Businesses in Rural Areas

Wednesday 18th June 2025 Westminster Hall

[Matt Western in the Chair]

14:30

[Matt Western (in the Chair)]

I am pleased to see so many Members here. It is a warm afternoon, so if you wish to remove your jackets, you may do so. I do not necessarily expect a hot debate on this subject; however, a great many of you are expecting to speak, so we will start with a time limit of two minutes—and I am already anticipating that it could be reduced—and you may wish to prepare your speeches accordingly. I remind you all to speak through the Chair.

14:31

[Steff Aquarone (North Norfolk) (LD)]

I beg to move,

That this House has considered Government support for businesses in rural areas.

It is a pleasure to serve under your chairship, Mr Western, and I am delighted to secure this important debate. We need growth. It is a key part of the Government’s agenda and it is a fact agreed across the House: our economy has to get going again. I want to make the simple but firm case that the Government can secure that much-needed growth if they give our rural economy the support it needs.

For hundreds of years, our country was driven primarily by the rural economy. North Norfolk was a vital trading hub, with the Glaven valley becoming highly prosperous as a key component of the wool trade, importing shipments from Europe and benefiting from our ease of access to the Netherlands by sea. While the Glaven ports are no longer economic powerhouses, the rural economy continues to play a major role. Nowadays, about a quarter of businesses are based in rural areas, and they contribute a whopping £240 billion to the economy per year. However, we are acutely affected by the specific challenges that rural economies face.

When people in North Norfolk think about economic growth and success, they do not need to dive head first into the spreadsheets of the Financial Times to decide about business confidence; they take a look at what is happening in their communities. Their economic indicators are not hedge fund billions, but on the high street. They take things such as the expansion of Coffeesmiths in North Walsham as a sign that more people are visiting our rural market towns, and they see from the opening of new businesses in Stalham that the Norfolk broads and their communities retain their unique appeal.

However, people in North Norfolk also see the closure of our local bank branches and think about how small businesses and sole traders will struggle with their business banking. They see our inadequate public transport system and wonder how our businesses can recruit or young people can train outside the immediate area.

[Adrian Ramsay (Waveney Valley) (Green)]

The hon. Member is doing a great job in advocating for rural businesses. I was speaking the other day to the Suffolk chamber of commerce, which highlighted just how critical rural bus services are for people being able to get to work, training and other activities, and therefore how critical they are for our rural economy. Does he agree that we need better funding for rural bus services not only to support the economy, but to tackle social isolation?

[Steff Aquarone]

I agree entirely—if only there was a buses Bill before the House. We are also going to get the Transport Committee’s report on buses connecting rural communities, and I would be interested in his thoughts on that in due course.

Meanwhile, rural residents see the Chancellor and the Business Secretary courting the banks and hedge funds, or flying overseas to seek investment. They know that that is important, but they would like to see similar care and engagement for the businesses that matter to them. The Chancellor is keen to get the ear of BlackRock’s Larry Fink, but what about the insights of Larry’s Pizzeria in Hoveton? Meg and Jamie, the hard-working owners, recently showed me how perilous the situation is for rural businesses like theirs. They have excellent reviews, a busy restaurant and a prime broads location, but the cash still just does not add up. The ever-growing cost of supplies, the broken business rates system and high energy costs mean that it has rarely been tougher for a rural business like theirs.

Business owners, employees, trainees and jobseekers have all shared their insights about how these rural economic challenges are impacting them. Chief among them is attracting, training and retaining the workforce. Although we in North Norfolk are proud to have the oldest population in the country, we are blessed with many eager and talented young people who are keen to cut their teeth in a range of sectors. However, the sad reality is that young people in rural areas are missing out on opportunities and seeing their career paths limited by the difficulty of accessing training, apprenticeships and early career development, which are simply too far away and take too long to reach to be feasible.

A large part of that is down to our public transport struggles. During the debate on the Bus Services (No. 2) Bill, I spoke about a young woman from my constituency who is eager to get an apprenticeship working in childcare, but buses will not get her to the right part of Norwich in time for the 8 am start.

[Brian Mathew (Melksham and Devizes) (LD)]

High streets in market towns such as Melksham, Devizes and Bradford-on-Avon in my constituency suffer from a lack of footfall, which is exacerbated by poor public transport connections. Does my hon. Friend agree that improving bus and train services, as well as providing safe cycle lanes, is crucial for business development?

[Steff Aquarone]

I wholeheartedly agree. It is not just the reduction in social isolation and the improved access to healthcare, but the access to training and development, and the ability of customers to get to places to spend their money in the local economy, that make the case for improvement in public transport such a compelling one.

As I was saying, a large part of this situation is down to our transport struggles. The would-be apprentice in childcare I mentioned cannot get to the right place in Norwich at the right time. Training providers themselves struggle to recruit and retain the necessary staff and professionals to deliver consistent and wide-ranging vocational training offers.

I want to highlight the work of one of my constituents in trying to tackle these training and employment challenges head-on. Mitzi from Mundesley has set up a business that employs young local people to turn empty second homes into affordable rental properties. She currently has three such young people—Jake, Jeremy and Sandor—and they are getting practical skills and training in the construction industry while helping to deliver much-needed affordable homes for people just like them.

Community-centred entrepreneurs like Mitzi are not a rarity in rural areas. People start the businesses that their communities want and need, and they provide just as much, if not more, than they receive. However, rural entrepreneurs such as Mitzi, and business owners and managers across rural areas, also struggle with a lack of networks and experience, which are more easily clustered in urban settings. In the square mile of the City of London, there are 22,000 businesses; in the 360 square miles of North Norfolk, there are 5,000. There is a lack of easy networking, shared expertise and experience, and paths to mentorship and training, which are far more viable in an urban business setting, and yet we have no less ability to develop cutting-edge innovation, global leadership and breakaway sector success.

[Alison Bennett (Mid Sussex) (LD)]

I was very lucky last year, on the day after the general election was called, to celebrate my birthday at Albourne Estate, which is a vineyard that produces exceptional English wine. As those of us in areas such as Sussex look towards devolution, does my hon. Friend agree that it is vital that businesses like Albourne are given support through the incoming mayors, and that those mayors have the powers in areas such as transport, training and skills to deal with the issues that he is outlining?

[Steff Aquarone]

I am grateful to my hon. Friend for her intervention, and I am grateful to that business in her constituency for providing such a great product, which I have sampled. It is mostly breweries in North Norfolk, so I think I will be safe.

I totally agree with my hon. Friend: devolution is a great opportunity. Whatever people feel about devolution, the opportunity that it provides, both in transport and for economic growth leadership, is clear and we must embrace it. Devolution is happening, including in Norfolk and Suffolk, and she has outlined one of the things in favour of it.

Clean Tech East, which is in a business park that straddles my constituency and that of the hon. Member for North West Norfolk (James Wild), is one example of sector-led success, but it is also a great example of the support that is needed from Government, which is slightly different. In particular, we need Government to empower local leaders to take action.

[John Milne (Horsham) (LD)]

It is good news that the rural prosperity fund has been extended for another year, but it has been reduced to £33 million this year. Does my hon. Friend agree that we need a firm, long-term commitment to solving the challenges of rural infrastructure provision?

[Steff Aquarone]

I am relieved that my hon. Friend asked that question, because much as funding is welcome in all forms—I know that many of my constituency businesses and their supporters have applied for funds, received them and been part of schemes—we need long-term settlements, long-term funding and local accountability. We cannot just be queuing up to make our pitches to Whitehall; we must have things decided and delivered on the ground.

The support that is needed in rural areas is different. Rural economic development can be, and must be, more exciting, inventive and far-reaching than just building and leasing business parks. Even where they are useful, local authorities and local leaders have to get to the root causes of rural economic struggles and support businesses to address them.

[Dr Danny Chambers (Winchester) (LD)]

In Winchester we have the fantastic Sparsholt agricultural college, which engages with local businesses and stakeholders to ensure that it trains students in the skills that the local economy will need. A good example is its vineyard management course, which takes advantage of the amazing new vineyards popping up on our amazing chalk soil. Does my hon. Friend agree that we need Government support to ensure that there are accessible courses to give students of all backgrounds the skills to drive our rural economy?

[Steff Aquarone]

I totally agree. We are developing a bit of a wine theme here, but let me return to a subject that Members might have heard Liberal Democrats talk about a lot, which is care. We are proud to have the oldest demographic in the country in North Norfolk. We should not be afraid of the fact that we have a care industry, which we should celebrate and encourage, and in which we should create career paths and provide training opportunities. Workforce development is key to tackling rural economic development.

I am delighted that some innovative, locally led programmes have been delivered by Lib Dem-led North Norfolk district council. Business owners have told me of the positive experiences they have had with the support and training that is available, and many more will benefit from the recently launched Invest North Norfolk hub. Local leaders, however, need to break the mould and provide innovative, far-reaching support and strategy to supercharge every rural economy. The rural economy is far from immune to the general business challenges that many face across the country; in fact, many of those struggles are only made greater by the nature of rural areas. Rural businesses struggle more with access to funding for investment and seed capital, and they struggle more to meet the cost of decarbonisation.

At the same time, in North Norfolk we have seen large community benefit funds from energy giants that host renewable infrastructure in our area, but the restrictions on those funds are incredibly onerous and they eventually run short of projects to fund. There are only so many bus stops in North Norfolk that they can attempt to gold plate. If access to the funds were liberalised, allowing businesses to secure the important support that they need to grow, adapt and improve, they could have a greater and wider-reaching economic impact, and they could support wider aims to secure environmental benefits and benefits for the communities that their infrastructure affects.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I wonder whether I can make the case for real support from the Government for community benefit from renewable energy. It is being proposed at a fairly modest level by the Department for Energy Security and Net Zero, but it is one of the biggest opportunities for rural Britain to transform its economy.

[Steff Aquarone]

We have started the list, so let me reinforce and add my support to that ask. I hope it is something the Minister might be able to discuss with colleagues in DESNZ, to see whether some joined-up thinking might happen.

I have spoken much about challenges and struggles, but I also want to talk about the huge opportunities that our rural businesses could seize on with the right support from the Government. The unique character of our rural areas sets them up perfectly to benefit from some of the most exciting advances in science and research. Norwich research park, which is not in my constituency but is not far away, hosts many of the country’s world-leading research institutes in the field of agriscience, and they are making incredible scientific progress that could make our food and farming healthier, more efficient and more sustainable. Having such research excellence almost on our doorstep is incredibly exciting, and its location within touching distance of many of our farming and agricultural businesses provides opportunities for easy roll-out of a new generation of science. Our farmers could benefit from world-leading research, and our researchers are already benefiting from our world-leading farmers.

[Sir Ashley Fox (Bridgwater) (Con)]

Is the hon. Gentleman concerned that the trade agreement signed with the EU will stymie gene editing and the important research that the United Kingdom is doing in that field? In fact, the treaty will prevent us from rolling out gene-edited crops in the United Kingdom.

[Steff Aquarone]

I am a cautious supporter of the latest developments in food science. I have met the researchers who are leading on the development of that scientific frontier and the safeguards as well. I am concerned about some of the detail. I accept that there is a difficult trade-off with the other demands that farmers make of me, to ensure standardisation for import-export and harmonisation with the European market that they can sell into. However, I welcome the hon. Member’s intervention; it is an important point, well made.

It is not just the deployment of research that can benefit our rural areas; these businesses add an exciting new link to our supply chain. With better connectivity and support for these new, progressive, science-led businesses to source locally, our rural businesses can see a huge boost from encouraging progress in our cutting-edge science and tech sectors.

However, we must not forget the middle of the chain. Still, too much of what is grown and reared in North Norfolk is shipped elsewhere for value adding and processing. With greater support for local leadership, we could create more resilient local supply chains from R&D all the way through to the finished product. That could vastly reduce food miles and improve quality standards and innovation. Additionally, many researchers, scientists and more might choose to come and live in North Norfolk if we had the necessary public transport links to make us a commutable destination. Instead, they are contributing to the overheating of the housing market in our main city.

[Alison Hume (Scarborough and Whitby) (Lab)]

The hon. Gentleman is making an impassioned speech, as is his norm. While tourism is vital for our rural economies, he touched on accommodation, and many businesses in my constituency of Scarborough and Whitby are finding it harder and harder to employ enough staff because of the increase in short-term holiday lets, which is forcing local people to move out. Does he agree that the Government must urgently bring forward registration of short-term holiday lets to avoid our rural areas being overwhelmed, so that employees have somewhere to live and businesses enough people to employ?

[Steff Aquarone]

On balance, I agree—partly to manage the local housing supply and encourage the local tourism economy, but also for reasons of public safety and improved standards. The people I speak to and who approach me are usually the ones whose standards I have no worries about, but there are many out there who probably would benefit from registration. That is the right, balanced approach, so I support what the hon. Lady says.

Going back to buses, with the right public transport infrastructure constituents of mine could commute to the many thousands of jobs emerging in what is fast becoming the global centre of excellence for agritech. Likewise, those bringing their expertise to Norfolk could more fully enjoy the environmental and lifestyle benefits of our county and my constituency, while bringing a new and expanding clientele to our local businesses.

I look forward to hearing from many others about the rural businesses in their areas. I am grateful for the interventions so far and I expect that we will hear of many shared challenges and frustrations, but I am also excited about the opportunities just waiting for the support they need to kick-start them. The rural economy is a sleeping giant waiting to be awoken. Let us do for rural and coastal communities what we did as a country for industrialised towns and cities in the second half of the last century. We just need the Government to grasp the reins and tackle the challenges that we face.

[James Naish (Rushcliffe) (Lab)]

I believe there was a rural White Paper in 1995, followed by a similar one in 2000, but then a 15-year gap until the productivity plan and another eight-year gap until the “Unleashing rural opportunity” paper of 2023, which was 28 pages in total. Does the hon. Gentleman agree that we need a clear, defined rural strategy that ties all those elements together to release the potential of rural Britain?

[Steff Aquarone]

I agree, and I thank the hon. Gentleman for giving me the perfect platform to remind the House of my support for a coastal communities Minister—but that is outside the scope of this particular debate. This issue requires not only strategic vision and leadership from the top, but empowerment and resources on the ground; if another strategy will help that, I support it. The number of papers the hon. Gentleman referred to reminds us all of the cross-party ambition here—we just have to get on and do it, and this feels like a good time to grasp that nettle. We already contribute hundreds of billions to the economy, but there are billions more just waiting to be unlocked all over our country. With real support, vision and strategy, we can transform the rural economy into the powerhouse it has been before and should be in the future.

[Several hon. Members rose—]

[Matt Western (in the Chair)]

It is good to see so many Members bobbing; I remind Members that they should bob throughout if they wish to be called in the debate. I am going to set a two-minute time limit, but we may have to reduce that at some point, given the amount of interventions that have been taken—I am not criticising that but, when speaking, please bear in mind that should you take an intervention you will prevent others from speaking later.

14:49

[Tim Roca (Macclesfield) (Lab)]

It is a pleasure to serve under your chairship, Mr Western. I commend the hon. Member for North Norfolk (Steff Aquarone) for securing this important debate.

Rural businesses are a core part of the economy in places such as Macclesfield, which—as you will know, Mr Western—is a beautiful part of the world, on the western edge of the Peak district. Field, farm and forest bring, in equal measure, community and economic activity. Businesses are vital in rural areas, be they the local pub, the farms that feed us or the businesses that support the tourism industry—a critical part of the economy in my area.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

At the end of the high season for tourists, does the hon. Gentleman agree that we should reduce tourism VAT to lower prices and allow businesses to increase investment, particularly in coastal and rural communities such as those in my constituency? That would boost growth in tourist economies. There is such a system in Italy, France and Spain, and it brings much more money in.

[Tim Roca]

I agree that we should be open-minded about such measures, just as I was open-minded about taking interventions—although that may change.

On that point, I want to celebrate the value of the visitor economy, which has been mentioned. It has risen to more than £1 billion in Cheshire East, which means that 10,000 jobs depend on that sector in my area. Many hon. Members have spoken, and no doubt will speak, eloquently about the challenges facing rural businesses, and I will talk briefly about a couple of those challenges too.

First, Macclesfield residents have great difficulty finding transport, so they are reliant on a car to get around. If they want to go to a local pub such as the Rose and Crown in Wincle or the Swan Inn in Kettleshulme, and they do not have a car, they must depend on bus routes that are unreliable, infrequent or simply not there. I welcome the more than £5.5 million in extra funding from the Government for Cheshire East council to improve local bus services, and I hope that we continue with efforts to improve rural transport connectivity and the road network—for those hon. Members were present for my Westminster Hall debate on roadworks in Cheshire, the B4570 remains closed from Macclesfield through Rainow.

Secondly, digital connectivity is incredibly important. In many parts of my constituency, phone signal is impossible to come by. I looked at Ofcom’s network coverage map prior to this debate, and there is limited data and not much voice access over huge chunks of my constituency. That strongly affects businesses, because we all know that internet access is a critical part of the rural economy. I welcome the schemes that are supporting further roll-outs, but more needs to be done.

Thirdly, I am sure that other hon. Members will talk powerfully about the impact of energy costs on rural businesses, and I am keen to hear more about what the Government are doing to ensure that those costs are reduced. The Country Land and Business Association powerfully said in 2024 that the rural economy was 14% less productive than the national average. If we close that gap, £40 billion extra could be added to England’s gross value added.

Our rural economy is critical, as is investment in it. There is a great opportunity for us, and I look forward to hearing from the Minister about the good work that the Government are doing to support that.

14:52

[Caroline Voaden (South Devon) (LD)]

It is a pleasure to serve under your chairmanship, Mr Western. As we know, rural businesses are the backbone of our communities, but they are being asked to compete with one hand tied behind their back. Across South Devon, local entrepreneurs—farmers, shopkeepers, tradespeople, producers and publicans—are working tirelessly to keep their communities vibrant, providing jobs, supporting local supply chains and bringing people together, but the odds are stacked against them.

One of the most urgent and unacceptable barriers that rural businesses face is poor broadband and mobile phone coverage. In some parts of my constituency, people cannot send an email without it crashing halfway, and taking card payments is a gamble. How can a small rural business compete in a digital economy if it cannot get online? Poor coverage is not just an inconvenience; it is a direct threat to livelihoods.

I will also address the way in which the Government are implementing the extended producer responsibility scheme, which is hitting local hospitality businesses hard. I welcome the Government’s efforts to make manufacturing more sustainable, but that must not come at the cost of adding further financial uncertainty for small businesses that are already under pressure.

The New Inn, a historical pub in the small village of Moreleigh in my constituency, has been informed by the brewery that supplies it that prices will increase by 7p per bottle of beer and cider and up to 21p per bottle of wine. The brewery will not deal with the bottles afterwards, however, so the pub also has to pay for the disposal of the glassware. The proprietor said:

“in effect we are paying twice…The hospitality trade is being unfairly targeted by this government. Trading is becoming increasingly difficult. After our business just surviving Covid—we are still paying the bounce back loan—then being hit with the Employer’s NI hike and now this, I am beginning to wonder if after 14 years it’s really worth it any more.”

These pubs are not major polluters; they are local employers and community hubs. They are vital to the social and economic life of our villages and towns. More than just pubs, they are third spaces and social hubs that are vital to community life. Yet under this scheme they are treated the same as massive supermarket chains. That is unfair, out of touch and economically harmful.

14:59

[Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)]

It is an honour to serve under your chairship, Mr Western. It has taken until 2025, but Barr, a rural south Ayrshire village, is finally able to enjoy a mobile phone signal. I was pleased for the community; I had my photograph taken with residents, and the local papers covered the story. It should have been a non-event—this is 2025, after all—but rural communities are too often left behind when it comes to digital connectivity, which is why it was an important moment for Barr. That is the first of three points that I want to make about businesses in rural communities such as Ayr, Carrick and Cumnock.

My second point is that businesses employ local people, and people buy houses and spend their money in the local community. Sometimes the issue is finding local talent, and that is made more difficult by a skills mismatch. Take green energy: many rural communities are hosting new wind farm projects, but vacancies for local engineers and maintenance staff for wind farms are not always easy to find. I am sure that that is also common in many other areas. We have talent in Ayrshire, but we do not have the right skills. We need to train our young people with the right skillsets for local jobs for the future. I want growth deals, such as the Ayrshire growth deal, to invest in skills for the future, and I made that case to the Scotland Office yesterday.

My final point is about broader infrastructure such as transport. Poor road connectivity and limited public transport options hinder people’s access to work. The A77 in Ayrshire is in desperate need of an upgrade. It is plagued by congestion and shocking road surfaces, which make travel difficult for residents and businesses alike. Last week, the Government announced £15.6 billion for transport in the spending review. The spending review shows that the Government are backing the devolved Administrations. Those funds should be used directly to ensure that Scotland’s transport network is efficient and accessible. I have again written to the Scottish Cabinet Secretary for Transport, Fiona Hyslop, about the state of the A77.

I want to finish on a broader point—

[Matt Western (in the Chair)]

Order. I am afraid you are out of time.

14:59

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to see you in the Chair, Mr Western.

The family farm tax was a hammer blow to our agricultural businesses. We understand that the Government seek to raise money, but there is an alternative on the table: the so-called clawback proposal. I hope that the Minister will update us on that and, if the Government do not think that the clawback proposal would work and raise potentially even more money than the current policy, I hope that he can explain that.

More broadly, the Government have said that they will increase spending on environmental land management schemes, but they are cutting back in other areas. The overall budget for the Department for Environment, Food and Rural Affairs is coming down in real terms. What will that mean for our agricultural businesses?

Beyond specifically rural businesses such as farms, rural constituencies have all manner of other businesses that just happen to be in rural areas. As colleagues have said, those businesses face additional challenges, first among which is connectivity. I hope that the Government will do more on the shared rural network; it is going quite well in Scotland and Wales, but we need more of it in England.

On the transition to VoIP—voice over internet protocol —we need to ensure that businesses have proper power back-up systems in place for power cuts. We need a rapid expansion of banking hubs, because the loss of banking infrastructure is felt particularly in rural areas, where banks are more spread out, and we need full utilisation of the national post office network.

As well as dealing with problems, we must seize opportunities. A couple of colleagues have already mentioned the wine sector, which is a great growth opportunity for rural areas. Much more could also be done on tourism, both inbound and domestic, as well as agritourism. We need to ensure that young people growing up in our constituencies have the same opportunities as others, and that means a particular focus on T-level industrial placements for children from rural areas, as well as ensuring that they can get to work; I would love to see a national version of the wheels to work programme, renting scooters to young people.

14:59

[Terry Jermy (South West Norfolk) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Western. I thank my Norfolk colleague, the hon. Member for North Norfolk (Steff Aquarone), for securing the debate.

One of the real pleasures of being a Member of Parliament is visiting businesses across the constituency. That is something I aim to do regularly in South West Norfolk. I have two questions when I visit: what are your challenges, and what are your opportunities? The responses are nearly always the same: skills and connectivity.

The Heygates flour mill in Downham Market is nearly 200 years old. When I visited, the owners told me that they have to bring over engineers from Turkey, which is a big flour-producing country, to service the machines. They cannot recruit engineers locally, so they bring them in from Turkey at great expense.

On healthcare, 85 million drip bags are produced every year in Thetford in my constituency. Those businesses tell me that they are moving away from having people on production lines and towards automation, so they need trained, skilled individuals to help with technology. They struggle to recruit locally for that critical part of our healthcare system, located in a rural community.

The Wissington sugar beet factory near Downham Market is the largest sugar beet factory in Europe. The owners tell me that they have vibration sensors on the machinery, linked with artificial intelligence, so they can proactively plan maintenance to reduce the number of breakdowns, but they struggle to recruit people with the right skills.

Those are the issues that come up time and again. Hon. Members have already mentioned connectivity, and I would agree that issues with connectivity in the broadest possible sense—mobile phone signals, broadband, trains, buses and road infrastructure—really hold us back in my part of the world. I therefore ask the Minister to comment on skills and connectivity.

15:01

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to serve under your chairship, Mr Western. I thank my hon. Friend the Member for North Norfolk (Steff Aquarone) for securing this important debate and for his excellent speech.

Small rural businesses are the heartbeat of the economy in Glastonbury and Somerton, but many are in crisis. The Government’s increase in employer’s national insurance contributions is an aggressive measure that disproportionately burdens the rural economy. Jacqueline, the owner of two businesses in my constituency, has gone from being in profit to laying off four members of staff. The Liberal Democrats have opposed the rise at every turn, knowing the devastating impact that it will have on rural businesses.

The Chancellor’s choice to introduce permanently lower multipliers for retail, hospitality and leisure properties from 2026 will punish significant rural employers at a time when the Government should be supporting them. The Kings Arms in Charlton Horethorne is a thriving rural pub, but the owners contacted me recently to say that the changes to business rates could cause its closure. Overt Locke, a Somerton hardware store, is also experiencing economic collapse. Indeed, it did close—the previous owners had to sell up—but luckily the new owners, Rob and Louise, have resurrected the business; however, it will be profitable only if business rates relief is sustained at 75%.

The Liberal Democrats would scrap the broken business rates system and replace it with a commercial landowner levy that taxes land value, not productive investment. When rural businesses fail, we lose not just livelihoods but the social and economic fabric of our countryside.

15:02

[Maya Ellis (Ribble Valley) (Lab)]

It is a pleasure to serve under your chairship, Mr Western. I thank the hon. Member for North Norfolk (Steff Aquarone) for securing this brilliant debate.

My constituency is a fantastic mix of urban pockets and vast rural areas, with some incredible businesses, including Butlers Farmhouse Cheeses, James’ Places hotels and Massey Feeds. I have just come from the Countryside Alliance awards in the House of Lords, and the hottest restaurant in the north-west, Eight at Gazegill, has just won the rural enterprise award.

Hon. Members have raised really important issues, including affordable housing, transport and congested country roads, but I want to focus on a particular point that I am concerned about following the spending review last week. My rural constituency in the county of Lancashire and many other areas across the UK are about to lose the last pockets of business support funding.

The areas that remain without a mayoral devolution deal are predominantly rural shire counties, and in the spending review it was confirmed that the shared prosperity fund will end in 2026. It was obviously meant to be a bridging fund to replace the millions of pounds of regional development funding that areas such as Lancashire used to receive from the EU, and it predominantly funded business growth hubs and other business support.

As of next year, all local growth and business support funding will be channelled into mayoral areas. I would be grateful if the Minister could assure us that further plans will be made to continue supporting innovative and high-growth businesses across our non-mayoral areas; otherwise, we are set to miss out on huge opportunities for innovation in the often more community-driven and community-embedded businesses that we value and want to encourage.

I am conscious of time, so I will end by saying that I look forward to the Government building out our strategies to understand rural economies more. I support the calls for a proper strategy. We need to grip the rural opportunity in this country, and that starts with the rural businesses that keep those areas thriving.

15:04

[Richard Foord (Honiton and Sidmouth) (LD)]

It is a pleasure to serve with you in the Chair, Mr Western. In eastern and mid Devon, we have many ordinary medium-sized and small businesses, but they are facing extraordinary barriers, including being held back by a lack of reliable broadband in rural areas. I appreciate that that is not in the Minister’s brief, but I urge him to lobby and talk to his colleagues in the Department for Science, Innovation and Technology to try to get some movement on the issue.

Under the recent spending review, the 99% target for national coverage moved from 2030 to 2032, which was deeply disappointing. According to Ofcom’s “Connected Nations” update in January, only 56% of premises in mid Devon have access to full-fibre broadband, which is way below the national average.

Daniel Lennox lives in Sidbury with his family. He works remotely and he runs a home-based business called Stagely, a digital platform that helps people to discover regional theatre productions. The business sets out to showcase local productions, and it is backed by Innovate UK. It is exactly the kind of enterprise that we want to be encouraging. It is creative, based in the community and part of the future digital economy. However, it cannot run properly, given the lack of a decent internet connection to Daniel’s property, which has been left with a part-copper line that is unreliable, slow and not sufficient for a digital business.

Daniel’s case is far from unique, and while I welcome the Government’s £5 billion investment in Project Gigabit, the delivery is falling behind. We must ensure that rural businesses such as Daniel’s on the edge of villages succeed, and that they do not fail because of unreliable or unavailable broadband.

15:06

[Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)]

It is a privilege to serve under your chairmanship, Mr Western. I start by thanking the hon. Member for North Norfolk (Steff Aquarone) for bringing forward this important debate.

I would like to celebrate the success of Orford General Store, which, just 45 minutes ago in the House of Lords, was highly commended in the Countryside Alliance’s national award category of best village shop. Susan and her team have built an incredible business that supports the local and regional supply chain. It procures from more than 50 local businesses, acts as an important champion of local and regional food producers, and supports the local community. It is, of course, just one example of the many local businesses across Suffolk Coastal that demonstrates the best of our rural businesses.

In Suffolk Coastal, we have 4,210 businesses, of which 4,135 are small or micro businesses. It is those small businesses that make up the lifeblood of business in rural areas. Micro, small and medium-sized businesses truly drive the regional and local economy. They do more than just invest directly and indirectly; their local money employs local people, uses local contractors, sells local produce and celebrates the best of our local offering. They provide local services to our community.

In fact, those businesses are more than just the lifeblood; they are the bones that hold us together and the very organs that make rural life possible. More needs to be done to ensure that we truly understand the challenges that they face.

I am conscious of time, but I am going to provide a shopping list of some of the issues that we would like to be addressed. Digital connectivity has been talked about a lot. We also need investment in our B roads; we have no motorways in the entirety of Suffolk, and B roads are the lifeblood of our areas. Transport, housing, planning restrictions and a cashless society are also challenges for rural businesses. I support the hon. Member in calling on the Government for a rural strategy.

15:08

[Victoria Collins (Harpenden and Berkhamsted) (LD)]

It is a pleasure to serve under your chairmanship, Mr Western. I congratulate my hon. Friend the Member for North Norfolk (Steff Aquarone) on securing this excellent debate. In preparation, I surveyed local businesses to hear from them directly. What came through loud and clear is that rural businesses face the same mounting pressures as many others. As one business in Tring said:

“The cost of business is the highest it has ever been.”

Another told me:

“Currently, there is no incentive for small businesses to employ staff or even start up.”

I grew up helping my mum on the shop floor in a rural market town, so that breaks my heart. Such businesses are the backbone of our community.

Practically all the businesses who responded cited the combined impact of Government Budget measures, from the employment costs faced by Claire in Wheathampstead, who runs 2by2 Holidays, to Tring Martial Arts Academy and DJ’s Play Zone, which are reducing operating hours and workforce, and shelving expansion plans. How does that support the growth of our economy?

Accountants are often the canary in the coal mine when it comes to business health. AngloDutch accountants in Tring confirms that numerous clients, especially in hospitality, are struggling with employer’s national insurance increases alongside rising business rates. There are also the rising costs of day-to-day operations, from energy bills to products, as highlighted by Savage’s and Tabure in Berkhamsted. The cost of living has an impact on customers too. Chantal from Wheathampstead tells me that people simply are not buying like they used to, a concern also raised by businesses such as iQuilt.

As has been mentioned, our rural businesses face additional structural burdens. Connecting people to businesses in person or online is hindered by terrible internet and inadequate transport services. Flamstead, Markyate, Gaddesden and parts of Wheathampstead are in the worst 10% for connectivity nationwide. What is more, under the Conservatives, Hertfordshire saw the biggest cut—56.5%—in vehicle mileage on bus services from 2016 to 2021. I call on the Minister to take action for our rural businesses.

[Matt Western (in the Chair)]

Order. I remind Members to keep an eye on the clock. The time limit is two minutes.

15:11

[Dave Robertson (Lichfield) (Lab)]

It is a pleasure to serve with you in the Chair, Mr Western. I congratulate the hon. Member for North Norfolk (Steff Aquarone) on securing the debate.

In Lichfield, Burntwood and the villages in my part of rural Staffordshire, we have an amazing number of great local businesses—far too many to name in only one minute and 45 seconds. Many businesses are held back by poor connectivity, both broadband and 5G. Although the Government’s investment of £5 billion at the spending review is welcome, we need to crowd in private sector investment to drive the much faster roll-out of broadband and 5G.

There is a potential lever for us to pull on broadband. BT Openreach owns the infrastructure that broadband providers rent—the poles and holes, as it is referred to in the industry. The rental of that infrastructure is charged by the metre, not by address or business, which means that access to it is 20 times more expensive in rural areas. Although I welcome Ofcom’s ongoing review of that charging structure, I hope that the outcome will reduce costs for rural businesses and level the playing field between what is urban and what is not.

There is also work to do on 5G, because the current roll-out is the slowest in the G7. The simple fact is that we need more masts; 5G works better because it is higher frequency and shorter range. Unfortunately, the tower companies that own the masts are driving down rentals for landowners and litigating against them using legislation introduced by the previous Government. Our Government should look at how the market structure operates, and how legislative change could allow a competitive market to bring forward new masts to provide the physical infrastructure to allow that connectivity to happen.

15:12

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is always a pleasure to serve under your chairmanship, Mr Western. I want to make two brief points that have been raised with me in the highlands. First, the gov.uk One website is proving difficult, with customer services support problems. I do not expect the Minister to reply but I would be grateful if that could be passed on to civil servants.

Secondly, on 1 November 1965, the then Labour Government had the wisdom to put in place the Highlands and Islands development board. That was a red letter day because it helped to halt depopulation of the highlands, boosted little businesses and got them off the ground. It was a great body, and many of us in the highlands had cause to be grateful for its work over the years. Today, it exists as Highlands and Islands Enterprise which, I am bound to say, is not what its ancestor once was, notwithstanding its best efforts. The budgets are lower and it is less able to target resources.

Hon. Members know that I have a cordial relationship with the Scottish National party. We have worked together over the years in a friendly and amicable way, and I am saddened that its representatives are not here today to listen to my words. I wish they were, because perhaps they could take the message back to their masters in Edinburgh to say, “Please, look at this problem. It is too bad that this excellent organisation is withering on the vine.”

The Minister would be within his rights to say, “That’s devolved, mate.” But there is something called the Scottish election coming up next year, so I am speaking through the ether, as it were, to the structure of the Scottish Parliament in a year’s time: “Please remember my words, look at Highlands and Islands Enterprise, and think about building it back to what it once was.”

15:14

[Sarah Bool (South Northamptonshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Western. South Northamptonshire is 92% agricultural, forest or semi-natural, so it really is a quintessential rural constituency. It is home to 5,300 businesses, of which 5,200 are small or medium sized. Reports say that almost a quarter of British businesses are in rural constituencies, but they often feel that their voice is not heard. That will certainly not be the case on my watch. I run a series of business breakfasts where I listen to the concerns that they raise, and they all say that they need support to be able to grow. That is across all sectors, from Yummy Grains, just outside of Towcester, which sells granola and free range eggs, all the way up to BPY Plastics in Brackley.

The Government talk about growth, but the policies such as the hikes in employers’ national insurance disproportionately affect small and medium-sized enterprises. Whittlebury Hall, for example, is a huge employer in my constituency and the hike hit it with a bill of nearly £1 million bill overnight. That makes offering new jobs totally unsustainable. The hairdressers and beauty salons in my constituency are scared that they will not be able to continue to offer apprenticeships. Indeed, it is said that by 2027 there will be no new apprenticeship starts.

The 95 pubs in my constituency, such as the White Hart in Hackleton, supply local jobs for local people, but this Government’s policies are really hurting them. As for my farmers—my poor farmers—please do not get me started on them. They do absolutely all that they can. They work relentlessly, but this Government are not giving them the ability to plan correctly. Changes to agricultural property relief, business property relief, the sustainable farming incentive and capital grants, as well as the double-cab pick-up tax and the fertiliser tax all make things unsustainable. They are the backbone of our society. Establishing and running a business is a risk, and we need to give our entrepreneurs some security and some hope for the future. I ask the Government to go back to the drawing board to help back British rural business.

15:17

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I want to make the case for a review of the VAT system. VAT starts at £90,000 and above, and I think that that level should be increased to £250,000. The UK has 3.1 million sole traders. Many of them do not want to grow above £90,000 because they do not think they are in the business of administration, and quite a lot do cash business in March just to get past that. If we lift the limit to £250,000, many of them would employ an apprentice or two. Some might become quite major. We would enable a junior level of people who were not particularly good at school to join the trades sector, in plumbing, for example. This is a fantastic opportunity if we want to take the foot off the neck of micro-businesses and would allow us to grow a worthwhile SME sector.

15:18

[Sir Ashley Fox (Bridgwater) (Con)]

It is a pleasure to serve under your chairmanship, Mr Western. Since the election last year, our rural businesses have been let down by the Labour Government. Their family farm tax has had a grave impact on the rural economy. Constituents talk to me of the enormous worry that that proposal is causing them. It threatens their family businesses with a huge tax bill when the owner of the farm dies. It is causing investment in rural areas to fall as families wonder how they can pay the tax; many will be forced to sell productive land or assets just to pay it. That not only is deeply wrong, but puts our food security at risk. If we combine it with the Chancellor’s jobs tax, the Government seem to be designing a system to cause as much damage as possible to family-run businesses in rural areas.

New taxes are not the only issue causing harm to businesses. Look at the disastrous scrapping of the sustainable farming incentive scheme earlier this year. The SFI was one of the main sources of Government support available to farmers, but it was closed to new applications with no warning whatsoever in a move the National Farmers Union described as “crushing”.

Digital infrastructure is critical to supporting the rural economy. Across Somerset, the Government have scaled back plans to install gigabit-capable broadband. In my constituency of Bridgwater, average speeds are already far below the national average, and now 1,450 properties have been descoped and are not included in the new deal. In the spending review, the target for Project Gigabit has been pushed back from 2030 to 2032. Minister, how can we close the productivity gap between urban and rural areas when digital infrastructure is not a priority for the Government?

15:20

[Gideon Amos (Taunton and Wellington) (LD)]

I congratulate my hon. Friend the Member for North Norfolk (Steff Aquarone) on the welcome focus on our vital rural businesses. When we talk about rural business, we are talking about the lifeblood of our countryside. In Taunton and Wellington, and across Somerset, businesses are not just economic units but the backbone of our communities. Family farms are not taxation units for inheritance purposes; they put food on our tables. The Government should think hard about their family farm tax, and should do so urgently.

Rural entrepreneurs face rising costs across the board, unreliable infrastructure and a postcode lottery in support. Constituents in villages such as West Hatch, Staple Fitzpaine and West Buckland, as well as those around Wellington, simply cannot get reliable broadband or mobile signals. Transport is another key concern, which is why the Liberal Democrats proposed an amendment to the Planning and Infrastructure Bill that would have provided compensation for rural firms, such as Apple Campers, Western Recovery Services and TLC, that are losing business due to the closure of junction 26 on the M5 for three whole months under National Highways requirements.

Public transport is also essential. It is about connecting the parts of our UK economy to make a stronger whole. Banking and postal access are also vital to our rural businesses. Although I welcome the introduction of the banking hub model in Wellington, as I know the Minister does, it is somewhat bizarre for residents to see, in a town that has no post office, a building with the Post Office logo above the door and window that is not a post office and does not provide post office services. That craziness is straight out of “Yes, Minister” and needs to change urgently.

Rural businesses do not ask for special favours. All they ask for is fairness and for a level playing field for infrastructure, support and services.

[Matt Western (in the Chair)]

I call Llinos Medi.

15:22

[Llinos Medi (Ynys Môn) (PC)]

Diolch, Cadeirydd—it is a pleasure to serve under your chairmanship. SMEs employ nearly 750,000 people in Wales, with a combined annual turnover of over £50 billion. There are more rural businesses in Wales, at 46.2%, than in the UK as a whole, at 31.9%. Supporting rural businesses is therefore especially important for the Welsh economy.

The spending review announced an increase in R&D funding to benefit businesses. However, Wales makes up 5% of the UK population and yet received just 2% of the R&D spend. We need a fair R&D funding policy to ensure that Wales’s proportion reflects its population share. The Federation of Small Businesses in Wales is calling on the UK Government to set a target that half of all direct Government business enterprise expenditure on R&D funding should be directed to SMEs.

The spending review also announced billions of pounds for improving transport connectivity in English regions, such as Manchester. However, there was nothing for rural Wales. Poor transport links in rural areas are a drain on businesses’ time, and it limits their ability to grow. Ynys Môn also has some of the worst digital connectivity in the UK, with 35% of the constituency receiving gigabit broadband, compared with 78% of the UK on average. Business needs both physical and digital infrastructure to flourish.

There are changes that the Government could make now to support specific industries. An example is food and drink. I declare that I am the chair of the all-party parliamentary group on hospitality, events, major food and drink businesses in Wales. In Scotland, the Scottish Government have introduced a guest beer agreement as part of the Scottish pubs code. This could benefit Bragdy Mona and Bragdy Cybi breweries in my constituency. The pub code is currently under review, so I ask the Minister whether the Government will look at the merits of including a guest beer agreement in the pubs code, as has been done in Scotland.

The Government must use their industrial strategy to prioritise rural businesses, which are the backbone of our rural communities.

15:24

[Adam Dance (Yeovil) (LD)]

There are over 3,400 fantastic businesses in Yeovil that provide amazing services for our communities, from big employers such as Screwfix and Leonardo to local businesses such as Ben Russell’s hairdressers or the Somerset Cheesecakery in Ilminster. Thanks to terrible Government Budgets, unfair trade deals and soaring energy prices, many businesses in Yeovil do not feel supported by central Government. This Government can change that.

I am sorry if this sounds like a list of local demands but, well, it basically is. The Government changes to national insurance are an unfair jobs tax. Let us get rid of that, and instead, reverse Conservative tax cuts for big banks, increase the digital services tax to 6% on social media giants and raise the remote gambling duty for online gambling companies.

Next is our family farms. Farmers deserve some actual support, because in Yeovil they have lost trust in this Government. To start, the family farm tax has to go, or at least be delayed until April ’27 as the Environment, Food and Rural Affairs Committee suggests. We also need to strengthen the grocery code so it has some actual teeth to support farmers.

Finally, our high street businesses need banking hubs. I was happy to have secured a banking hub for Crewkerne, but, despite having the same needs, Chard and Ilminster were denied one because they had cash machines. They are not alone. Will the Government expand the criteria for approving banking hubs and commit to rolling out a few more than 350 banking hubs?

I could go on about funding for vital bus services, such as the No. 11 bus in Yeovil, and the need for better broadband, greater investment in apprenticeships, greater defence spending to support jobs in Yeovil and so on, but time is short, so I will just say that I hope the Government take on board my asks and those from hon. Members today, because then we might finally start to get a Government who help rural businesses thrive rather than getting in the way.

[Matt Western (in the Chair)]

Last, but certainly not least, I call Jim Shannon.

15:26

[Jim Shannon (Strangford) (DUP)]

The book is very clear, Mr Western:

“the last shall be first, the first shall be last”.

Today I am the last; the next day I will be the first. I thank the hon. Member for North Norfolk (Steff Aquarone) for setting the scene so well. I want to give a Northern Ireland perspective—I know that is not the Minister’s responsibility, but I always sew it into debates, and I have one question for him at the end.

As the MP for Strangford, a wonderful mixed rural and urban area, I have the ability to see success in both areas, which I am thankful for. Although there is no doubt that business is more difficult to carry out logistically in rural areas, I believe there is greater potential—it is massive. Rural businesses in Northern Ireland are a vital part of the economy, with 58% of all businesses located in rural areas, although they only account for a smaller percentage of the total employment—21%—and a turnover of 25%. However, they are still critical for the area. The businesses are heavily concentrated in sectors such as agriculture, forestry, fishing and construction.

Support for rural business is available through various initiatives, such as the rural business investment scheme and the rural business development grant scheme. They are administered by the local Ards and North Down council, but the money comes from the Department of Agriculture, Environment and Rural Affairs and the tackling rural poverty and social isolation framework. I commend my honourable friend and colleague Councillor Alderman Robert Adair.

The development grants are between £500 and almost £5,000, and are available to micro-enterprises based in rural areas to support sustainability and growth. Over the last short time, £100,000 has been allocated to 32 rural businesses in my area. The scheme is oversubscribed. It was an annual scheme, but there is a question mark over what will happen in the future. I highlight that to the Minister—it is not his responsibility, but he is an hon. Gentleman, a good Minister and he does good for us all. Will he engage with the relevant Minister at the Northern Ireland Assembly to ensure that we continue to have the business growth that is available in my constituency of Strangford and across all of Ards and North Down?

15:28

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Mr Western. I thank my hon. Friend the Member for North Norfolk (Steff Aquarone) for securing this debate and his excellent opening speech, which touched on Liberal Democrat enthusiasms such as buses and microbreweries, but also his characteristic interest and enthusiasm for the opportunities created by science and tech in rural areas as much as across the rest of the country. Small businesses have had a tough time for years. I thank my hon. Friend for his eloquent speech, particularly outlining the challenges that businesses in his constituency face and touching on the broader challenges facing rural businesses in all corners of the country.

When I speak to businesses, their owners repeatedly tell me that their bills are too high, and that causes them to question their future, as they see their neighbouring shops and businesses close down. As we have seen, soaring energy costs over the past few years and costs related to transport, energy and supply chains can disadvantage rural businesses, and many of the Government relief schemes that exist do not sufficiently account for unique rural pressures.

Nowhere is that clearer than in the changes to national insurance contributions announced by this Government. The changes are an unfair jobs tax that will hit small businesses, social care providers and GPs. The NICs changes present an additional challenge to businesses already struggling with rising energy prices, interest rates and input costs. These businesses were hammered by the previous Conservative Government, who broke their promise to reform business rates, and instead trapped businesses under mountains of red tape, stopping them trading internationally. Making things even harder for small businesses and their workers will not grow the economy. Raising the employment allowance will shield only the very smallest employers, but thousands of small businesses will be seriously affected.

A significant amount of the income of many businesses goes straight out the door via our outdated businesses rates system. Business rates are harmful for the economy, because they directly tax capital investment in structures and equipment, rather than taxing profits or the fixed stock of land. I am sure the Government would agree with that assessment, given their pre-election promise to overhaul our business rates system. Nearly a year into this Government’s time in power, however, and this commitment seems to have been forgotten. Meanwhile, businesses across the UK are continuing to struggle with a system that is unfit for a modern economy. The Liberal Democrats are committed to replacing business rates in England with a commercial landowner levy based solely on the land value of commercial sites, rather than their entire capital value, thereby stimulating investment and shifting the burden of taxation from tenants to landowners. I urge the Government to consider this change.

The decline of high street services in rural areas has been an ongoing issue in the UK, with banks, post offices and other essential services disappearing at an increasing rate. This has significant consequences for residents, particularly older people, those without digital access and small businesses—not least the confusion it appears to be causing in Wellington. In the past three years, nearly 2,000 banks have closed across the UK, including hundreds of rural branches, due to declining in-person transactions and the rise of online banking. Many villages and small towns now lack a single bank, forcing residents to travel long distances for financial services.

The challenges are often compounded by limited broadband or access to the internet, leading to swathes of people in rural communities being excluded from online services and digital banking. The Liberal Democrats are concerned about the inequality of provision as the 5G network is rolled out, and we believe it is wrong that people should be disadvantaged simply because of where they live. I urge the Government to prioritise major investment in broadband for underserved communities. Alternative solutions such as banking hubs are being developed, but there are not enough of them, and the Government should be facilitating more to ensure that people across the country can access vital services when they need them, and prevent the digital exclusion of people in rural areas.

As high street services close, rural public transport has also been cut, making it even harder for residents to reach alternative services.

[Jess Brown-Fuller (Chichester) (LD)]

Does my hon. Friend recognise that rural communities always seem to carry the burden of losing out on everything? They have the businesses struggling to get people through the door, they lose their public transport and they lose their health provision. I am seeing that in my constituency, where a rural village is losing its GP surgery, but there is no bus to take people to the proposed GP surgery in the nearby town. We need to support our rural businesses because they are the backbone of these rural communities, and they are keeping these rural communities alive.

[Sarah Olney]

My hon. Friend is absolutely right. There is always the danger that we get into a vicious circle of declining transport provision leading to declining demand for services, which then lose viability and are withdrawn. The point about investment in public transport that my hon. Friend the Member for North Norfolk made so eloquently at the start of this debate would go a long way to managing some of those issues.

Bus route reductions leave some villages with little to no public transport, which worsens isolation. Bus services are the backbone of economic activity in communities across our country, but they are particularly crucial in rural areas, where accessible local amenities and services are greater distances apart.

[Caroline Voaden]

In fact, in the spending review, the whole of rural England was given a seventh of the money for transport plans that was given to urban areas. Does my hon. Friend agree that that is not sufficient to sustain and improve the rural bus transport network as much as we need?

[Sarah Olney]

My hon. Friend is absolutely right. The way that some of the infrastructure and transport investment moneys have been distributed in the recent spending review has raised some eyebrows. Investing in rural bus services would certainly boost our struggling town centres and high streets, which would lead to economic growth.

The increase in the fare cap to £3 is a bus tax that will hit working people, rural communities and people on low incomes the most. Although the Government have made their red lines on taxation clear, a 50% increase to the bus cap is just taxation by other means. The Government have been left to make difficult choices, but they cannot allow the burden of fixing the Conservatives’ mess to fall on working people and small businesses. Neither Labour nor the Conservatives before seems to understand that for rural communities, having a reliable bus service is critical to enable daily tasks and commutes to be completed. I was also reflecting on the point made by my hon. Friend the Member for North Norfolk about the impact of a lack of suitable transport infrastructure on training and the workforce.

Last week, the Liberal Democrats welcomed many of the Government’s public infrastructure and public transport investment announcements. However, we are concerned by the lack of provision allocated to rural bus services. Many communities without combined authority mayors—from Cumbria to Cornwall, and Norfolk to Newton Abbot—seem to have been left without new support for their transport networks. The Liberal Democrats continue to call on the Government to make sure that these areas see the investment that they so desperately need.

As the Government start implementing the new public infrastructure announcements, they must put the construction sector on a sustainable footing by introducing, in tandem, an industrial strategy to actually implement the projects. The general secretary of the Prospect trade union warned that the UK lacks the skilled workers required for new defence and nuclear infrastructure projects. Similarly, Make UK and the Federation of Small Businesses have highlighted a shortage of skilled works as a critical stumbling block for growth. Workforce shortages often disproportionately affect rural areas, with limited local training opportunities and housing affordability issues exacerbating the problem, making it harder for businesses to expand.

As we await the much-anticipated industrial strategy, I ask the Minister to ensure that it will include a strategic framework to effectively address the needs of businesses in rural areas, by collaborating with local, regional and devolved authorities in England, Scotland, Wales and Northern Ireland to establish how the strategy will support and facilitate industrial regeneration and innovation across all UK nations and regions. My Liberal Democrat colleagues and I look forward to scrutinising the details of the proposals as they are brought forward.

Businesses and rural areas of the UK face a distinct set of challenges compared with their urban counterparts. Although Government support exists through various grants, loans and initiatives, several issues, including infrastructure challenges, the phasing out of EU funding and higher costs related to transport, energy and supply chains, can disadvantage rural businesses more severely. I thank my hon. Friend the Member for North Norfolk for securing this debate, and I look forward to hearing from the Minister about the steps the Government are taking to ensure that businesses in rural areas receive the additional support they so desperately need.

15:37

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Western. I congratulate the hon. Member for North Norfolk (Steff Aquarone). We have had many great contributions from across the Chamber. Given the number, I will not seek to name all the Members who spoke; I will just pick three at random who I thought were particularly good: my hon. Friend the Member for South Northamptonshire (Sarah Bool), my right hon. Friend the Member for East Hampshire (Damian Hinds) and my hon. Friend the Member for Bridgwater (Sir Ashley Fox).

It is a privilege to speak on a subject that is close to the hearts and livelihoods of so many of my own constituents in my rural constituency of Mid Buckinghamshire. I pay tribute to the immense contribution that rural businesses make to the United Kingdom. Whether they be in farming, tourism, food production, forestry, hospitality or manufacturing, or our rural innovators, these enterprises are not simply economic units; they are custodians of heritage, engines of local employment and lifelines for communities that could otherwise be left behind.

Some of the challenges have been picked up through the course of the debate. We will start with communications. It was a Conservative Government who introduced the shared rural network in 2020, which was a £1 billion joint programme, at that point, with mobile operators to attempt to eliminate the so-called notspots in rural coverage. Many of those spots were found in my constituency and some still are, such in as the village of Cuddington. The initiative is transforming how farmers, tourism operators and remote workers do business, but it is clear from the debate, and indeed my own experience, that there is still some way to go. As others have said, if we cannot solve the communications challenges in the digital age, that will hold everyone back.

A thriving rural economy also depends on a fair tax system, which is why successive Conservative Chancellors took steps to freeze fuel duty—a vital measure for those who live miles from the nearest market, school or supplier. It is why we increased the VAT threshold for small businesses and championed business rates relief for village shops and pubs, demonstrating their community value as well as their commercial one. We also froze alcohol duty, offering a crucial boost to rural pubs, breweries, cider producers and vineyards, which are often vital employers and social hubs in rural areas. These measures reflect a Conservative belief in letting enterprise breathe, rather than smothering it under tax and bureaucracy.

We also need to combat rural crime far more harshly—another area in which I speak with some experience from this place. What began as my private Member’s Bill grew into the Equipment Theft (Prevention) Act 2023. Once the Government finally introduce the secondary legislation required for it, it will protect farming businesses from agricultural machinery thefts.

[Suella Braverman (Fareham and Waterlooville) (Con)]

On that point, I recollect a visit I made in 2023 to one of the fantastic farms in my hon. Friend’s constituency. I pay tribute to his doughty and indefatigable campaigning to create that new offence, which protects farmers from rural theft and is an important change to the law.

Does my hon. Friend agree that illegal encampments are also blighting our rural communities? In Denmead and parts of Southwick and Fareham, we have had real challenges with illegal encampments. The last Conservative Administration introduced more police powers to move on some of the groups that cause a nuisance, destruction and intimidation, and sometimes engage in illegal activity. Of course, we respect the rights of minorities, but does he agree that a lot more awareness needs to be raised among the police and communities so that we can combat the scourge of illegal encampments more successfully?

[Greg Smith]

I remember my right hon. Friend visiting the farm. It was in my constituency at the time, but the boundary changes actually took it away from me. Preventing the theft of machinery from not just farms but all rural businesses, which suffer so badly when equipment theft takes place, is a critical measure that we have to get right.

I take the important point that my right hon. Friend makes around illegal encampments. Any illegal development needs to be clamped down on in whatever form it takes. I pay tribute to Thames Valley police’s rural crime taskforce for some of its work on that. It would be good if the Minister could work with Home Office colleagues to extend that work across the whole country, and push the Minister for Policing, the right hon. Member for Kingston upon Hull North and Cottingham (Dame Diana Johnson), to introduce the statutory instruments that would bring the Equipment Theft (Prevention) Act into full force.

Let us turn to the direction of travel on rural business under this Government, which gives me real concern. First, as others have mentioned, the increase in national insurance contributions and changes to the NICs thresholds place a disproportionate burden on rural employers, many of whom already operate on the tightest of margins. For a rural farm employing five seasonal workers, or a family-run dairy business with a handful of long-serving staff, these extra costs are not abstract; they are the difference between hiring and firing.

The sharp rise in the national living wage is hitting rural sectors, with seasonal and low-margin employment—especially farming, food processing and rural tourism—hit particularly hard. These sectors do not have the luxury of passing on costs to consumers in the same way that some of the big urban retail or tech companies do. They face fixed contracts and price pressures from supermarkets, and this change risks hollowing out jobs that were previously viable.

Compounding that is the change to business property relief, which will strip tax protections from many family-run rural enterprises such as holiday accommodation and equestrian centres, undermining succession planning and deterring future investment in those rural businesses. Labour has targeted the very dynamism that it claims to support.

Labour’s Planning and Infrastructure Bill poses a serious threat to rural enterprise. By relaxing environmental safeguards and expanding compulsory purchase powers—removing hope value protections from prime farmland—the Bill risks allowing developers and central authorities to override local rural businesses and agricultural land. The removal of green belt-like protections from the mythical grey belt areas also paves the way for large-scale development in what were previously safe rural areas. Rural entrepreneurs now face heightened uncertainty over their long-term investments and succession plans. Farmers, holiday let providers and small rural manufacturers alike may wake up to find their economic foundations undermined by top-down planning interventions.

The Employment Rights Bill threatens significant administrative, legal and recruitment costs for rural businesses, which are estimated at up to £5 billion across the economy and are disproportionately heavier for small rural businesses, jeopardising their ability to hire flexibly or offer seasonal work.

But perhaps the most damaging of all is Labour’s recent change to agricultural property relief: the family farm tax. This is not simply a tweak to inheritance policy; it is a direct assault on the ability of farming families to pass on their land and their livelihoods from one generation to the next. An estimated 40,000 farming jobs will be lost under Labour’s plans to force all farmers to stop farming on up to 20% of their land.

The Government’s estimate of 27% of farms being impacted is based on outdated APR claims data from 2021-22 that does not reflect rising land values or the full economic picture of commercial family farms. Nearly 40% of farms rely on a combination of APR and BPR to mitigate inheritance tax liabilities. The £1 million threshold applies to both combined, making it far more restrictive than the Government’s modelling suggests. In my constituency, this is already causing disinvestment. I have spoken with farmers who are now deferring expansion, shelving plans for tourism ventures and, in some cases, considering breaking up long-held estates that have supported jobs and communities for generations.

Farm shops have, after years of successful trading, made the difficult decision to close. On rural high streets, costs have risen 15%. At Rumsey’s Handmade Chocolates in Wendover in my constituency, this is already leading to job losses and reduced hours for the staff they have been able to retain. The Pink and Lily pub in Lacey Green shut in February, just seven years after it first opened.

Rural Britain does not ask for favours, but it does demand fairness. It wants policies that reflect the unique challenges of doing business across distances, in smaller labour markets and with greater exposure to the weather, the global economy and regulatory interference. That is why the Opposition will continue to champion low tax, light-touch regulation and a level playing field for rural enterprise. The future of the rural economy cannot be sustained on sentiment alone; it must be underpinned by policy that understands the realities of rural life. On that test, thus far, Labour is failing.

[Matt Western (in the Chair)]

Before I call the Minister, I gently remind him to allow a couple of minutes for the mover of the motion at the end.

15:48

[The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)]

It is genuinely a pleasure to serve under your chairmanship, Mr Western—thank you for your reminder of the etiquette at the end of the debate—and to respond to what has been an extremely important debate on supporting the many remarkable rural businesses across the country. In the usual way, I take this opportunity to thank the hon. Member for North Norfolk (Steff Aquarone) for securing this debate, and for what I understand is a long-standing interest in this vital issue for our rural community.

If there were any doubt about the importance of the rural economy, the sheer numbers of hon. Members who have contributed to this debate have surely put that to bed. I say gently to the Opposition spokesperson, the hon. Member for Mid Buckinghamshire (Greg Smith), that I heard some impressive speeches from Members on this side of the House, but I none the less recognise the significance of the contributions from those on the other side. Such was the range, I fear that I will not be able to do justice to all the different points that were made. I recognise that one or two contributions were as much about getting me to deliver messages to other parts of Government as they were about my own Department.

Rural businesses are without doubt the lifeblood of our countryside. More than half a million businesses are registered in rural areas, contributing over £315 billion a year to the economy in England alone. The diversity of the rural economy is striking: 86% of rural businesses span sectors beyond just agriculture, forestry and fishing. The Government fully recognise the immense potential for growth in our rural areas. That is why we are committed to creating the right conditions to allow rural enterprises of all kinds to thrive and succeed.

First, we are taking steps to improve rural infrastructure —the keys to unlocking that growth potential. The hon. Member for North Norfolk waxed lyrical about the significance of rural bus services, which I absolutely accept. He will be only too aware of the significance of the decisions, to which I think he alluded, that the Bus Services (No. 2) Bill will bring into force. It will put decision making about what bus routes should be provided into the hands of local leaders across England, including in rural areas. That will allow local communities to determine for themselves how best to design their bus services, so that they genuinely have control over routes and schedules, helping both local communities and—crucially, in the context of this debate—rural businesses.

[Joe Morris (Hexham) (Lab)]

On transport, it is not just buses but road infrastructure that is important for our communities and businesses, whether that is the Lord Crewe Arms in Blanchland, in the south of my constituency, or Falconry Days in Simonburn, in the north. Filling potholes is important to ensure that we can get to appointments and to businesses, but the lack of advertisements from councils on when they are conducting roadworks impacts tourism businesses. Does the Minister agree that Northumberland county council could do a far better job of communicating with small businesses about when it is repairing roads, so that tourism bookings do not drop off?

[Gareth Thomas]

I am disappointed to hear that my hon. Friend’s local county council is not liaising about roadworks more effectively with small businesses in the rural areas that he represents, and I hope that it will hear his intervention and take action. He is right that we need to ensure that we are investing not just in buses—I will come back to that point—but more generally in the roads that serve rural and urban areas. We have committed more than £2.3 billion for local transport links in smaller towns and villages, which I hope will make a real difference in all the communities where hon. Members have expressed concerns about the quality of bus services.

A key theme that has surfaced in this debate—certainly a lot of Government Members were keen to stress it—is digital connectivity. I hope that the fact that the Government are investing over £1.9 billion in broadband and 4G connectivity will help to give confidence across rural and urban communities that the crucial issue of digital connectivity is being taken forward in a way that supports residents and small businesses. Good digital and transport connections are essential for rural businesses to access markets, suppliers and talent.

As well as taking steps to improve rural infrastructure, we are backing rural entrepreneurs and businesses with finance and advice. The British Business Bank has supported more than 200,000 businesses, in every constituency of the UK, to grow over the past decade. Its regional funds provide vital debt and equity finance to firms outside London and the south-east.

Meanwhile, our nationwide network of growth hubs offers free, impartial guidance to rural enterprises on everything from start-up to scale-up. I hope that the business growth service, which my right hon. Friend the Secretary of State for Business and Trade has announced, and which we will say more about shortly, will also help to make a significant difference to rural businesses in terms of the quality of advice that they can access.

[Mr Angus MacDonald]

Will the Minister acknowledge the disparity in energy price between rural areas and urban areas? Businesses in urban areas can access mains gas and pay 6p per kilowatt for their energy, whereas businesses in rural areas pay 24p per kilowatt for their energy. What a disadvantage that is for rural areas.

[Gareth Thomas]

The hon. Gentleman underlines the need for significant investment in green energy. Other hon. Members referred to the need to support renewable energy, particularly community renewable energy schemes, as part of the solution to issues around rural prosperity and to tackle the energy challenges that we are all familiar with.

We are investing directly in rural areas through schemes such as the rural England prosperity fund, which is worth £33 million this year. That funding will provide capital grants for new business facilities for product development and community infrastructure improvements that benefit local economies.

We are committed to sustaining vital services and amenities in rural areas. Our £2.7 billion a year for sustainable farming ensures continued investment in environmental land management and nature recovery, underpinning the agriculture sector. We are also working to enhance access to banking, particularly in rural areas, including through the roll-out of banking hubs across the UK by the end of this Parliament.

Rural businesses can also look forward to benefiting from measures such as reforms to the apprenticeship levy, helping them to invest in skills—a key concern that was raised in this debate. I know that rural businesses, as well as businesses in urban areas, are really concerned about that.

We also heard a couple of contributions from hon. Members about the significance of post offices in their communities. Again, I recognise the critical role that post offices play in rural communities, and indeed, the potential for the Post Office to do more. As some hon. Members will know, we are bringing forward a Green Paper on the future of the Post Office shortly, which I hope will give further confidence about the potential for the Post Office to do more in rural areas, as well as more generally.

[Jamie Stone]

Will the Minister give way?

[Gareth Thomas]

I will for the last time.

[Jamie Stone]

The Minister may or may not know, although I thank him for it, that a banking hub will shortly open in Wick, in the extreme far north of the United Kingdom. I would be grateful if he could ask his civil servants to come up and take a look at it once it is up and running, because there might be something to learn from it as to how other very remote parts of the UK can be serviced.

[Gareth Thomas]

I thought the hon. Gentleman was going to invite me to come to Wick, but I will certainly pass on the invitation to my officials. We are keen to learn from the experience of the banking hubs that have worked, that are up and running, and that are now seen as being effective. There is more that the Post Office can do to provide more of the services that banking hubs provide, and we are keen to work with the financial services industry to make sure that that happens.

Hon. Members asked a series of questions about tax and I suspect that we will come back to those issues in a number of forms. I just say gently to the Opposition spokesperson that we inherited a very difficult financial situation—a £22 billion black hole. If we are to provide, as we rightly should, the schools, teachers, hospitals and police forces in rural communities, difficult decisions had to be made about the finances going forward.

Lastly, we also want to make sure that we are opening up new markets for businesses in rural communities to access, which is why the trade deals that we have agreed with the United States, India and—crucially, too—the European Union are so significant. I welcome the opportunity to discuss the importance of rural businesses to growth across the UK. We know that there is more to do in this space and we are determined to do it.

15:59

[Steff Aquarone]

I just reflect on the fact that this debate, far from being a game of constituency bingo, has seen hon. Members from across the House bring forward genuinely new issues and new ideas, for which I am deeply grateful.

I will end on a reminder of the importance of skills and the trade strategy. Just this morning, we were talking in the Transport Committee about the impact of boom and bust on rail infrastructure. We must get the offering right for our young people so that they can better enter training in rural areas.

Question put and agreed to.

Resolved,

That this House has considered Government support for businesses in rural areas.