Rural firms to 'lose out on millions' after funding cut

The CLA has questioned the government’s commitment to closing the productivity gap and 'levelling up' rural areas
The CLA has questioned the government’s commitment to closing the productivity gap and 'levelling up' rural areas

Rural firms are set to lose out on hundreds of millions under revised funding plans unveiled in the recent Budget, the Country Land and Business Association has warned.

The CLA, which represents 28,000 rural businesses and farmers, has criticised the government for removing support aimed at levelling up the rural economy.

The group found that spending plans under the UK Shared Prosperity Fund (UKSPF) will lead to a shortfall of £315 million for rural businesses over a seven-year period.

The figure represents the discrepancy in funding assigned to tackling regional economic disparities through the EU’s Structural and Investment Funds (ESIF), versus what will be received under the UKSPF to bolster rural productivity.

But the government's new plans signal a marked shift from previous EU investment models, where rural areas benefitted from a ringfenced fund every year.

Closer inspection of the 2021/2022 Budget shows that there will be no dedicated funding in the UKSPF for rural businesses, as the ESIF rural fund had already been allocated for 2020/2021.

This means rural businesses will be unable to access the grant for the next three years, the CLA warned.

The funding has traditionally helped to fund 40% of the capital expenditure required to diversify farms into high-growth, high-productivity sectors such as tourism, food processing and digital creativity.

With rural areas 18% less productive than the national average and earnings 10% lower, the CLA warned this cut would damage the levelling-up agenda.

The spending cut comes at an already financially testing time for farmers and landowners amid reductions in Basic Payments (BPS).

CLA President Mark Bridgeman explained that rural economy was already 18% less productive than the national average.

"Plans under the UKSPF make a mockery of the government’s promise to level up," Mr Bridgeman said, "This cut is a major backward step.

“When we speak of levelling up, we have a tendency to think of it purely in terms of the north/south divide, but too often there is a lack of opportunity in the countryside that drives people away.

"We want to create businesses, create jobs and prosperity – but we need government support to do it."