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DEFRA launches £110m rural levelling up fund

Author: ICAEW Insights

Published: 06 Sep 2022

Rural England Prosperity Fund will back projects with the scope to create jobs, raise productivity and boost local economies in the UK countryside.

Multimillion-pound funding to support levelling up and productivity in rural England has been unveiled by the Department for Environment, Food and Rural Affairs (DEFRA).

Announced on 3 September and worth up to £110m, the Rural England Prosperity Fund will be dedicated to projects with the potential to create job opportunities and boost outputs – that includes farming businesses that are aiming to open their own shops, wedding venues and tourism facilities, or schemes designed to upgrade pubs, village halls and other local hubs for community uses.

Investments made under the fund will be tailored to address local priorities, providing capital grants for initiatives such as the conversion of farm buildings to new business uses, new visitor accommodation for the rural tourism industry and the installation of gigabit-capable digital infrastructure at village halls, pubs and post offices for the benefit of local communities.

Other examples of possible beneficiaries of the fund include the development, refurbishment or restoration of nature, cultural and heritage assets, and the creation of new footpaths and cycle paths – particularly in areas of health need – or resources to enable local residents to develop volunteering and social action projects.

Natural materials

News of the funding has emerged following recent concerns over whether the metrics for need outlined in the government’s Levelling Up White Paper adequately address the specific challenges at large in rural communities.

A DEFRA prospectus notes that the new funding pot has been integrated into the UK Shared Prosperity Fund (UKSPF), which aims to support productivity and wealth creation in places that need it the most. In practical terms, this means that, for eligible local authorities, the new fund will serve as a complementary, rural top-up to allocations made under the UKSPF.

As an example of the type of scheme that would be likely to secure backing under the Rural Fund, the prospectus cites a farm-diversification project that received £15,500 under the now-closed LEADER programme in order to construct glamping facilities. 

According to the prospectus, the project capitalised on the growing demand for tourism in natural locations and drummed up new business for local pubs, restaurants and rural tourist attractions. Plus, the accommodation was low impact, using renewable energy and tents made from natural materials.

The Rural Fund will work in parallel with other existing DEFRA schemes, such as the Farming in Protected Landscapes programme, the Farming Investment Fund and the Platinum Jubilee Village Hall Improvement Grant Fund.

In a statement, Secretary of State for Levelling Up Greg Clark MP said the investment in rural businesses will help boost the countryside economy and close the rural productivity gap. “It’s our mission to spread opportunity across the whole of the UK and this funding will help us do just that,” Clark said.

Building resilience

Commenting on the fund’s launch, ICAEW Farming & Rural Business Community Chair Will Nixey said: “As farming profitability comes under mounting pressure from the reduction in direct government support – and the likelihood of increased food imports from outside the EU following recent trade deals – it is vital that farming and rural businesses are encouraged to diversify so their local economies do not suffer.

“This support to help farming businesses throughout the country diversify is very welcome. The ability for all rural areas – no matter how remote – to benefit from significantly better digital infrastructure is key to ensuring those areas do not become uncompetitive locations for businesses to operate in.”

ICAEW Managing Director, Reputation & Influence, Iain Wright said the levelling-up agenda is crucial to addressing regional disparities in productivity and economic activity. “However, it is often characterised in a crude manner of North versus South – or city versus town. A successful levelling-up agenda needs to be more nuanced and take into account local priorities and circumstances.”

In that context, Wright noted: “The announcement of the Rural Fund is a welcome one. The principles by which the fund will be allocated – led by local people through mayoral or local authorities, and prioritising improvements in productivity and connectivity – are sound. 

“Funding to assist rural areas improve their productivity and business resilience is welcome. However, as with any government initiative designed to address long-term structural challenges, such as regional economic disparities, announcements of one-off and relatively small sums of money will not address the fundamental problem.”

Wright believes a longer-term and more substantial commitment to levelling up is essential if this issue is to be properly addressed and the great economic potential of our rural areas, backed by their communities, is realised. “I hope that this announcement – coming in the final days of Boris Johnson’s administration – does not mark the end of any commitment, but that the new government led by Liz Truss will commit to this policy, in terms of proper timescales and significant investment.”

Find out more about ICAEW’s Farming & Rural Business Community here.

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