Businesses in Rural Areas

Sarah Olney Excerpts

Wednesday 18th June 2025 Westminster Hall

[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A significant amount of the income of many businesses goes straight out the door via our outdated businesses rates system.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.