IES examines take-up of business support by rural employers

Newsletter articles

1 Feb 2014

Employment Studies Issue 19

Jim Hillage, Director of Research

The profile of rural employment differs from that in urban areas in some significant respects. Rural businesses tend to be smaller, employ different kinds of staff and are more likely to operate in different parts of the economy to urban businesses. It is these differences, rather than operating in a rural locality itself, which largely explain variations in the take-up of business support services, access to training and response to skill shortages between rural and urban businesses, according to new research by IES for the UK government’s Department for the Environment, Food and Rural Affairs (Defra).[1]

What’s the issue?

In 2012 the government published its Rural Statement, which said that it would ‘ensure that all government policies designed to promote business and support economic growth benefit rural communities’. As part of that commitment the government said it would ‘research the degree to which rural businesses are accessing national employer skills programmes and government business support programmes and identify options for improving take-up if evidence shows that rural businesses are not accessing programmes that might benefit them’.

In 2013 IES, supported by the Countryside and Community Research Institute (CCRI), was commissioned by Defra, working in conjunction with the Department for Business Innovation and Skills (BIS), to examine and assess the take-up by rural businesses of government business and skills support programmes. The study took place between January and June 2013 and included: a review of available literature; re-analysis of existing surveys (mainly the Small Business Survey and the UK Employer Perspectives Survey) and administrative data; and interviews with policy makers, interest groups and rural- and urbanbased employers.

There is some variation in the take-up of business support between urban and rural businesses...

The take-up or use of mainstream employer skills programmes and government business support programmes among rural employers is generally low but this is not driven by rural location and is broadly similar to that among urban businesses. Reasons for the low take-up include: lack of awareness; a perceived lack of need; a distrust of support provided by government; a lack of time or money; and failed earlier attempts to gain support. In our detailed analysis of the survey data we did find some variations in the extent of awareness and involvement in government support programmes by location. So, for example, compared with urban businesses, rural businesses are:

• more likely to be aware of and to have sought help from the government’s business support services (Business Link)
• more likely to have contacted professional bodies, local authorities and learning providers (universities, colleges and private trainers)
• just as likely to have tried to access financial support (from any source) but more successful in actually obtaining the amount of financial support being sought
• slightly more likely to offer externallyprovided training to their staff
• less likely to be accredited as Investors in People, although urban and rural business are equally aware of the existence of the standard
• less likely to be aware of labour market programmes such as the Work Programme.

There are also indications that rural businesses are more likely than urban businesses to need some forms of business support. For example, rural firms are more likely to seek information or advice on e-commerce and technology, while urban firms were more likely to have sought information or advice on financial matters.

...but it is driven primarily by factors other than location

Detailed survey analysis shows that awareness of business development support is not driven by location. The age of the business and in particular its size are more important influences. Newer firms, those trading for no more than a year, are more likely to be aware of one or more sources of government business support, as are those working on public sector contracts. Business size is an even more significant determinant of awareness, with larger firms more aware than their smaller counterparts.

We found no substantial evidence that rural businesses are significantly less likely to be aware of, or participate in, national mainstream employer skills and government business support programmes than businesses from urban areas. A similar study commissioned by the UK Commission for Employment and Skills[2] looking at skill deficits and training behaviour in rural and urban businesses using slightly different datasets reached the same conclusion.

What is different about rural areas?

Rural areas have a higher density of small businesses and proportionally more sole traders than urban areas. In rural areas, a much higher proportion of people are employed by SMEs than in urban areas. Rural businesses are more likely to be in the landbased, retail and distribution, construction, and professional, scientific and technical services sectors than urban businesses (which in turn are more likely to be in sectors such as finance or public service). It is this difference in the make-up of rural businesses that is the primary driver of any differential take-up of government business and skills support programmes.

Improving the take-up of business support in rural areas

Based on our analysis of all the data collected, we concluded that access to national mainstream employer skills programmes and government business support programmes among rural businesses may be improved if:

• information and advice on how to apply for support is proactively provided (ideally face-to-face or by telephone) by a stable set of intermediaries
• businesses can see a quick return on the time or resources invested in accessing and engaging with support and/or see the opportunity costs that might result from not taking up support
• businesses are provided with only a small tailored menu of choices for information and/or support so that businesses can ‘go with the flow’ of pre-set options rather than be faced with a difficult decision or too much choice. This could include building on the Business Link brand.
• support is tailored to the characteristics of the business (size, sector and to a certain extent age) and making it simple to understand; in particular, being very clear about the eligibility requirements, the commitment required and how the application process works.
• marketing literature presents those businesses that take up support as ‘canny, savvy’ businesses that are ‘in the know‘ and have managed to access ‘something worth having’.

Footnotes [back]

[1] See Culliney M, Pollard E, Hillage, J (2013), An assessment of the degree to which rural businesses access national mainstream employer skills and government business support programmes : Evidence Report. Institute for Employment Studies, and Hillage J, Culliney M, Pollard E (2013), An assessment of the degree to which businesses access national mainstream employer skills and government business support programmes: Synthesis Report. Institute for Employment Studies.

[2] Owen D, Li, Y, Green A (2013), Secondary Analysis of employer surveys: urban and rural differences in jobs, training and skills. Evidence Report 75, UKCES.