The Government’s industrial strategy must identify how rural areas can complement the role played by city economies.
Despite being the Centre for Cities, one of the most ‘frequently asked questions’ we’re asked when out and about discussing our work is “what about rural areas?”. This question has become more relevant in recent months, given the new Government’s focus on encouraging economic growth right across the country as part of its new economic and industrial strategy.
In response, we’re always clear that although our work focuses on the UK’s 63 biggest urban cities, we do not regard cities as islands, or as the be-all and end-all of the national economy. Our recent report Trading Places, which looked at the economic geography of businesses and jobs across Britain, offers a better insight into the role that rural areas play in the national economy.
In the report we split non-city areas into two categories – hinterlands and rural. Hinterlands are non-urban areas which are within the travel-to-work area of cities, and rural areas are those areas outside the travel catchment of cities. When we look at the economic make-up of these two types of areas we see some notable differences.
First, very little of the national economy is located in rural areas. Despite covering 53 per cent of all land in Britain, rural areas are home to only 13 per cent of businesses, 10 per cent of jobs (in 2015) and 12 per cent of Britain’s population. In comparison, hinterlands cover a smaller area – 38 per cent of land – but have roughly three times as many businesses and jobs as rural areas, and are home to a bigger share of the total population (34 per cent).
Source: ONS (2016), Business Structure Database 2015; ONS (2016), Census 2011, origin-destination data (WU02UK); Centre for Cities’ own calculations.
Second, as well as differences in scale, there are also differences in the industrial make-up of the two areas. While goods-exporting businesses are the cornerstone of the export-base of both places, rural areas are much more dependent on the goods exporting sector – home to 25 per cent of Britain’s goods exporters but only 7 per cent of services exporters. In contrast, hinterlands are home to 44 per cent of Britain’s goods exporting businesses, along with to 32 per cent of service exporting businesses – although there are twice as many jobs in the goods exporting sector as there are in the service exporting sector.
Source: ONS (2016), Business Structure Database
The third difference is that compared to hinterlands, employment in exporting firms based in rural areas is slightly less high-skilled. We estimate that 30 per cent of goods-exporting jobs in rural areas are high skilled, compared to 34 per cent of goods exporting jobs in the hinterlands. When it comes to service-exporting jobs the difference is greater – in the rural areas 41 per cent of these jobs are high skilled, compared to 48 per cent in the hinterlands. However, both these areas are home to a much lower proportion of high-skilled export jobs than city centres, where 66 per cent of service exporting jobs are high skilled.
Source: ONS (2016), Business Structure Database
Fourth, both hinterlands and rural areas are less attractive to foreign investment than urban and suburban places. Rural areas, as we have seen, are the location of choice for 25 per cent of domestic goods exporters, but only 14 per cent of foreign goods exporters based in Britain. Hinterlands – home to 44 per cent of domestic goods exporters – attract 39 per cent of foreign goods exporters.
Source: ONS (2016), Business Structure Database
These reflections suggest that for the Government to realise its aim of driving growth up and down the country, it will need to be realistic in recognising the limits of policy to bring about the growth of high-skilled exporters in every type of place across Britain. Rural and hinterland areas will have important parts to play in improving the performance of the national economy, but given their relative lack of high-skilled exporting firms and jobs, these will be (and should be) different from the those played by cities.
Identifying how to make the most of rural and hinterland areas – for example, by improving transport links to cities to help people access jobs, or through bolstering rural sector strengths such as tourism – and how they can complement rather than contradict the roles played by cities, will therefore be a critical task for the Government in its upcoming industrial strategy.
Leave a comment
Be the first to add a comment.