Government and Institutions

A new rural economy has emerged, but government policy has not kept pace with change


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Government policy has failed to keep pace with dramatic change in the rural economy in recent years, claims a new study published by the Institute of Economic Affairs.* Whereas the rural economy was traditionally regarded as being synonymous with agriculture, this is no longer the case – tourism is a far more significant contributor to the rural economy.

This point can be illustrated by the fact that 84% of government funding spent in rural areas is in support of farming, but farming only makes up 3% of rural employment. Tourism employs far more people, but as was seen in the case of the 2001 foot and mouth outbreak, government policy puts the needs of tourism secondary to farming.

It is also the case that government subsidies to agriculture maintain uneconomic activity, and this conflicts with the government’s aim of creating a sustainable rural economy.

The author of the IEA study, Professor Berkeley Hill of Imperial College London, argues that rather than spending public money unwisely, rural areas might be better served if government simply did nothing. Government departments and public agencies implement a variety of polices, many of which have no benefit or proof of benefit, so that government intervention may actually be doing more harm than good.

Read the full study here.