Rural Services Network—written evidence (DCL0028)

 

House of Lords Communications and Digital Select Committee inquiry ‘Digital exclusion and the cost of living

 

The Rural Services Network is a membership organisation, and the national champion for rural services. In membership we have, over 100 rural local authorities, over 200 rural service providers such as housing associations, health trusts and national organisations, and around 200 rural Market Town Councils. It campaigns for fair funding for rural areas and also for more nuanced national policies that reflect rural circumstances.

 

The RSN is responding to this call for evidence because digital connectivity is so crucial for rural communities who are often left behind, leaving them at a disadvantage.

 

Inquiry questions

 

  1. What are the main causes of digital exclusion in the UK? What is the economic and social impact?

 

Digital exclusion is caused by the following:

 

 

 

 

In the rural context

 

Broadband and mobile networks are clearly more widely available in rural areas than they were a few years ago. However, there remains some notable connectivity challenges to resolve.

 

40,000 premises are without access to decent broadband (below 10Mbps) from either fixed or wireless network.

 

This is the threshold set for the broadband USO, which the regulator (Ofcom) considers necessary for everyday use, though it is likely to prove inadequate for many business or home working users.

Some 12% of rural premises in England cannot access a superfast broadband connection of 30 Mbps. (2022)

 

There remain significant issues with mobile connectivity in rural premises. Some 28% of those in England are premises where it is not possible to make an indoor phone call on all four of the mobile networks (EE, O2, Three and Vodaphone). Similarly, it is not possible to get an indoor 4G connection on all four networks at a majority (51%) of rural premises. (2022)

 

The outdoor signal is notably better. However, complete ‘not spots’, where no 4G signal is available from any operator, make up 3% of England’s rural landmass. Across 17% of that rural landmass it is not possible to access a 4G signal from all four networks. (2022)

 

 

Work placed based rural incomes are lower than the national average with the average for rural areas 6 percent lower than those working in urban areas. This increases to 12 percent among employees with the lowest earnings, leaving the most vulnerable families unable to cope with soaring costs.

 

This disparity is also seen within regions, with the average income of employees working in rural areas consistently lower compared to those living in urban areas of the same region. The greatest disparities are within the South West and East and the South East, with employees working in rural areas in the South West having the lowest average income in England.

 

The cost of living is higher in rural areas. See this link to a 2022 report, “Rural cost of living”, by Kovia Consulting for the Rural Services Network, which examined the key differences in cost-of-living between rural and urban locations. It found that rural residents working in rural economies earn much less than urban residents, yet still face significantly higher costs across key aspects of living including heating, transport, house prices, rent, food prices, child-care costs and council tax. The higher cost of living challenges for rural areas can leave rural residents with less available income to spend on digital technology.

 

 

Rural areas have a much older population profile than the rest of the country.

 

Some 3.2% of the predominantly rural population is aged 85 or over (2.1% in predominantly urban areas). Comparing the 2021 census figures with the 2013 population projections shows an increase of 15.4% in the predominantly rural population aged 65 or above (9.6% for predominantly urban).

 

An older population may be less likely to engage with digital technology, although this is not always the case, but a greater older population in rural areas may leave this demographic at greater risk of being digitally excluded.

 

ECONOMIC AND SOCIAL IMPACT

 

The social impact for rural areas of digital exclusion is compounded by physical exclusion with lack of public transport and a lack of accessible public services in rural areas.

 

Many service providers across the public and private sectors have encouraged their customers or users to access them online, to automate and save costs. Some services have become ‘digital by default’ or ‘physical by exception’. This may benefit many users, but it can leave others at a disadvantage. An added issue arises in rural areas where digital connectivity still lags behind. There seems little doubt the pandemic shifted more services and their users online, whether in retail, health care, education or banking. Key questions include whether this will prove permanent, whether it diverts custom away from rural-based services and whether some rural groups lose out.

 

Connectivity is also, of course, important for access to services (many now digital by default) and for social networks. Whilst these do not currently need gigabit or 5G networks, that is likely to change.

 

Tele-health is just one example of online services that has obvious rural application e.g. enabling patients to ‘see’ specialist clinicians based in urban hospitals or health facilities.

 

Recent research by Murphy et al (University of Bristol and NIHR, 2020) explored how GP practices in Bristol, North Somerset and South Gloucestershire adapted to the pandemic and the challenges they faced. Their report included some findings of interest about remote patient consultations.

 

Although remote consultation enabled GPs and nurses to communicate with patients, a variety of issues arose. These included technical and IT or connectivity issues. There were also medical concerns about missed diagnoses among patients with long-term conditions, prescribing to patients at a distance and managing complex cases such as mental ill-health. Some medical practitioners felt that remote consultations were least suited to vulnerable patients.

 

It will often be the case that in rural areas those digitally excluded will also be isolated and lonely – with few if any local buses and closures of rural pubs, shops and facilities.

 

The disadvantage economically for rural communities of digital exclusion is significant.

 

Many rural economies have been held back by poor connectivity. Productivity in rural areas is lower than in urban areas of England. This can affect business premises, home workers and those who frequently work on the move (relying heavily on a mobile). It affects business productivity, innovation, supply chains and client orders. It also deters inward investment in rural areas. A report[1] by Rural England CIC (2018) estimated that resolving digital constraints experienced by rural based businesses would add at least £12 billion annually (Gross Value Added) to the UK economy. Download report at this link.

 

It is important to note that modern rural economies are diverse, with a wide range of service, manufacturing and land-based sectors represented. Moreover, that some of the 5G applications being highlighted have obvious rural application e.g. agritech on farms, virtual reality in tourism/heritage facilities.

 

An important point – not often reflected in policy documents - is that broadband requires electricity. The existing electricity networks in rural areas are often disrupted – sometimes for days and weeks on end – by adverse weather conditions. The move to Net Zero will increase the demands for electricity (heat pumps, electric vehicle charging). Urgent attention must be given to the resilience of the electricity networks serving rural areas.

 

In November 2022, the Rural Services Network submitted evidence to the APPG for Rural Business and the Rural Powerhouse’s call for evidence on the impact of the cost-of-living in rural areas. That evidence can be seen here.

 

Figures from the 2020 Digital Technology Survey, carried out by the National Farmers Union, show that its membership – often in remote locations – face particular connectivity issues including:

 

 

 

 

Despite this, research by the National Federation of Young Farmers’ Clubs (2020) found that many young farmers were considering increasing further their online sales through digital marketing.

 

The Communications Consumer Panel (2020) stated, in a summary from its National Hubs debate that, “since the pandemic digital connectivity has become essential, particularly for consumers working from home”. They added, “Covid-19 has propelled consumers into the digital world and those who cannot gain access need safeguarding”.

 

Despite clear benefits of ‘digital inclusion’, the Good Things Foundation (2020) predicts that in 10 years-time almost 7 million adults in the UK (12% of the population) will still be left behind as a result of digital exclusion “With more and more services moving to digital platforms to save money, the digital literacy needed to use these services is not keeping pace. Those without digital skills are likely to be the most vulnerable and excluded… Providing everyone in the UK with the essential digital skills they need by 2028 will lead to a benefit of £15 for every £1 invested, and a net present value of £21.9 billion”.

At a Great Britain level, the ONS tracks the value and type of retail sales through its regular Retail Sales Inquiry survey. That survey, which does not distinguish rural from urban areas, shows there has been consistent and steady growth in the proportion of retail sales taking place online (ONS, 2021).

 

Of course, it follows that those businesses which are digitally excluded cannot engage in online retailing. Neither can people engage in online shopping, if they are digitally excluded.

 

Those that are digitally excluded cannot take advantage of online learning and skills development which may lead them to upskill or find higher paid employment.

 

  1. How has the rising cost of living affected digital exclusion? a) To what extent does digital exclusion exacerbate cost of living pressures?

 

The Rural Services Network, with support from the Rural Issues Group of Citizen’s Advice is currently carrying out a cost-of-living survey across rural households. The Survey does not close until 31st March 2023, but Interim Findings show:

 

Wider financial pressures

The survey asked respondents how much of their household income was left over after paying for essentials (including mortgage or rent payments, utility bills, essential food and drink, essential car or travel costs and childcare). The question then gave four descriptions to choose from. Looking at all rural respondents, most (61%), say they have a small income left over. However, 14% say they have no income left over and another 4% that their spend on essentials exceeds household income.

 

As might be expected, households that fall in the lower income quartiles are much more likely to have no income left over or to find their spend on essentials exceeds their income.

 

A further question asked respondents how their household financial situation has changed over the last year. In this case they are given five descriptions to choose from, which are that it has become: a lot better; a bit better; unchanged; somewhat worse; and a lot worse. The results show that:

 

 

 

It is the poorest households that have been hardest hit by the financial squeeze. Respondents from first (or lower) quartile households, in terms of their disposable income, are easily the most likely to say their financial situation has become a lot worse.

 

Those Interim Findings also demonstrate that “More marked still are the spending cut backs being made by households that fall within the first (or lower) income quartile, as illustrated on the chart below. These households are cutting back across the board, though most frequently on going out, home heating and clothing purchases.

 

 

There are, however, impacts from the cost-of-living crisis which may not be so obvious.

 

Principal Councils serving Predominantly Rural Areas receive some 38% less Government Grant per head of population than do their urban counterparts. Yet it costs more to provide services across rural areas. An impact of this is that predominantly rural councils are able to budget (in 2022/23) for £67 per head on non-statutory services whilst in predominantly urban areas that figure is almost double at £131 per head. Non-statutory services include bus service support, economic and social development activities and support to the Community and Voluntary Sectors. The later provide essential support to those who are digitally excluded.

 

The Government grant for 2023/24 will not be enough to cover inflationary cost increases and there will be service cuts.

 

Another impact of the cost-of-living crisis in rural areas is the impact on the rural Community and Voluntary Sector. Increased running costs will impact on the sustainability of these organisations and in some cases on community premises such as Village Halls. Village Halls and facilities such as Libraries are often the places where people without internet connectivity go to access the internet (they also act as ‘warm hubs’) and if the facilities close (or substantially reduce their opening hours) digital exclusion is worsened.

 

A key question is whether certain groups within the rural population are being disadvantaged, for whatever reason, by the switch towards greater online service provision.

 

According to a survey conducted in late 2020 by Opinium for Citizens Advice, around one in six (16%) adults in the UK said they were struggling to pay their regular broadband bills (Citizens Advice, 2021). That figure rises to one in four (28%) among adults who are recipients of a means tested benefit. This survey indicated that about 2.3 million people may be behind with their bill payments.

 

The National Hubs Debate on Rural Connectivity by the Communications Consumer Panel (2020) highlighted concerns that some rural residents have been left behind by the recent, further (pandemic-induced) shift to online services. From a rural perspective, they flag:

 

 

 

 

 

  1. What are the obstacles to greater digital inclusion? Where is policy intervention likely to have the greatest impact over the next 12 months and 5 years?

 

Broadband USO: industry regulator, Ofcom, should urgently review and upgrade the broadband Universal Service Obligation, which (at 10 Mbps) is out-of-date and inadequate for, what have become, some everyday essential uses. To reflect the new normal the USO should be upgraded to superfast broadband download speeds of 25 to 30 Mbps minimum. Costs passed on to consumers seeking a USO connection must be reasonable. This would level the playing field for rural residents and businesses until gigabit-capable connectivity can be rolled out.

 

Gigabit-capable connectivity: the Government goal for universal gigabit-capable networks, achieved with public investment to ensure their roll out in unviable rural areas, is welcome. However, announcements in late 2020 that 15% of premises will be excluded from the 2025 target and that firm public funding for that period is reduced from £5 billion to £1.2 billion are hugely disappointing. Published procurement plans make clear that it is premises in highly rural or remoter areas which could again be left behind. This effectively abandons the outside-in approach which was set out by Government in 2018. Government should work urgently with the telecoms industry and revisit its plans for the period to 2025. Digital connectivity will be key to levelling-up rural areas and their economies. All rural areas need clarity when they will receive gigabit-capable connectivity and remote areas with the worst connectivity should be first in line for that public investment.

 

The RSN responded to the Government Consultation on Broadband and the road to 5G Inquiry. You can see the submission at this link.

 

The Government also held an inquiry into Very Hard to Reach Premises. https://www.gov.uk/government/consultations/improving-broadband-for-very-hard-to-reach-premises and received numerous responses about the impact for rural communities of lack of connectivity.

 

Mobile networks: the Shared Rural Network initiative, to plug gaps in 4G provision, is helpful, if not a total solution. Delivery of this initiative must be carefully and transparently monitored by Ofcom, to ensure that network providers are on track to meet their objectives and targets. Options should also be explored to address any remaining mobile ‘not spots’ by 2025. Government should announce some further rural trials to pilot 5G connectivity, including its use within health and social care provision.

 

Digital skills and inclusion: Government should announce a fully funded Digital Inclusion Programme, so no citizens (rural or otherwise) are left behind due to their lack of online skills or their inability to pay for basic equipment and connection charges. Key strands are likely to include training and the recycling of IT. As recently highlighted by the Communications Consumer Panel, the Covid-19 experience has brought home just how important this issue now is, with some left isolated and struggling to access basic services, such as shopping, banking, education and health care. Although it will require national resource, this should be a locally delivered programme, involving statutory, private and voluntary sector organisations working in partnership.

 

a)              To what extent would these changes help unlock economic growth?

 

Improving access to gigabit cable connectivity will help enable economic growth in rural areas however the rural economy is noted for the prevalence of SMEs and Sole Traders. These may need support and upskilling in digital adoption and skills development to truly give rural businesses the opportunity to compete in wider economic markets.

 

  1. How effective are Government initiatives at addressing digital exclusion? What further action is needed, and what should be done to provide offline access to services?

 

Greater availability of connectivity does not necessarily mean that all residents will use it and options for accessing services offline should be available for those who choose not to, and are unable to use them online through poor connectivity or not having the skills to access them. Otherwise, the risk is that the most vulnerable residents are left behind and isolated.

 

 

7 March 2023

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[1]              Wilson B et al, Unlocking the digital potential of rural areas across the UK, Rural England CIC (2018)