadband.
Q52 Neil Parish: One of the problems I find in my constituency is that because this big rollout is going on, those small pockets that have their own private solution are also holding back because they do not know what will be delivered by the whole process. Are you finding the same view?
Gillian Elliott: There are areas where, if you have a technology expert, they are out there and they are doing what they possibly can to get broadband into their locations. In other areas, if there is not a particular person driving it through, then yes, they are hanging back and waiting. It is causing problems, on the back of not having state aid through yet so we cannot start to deliver the service. We have businesses that are desperate for the access to faster service.
Q53 Neil Parish: I have three supplementary questions; I will give them all to you and ask for very brief answers, please. Will local authorities meet the Universal Service Commitment of at least two megabytes by 2015? If not, why not? Do local authorities have any concerns about the proposals in the Growth and Infrastructure Bill to reduce the planning permissions required for the installations of broadband infrastructure-masts and the like-and will National Park status impact your ability to roll out broadband? Big questions, but small answers, please.
Gillian Elliott: If I could start with the last one about the National Parks, we have a steering group; our National Park is on it. They are working with us and have been from the very beginning to ensure it is not a problem to be able to implement superfast broadband in those areas.
Councillor House: On the middle question about the Growth and Infrastructure Bill, we think the clauses in the Bill are irrelevant and inappropriate. Planning is not an obstacle in this area; if anything, the reverse will apply.
Q54 Neil Parish: Even in the National Parks?
Councillor House: No, I appreciate there is a case in the National Parks, but in the round if we are looking at planning as a barrier, then disempowering local communities from having a say on planning issues is far more threatening to growth than removing powers from them.
Neil Parish: We had better keep moving. In Cumbria and East Riding-
Q55 Chair: Sorry, before you go on, Mr Parish, Ms Elliot: Cumbria was the first authority to reject a bid on broadband. That was around the time when there had been considerable criticism of the lack of transparency over costings and so on. Can you tell us-not in detail, obviously, but generally-why that bid was rejected and what happened to make it subsequently satisfactory when you did then accept it?
Gillian Elliott: We had certain criteria that we wanted to see benefit our communities, and we wanted to ensure they were coming through in the successful bid that we accepted. What came through our tendering process did not meet our expectations; what has come through now does meet our expectations.
Q56 Chair: Neatly sidestepped, if I may say so. Would you agree with those who have called for increased transparency around the costs of rolling out the service from providers so that local authorities such as yourself can have a better understanding of whether what they are getting is value for money for their residents?
Gillian Elliott: It would be exceedingly helpful.
Q57 Neil Parish: Can I go back to my previous question on whether local authorities will meet the Universal Service Commitment of at least two megabytes by 2015?
Gillian Elliott: Our rollout programme determines that that will happen so long as state aid comes through in time.
Q58 Neil Parish: So you are reasonably confident, is that how I put it?
Councillor House: We want to repeat the issue on state aid again and again and again. It is the big block. If we can unblock the state aid issue, local authorities just want to get on with this because it is in everyone’s interest so to do. We want to spend the money.
Q59 Neil Parish: My experience of Europe is that other member states are not quite so tied up about state aid rules. That is probably a debate for another day. Again, to East Riding and Cumbria in particular: both Cornwall and Lancashire County Councils applied successfully for European Rural Development Funds to assist with rollout of broadband in their areas. Are you considering seeking funding from Europe?
Gillian Elliott: We have European Regional Development Funding in our proposal; we have that accepted and, again, it is just waiting the state aid approvals from BDUK. We also have a bid in at the moment for RDPE funding.
Helen Wright: We also have a bid in to ERDF.
Q60 Neil Parish: This is just to East Riding on a more general point regarding Europe. In your written evidence you state it would, "be helpful to see more priority attached to understanding how EU rural funding frameworks are going to play out at the local scale." Could you expand on this particular point?
Helen Wright: The thinking behind this is that we have been quite fortunate to have had European LEADER programmes for about 14 years. We have built up a lot of skill and expertise and have some very good programmes running and some good benefits from it. We are concerned about this potential gap in funding in terms of losing the momentum and losing skilled staff. We are struggling to get any sort of clarity or guidance; I know the Government is as well because it is all in Europe, but we are struggling to get any clarity on this. It is making it very difficult to forward plan activity when you are facing a potential black hole for some time.
Q61 Neil Parish: Are you finding the whole thing very bureaucratic?
Helen Wright: It is very bureaucratic and we are finding it frustrating, but we do understand the situations and the circumstances. It is important that at the local authority level, as at all levels, we start to look at how these pots are going to come together and we get perhaps a fairly broad, strategic development plan for it that draws in all the elements. It is quite difficult to get anything started in the absence of any clarity.
Gillian Elliott: I would reiterate: we have been very fortunate in that we have had LEADER and local action groups with RDPE funding for a long time now. They have worked exceedingly well. It has allowed us to do a lot of communityled initiatives that have worked brilliantly in our area with innovative proposals. The bureaucracy gets in the way substantially, and anything that can be done in any future programmes to reduce the impact from the Rural Payments Agency end of that will be superb. We need to be able to have that knowledge of what is coming through in the future.
Q62 Neil Parish: Defra has brought the allocation of RDPE money back in house. Has that made the situation better or worse?
Gillian Elliott: I would say that we have four layers of bureaucracy at the moment that we have to work through where RDPE is concerned. That is not easy to deal with.
Q63 Neil Parish: We talked in the previous evidence session about rate relief. The Federation of Small Businesses have criticised councils for not being sufficiently proactive in ensuring that businesses received appropriate business rate relief. What steps are local authorities taking to address this criticism? A point I made in the previous evidence: is it necessarily in local authorities’ interest to dish out rate relief? Are you sufficiently enthusiastic about it?
Councillor House: Yes, it is; yes, we are.
Q64 Neil Parish: You can prove that, can you?
Councillor House: Some things you can prove very easily, some things it is much harder to prove when they are across a sector.
Neil Parish: I am slightly teasing.
Councillor House: The critical point is that local authorities have an interest in promoting growth and business success. They are not going to promote growth and business success if there are blocks and barriers to businesses performing. In that sense, it is absolutely in local authorities’ interest to promote business rate relief. The wider issue on business rates has to be how we roll forward localisation of business rates over time, because local authorities have a tremendous ability to really drive growth from a local level. A key factor in that is the long-term full localisation of business rates. At the moment, with the Treasury taking off half that growth and with the resets being pretty frequent, there is not the incentive that there could be with a longer rest period and more retention locally. Yes is the answer to the question, but let us get on with it and do some more.
Q65 Neil Parish: Are councils using officer time to seek out these businesses that could do with rate relief, or are you waiting for the businesses to come to you? Some of my experience has been that local councils have not been as helpful as they could be on this issue.
Councillor House: We would like to turn that back round to the Committee: if you have examples we will happily look at them. All the evidence we have in terms of the messages we are getting back from local authorities is that councils are committed to make this happen. They are being both reactive and proactive.
Q66 Neil Parish: Does Ms Wright want to say anything?
Helen Wright: To show you that I have done my homework, I can tell you that in 20122013 so far we have put in £334,105 of discretionary rate relief for rural businesses. I would fully support what Councillor House says. Rural areas in the East Riding are really the bread and butter as far as I am concerned: they are the heart of the East Riding; they know what it is about. It is very important to us that they are vibrant, and facilities like village shops, post offices, pubs are critical to that vibrancy.
Q67 Neil Parish: Can you claim that discretionary rate relief back from Government, or has that come from council resources?
Helen Wright: Part of that comes from council resources. We put in some of it. I would have to recheck the figures and come back to you, but we certainly put in part of that discretionary rate relief.
Q68 Richard Drax: On rural proofing and the key functions of Defra’s Rural Communities Policy Unit: what is the process of rural proofing policy in local government and how effective is it, Mr House? Or perhaps, Ms Elliott, we can start with you.
Gillian Elliott: Cumbria has been very involved with rural proofing for a long time now. Ever since the foot and mouth crisis, we brought our own policy together, which was called Rural Matters and was our own rural proofing. Any of our own council policies that we were implementing, we ensured that they were very cognisant of what the impact would be on the rural areas. We have it built into all our equality impact statements: rural proofing. Everything we have done since around 2005 has been ensuring that we rural proof all our proposals.
Helen Wright: We are in a similar situation. We take it very seriously, and it is embedded in the development of policies, in training and guidance on drafting documents. What is also quite important in our case is that, because we have this arms’ length rural partnership with an independent chair, it has a role to rural proof policies and programmes within the council and with key partners. We do scrutinise things like the preparation and the development of the local plan and various strategies coming through from health authorities. It is a fairly informal process but nevertheless people are called to account and we ensure that things from a rural perspective get embedded. Indeed, some of the planning policies have been changed and amended to reflect the comments coming through from the rural partnership. It is very positive in that respect and a very key role for that partnership to undertake.
Councillor House: I would come back to localism, almost inevitably: a onesizefitsall approach is not going to work for rural proofing, given that the needs of different communities are, by definition, very different. If you talk about an exmining community and a coastal community, they are almost certainly going to need different agendas to ensure policies work. From a broad local government perspective, rural proofing-in the same way as testing out equalities-is part of DNA now.
Gillian Elliott: One thing I would say is that the difficulty we see time and again is that there are different types of rural economies. There are rural ones like we have in Cumbria and there are rural ones that are hinterlands to a city region. They are very different.
Councillor House: If I can briefly follow up, central Government has been pushing City Deal very effectively over the course of the last 18 months. How you really roll that out in rural communities is an important part of central Government rural proofing, so the flexibility that different rural communities can address is fully there.
Q69 Richard Drax: Ms Wright, on the rural proofing, what input has the Rural Communities Policy Unit had with you as a council, if any?
Helen Wright: Not very much; not very much at all. This is a very key issue for the role of Defra and the Rural Communities Policy Unit. They say in their Rural Statement that a key issue for them is engaging with stakeholders. They do list a lot of stakeholders that they engage with. Those stakeholders are virtually all umbrella organisations, operating at a fairly strategic level. I feel really, really strongly that we would like greater direct involvement as a rural local authority with Defra and the Rural Communities Policy Unit. It is a very key message that I would like to get across.
Richard Drax: You are making it very clear.
Helen Wright: I believe that if you are to get good rural delivery, you have to have a strong linkage between the policy and the delivery on the ground. Local authorities are extremely well placed to do delivery on the ground and understand what they are doing.
Gillian Elliott: It is interesting: we have had a level of engagement with the Policy Unit through the roundtable events, but again, where are most of the roundtable events held? In the cities.
Councillor House: From an individual member perspective, my authority is not a rural authority, so it had not had contact. From the LGA’s perspective nationally, we would be very keen to put the Policy Unit in touch with selected member councils that can contribute to future approaches to rural proofing, given that there are very different needs in different areas.
Q70 Richard Drax: Very briefly, have you got any existing or forthcoming legislation that you feel has not been effectively rural proofed?
Councillor House: I make the point about City Deal again. We are absolutely right to promote growth in city regions; Lord Heseltine’s report last week is very much an important part of that agenda. However, we must not let rural communities get left behind. As Gillian has said, rural communities vary enormously, from hinterlands of cities to very sparsely populated, truly rural areas. If we want to promote economic growth in those areas we have to find bottomup solutions, which means central Government being prepared to let go to allow those solutions to come forward.
Helen Wright: I would like to cite the lack of funding: small seed and core funding for things like the Local Nature Partnership and the Rural and Farming Network. That is a rural proofing element at the end of the day, because without that core funding and seed funding it is very difficult for those sorts of partnerships to move forward. Again, it is going into City Deal; there is money now for LEPs. In your case it is good because it is rural. This is the point about the different nature. In our case, it very much is estuarybased activity at this stage in time.
Gillian Elliott: From our perspective, one of the things I would say is that we have one of the largest landmass areas. If you put Cumbria over the top of London it would go from Cambridge in the north down to Hampshire, and across parts of Oxford into Essex: a huge area. Something like the schools funding formula has really been dramatically detrimental to the schools in our area. Things like that I would say have not been rural proofed. We used to have factors that we could bring in about population density. We only have half a million in our area: big, big problem when the school funding formula has not been rural proofed, we would suggest.
Q71 Richard Drax: Finally on rural proofing, and very brief answers please-a yes or no probably will suffice-the Government is going to commission an external review of the impact of the forthcoming Rural Proofing package. Would you like to be engaged with this external review?
Gillian Elliott: Yes, most definitely.
Helen Wright: Yes, very much so.
Councillor House: Yes, on behalf of the LGA.
Q72 Richard Drax: A number of Councils have written to us highlighting Business Rates Retention as a problem that will impact disproportionately on rural councils. However, Defra gives this as an example of a policy that has been rural proofed. Who is right? Ms Elliott, do you want to answer that first?
Gillian Elliott: I said something earlier: of 29,000 businesses in Cumbria, 95% have less than 20 employees. The majority of those businesses potentially work out of their own home environment. Business Rate Retentions: we may have levels of growth in those businesses, but that is not going to impact on Business Rate Retention that we would actually get. The other thing is of course that a number of these policies that come out at the moment are not cognisant of twotier authorities; Cumbria is a twotier authority.
Helen Wright: We do not believe it has been rural proofed for rural businesses because we are concerned that you will not get the growth in rural businesses that you will need to make the difference. It is the same point, I think.
Councillor House: If you have had representation from individual local authorities, I would suggest they probably are right.
Chair: Ms Wright, you confused me very badly, because I think I am quoting you in your response to Mr Drax’s earlier question, in that you said that the RCPU’s work tends to engage with national umbrella bodies and that is no substitute for local engagement as different rural communities have different needs. That was almost verbatim, I think, the written submission that we received from Cumbria Council. So there is clear unanimity in response to the issue about engagement. To what extent do you think that there is an organised dialogue between rural policy experts in local authorities and Defra’s Rural Communities Policy Unit? You are shaking your heads.
Helen Wright: I do not think there is an organised one. This is not to be critical of them, because they are there if you want them; we have some very good contacts. Picking up Gillian’s point about the distinctiveness of areas and therefore the opportunities that you get to engage directly with Defra, we have a dedicated rural team. We are not part of any LEP situation directly, so we are not around a LEP roundtable. We feel quite bereft, really, that we cannot get more direct contact. I do not think there is that direct contact with individual local authorities. Clearly they engage with the LGA and that is brilliant but, with the best will in the world, it is very difficult for that to trickle down to where it needs to be on the ground.
Q73 Chair: Ms Elliot, the CRC to some extent provided that more local perspective, you have told us. It may be appropriate here to pay tribute to the work that Stuart Burgess and the CRC did actually.
Gillian Elliott: It was excellent, as far as we were concerned. Having a rural advocate was absolutely the right thing, somebody who came out into the rural communities. That really is vital to understanding the rural communities. Let us face it; if you live in London, you look out, you see what is on your doorstep and that is what is normal. In a rural community, you need to be able to look out and see what is happening. That becomes the norm to you. Having a rural advocate out there worked.
Q74 Chair: Do you therefore think it was a mistake to get rid of the rural advocate?
Gillian Elliott: We are early on the Rural Policy Unit, but I genuinely think that we are missing something by not having the advocate.
Helen Wright: I would concur with that. I would particularly like to support his visits to different ruralcommunity scenarios. He came to the East Riding to look at coastal communities and coastal issues, and it was a very vibrant visit. He engaged with communities and he went back and presented his report. It is that engagement at the most local level that is important. If mechanisms are in place so that we can truly feed that upwards to inform policy development, we may be some of the way there. It is exactly the point you made, Gillian: it is what is actually out there and who really understands that.
Q75 Chair: There is currently a gap, then. What does the RCPU need to do to ensure that those views, the views that are at the moment hard to reach within rural communities, are actually heard and taken on board by Government? What mechanism would you like to see in place to overcome that problem?
Gillian Elliott: I think they have to be out and about on the ground. It is timeconsuming. We know how far it is to travel between one place and the other. They need to know exactly the same.
Helen Wright: I agree with that, but again I would at least like to see some sort of direct contact with rural practitioners in rural local authorities, so that that information can be shared.
Councillor House: I have a slightly different perspective as the umbrella organisation, perhaps inevitably. We recognise that it is actually very difficult for central Government to reach out, talk to and have a proper individual dialogue with every local authority across the country. As a membership organisation, that is our job. We can be part of filling the gaps there. That is not to negate the need to have more local dialogue but, as the umbrella organisation, we ought to be part of the solution. We would like to see more regular contact with all parts of Defra. We would also like to be part of the process earlier on, particularly with policy development. Often we see from central Government policy development happening in isolation from the people on the ground. More dialogue earlier on removes problems arising simply through poor drafting of legislation.
Helen Wright: Could I just cite one example? We were fortunate enough to be one of the Rural Pathfinders four or five years ago. John Mills, who was with Defra then, brought together what he called the ‘Pathfinder family’, plus one or two others. It was basically people who were broadbased rural development practitioners. It was the most excellent vehicle for us to see what was going on nationally and to get that interface, and for him to find examples of different ways of delivering services in the broadest sense and to have that fed back up. I would not want to be exclusive to people, but it was a very good vehicle for getting that interchange between practitioners.
Chair: It was; I remember it well.
Q76 Neil Parish: I want to talk a little bit now about affordable housing. How important is affordable housing to sustain rural communities, especially small ones?
Councillor House: It is absolutely vital. The critical issue from a local authority perspective is funding. Mr Drax touched on that from the other angle, in terms of viability, earlier on. Given the changes to property values over recent years, it is inevitably the case that viability is an issue. The answer to that has to be finding other methods of getting finance into the system. If we are going to deliver affordable housing, there are only a certain number of pots available. If we are not going to take the money from the developer, then we either have to find new sources of local authority funding-some of the discussion recently about opening up local government pension funds can and should be part of the solution there-and there is also local authority borrowing, as I have already mentioned. Prudential borrowing is encouraged by the Treasury for all other aspects of local infrastructure, but not for housing. We have a crisis in housing, right the way across both rural and urban areas. Allowing prudential borrowing and removing the cap can be a solution.
Q77 Neil Parish: I have people come to say to me they are very keen on affordable homes, but they are just not there. To what extent do you find problems actually finding sites for affordable homes?
Gillian Elliott: I am not convinced that the sites are the problem, for us. In areas like Eden and South Lakeland, we are talking about it costing people seven times the average wage to get their deposits down on properties. In our rural area, tourism is vital as the main employment and it is a low wage. We do not necessarily have problems over sites, but we do have problems over having sufficient key worker accommodation. Access to farm development that is more in line with it being multipurpose use, not just properties for tourists, would be beneficial as well.
Q78 Neil Parish: I have a couple more supplementaries. What impact will the measures in the Growth and Infrastructure Bill have on the provision of affordable housing in rural communities?
Councillor House: We have argued that the Growth and Infrastructure Bill is very much a missed opportunity in a number of ways. The issues are around planning. There is a strong argument that centralising planning decisions will actually make them slower, rather than faster; that there is a capacity issue within the Planning Inspectorate anyway; that there is a risk that the issues of local accountability become so marginalised that they actually make nimbyism more, rather than less of a problem. We would argue that, if local authorities could create their own local permitted development right schemes, rather than have a national Permitted Development Right Scheme, that would allow for more problems to be solved. We do not believe that the proposals in the Growth and Infrastructure Bill will assist in that area.
Q79 Neil Parish: Naturally then the local authorities would have the right to let those as well, because that is also an issue sometimes, when you have affordable homes and they do not necessarily go to the people in the area that they think they should do.
Councillor House: Yes, absolutely.
Q80 Neil Parish: The final one is to what extent you are concerned about the impact of housing benefit reforms, in terms of underoccupancy. I know some of the rural housing authorities and housing associations do not necessarily have the stock of houses to be able to find smaller houses for individuals.
Councillor House: Typically, a physically large rural district with a small population and a small stock has not got the flexibility to deliver. For example, there is an issue where a resident is in a threebedroom property yet may fill a vital role in the local economy. Their loss of housing benefit, because of underoccupancy, is going to force them to move. Where they can be moved to, in reality, is an unanswered question for many of these people. I am sure you have all got casework of examples yourselves in your communities, be they rural or urban, but they are by definition more acute in rural areas, where that flexibility is much lower.
Q81 Neil Parish: Although they are different departments, there almost needs to be a link between the allowing of building of houses and freeing up of borrowing, linked to the type of houses built in order to be able to fulfil the policy. If you need to build some smaller houses, you could do it and so on. Is this too complicated?
Councillor House: You are arguing for localism. Local authorities inevitably back that.
Q82 Mrs Glindon: The Federation of Small Businesses has called for LEPs to "Take on greater responsibility for setting a strategic vision for their areas, so that rural infrastructure and planning development moves forward in a way that reflects the needs of local economies." Do you agree and, if so, do you think that LEPs have the capability to perform this role?
Gillian Elliott: It depends on the area and the LEPs. For example, we are quite fortunate that Cumbria County Council is coterminous with our LEP. We sit on a publicprivate partnership, so there are councillors who sit on the board alongside the privatesector members. As a consequence, it is right and proper to be able to have that strategic conversation about planning issues, but LEPs have been set up in different ways in different areas. That comes back to that localism bit. In reality, there is a strategic conversation going on about what the need of the private sector is and how the public sector can come forward with the right tools of delivery.
Councillor House: I am very nervous about devolving too many responsibilities to Local Enterprise Partnerships. The capacity issues vary enormously from one to another, as has been described. The evidence before this Committee’s last session touched on some of these points too. There is also a fundamental issue about accountability. By definition, Local Enterprise Partnerships are not fully locally accountable; they are indirectly accountable. We would strongly argue that local authorities are much better placed to pick up these responsibilities because they are directly accountable to the community they serve.
Helen Wright: The only thing I would add is that, unlike Cumbria, as I said earlier, the geography of our LEPs is extremely complex. Certainly the Humber one is very focused at this point on estuaryrelated activity, although there are subgroups on either side of the river that are going to start to pick up some of the rural issues. There is a link through to your question that the LEPs, far more overtly in instances where there is a hinterland, go down the road of ensuring that that rural voice and that rural element are in there and that mechanisms are put in place to make sure that happens.
Q83 Richard Drax: We move on to the thorny issue of rural transport. The Government is helping community transport out. It is investing £10 million in 201112 and 201213, money that local authorities can use to help address your local transport problems. Is the greater use of community transport the right strategy for improving transport in your area, Mrs Elliott?
Gillian Elliott: We have 7,000 miles of roadway. We have huge gaps between where our villages are and where our market towns are. For transport in a rural area, it is enormously difficult to be able to set one strategy that will meet the needs of each area. It is very difficult.
Q84 Richard Drax: Each area has to have its each strategy.
Gillian Elliott: I think it has to. For us, a lot of it is down to community transport opportunities. It is down to how you actually link arrangements.
Q85 Richard Drax: Can I put a crude example? If you want to get people out on to farms to milk cows, the bus has got to leave at four in the morning. If you want to get people to go into the office in town, you have to go at eight in the morning.
Gillian Elliott: There was a comment earlier about how, in a rural area, if you do not have two cars then two people cannot go to work, because they are in different areas. It is not a luxury; it is a necessity. In my village, we do not have any buses at all. If the children want to go to school, you take them there and then you go to work, or else they have to ride their own bikes, and again you are on rural roads. Transport and any form of community transport are problematic in rural areas.
Helen Wright: We certainly invest a lot of energy into the community transport sector and we see it as providing a vital link for our isolated communities, but it is only part of the problem. One of the things that we have been talking about around that is this business of linking it to NHS transport, with stuff linked to special needs. Certainly if a bit of pressure could be brought by Government on encouraging more joinedup thinking on this, we would find that very beneficial, because it is not always easy to achieve. We have problems with rural transport generally around the concessionary fares. The problem is such that the buses are becoming unviable now, because of this concessionary fares system. Therefore, unless some sort of levy can be raised for people, who seem willing to pay a small levy, we are going to have to look more towards the community transport sector. We believe quite strongly that it meets some of our needs. The thing about getting to the farm at four o’clock in the morning is that we have a Wheels to Work scheme, which helps those sorts of individual issues.
Councillor House: There needs to be a fundamental rethink about how we make public transport funding work. At the moment, we are effectively subsidising some commercial services through the bus operator subsidy system. That subsidy arguably does not need to be there. I have already described what I have called the "perfect storm" of rising fuel prices and general rising costs meaning that commercial operators are deregistering more services; local authorities naturally do not have the funding to pick those up. Therefore, we are seeing more and more communities become isolated, and inevitably community transport has to be part of the solution to that. The simple answer to your question, Mr Drax, is yes, absolutely. Community transport has to be looked at more frequently with more bespoke solutions, as we have heard described by my colleagues.
Q86 Chair: The Country Land and Business Association has said there "must be greater flexibility to allow upland farmers to … diversify". They have said that that "will inevitably mean a more flexible attitude towards planning, especially within National Parks", is required. Do you agree with them?
Gillian Elliott: I think our National Park has moved on leaps and bounds in the last few years. They are working very closely with developments preapplication stage to make sure that problems are alleviated at the earliest opportunity. No doubt it is harder in a National Park, but I think that our own National Park is working very closely with developers. In upland areas, yes, it is difficult. All services are much harder in upland areas. The National Parks are protecting what is a national asset, but they are working very closely with businesses to make sure that they are ensuring that they do not stand in the way of business.
Q87 Chair: Finally, to all of you, clearly we must try to advance our economic growth in rural areas, but without jeopardising the natural environment. Is there anything in the Government’s current planning proposals, which we have not already touched on obviously, that gives you concern for the natural environment and any potential risks that there may be?
Councillor House: The quick simple answer is that the removal of permitted development rights on small householder extensions is going to cause us decades of grief. A shortterm problem with a longterm consequence, with respect, this has not been thought through. Both local authorities and Members of Parliament are going to have enormous grief on this, because of the environmental damage and degradation that follows.
Helen Wright: I would support that but, in terms of for example the National Planning Policy Framework, we are really quite receptive and pleased with its greater flexibility for the rural economy. I hope we have the skills within the authority to make sure we get the balance right in our own local plan as we take development forward.
Gillian Elliott: I do not think I can add anything to what has been said.
Chair: In that case, I thank you all very much for your time. My apologies once again that we were delayed by the votes, but you all understand that that is the nature of democracy. Thank you very much.