Rural Scotland Business Panel Survey

1. Introduction

The Rural Scotland Business Panel Survey

The Rural Scotland Business Panel was established to measure and monitor the economic health of rural Scotland through capturing the experiences and opinions of rural businesses and social enterprises. It was commissioned through a partnership of the Scottish Government, Highlands and Islands Enterprise (HIE) and South of Scotland Enterprise (SOSE).

This report presents the findings from the second wave of the Rural Scotland Business Panel survey, the first having taken place in October/November 2021. The aim of the survey is to ensure that the voices of rural businesses are represented at regional and national level. Survey findings will help address existing data gaps by providing consistent and comparable data on businesses in each region and across rural Scotland overall, allowing the Scottish Government, HIE and SOSE to explore emerging opportunities and challenges and to track change over time. Findings will help inform resource prioritisation and policy development within and across the public sector. The HIE and SOSE Business Panel surveys are distinct components of the overall survey, with findings reported on separately as well as within this report^[1].

The survey covered a range of topics including: economic optimism, current priorities and concerns, concerns about costs, what businesses are focussing on and how they are planning ahead, workforce, new technology, low carbon and markets.

Context

The survey was carried out against the backdrop of challenging economic circumstance for businesses in the region, and across the UK.

Though widespread COVID-19 lockdown restrictions had eased, some businesses were still operating in a different way than they had been pre-pandemic.

The first quarter of the year saw reports of increased inflation, interest rates and record fuel prices. These challenges were compounded during February and March 2022 by the invasion of Ukraine by Russian forces. The resulting economic sanctions and reduced supply chains increased prices in some sectors. The survey therefore captured concerns in these areas.

November 2021 saw the UN Climate Change Conference (COP26) take place in Glasgow, with the attention of global media turned to Scotland and its response to the climate emergency. Reflecting this, the survey captured business views on net zero and moving to low carbon ways of working.

Methodology

Fieldwork

The survey was conducted with businesses and social enterprises across rural Scotland between 7 February and 5 April 2022, using telephone interviewing. In total 2,723 eligible interviews were achieved.

Geographic coverage

The survey covered three geographic areas:

• Highlands and Islands (the area covered by HIE), including: Argyll and the Islands, Caithness and Sutherland, the Inner Moray Firth, the Outer Hebrides, Lochaber, Skye and Wester Ross, Moray, Orkney and Shetland.
• South of Scotland (the area covered by SOSE), consisting of Dumfries and Galloway and the Scottish Borders.
• The rest of rural Scotland. This area included all other parts of rural Scotland not already covered by the HIE and SOSE samples. For the purposes of this survey, 'rural' was defined as categories 2 to 6 of the Scottish Government's six-fold Urban Rural Classification^[2] (see Table 1.2), excluding any parts of category 2 that were within travel to work areas^[3] centred on Large Urban area (therefore excluding category 2 areas that are within commuting distances from Glasgow, Edinburgh, Aberdeen or Dundee, which share some of the infrastructure and operating environments of those large urban centres).

The map in Figure 1.1 shows the broad areas covered by the survey.

The number of achieved interviews in the three areas is shown in Table 1.1.

The profile of the businesses that took part in the survey covered a range of categories in the six-fold Urban Rural Classification (Table 1.2), with more than half (57%) being in either a remote or accessible rural area. Further details of the profile of the survey sample are shown in Appendix B and a map of the six-fold Urban Rural Classification is provided at Appendix C.

In this report, survey findings have been condensed into three categories: remote rural (category 6), accessible rural (5), and small towns and peripheral urban areas (2 to 4). Grouping categories 2, 3 and 4 together allows more statistically significant variations between groups to emerge because of the larger sample size involved.

Sampling

The survey sample was based on an overall business base of 94,275 businesses across rural Scotland.

The survey sample was sourced from two sources. First, contact was made with members of the existing HIE, SOSE and Rural Scotland business panels, that had taken part in previous waves and indicated they were willing to be re-contacted. The remaining sample was sourced from the Dun and Bradstreet business database and was stratified by sector and size to reflect the population of businesses in rural Scotland.

Quotas were set for recruitment and interviewing so that the achieved sample reflected the population of eligible organisations as defined by the Inter-Departmental Business Register (IDBR)^[4]. Eligible organisations were defined by SIC (Standard Industrial Classification) code, with the following SIC 2007 Sections excluded from the sampling:

• public administration and defence; compulsory social security;
• education and health and social work;
• activities of households as employers; undifferentiated goods- and services-producing activities of households for own use; and
• activities of extraterritorial organisations and bodies.

SIC codes were used to identify areas of economic activity considered to be growth sectors^[5] (as set out in the Government Economic Strategy) so that quotas could be set to ensure these were represented in the survey sample. These growth sectors are derived from the longer list of SIC code categories (as outlined in Table 1.3) and are used for analysis throughout the report. Where businesses do not fall within one of these categories, they are classed as "non growth sector", a collective term that covers a range of individual SIC categories (see breakdown of the sample in Appendix B).

Table 1.3 – Growth sector categories

Within each participating organisation, the survey respondent was the owner or a senior manager able to comment on the performance and future prospects of the organisation.

The achieved sample was broadly representative of the population, notwithstanding some differential non-response due to differences in availability and willingness to participate. Weighting was applied to the data so that it matched the business population by broad geographic area (Highlands and Islands, South of Scotland and rest of rural Scotland), sector and size of business.

Presentation and interpretation of the data

The survey findings represent the views of a sample of businesses, and not the entire business population of rural Scotland, therefore they are subject to sampling tolerances, meaning that not all differences will be statistically significant.

Throughout the report, differences between sub-groups are commented upon only where we are sure these are statistically significant, as in where we can be 95% certain that they have not occurred by chance. The typical sub-groups reported on are:

• size of business (grouped by sole trader^[6], 1-4, 5-10, 11-24 and 25+ staff),
• location (one of the three broad areas shown in Table 1.1),
• sector (using the growth sector categories in Table 1.3),
• rurality (grouped into three categories of remote rural, accessible rural, and urban), and
• other characteristics based on responses to the survey (for example the markets they trade with, or their growth aspiration).

Where percentages do not sum to 100%, this may be due to rounding, the exclusion of 'don't know' categories, or multiple answers. Aggregate percentages (for example "optimistic/not optimistic" or "important/not important") are calculated from the absolute values. Therefore, aggregate percentages may differ from the sum of the individual scores due to rounding of percentage totals.

Throughout the report, an asterisk (*) denotes any value of less than half a percent and a dash (-) denotes zero. For questions where the number of businesses is less than 30, the number of times a response has been selected (N) rather than the percentage is given.