Owen Paterson, Environment Secretary delivered the below speech at the Federation of Small Businesses National Conference in Leicester on Friday 22nd March 2013.
It is inspiring to hear how rural businesses are using digital services to access new markets and expand their customer base. My priority is to ensure that these opportunities are available to every rural business.
Before I start, I would like to say what a privilege it is to be here today. As someone who spent twenty years working in my family leather business, I know firsthand about the challenges and rewards of running a business in a rural area. Small and medium businesses provide 69 per cent of all employment in rural communities. Put simply, your businesses are the bedrock of the rural economy. I have always enjoyed working closely with my local FSB branch in Shropshire and I want to do all that I can to support you nationally.
On my appointment to this role, the Prime Minister gave me clear instructions to boost growth in the rural economy while improving the environment. The two are not mutually exclusive. They go hand in hand. You cannot have a prosperous economy without a healthy environment. There is a big opportunity for us to work together to unlock the potential for rural growth. Rural areas are home to one fifth of the English population, yet support nearly a third of England’s businesses. Getting the right conditions in place to allow these half a million businesses to compete and thrive is key.
I welcome the FSB’s incredibly worthwhile report last year, Missing Links, which focuses on some of the steps needed to revitalise the rural economy. Many of the issues raised in the report are priorities that we share and have made good progress on. For example, the Government is rolling out superfast broadband to rural areas, cutting red tape and simplifying the planning system. I believe that nothing will have a more spectacular effect on the rural economy than the roll out of superfast broadband. It’s bigger than the advent of the canals, railways and the telephone combined. For the first time, we have a technology that can truly bridge the gap between urban and rural. In my first week in the job, I visited an old barn at the top of a Cumbrian fell. Inside it, I was amazed to find an architects’ business designing golfing villas for Nasiriyah in Iraq. That’s the transformative power of broadband. And that’s why we’re investing £1.2 billion of public funding in broadband infrastructure, including £530 million in our rural broadband programme.
This will deliver superfast broadband to 90% of premises in each county. Everyone, even those in the hardest to reach places, will have access to a good internet connection. The private sector is also investing in this. Together we are ensuring that 100,000 homes and businesses are getting access to superfast broadband every week. While superfast broadband may not yet be an option for very remote communities and businesses, our £20m Rural Community Broadband Fund is supporting faster connections for the hardest to reach areas. The third round of this fund is now officially open for applications but I know that some applicants have found it difficult to find the 50 per cent private sector match funding for projects.
I am therefore delighted to be able to announce to your conference today that we will now consider applications based on a grant rate above 50 per cent of project costs where there is a need. We saw in the video the huge business benefits of high speed broadband. Without it doing business is much slower. I know how intensely frustrating this is. The same goes for mobile coverage which in many rural areas is dire. I find it difficult enough not being able to maintain a signal between the five market towns in my constituency but what must it be like for someone who is on the road the whole time and whose livelihood depends on being able to keep in touch with their customers.
The impact on the self-employed and those wishing to expand a business is particularly tough. This situation has to change. That’s why the Government is investing £150 million to help tackle mobile ‘not spots’ and increase overall mobile coverage across the UK. Mobile providers are now working to increase 3G coverage to 90 per cent of the UK population by the middle of this year. The industry itself is making a difference through commercial infrastructure sharing deals between mobile providers that help increase coverage footprints.
Ofcom recently ran a successful auction of the 4G spectrum and national rollout will start this year aiming to provide coverage to at least 98% of the UK population by 2017. As long as rural areas are placed at a communications disadvantage, the Government and Ofcom will actively look at other innovative ways of improving coverage. While improved broadband and mobile infrastructure will help you access new markets and customers, physical transport infrastructure remains vital.
Transport is consistently identified by people and businesses in rural areas as one of their main issues of concern. We recognise that the cost of fuel has a disproportionate impact on those living and working in the countryside. That’s why we have listened to you and worked hard, in difficult circumstances, to cancel the fuel duty increases planned by the last Government. We have made a determined choice to pass up on £20 billion of revenue for the Exchequer to put in place the longest freeze in duty for 20 years. This means that fuel prices will be 13 pence per litre cheaper than they would have been under the previous fuel duty escalator. For a Vauxhall Astra or a Ford Focus that’s a saving of £7 every time you fill up.
For too long rural transport policy has been put in place by people with little understanding of rural transport needs. People who can’t comprehend that in my part of Shropshire 67% of people have to go to work by car, simply because there’s no other option. We must look for local solutions that recognise that different communities have different needs. I would urge you to get involved in the discussions that are taking place at a local level. This way you can help to influence transport decisions where you live and work. This will benefit both the competitiveness of rural businesses and the quality of rural life.
One thing government must do is to get out of people’s hair and let them get on with what they’re good at. We are constantly looking at areas where we can reduce red tape and make it easier for businesses to comply with legislation where there is a need for it. But I still believe that every minute you spend form-filling, is a minute spent not growing your business. When it comes to better regulation, Defra has saved business £143 million per year under the Government’s One-in, One-out system and we will continue to build on this by One-in, Two-out. In addition our environmental red tape challenge will save business £1 billion over 5 years.
On waste, for example, we are looking at exempting more small businesses from the waste battery producer responsibility regulations and reducing burdens on SMEs by simplifying record keeping, reporting requirements and approval processes. We are also introducing a quick and easy electronic recording system from January 2014 to save businesses from having to complete waste transfer notes. This could save businesses at least £5 million a year. We are also improving competiveness by investing in skills, providing grant support for micro-enterprises and promoting tourism.
Defra has established five Rural Growth Network Pilots tackling the barriers to economic growth such as a shortage of work premises, slow internet connectivity and fragmented business networks. In Northumberland, the Wooler Smart Work Centre is now under construction providing a mix of small start up units and flexible remote working facilities designed to support small businesses. In Devon and Somerset, the Rural Growth Network has just launched a Family Business Growth Programme to mentor and develop skills in family run businesses.
Through the current Rural Development Programme for England we have provided over £320 million in grant support to aid competitiveness and diversification in the rural economy. This has supported thousands of small and micro businesses creating over 7,700 jobs, safeguarding a further 8,900 jobs and delivering over 90,000 training days for rural entrepreneurs. Thousands of businesses have benefited from RDPE funds. I can’t mention them all today but just a few examples here in Leicestershire are Buckminster Yard, where RDPE funds have helped to create 11 self contained office units with fibre optic broadband of up to 100 Megabits per second.
At Long Clawson Dairy an RDPE grant helped to fund equipment and site works to grow UK sales and exports of added value cheese products. As we develop the next English Rural Development Programme, I hope that you will share your views with us to help shape the future direction of this important programme.
Tourism is another great driver of growth. Rural tourism generates economic opportunities particularly suited to small businesses, local environments and communities. In rural England, tourism currently makes up 13% of employment and 10% of businesses. This is worth around £33bn to the rural economy. That’s why the Rural Development Programme is supporting businesses like the family farm and fishing business in Eye Kettleby to help them diversify into tourism, developing a 5 star touring and camping facility.
We are investing £25 million in a package of initiatives to promote rural tourism and to support rural tourism businesses. We need to attract more visitors to rural areas and encourage them to stay longer and spend more. Having driven through rural Leicestershire this morning, that shouldn’t be a problem. And that’s before I mention the leisure potential of the National Forest or the county’s rich history, newly bought to life by the amazing discovery of Richard III’s remains underneath a local car park.
We are also helping rural businesses to grow by opening up new export markets. Agricultural, food and drink exports were worth £18.2 billion in 2011 - the seventh year of continuous export growth. There are some great examples of new markets that we have worked hard to open up. Russia has just lifted its ban on British beef and lamb imports in a deal potentially worth £80 million over the next three years. China has also opened its doors to British pork providing a new market valued at £50 million a year. We are now working on opening up exports to other parts of the world and providing businesses of all sizes with the support they need to access them.
Of course, domestic markets are equally as important for small businesses. Take the domestic food sector. It successfully produces food for 64 million people and supports industries that add nearly £90 billion to the UK economy. The food supply chain accounts for nearly 4 million jobs. We currently import 22 per cent of food that could be produced here. For example, we have a £1.2 billion trade deficit in dairy products. 30 per cent of our raw milk output goes to making cheddar cheese. Yet we imported nearly 95,000 tonnes of cheddar from January to November last year.
I believe that the recent focus on the resilience of our food supply chains provides us with a massive opportunity to champion British produce, with its top quality raw materials, rigorous traceability and excellent standards of production. The East Midlands already boasts some of our top food and drink producers. These range from individual butchers and brewers making Melton Mowbray pork pies and Rutland Bitter - two local products which have secured protected designation under EU law - to the factories in Leicester and Lincoln producing Walkers crisps.
Now more than ever, we must work together to show consumers how great UK products are and encourage them to get behind them. The FSB’s ‘Keep Trade Local’ campaign is a great example of this. Many of our best products can be found on our local high street and I know how important a buzzing high street is for communities and economic growth, particularly in rural market towns. The Government has already taken action to help rejuvenate the nation’s high streets. We are backing communities across the country with a multi-million pound package of support, providing over £80 million in loans for start-up companies and doubling small business rate relief to help small entrepreneurs.
Planning restrictions have been lifted to help landlords make better use of empty properties. By allowing them to lease for shorter periods we are helping start-up businesses to set up in the high street. Also by making it easier to convert properties into residential facilities we are helping to increase resident population and local footfall to the high street. Vince has already spoken about the new Employment Allowance, which will see 450,000 small businesses, one third of all employers, paying no National Insurance contributions at all. We’re also reducing Corporation Tax so that in April 2015 we will have the lowest rate in the G20.
But I would like to briefly mention some of the other steps we are taking to help existing businesses, many of which can be found on your local high street, flourish and grow. In January this year we put in place a ten-fold increase in capital allowances, now up to £250,000, enabling businesses to invest in new machinery and equipment. Defra is also spending £20 million to help aspiring business people in rural areas get specialist training, ensuring that we have the right people with the right skills to drive forward rural growth. And as I’m on the home turf of Everards, it would be remiss of me not to mention the cancellation of the planned three pence rise in duty on beer and the one penny cut that will come into force on Sunday night, helping our pubs to stay at the heart of town and village life.
I know many of you will be worried about the costs and risk that flooding poses to your business. 2012 was the wettest year on record for England. My department is working hard with the Environment Agency to limit the risk of future floods damaging businesses and homes. This is a top priority for us. In the four years to 2015 we will be investing £2.3 billion to reduce flooding, providing better protection to 165,000 households. Nine flood defence schemes, including Leeds, Sheffield, Ipswich, Exeter and Derby, will receive a share of the £120 million extra funding announced in last year’s Autumn Statement. The extra funding will speed up the construction of 50 schemes, including the Willow Brook scheme in the Leicester area, protecting up to 60,000 households and delivering up to £1 billion in economic benefits.
In my first week in the job, I saw how in Nottingham our largest inland flood defence will not only provide protection for 16,000 homes and businesses but fuel economic growth by freeing up 500 acres of land for development. Small and medium-sized businesses are the lifeblood of the rural economy. I believe that government’s role is to help where it is needed and to get out of the way where it is not. That is why we are determined to put in place the conditions that will enable you to capitalise on the very real opportunities that exist at home and abroad and to put your businesses - our economy - on a firm footing for the future.
I look forward to working with you to achieve this.