Scotland’s Rural Businesses Could Add £1.4 Billion to Economy

Broadband Compensation

Scotland’s rural economy could benefit from access to high speed broadband connections according to a new report from SRUC. Can Community Fibre Partnerships play a part in a £1.4 billion boost to the country’s economy?

Two new reports have highlighted the importance of Scotland’s rural economy and the value it can add to the country, through the provision of high speed broadband services.

In a study published today by Regerenis Consulting, it is estimated that the Community Fibre Partnerships (CFP) programme will be worth a staggering £12.2 million to rural communities over a 15 year period – increasing economic turnover and providing greater broadband services.

In a separate report published today by Scotland’s Rural College (SRUC) and Rural England, it is suggested that a greater adoption of digital tools and an increase in focus toward digital services could generate over £1.4 billion toward Scottish rural businesses.

Community Fibre Partnerships

The Impact of High-Speed Broadband for Communities focused on the economic impact of the CFP initiative on rural businesses, as well as highlighting the social benefits of continued investment in rural fibre.

The report says that its findings “set out a compelling case for continued investment in fibre broadband networks” and calculates that £800,000 could be generated per community.

According to Simon Hooton, Director of Regeneris Consulting, the report shows “the breadth and scale of benefits generated when you bring high speed connectivity into those communities for the first time.”

The CFP enables communities not yet included in nationwide fibre roll-outs to take their own steps toward better broadband services by jointly funding upgrades with Openreach.

A Digital Scotland

Currently, more than 500 communities across the United Kingdom – around 35 of which are in Scotland – are signed up to the Community Fibre Partnership programme.

Rural communities are an integral part of the Scottish Government‘s plans to roll out inclusive high-speed broadband services across the country. The R100 initiative aims to provide every Scottish household access to superfast broadband by 2021, and in December 2017, a £600 million investment was announced for the first phase of the initiative.

For Scottish business, this increased investment is expected to be worth nearly £6 million and could provide the opportunity to join new markets and attract a greater customer base – whilst greatly improving productivity and efficiency in company operations.

Enhanced upload and download speeds, cloud computing technology and even conference calls are all cited as methods by which rural businesses can open themselves up to a broader marketplace while offering customers efficient services.

Additionally, the traditional difficulties that poor broadband services pose to rural business start-ups will be removed due to the presence of superfast service.

Households will also get social and economic benefits worth around £6.2 million. Better access to employment and online healthcare are cited as enormous benefits to rural residents, and as government services become increasingly digitised, greater broadband services will aid residents and prevent a future ‘digital divide’.

Robert Thorburn, Openreach fibre partnership director for Scotland believes increased investment in super-fast broadband services for Scottish communities is critical to future economic prosperity, claiming “this technology is making a major contribution to the future success and prosperity of people across the Scotland.”

He added that although “more than 2.5 million households and businesses now have access to superfast fibre broadband” Openreach recognises there is “still more to do” in building Scotland’s digital future.

Unlocking the Digital Potential of Rural Areas

A separate report, commissioned by Amazon and created by Scotland’s Rural College (SRUC) and Rural England, suggests that a greater adoption of digital tools and an increase in focus toward digital services could generate over £1.4 billion toward Scottish rural businesses.

Greater adoption of digital tools and services by Scotland’s rural businesses could add £1.2-£2.5 billion to Gross Value Added (GVA) in addition to the just over £30 billion GVA which Scotland’s rural economy already contributes in the UK.

The report uses SiteKit, a health technology company based upon the Isle of Skye as an example of a successful rural business. The company is the creator of the eRedbook, a digital version of the personal child health record given to new parents.

Dr Jane Atterton of the Rural Policy Centre at SRUC said:

“Rural Scotland is home to a significant number of businesses operating across all economic sectors. For the vast majority of these businesses, access to reliable, quick broadband is crucial for sustainability and growth. But it’s not just about the infrastructure, we also need to ensure that the right kinds of support are in place to enable rural businesses to make the most of it, whether that’s through easy-to-access, appropriately tailored business support, information and training, or through businesses themselves collaborating and mentoring one another.

“With the right kinds of support, our report suggests that there could be a substantial economic boost, not to mention the positive impact on the sustainability of communities including the most remote rural areas.”

To unlock the billions of pounds additional GVA from greater digital adoption in rural areas, Rural England and SRUC outline a number of recommendations for the public and private sectors, including:

  • Streamlining digital support services – Setting up a single portal for information and local directories giving guidance and support that fulfils the digital needs of rural businesses
  • Digital Enterprise Hubs – Establishing hubs in rural towns which businesses can use or visit for better connectivity, start-up workspace, hot-desk space and training
  • Training and skills development – Local collaboration between employers and education providers, improving retraining opportunities and ensuring short training courses and online tools are more readily available to small business owners for life-long learning
  • Accelerated business adoption of digital connectivity – Encourage businesses using superfast broadband to champion its benefits to their peers locally, offering practical real-life examples of success, and prioritise investment in connectivity and digital tools.
  • Stronger rural targeting by existing policies and strategies – Making support for digital growth a key objective in future rural business support programmes and encourage larger technology-driven firms to implement policies focused on greater digital adoption in rural areas that shares best practice and provides practical hands-on support for smaller companies

Digital Technology & Skills Are Key

Almost four-in-five rural business owners believe digital tools and services are important to their future growth potential. Cloud computing is seen as the biggest driver (67%), closely followed by 5G mobile networks (54%), the Internet of Things (47%) and Machine Learning/Artificial Intelligence (26%).

Rural business owners who export say e-commerce plays a big role, with over 80% using digital tools and services to trade goods and services abroad. 43% of all rural businesses specifically sell online through their own site or via a third party site, with the top two sectors using e-commerce being retail (80%) and the accommodation & food sector (71%).

Beyond reliable and high-speed internet connectivity, 52% of rural business owners say they face some form of skills-related obstacle to adopting digital to unlock more growth, such as recruiting people with appropriate skills and training their existing workforce. Around 30% have difficulty finding external or outsourced digital connectivity support, 14% have difficulty accessing appropriate digital training for the existing workforce and 20% say their existing workforce lacks sufficient skills or they struggle to recruit people with appropriate digital skills.

The full report can be found on the SRUC website.

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