Examining the impacts of the recession on the economies and the communities of rural Wales
Examining the impacts of therecession on the economies andcommunities of rural WalesA research project undertaken by the WRO between April 2009 and Oct 2009
Introduction• Background– The Wales Rural Observatory was commissioned by the RuralPolicy Unit of the Welsh Assembly Government (WAG) in April2009 to undertake research on the impacts of the currentrecession in rural Wales.• Objectives– to examine the economic, employment, housing, welfare andsocial consequences of the recession in rural areas, with a viewto comparing the rural situation with that in other parts of Wales.– explore the differential sectoral, social and spatial impacts of therecession within rural Wales.
Methodology• Defining Rural Wales:- For the purpose of the report,rural Wales was defined as alllocal authorities in Wales witha density of fewer than 150residents per square kilometre.• The study involved two stages of enquiry:- temporal and spatial analyses of relevant data- semi-structured interviews with representatives oforganisations with a specific rural remit in Wales
Methodology• Stage 1 - Temporal and spatial analyses of relevantdata:– house prices, housing affordability, property completions,housing need, property repossessions, homelessness,unemployment, Job Seekers Allowance (JSA) claimants, jobvacancies, debt and other welfare enquiries, and businessinsolvencies.– Where possible, data were analysed based on a fixedperiod between the first quarter of 2007 and the first quarterof 2009.– Data were also examined at different spatial scales tocompare the rural and non-rural situations(NUTS3, LA, Ward).
Methodology• Stage 2 - Semi-structured interviews:– Of the 50 organisations contacted, a total of 37agreed to be interviewed as part of the research.– The interviews explored in greater detail the impactsof the recession on different economic sectors, socialgroups and places within rural Wales and, wherepossible, compared the rural and non-rural situations– Valuable evidence and commentary was provided bya range of relevant economic, employment, housing,welfare and social / health organisations
Findings1. The economic position of rural Wales2. The rural housing market3. Welfare and advice4. Impact on rural communities5. Policy Implications
1. The economic position of rural Wales(a) Economic Performance– Gross Value Added (GVA) is used as a broad indicator ofeconomic performance– Problems using GVATable 1: GVA per head and GVA per head indices in Rural WalesNUTS 3 AreaGVA per head,2006Index of GVAper head, 2006(UK=100)UK 19 430 100Wales 14 226 75Isle of Anglesey 10 560 56Gwynedd 12 972 68Conwy and Denbighshire 11 529 61South West Wales 11 711 62Powys 13 258 70Monmouthshire and Newport 18 537 98Source: Office for National Statistics (ONS)
(b) Economic Activity and Employment- Rural Wales - relatively high economic activity rate and lowlevels of unemployment compared to rest of Wales- Job Seekers Allowance (JSA), the UK’s mainunemployment benefit
(b) Economic Activity and EmploymentTotal JSA claimants0.01.02.03.04.05.06.07.08.09.010.0Jan-92Jan-93Jan-94Jan-95Jan-96Jan-97Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10ResidencebasedproportionsRural Semi RuralValley UrbanWales United Kingdom
(b) Economic Activity and Employment– High levels of employment in the service sector public administration, education, health, distribution, hotels andrestaurants = 54% agriculture accounts for only 5.5% of rural employment in Wales(Nomis, 2008) and its contribution to total Gross Value Added (GVA) inrural Wales is marginal, at only 2%– The number of job vacancies per JSA claimant isdecreasing in rural Wales
(c) Sector-specific evidence• SMEs and the current recession- Small businesses prevalent in rural areas experiencing financial difficulties- Loss of business impacts on the community- Long-term impacts likely - difficult for rural enterprises to recover• The agricultural sector in rural Wales- Recently experienced problems caused by diseases and major retailers forcingdown food prices- Fared better than other industries during the recession- Economic viability of dairy sector challenged• Tourism in rural Wales- 5% reduction in tourist trips by residents in the UK to Wales + 12% reduction inspend- Uncertainty about the future and fear over job security had led to fewer peopletaking holidays- Business travel had fallen significantly during the recession as corporate budgetswere tightened
(d) Labour market EarningsMean weekly earnings by local authority of residence, 2009050100150200250300350400450500MonmouthshireTheValeofGlamorganCardiffUnitedKingdomNewportWrexhamNeathPortTalbotFlintshireWalesPembrokeshireSwanseaTorfaenBridgendAngleseyPowysRhondda,Cynon,TaffCarmarthenshireCaerphillyConwyDenbighshireMerthyrTydfilCeredigionGwyneddBlaenauGwent(£)MeanWeeklyEarnings
(e) The youth labour market– “We’re just creating a situation where our young people are left with no sort ofcareer route at the ages of sixteen or seventeen and can’t claim benefit untilthey’re eighteen.” (Careers Wales)(f) Older Workers– “We’re now dealing with a lot of enquiries from older workers about loss ofcontributions and earnings, pension funds losing value significantly, savingsproducing reduced levels of income, and all the difficulties that you’d associatewith all these things, in terms of meeting above inflation rises in fuel and foodcosts.” (Age Concern Cymru)(g) Migrant workers in rural Wales– Migrant workers accounted for a greater proportion of the workingpopulation in rural areas of Wales than urban and valley regions– The jobs that migrant workers are doing are predominantly low skilledmanual positions– Current slowdown in migrants entering the country resulting in hard tofill vacancies
2. The rural housing market020,00040,00060,00080,000100,000120,000140,000160,000180,000Jan-95Jan-96Jan-97Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10AverageHousePrice(£)Wales RegionRuralSemi ruralValleyUrbanAverage house prices by region (January 1995 – January 2010)• House prices decreased throughout Wales between February 2008 andFebruary 2009 – highest falls observed in rural and valleys authorities• But, recent changes have had little impact in the affordability ofhousing in rural areas(a) Impact on rural homeowners
(b) Impact on housing development and supplyDevelopers and builders:• Construction industry currently accounts for 9.7% of all jobs in ruralWales (Nomis, 2008)• Substantial decline in construction activity, with knock-on effects onemployment levels within the sector• Calls for greater emphasis on repair and maintenance work – WAGWelsh Housing Quality Standard
(b) Impact on housing development and supply…(cont.)New housing development and reinvestment:• Evidence of limited flexibility in the rural housing market• Higher interest rates / lack of credit impacting on housing associationbudgets• Over-reliance on private sector to provide affordable homes via theplanning system.• Urgent need to widen scope of housing products to address demand /support transactions across tenures
3. Impact on welfare and advice services(a) Evidence of increased demand for housing services, debtadvice and benefit enquiries as a result of the recession:Rates of recession related enquiries to Citizens AdviceCymru (April 2008 – March 2009)Mortgage/securedloan arrears issues)RedundancyissuesJobseekersAllowanceissuesRural 83% 196% 117%Semi Rural 11% 134% 104%Valley 37% 160% 116%Urban 44% 197% 174%Source: CAB (2009) http://www.citizensadvice.org.uk
Changes in recession related enquiries to Shelter Cymru between the firstquarter of 2008 and the first quarter of 2009Comparison Q1 08 to Q1 09 RURAL SEMI RURAL VALLEY URBANHomelessness -11.4 -17.0 -7.8 -14.5Rent arrears 1.7 5.9 3.1 -9.4Mortgage arrears 4.7 5.3 2.0 5.3Rents/rent levels 1.0 -0.2 0.4 0.8Other financial 1.8 0.5 2.9 11.2Domestic violence 0.3 0.0 0.0 0.0Household dispute -0.2 0.0 0.0 0.0Neighbour friction -1.3 0.0 -0.2 1.1Violence outside home -0.2 0.0 0.0 0.0Dampness/disrepair 2.0 0.2 2.7 5.1Unsuitable accommodation -0.3 0.0 0.3 1.7Landlord possession action 1.6 1.0 2.5 2.2Harassment/illegal eviction -0.6 0.0 -0.2 0.4Tenancy ending -0.2 0.3 0.8 1.1Deposits -0.3 -0.5 0.5 2.8Landord/tenant - other 0.2 -0.2 0.6 1.3Children Act 0.1 0.0 0.0 0.0Medical/health -0.2 0.0 0.0 1.1Red = Rural increase and Blue = Rural DecreaseSource: Shelter Cymru (2009) http://www.sheltercymru.org.uk/shelter/policy/default.asp
Anecdotal evidence from interviews:• Increased demand for welfare and advice services across all socio-economic groups• Unemployment and increased personal debt increasingly associatedwith mental and physical health problems• Breadth of individuals impacted wider than just those who have losttheir jobs• Significant barriers to help-seeking within rural communities
(b) Impact on older people• 27.2% of the rural population aged over 64 (ONS, 2007), a largeproportion (60%) of this age group live alone (Census, 2001)• Retired rural residents hit hard by economic downturn:- rising prices / inflation- issue of ‘pride’- loss of rural services• 2011 Census Projections indicate that population in rural Wales willincrease from 986,000 in 2006 to over 1 million, with greatestproportional increase likely to occur within pensionable age range• Implications for rural society and economy?
(c) Impact on families and children• Financial / personal well-being of families and childrenhighlighted as a key area of concern:- unemployment / reduced incomes- threat of repossessions and declining housing conditions- sharp rise in cost of basic food items- rising energy prices- increasing levels of personal debt- increasing levels of stress / health• Housing debts and risk of evictions may translate into futureextra demand on children’s services, social and care services
4. Impact on rural communities(a) Loss of rural retail services• Rural retailers affected by tightening h’hld budgets• Social enterprises / co-operatives – key role to play in preservingservices essential to sustainability of rural communities• Impact of further cuts in public spending?
(b) Cost of fuel and heating oil• Fuel poverty identified as a major issue in rural areas:- increased costs / limited choice- higher than average length of rural journeys / poor publictransport provision- higher distribution costs for rural services / businesses
5. Policy Implications• Targeted investment in age-specific advice and counselling servicesurgently required• Young people’s needs may be broader than education and employment• Employment and training support should be maintained and expanded tohelp more disadvantaged people overcome information, skills, transport orchildcare barriers to work• Calls were made for improvements to banking services and creditavailability in rural Wales• WAG should give further consideration to the challenges facing smallbusinesses in rural Wales, and consider improvements to the businessinfrastructure in these areas• new approaches are needed to support older people hit hardest by thedownturn in the economy• tourism businesses may need to respond to current challenges by improvingthe quality of the service they provide