Delivering for rural and coastal businesses

The CBI’s mission is to speak for businesses of all sizes and sectors, across the whole economy, to ensure sustainable growth for the benefit of society in every UK nation and region.

Businesses face the same challenges whether they are based in urban, or rural locations, but for those in rural and coastal areas, these challenges can be heightened due to a lack of economies of scale, distance, sparsity and demography.

The CBI’s Autumn statement submission prioritises the catalysts for sustainable growth. Measures we've suggested that will stimulate economic prosperity across the UK’s regions and nations include: -

• Publishing a national strategy to accelerate the delivery of key infrastructure projects to spur economic growth and levelling up.

Work in partnership with Devolved Nations to adopt their own strategies and, where these already exist, build them into a coherent UK-wide strategy. This strategy should include addressing blockers to delivery - whether that's the current pressures of inflation, supply chain disruptions, and labour shortages; future challenges, such as the skills gap; or potential opportunities for policy changes (e.g. around the UK planning system or commercial pipelines).

• Rolling out the ‘Funding Simplification Doctrine’ to streamline local growth funding to local authorities and include a requirement for an assessment of the impact of any proposed scheme on rural areas.

Introducing a duty to assess the impact of funding bids on rural areas in line with DEFRA’s rural proofing impact assessments guidance, would enable schemes in rural areas to be funded when they might normally not be eligible because of factors, such as lack of economies of scale, distance, sparsity and demography.

• Introducing a targeted ‘green’ super-deduction for both incorporated and unincorporated businesses to help drive the UK’s transition to net zero.

In addition to making full expensing permanent, the capital allowances regime should go further for businesses investing in capital assets that reduce their carbon emissions or improve energy efficiency via green super-deduction (a first-year allowance at a rate of at least 120%).

This should include solar panels, more energy efficient heating and cooling (including insulation), electric vehicles and charging infrastructure, and investment in production lines for any green technology. This will help to green UK business investment from the beginning of supply chains through to end users.

• Decreasing the amount of time it takes to build electricity transmission infrastructure and speed up the process for obtaining connections to the grid.

The UK's grid infrastructure was built to serve traditional fossil fuel power plants, which are typically located close to urban areas. In contrast, many of the country's renewable energy sources are located in remote and rural areas. This poses a significant challenge to developers, who must invest in expensive grid infrastructure to connect their renewable energy projects to the main grid. The government should: -

1. 1. Publish a new National Policy Statement for Energy Networks.
   2. Establish a more strategic approach to energy planning that clearly sets out the grid infrastructure that is needed across the country, such as through a Strategic Spatial Energy Plan. This includes the impact of grid connectivity challenges specific to rural and coastal areas.
   3. Replace the first-come, first-served model in grid connection queues with a system that considers achievement of project milestones.

• Announcing plans at the Autumn Statement to develop an overarching strategy for planning that will be consulted on and developed with industry.

The finalised plan should then be published before the Spring fiscal event to unlock trapped investment. The UK’s planning system is confusing and inconsistent. Introducing an overarching strategy for planning, working closely with the Devolved Nations, would provide cohesion and consistency across all Local Planning Authorities. This would help to reduce burdensome processes and uncertainty for firms.

The overarching strategy should be informed by recommendations from agencies, such as the National Infrastructure Commission, and the Devolved Nations. Creating this strategy will help unleash trapped investment in crucial infrastructure, such as UK housing stock, helping both to alleviate the UK’s housing crisis and ensure better planning for vital national infrastructure.

• Providing funding for the continuation of the 38 English Regional Growth Hubs, while their operations are transitioned from LEPs to local authority control.

SMEs represent 99.8% cent of all registered rural enterprises, which in turn account for 23% of all registered businesses in England. Government-commissioned independent analysis of the Growth Hubs showed that they were successful in increasing turnover, business R&D, access to finance, and job creation. Growth Hubs have engaged 8% of all businesses in England – higher than the 2.5% ambition set in BEIS reporting. Growth Hubs are proven to work, especially for SMEs and have a strong reputation for reliability and independence among stakeholders, partners, and businesses.

• Government should commit to undertaking an independent review of the impact of tax-free shopping and provide evidence for reinstating the VAT refund for overseas visitors.

Before the next financial year, the government should undertake this independent review, assessing the costs and benefits of reinstating the VAT refund for overseas visitors as a potential way to boost the UK’s international competitiveness and regional growth. 10% of all international visitors that arrive in UK go to the coast and coastal tourism in Great Britain generated £17.1bn in tourism spend and supported 285,000 tourism-related jobs pre-COVID. The tourism sector is vitally important in some communities with tourism-related jobs accounting for over 50% of the employment opportunities in some areas.

Find Out More

The CBI is committed to working with Trade Associations and CBI members to ensure that the needs of rural and coastal businesses are represented within our work. To achieve this we hold regular working groups to identify priorities for those members. If you would like to join one of these working groups or have any questions about our rural and coastal work please contact Nicky Williams, Senior Policy Advisor, UK Competitiveness (domestic and global).