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Digital for rural areas worth up to £26bn to UK economy

A study commissioned by Amazon has posited that greater use of digital tools and services could be worth between £12bn and £26bn per annum to the UK economy

Greater investment in digital technologies and connectivity in rural parts of the UK could add between £12bn and £26.4bn annually to the British economy, and increase business turnover by £15bn, according to a study conducted by think tanks Rural England and Scotland’s Rural College (SRUC) on behalf of Amazon.

The report found the rural economy is already worth £299bn in gross value add (GVA) to the national economy, but argues that a government-led digital rural strategy could improve this still further.

A typical rural business is far more likely than the national average to be family-run, home-based, owned by people aged over 55 and to employ fewer than 10 people. Proportionately more have an annual turnover of below £50,000 and proportionately fewer make over £1m compared to urban businesses.

“Over the past 20 years we’ve seen opportunities for rural entrepreneurs transformed. But as today’s report shows, there’s much further to go before anyone can say the rural-urban divide has closed,” said Amazon UK country manager Doug Gurr.

“Embracing digital not only benefits the economy; it also allows rural communities to combine great quality of life with access to global opportunities.”

The report showed microbusinesses – those employing under 10 people – stood to benefit the most from digital investment, accounting for up to £9.4bn of additional turnover, while companies with over 250 employees stood to benefit the least.

It found the concerns of rural business owners echoed those of much larger enterprises, with four in five rural business owners agreeing that digital tools and services were important to their growth potential. Better access to cloud computing was seen as the biggest driver for future growth, cited by 67% of respondents followed by 5G mobile networks (54%), the internet of things (IoT) (47%), and machine learning and artificial intelligence (AI) (26%).

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Those who export also cited access to e-commerce tools, although the vast majority of those are already using these to some extent, mostly those in the retail, tourism and hospitality industries.

Overall, rural business owners were looking for benefits in terms of assisting remote working (30%), improving access to customers and suppliers (29%), improving business efficiency (28%), improving data storage and security (25%), and enabling more flexibility within their organisations (25%).

The business owners surveyed also identified a number of challenges. Access to broadband and other forms of connectivity was naturally top of mind, but besides that, 52% said they faced skills-related obstacles to digitisation, usually to do with recruiting people with appropriate skills, or retraining existing workers. Around 30% also had difficulty finding external or outsourced connectivity support.

“Rural businesses are to a considerable degree already strong digital adopters, and most recognise the importance of going further,” said Brian Wilson, chair of directors at Rural England. “However, their ability to go digital has been held back by constraints, which have included connectivity but also extend to a lack of skills, training and resources.

“We believe there are some straightforward quick wins which if delivered locally, nationally and UK-wide, could have a significant and positive impact on the quality of life for rural communities.”

Digital rural strategy

To this end, Amazon’s report outlined a number of recommendations for the public and private sectors. These include streamlining digital support services by setting up a single information portal and local directories giving guidance on digital resources.

It also proposed establishing Digital Enterprise Hubs in rural towns which businesses can use of visit for connectivity, workspace and training, and improving collaboration between employees and education providers to improve access to retraining resources and making short training courses and online tools more readily available to small business owners.

On the broadband access front, the report proposed boosting adoption of connectivity by encouraging local businesses using superfast services to act as evangelists among their peers, and prioritising investment in connectivity and digital tools.

Support for digital growth

Finally, the report’s authors said that making support for digital growth a fundamental objective in future rural business support programmes should be a key objective, and the government should encourage larger technology-driven firms to implement policies focused on digital adoption in rural areas that provide support for smaller businesses.

“The internet has the potential to ensure the countryside can flourish in a way that combines preserving the environment with economic dynamism,” said Michael Gove, minister for the environment, food and rural affairs. “Digital technology can open opportunities, build skills, and connect rural businesses to global markets.”

Countryside Alliance police head Sarah Lee said the report proved that far from being a secondary issue, a rural-focused digital strategy should be at the core of the government’s plans to boost the economy.

“Achieving full connectivity, investing in skills development and encouraging more rural businesses to maximise the digital opportunities already in existence will enable rural communities to achieve their full economic potential,” she said.

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