A presentation for the National Transport Strategy sub-group, ‘Enabling Economic Growth’
Prepared by: Emma Cooper, Chief Executive, Scottish Rural Action
Presented: 30th November 2017
The presentation was an overview of key information we have on the rural economy and some considerations for the National Transport Strategy.
• RESAS Working Paper, July 2017 – Understanding the Scottish Rural Economy (to be published)
• SRUC Rural Scotland in Focus 2016 – Scotland’s rural economies: Looking beyond the land based sector
• Manifesto for rural Scotland / Scottish Rural Parliament 2014, 2016 / #FareEnough? campaign
• Barriers to rural economic development in Scotland, Scottish Enterprise Borders
• Draft ScotFLAG rural sub-group paper (to be published)
• Rural Scotland Key Facts 2015, Scottish Government
The Rural Economy
• Rural Scotland is 1/5 Pop., 1/3 SMEs, 51,000 businesses
• Growth by GVA is similar in rural & urban
• Highest performers by GVA are Wholesale, Retail & Transport; Public Sector; Manufacturing; Business Services; Real Estate
• Best performer for GVA growth is ‘Business’ – 166% real GVA growth since 1997
• 25% of jobs in growth industries are in rural (15% in urban)
• Micro and small enterprises in rural offer the best potential for employment growth in Scotland
The rural economy is more diverse than it is often perceived to be; often there is an emphasis on agriculture, forestry and fishing (which is only 3% of GVA; although 15% of employment), tourism, and the related food and drink sector. The evidence supports a broader focus on a more diverse range of sectors.
The rural economy is often perceived to be a drain on the national economy, with cities being the major drivers. This evidence indicates that is not the case, and the rural areas have a diverse and important role in our GDP, including the best potential for growth.
Key Urban/ Rural Differences
(stats: remote rural/accessible rural/urban)
• More people in rural are employed (78/76/72%) and work for smaller employers (68/54/34%)
• More people in rural have a second job (8/4/3%) and are homeworkers (27/ 21/ 10%)
• More people in remote rural are in part-time employment (31/27%) and more are self-employed (22/10%)
• Women in remote rural have the lowest income of any group, and the largest gender pay gap (£5,706)
• Family and home-based businesses are more common in rural
• Accessible rural SMEs are most likely to export (8/14/12%)
• Innovators are less common in rural overall than urban, but more likely in remote rural (41/28/45%)
• Rural SMEs more likely to have applied for finance (30/15%) and less optimistic about growth in coming year (multiple measures)
The differences between our rural and urban economies indicate a need to consider, treat and support them differently. These facts are mostly sourced from recently published materials, as it has become more widely acknowledged that we have less information on the rural economy than we need to make informed decisions about how to best grow the rural economy.
There is limited research on why these differences exist between the rural and urban economies and what the implications of these differences are. For example, do unemployment rates indicate that people move if they don’t have a job? Or that it is harder to register as unemployed? Or that there are better employment opportunities in rural Scotland? Does self-employed mean people are more entrepreneurial or there are poor employment options?
There are also significant differences between rural areas, with Aberdeenshire, Perth & Kinross and Highland having the best GVA (as well as the highest populations), and East Ayrshire having a notably high unemployment rate.
Transport considerations: Personal mobility
• Staff recruitment and retention – rural businesses have more difficulty in recruiting for roles, and higher levels of long-term vacancies. In part this is because people cannot travel as easily for work, so the population within the recruitment area is smaller. Transport issues can also make an area less desirable for people to live in, or make it harder for both partners in a relationship to find employment within a reasonable travel time.
• Training & Education – transport makes it harder for rural residents to access training and education, limiting the lifetime earning potential of individuals and impacting on the skills available to businesses. Young people are less likely to go into further education if they are from a rural location, and this is in part
• Complexity, reliability & timetabling – rural journeys are more complex, involving multiple modes of transport. A common issue is a lack of joined up timetabling of services, and reliability which is affected by geography and weather conditions.
• Cost – the complexity of rural public transport journeys adds to the cost of them, with young people recently reporting that the cost of transport alone was preventing them from accessing employment and education. Rural households have cars by necessity, and pay higher fuel prices. Rural households are more likely to be in fuel poverty.
• Sharing road spaces – when roads are narrow without pavements and cycle lanes, it is dangerous to walk and cycle even short distances. HGVs damage road surfaces and verges.
• Broadband & remote working – we need to consider the impact of improved broadband, potentially as a partial solution to some of these issues, and the potential for increased home-working. Will this happen, and if it does, will it make transport less important, or change the need?
Transport considerations: Freight
• Distances, geography & complexity – rural goods have to travel further to market, over challenging geography and sometimes using sea, road and air. This can significantly increase the cost and prevent investment in rural areas, as well as making it harder for rural businesses to increase.
• Road network – we have limited motorways and major roads in Scotland, as well as issues with the conditions of verges and roads having an impact on travel times, speed and fuel efficiency. The conditions can also damage vehicles.
• Single track roads – there are lengthy single track road networks in Scotland with limited passing places, often too small for HGVs, and increasing congestion.
• Fuel costs & efficiency – the impact of challenging road conditions and slow speeds has an impact on fuel costs and the efficiency of journeys.
• Road closures – for works, accidents or weather-related issues can mean very long diversions and delays.
Transport considerations: Other
• Complex relationships – investment often has unintended consequences. For example, the introduction of RET on ferries has reduced travel costs and consequently increased tourism. This has led to road congestion on the islands, increased freight vs passenger competition, and ferries that are slower to be loaded (so foot passengers miss onward transport connections).
• Understanding of the rural economy and transport impacts – there is limited research on the rural economy and the impact of transport investment. Some sources suggest that investment in transport in rural areas has a much greater return than investment in urban areas. We have limited evidence about what support for the economy would have the greatest impact.
• Political attention – the wider rural economy has had less political attention than particular sectors of the economy. Greater political attention would result in better and more effective decision-making.
What we don’t know / Limitations
• Unregistered businesses – it is harder to get information on unregistered businesses and therefore we know very little about them. It is predicted that unregistered businesses account for 50% of enterprises in Scotland.
• Third sector – recent research has focused on the private sector, with less attention paid to the specifics of the economic contribution of the third sector in rural areas.
• Deeper sectoral division – research at present examines the broad sectors and does not look at deeper divisions. ‘Manufacturing’ for example has 26 divisions.
• Below Local Authority level – the data is generally available at a local authority level only, and looks at only predominantly rural local authorities.
• Qualitative information – there are sources of qualitative information, but generally they are limited and have not been included here aside from our own research.
• Access to services for businesses – we have data on access to services for households, but we do not have data on access to services for businesses.
• Impact of transport – there is generally limited information on the impact of rural transport initiatives on the economy.