Countryside blues

A VISIT to Okehampton—a small town in England’s most rural parliamentary constituency of Central Devon—fulfils a very English yearning for long shadows on cricket grounds and warm beer. It is near to Dartmoor, a wild national park; cream teas are served in its 1950s-themed railway station, from where tourists can catch a train along the moor to Exeter every Sunday. You might be forgiven for thinking that rural areas like Okehampton must be big winners from Britain’s rapid shift to the online economy. Why live in a cramped city when you can be just as productive working from a pretty village?

Since 1999 the proportion of British households with an internet connection has increased from 15% to 90%. Most adults now have a smartphone and in 2015, 13% of retail sales were online, up from 3% in 2007. Yet many places like Okehampton are not booming. The economic output of “predominantly rural” areas in England (a classification based on the number of people living outside settlements with more than 10,000 people) accounts for about one-fifth of the country’s total. But output is probably lower today than it was in 2006, official figures suggest—in effect, a decade-long rural recession. The percentage of rural folk who are employed is lower now than it was in 2008-09. In recent years population growth has been far slower in rural areas than in urban ones.

On Okehampton’s high street, there are plenty of empty shops. Since 2010 the rate of business creation in Central Devon has been one of the lowest in the country. Its position on a ranking of “multiple deprivation”, a rounded measure of poverty in English constituencies, has worsened by eight places since 2010. This is not just chance: the average “highly” rural area in England deteriorated by 14 places over the same period. Highly urban areas, meanwhile, improved by 11 places on average (though urban areas still tend to be more deprived than rural ones). In the decade to 2013 (the latest available data) suicides in highly rural parts of England rose by 3%, while falling by 10% in urban areas.

The poor performance of rural areas is in part because of government policy. Firms in the countryside struggle to break into the online economy; in Okehampton the internet can be painfully slow. The previous Labour government promised that everyone in the country would have broadband by 2012. Having missed that target, the Conservative government estimated that by the end of 2015 less than 1% of all premises would have access to speeds of under 2Mbps—good enough for basic internet use, but not for streaming videos. The average download speed in urban areas is at least three times what it is in rural ones, according to a report from Ofcom, the telecommunications regulator. A recent study by the universities of Aberdeen and Oxford argues that low-quality internet imposes extra costs on rural businesses.

The countryside has lost out from government policy in another way, too. Since 2010 the number of public-sector workers across Britain has fallen by about 15%, as the government has trimmed public spending. This is a troubling development, since rural parts often rely heavily on the state for economic growth. For instance, without the spark generated by a growth of government jobs, private-sector employment in the Scottish Highlands would have fallen in the 2000s.

The pace of public-sector job losses in England since 2009 has been roughly 50% faster in rural areas than in highly urban parts. This may be the result of the government consolidating jobs in urban areas to make them more efficient. In parts of Leeds and Coventry, two mid-ranking cities, public-sector employment has recently risen.

Down, on the farm

However, structural economic changes, beyond the remit of any politician, may be even more important than government policies. Agriculture may be one weakness. Total income from farming is estimated to have fallen in 2014-15 by a whopping 29% in real terms. Yet over a longer timeframe farming has performed decently. Average farm incomes are roughly double what they were a decade ago.

Changes to Britain’s manufacturing sector have probably had a bigger impact on rural areas. From the 1960s to the 1980s manufacturing employment grew rapidly in the countryside, according to a paper by David Keeble of Cambridge University, as firms looking to expand left the cities in search of cheaper land. Places like Powys, in central Wales, and the Highlands and Islands of Scotland benefited, even as overall manufacturing employment started its long decline. Rural areas ended up about a third more dependent on manufacturing employment than highly urban places.

However, recently the pressure of foreign competition has made production even in rural areas unviable. Manufacturing employment in the Highlands and Islands has fallen by about 20% since 2004, a similar magnitude to the average rural area. In 2013-14 a maker of electronic goods near Okehampton, which had been there for 50 years and employed at least 250 people, closed.

Nationally, the service sector has more than compensated for the continued fall in manufacturing jobs. But high-value service-sector industries are much better suited to urban areas. Such are the benefits of close personal relationships, in industries like banking, or the rapid sharing of ideas, in industries like advertising, that no matter how good technology is, dynamic firms still want to be clustered.

In the past decade the economies of Britain’s five biggest cities have grown 12 percentage points faster in real terms than the rest of the country. Even if every rural area were hooked up to ultrafast broadband, places like London, Manchester and Glasgow have other advantages which make them an irresistible draw.

To convince rural folk that it was not just concerned about cities, last summer the government set out ten measures to improve rural productivity, including vague promises about “encouraging long-term investment” and giving such areas “greater local control”. Access to superfast internet will soon be a legal right. All this will help, yet the economics continue to tilt in favour of cities. Small towns and villages may be the spiritual heart of the nation, but economically they will continue to struggle.