Guidance

Rural England Prosperity Fund: methodology

Published 3 September 2022

Applies to England

How Defra allocates the Rural Fund to eligible local authorities.

The Rural Fund is for eligible local authority districts and unitary authorities. It will benefit businesses and communities in rural areas.

Classification of local authorities

To allocate the Fund, Defra is using an official statistical definition of rural areas^{[footnote 1]} based on the 2011 Census.

Settlements with populations of 10,000 or more are ‘urban’ and everywhere else is ‘rural’.

There are:

• 83 predominantly rural authorities^{[footnote 2]} - with at least 50% of the population in rural areas or hub (market) towns

• 50 urban with significant rural authorities - with at least 25% of the population in rural areas or hub towns
• 175 predominantly urban authorities - with less than 25% of the population in rural areas or hub towns

Allocation of the Rural Fund

The allocations reflect the strategic objectives of the Fund, to support:

• business development
• farm business diversification
• community infrastructure

Defra does not prescribe how much a local authority should spend on each of the objectives.

To access the funding, eligible authorities must describe how they’ll spend their allocation in line with the interventions in the Rural England Prosperity Fund: prospectus.

Before adjustments, Defra has apportioned the Rural Fund on the following basis.

55% of the Fund is allocated to take account of rural populations:

• 40% pro-rata to rural population
• an extra 10% pro-rata to the 10% most deprived rural areas to reflect their additional needs
• an extra 5% pro-rata to sparsely populated areas to reflect their additional costs and needs

35% of the Fund is allocated to take account of businesses and productivity:

• 25% pro-rata to the number of registered rural businesses^{[footnote 3]} weighted by the productivity gap^{[footnote 4]}, so that the least productive areas benefit more

• an extra 10% pro-rata to the number of registered rural micro businesses (businesses employing less than 10 people)

10% of the Fund is allocated to support farm business diversification. There are no suitable data on the potential for farm business diversification so a proxy measure is pro-rata to Farm Basic Payments^{[footnote 5]}. This reflects the importance and scale of farm businesses.

Defra has adjusted the notional allocations to achieve a viable programme at local authority level. This provides good coverage of the rural population in England.

Eligible authorities

Authorities should check their eligibility and indicative allocation in the Rural England Prosperity Fund: allocations.

Of the local authority districts and unitary authorities in England, those that are eligible are:

• all 83 predominantly rural authorities
• 40 of the 50 urban with significant rural authorities
• 13 of the 175 predominantly urban authorities

This means 89% of the rural population in England are in eligible authorities.

Defra has applied a minimum floor level of funding of £400,000 for each eligible authority. This ensures authorities have enough funding to run a viable programme.

In the last LEADER^{[footnote 6]} programme the average size of a project was £40,000. This has informed the Rural Fund minimum floor level of funding but does not prescribe the size of projects authorities can fund.

There is not enough funding to allocate £400,000 to every authority. Defra has considered the size of the rural population, to prioritise rural areas.

Authorities are ineligible if their share of the Fund was too low to justify the uplift to the minimum floor level. This applies to authorities with smaller rural populations and fewer rural businesses.

1. 2011 Rural Urban Classification. Data from the 2021 Census are not yet available to update this classification ↩

2. The Isles of Scilly are included with Cornwall as Cornwall and the Isles of Scilly ↩

3. Using the Office for National Statistics (ONS) Inter-Departmental Business Register ↩

4. Productivity is determined by a measure of economic output, Gross Value Added, per Work Force Job, as determined by the ONS. The weighting has been determined as 100 for the least productive authority and 0 for the most productivity authority ↩

5. An average of Farm Basic Payments for the years 2018 to 2020 as determined by the Rural Payments Agency (RPA) ↩

6. LEADER, a French acronym meaning ‘Liaison among Actors in Rural Economic Development’ is a programme previously funded in England as an EU-funded rural grant programme designed to support local businesses ↩