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23 August 2019

#FSBmyTown: A rural perspective

Traditionally, the image conjured up when one thinks of the Highlands is redolent more of the shortbread tin than the financial pages of our quality newspapers.

Indeed, the view from afar may be that, rather like shortbread, our economy is a nice little luxury, not the solid basis of a healthy, hearty diet.

That, of course, is nonsense and the Highlands’ significance is dismissed at one’s peril.

In truth, the Highlands has done well of late.  Thanks in part to ever-increasing mobile and broadband coverage, combined with some improving transport links, the region has become less remote and more accessible.  And the fall in the value of the pound, while always a mixed blessing for an economy like ours, has certainly been of benefit to what is arguably the Highlands’ most important industry – tourism.

Every day I meet local businesses who are thriving as part of a tourism and hospitality industry that has been going from strength to strength.  Indeed, official figures show that the business birth rate in the Highlands is two per cent above average and the 3-year survival rate is seven per cent higher than in the rest of Scotland.

Of course, that’s not to say doing business in our more remote areas is not without challenges. 

The Highland population is aging, and in many rural areas it is declining.  There’s no getting away from the fact that many of the facilities and opportunities that younger people crave are missing from large parts of the region.

Not only that.  Many jobs here are seasonal, wage rates tend to come in at below the national average and Brexit has reduced the number of job seekers from Europe.  Taken together, this is making it hard for Highland firms to recruit the staff, and especially the skilled staff, they need.

And while it is easy to counter that market forces dictate that a shortage in the supply of staff will lead employers to pay higher wages, many of these firms have seen their operating costs steadily rise and their margins evaporate.  Thus, unless the Great British customer is ready to pay higher prices, their ability to do is limited.

For a region so dependent on its service sector, a shortage of suitably skilled staff to make, sell and serve is a major problem. Businesses who cannot provide the services and service levels that their customers seek will really struggle. Some will be forced to curtail expansion plans and reduce the range of services they provide. Not only does this impact on their own businesses, it can impact on the area as a whole.

Perhaps, at some point in the future, automation will reduce the need for physical staff (although I refuse to believe that anyone comes on holiday to rural Scotland to talk to as few people as possible – the whole point is the friendly, personal welcome).  But right now we need them and, with the decline in job-seekers from the EU, it is imperative that we retain more locally-grown, talented young people and attract more entrepreneurial young families to move in from the rest of the UK.

This not only increases the pool of talent available for local firms to employ, it also stimulates demand for public and private services – in some cases maintaining the critical mass they need to survive.

So the twin challenges are inextricably linked.  We need to grow the workforce to keep businesses and services viable; we need viable businesses and services if we are to attract and retain a workforce.

Easier said than done, of course.  If we are to attract more young people and young families, they’ll need to be assured that they’ll enjoy a level of amenity closer to that taken for granted in more populous areas.

That obviously means plans for world-class transport and digital connectivity must be accelerated.   But, more importantly, it means recognising the increasing pressures on our housing stock.  As is said repeatedly at virtually every Highland meeting with infrastructure and the economy on the agenda, we must ensure that there’s enough affordable housing to meet current and future needs. All the fibre broadband in the world is of limited appeal if you don’t have anywhere to live.

At the same time, we must protect the beating hearts of our rural communities, wherever possible preserving shops, post offices, leisure facilities, schools and the many other facilities that deliver a decent quality of life.

And there are some signs that the message is getting through.  For example, Highlands & Islands Enterprise’s latest research shows that this region is becoming more attractive to young people seeking employment.

But the job isn’t done.  Decision-makers in Holyrood and Westminster can play their part by ensuring the rewards of setting up and growing a Highland business justify the hard work and risks. This means keeping firms’ utility and fuel bills down, making it easy as possible for Highland firms to access the staff they need, and keeping a lid on regulatory and tax burdens. It also means doing everything possible to keep the hearts of our remote and fragile communities – and our economy – beating.


David Richardson is FSB’s development manager for the Highlands and Islands

This article first appeared in The Herald on 21/08/2019