Rural businesses are battling on in the face of mounting energy costs, poor transport links and unreliable broadband, a report shows.
Research by the Federation of Small Businesses sets out the unique set of challenges that continues to hamper the growth of small firms in rural areas.
The situation won’t be reversed unless policymakers to step in to make serious change, the FSB urges.
The issues are examined in its report entitled “The Growth Belt: Supporting Rural Small Businesses.”
The diversity and ambition of rural small firms is emphasised, with rural areas holding enormous potential for businesses to thrive and contribute to the wider economy.
However the Government needs to raise the basic VAT taxable turnover threshold from £85,000 to £100,000 to encourage growth rather than discouraging it, says the FSB.
The report points to anecdotal evidence of small firms scaling back activity to avoid the risk of crossing the VAT cliff-edge.
Other suggested solutions to problems inhibiting growth in the rural setting include:
The Government should update the Universal Service Obligation (USO) minimum requirements for both upload and download speeds.
More hard-working, potentially growth-creating small firms should be taken out of Business Rates by increasing England’s Small Business Rate Relief threshold to £25,000 from the current £12,000.
UK Governments must deliver the necessary charging points for electric vehicles by 2030 in rural parts of the UK.
Councils should appoint Local Business Champions to take clear responsibility and accountability for business engagement and funding applications.
Energy providers should allow small and vulnerable firms who entered into a new energy agreement during the high-cost wholesale energy period to renegotiate early to reflect the much lower wholesale energy prices currently available.
FSB National Chair Martin McTague said: “Our research highlights how rural small firms are the bread and butter of their communities, full of diversity and ambition. They provide local employment opportunities, drive innovation, and generate economic growth.
“But after decades of promises from the Government, inadequate transport and poor digital connectivity are still putting these rural firms at a disadvantage. This hinders their potential to contribute even more to a sustainable and thriving economy. The VAT threshold is a barrier to growth for many, and charge anxiety and the need to use off-grid fuels means that the transition to net zero needs attention.
“Our report offers concrete, feasible solutions to narrow the productivity gap and unlock these rural small firms’ full potential – not just for now, but for generations to come. The Government has the power to create a more sustainable and resilient economy that benefits everyone, no matter how small or how large their rural community is.”
The report shows that 37 per cent of rural businesses reported more than a 10 per cent increase in their operating costs during 2022, and 32 per cent reported issues with internet reliability.
