Rural firms 'could double earnings'

Government, insurers and firms must all work together to improve the response to rural problems, the government's rural advocate has concluded.

And, in a report commissioned by Gordon Brown after last summer's flooding and foot and mouth outbreaks, Doctor Stuart Burgess finds that there is "scope for significant improvement" in the rural economy.

Dr Burgess, who chairs the Commission for Rural Communities, found that rural areas host around 30% of England's businesses, which in 2005 collectively earned more than £325 billion. He argues that an equivalent cross-section of businesses distributed throughout the country would have a higher turnover, and that rural communities thus have "further potential for growth".

According to Dr Burgess' report, this growth potential could be as high as £347 billion per year – amounting to more than a doubling of rural firms' current earnings.

"Rural England is witnessing a boom in home working, healthy rates of new business start ups, high levels of entrepreneurship... and the growth of small firms in new business areas," the report says.

But it adds: "There is strong evidence that high levels of rural business aspiration are not being translated into their full potential for growth, whilst high levels of entrepreneurship are not bringing with them commensurate levels of wealth creation."

Announcing the report, Dr Burgess said that it "sets out a package of practical proposals for coordinating government activity to improve areas of support for and development of people and enterprises in the rural business sector in order for [their] potential to be realised".

Among these proposals are finance and innovation initiatives to improve access to investment in rural communities, and "a new compact between government, insurance and rural industries to improve response to shocks caused by disease and bad weather and develop new insurance products".