How do rural estates contribute to the UK economy?
How do rural estates contribute to the UK economy? - RICS Rural Conference, June 2016
“Don’t talk unless you can improve the silence” – Jorge Luis Borges
No apologies for not addressing countryside stewardship or affordable housing in detail – happy to take questions but I want to be far more strategic today…
I have been asked to talk about ‘How rural estates contribute to the UK economy’. Personally, I think the question is much bigger than that. Estates do not only contribute significantly towards the UK economy but also towards the environment and wider society.
I have the privilege of chairing the Estates Business Group, comprising 28 of the larger private Estates in England and Scotland.
EBG estates in the UK contribute over many £millions to government each year in taxation alone. In addition to this EBG estates assist government in delivering their objectives by providing:
- Thousands of rented homes and new homes built in the last 5 years; many thousand more in the pipeline
- Employment for over 5,000 people
- Over 2000 commercial lettings
- Significant areas of land for food production
- Hundreds of MW of power from Solar
- Thousands of acres of managed forest
- With public access to much of this land
- 144,000 acres of SSSIs
- Historic buildings with over 7 million visitors each year
- Management of thousands of Grade 1 listed, Grade 2 listed properties
- And over 4000 thousand visits by school children to the countryside
Rural estates have scale, scope and professional management across a wide
range of disciplines. They also have common agendas with many different stakeholders. They have governance that enables change and innovation on a landscape scale, some risk taking and collaboration. They have built, human and natural capital.
This is probably one of the most exciting times to be leading change in the management of rural land and property. Every industry faces a breakpoint sometime in its cycle. Today rural estates face breakpoints across every facet of our complex countryside businesses. For me this is a wonderful opportunity, for some though, it is a threat.
My suggestion to you today is that the solution is simple; clear leadership, embracing innovation and new networks and relationships. Your profession can deliver on all three – and needs to.
Sustainable business is no longer an ideal. It’s real. Estates need to develop long-‐term visions to address the challenges and opportunities derived from a new and complex paradigm. Consumers expect it, governments legislate it and the economy and environment needs it. Rural Chartered Surveyors will play a key part in this transformation and are ideally placed to help rural estates to transform and realise their potential.
Sustainable business is about creating value – not diminishing harm – the latter is not sustainable.
In order to survive every estate will need to have sustainability at the heart of their strategy. Whilst estates have the built, human and natural capital to achieve this many will certainly need professional support to move through the transformation and innovation required. As the rural professionals you will be in a position to ‘Think Big’ and align the strategy of rural estates with the objectives of government and demands of an ever-changing world. Indeed, you should take the lead and influence the political agenda.
At Clinton Devon Estates short-term economic success has NEVER been the main criteria in the way we lead our organisation. STEWARDSHIP has been our watchword for generations. Handing over something more valuable to those that follow than we received from those that went before. Transformation and innovation has been a continuum for hundreds of years.
Frequently we have found that improving performance in one dimension can mean considering decreasing performance in the other, trade-offs were more common than not. We have sought to embed sustainability into the heart of our business approach, to drive creation of value whilst also improving the physical and social environment. No more trade-offs, but delivery of multiple outcomes. We consider the impact of our choices, learning to embrace sustainability dilemmas to enhance our strategic decision making.
Looking ahead, all businesses, including estates, need to find new ways of increasing consumer value while providing overall benefits to society. This means re-examining – and if need be transforming, business models to better compete in the present and future global arena, innovating to build a sustainable future. We are testing our supply chains to ensure that they comply with legislation and best practice. Investment decisions require impacts on society and environment to be assessed. Farm and forestry operations assess environmental impacts which are placed alongside financial objectives. Our housing developments deliver more than just homes… green space, community infrastructure and built heritage… beyond any 106 requirement. Our conservation teams are embedded across the organisation acting as a challenge function as well as executing exemplary conservation outcomes, on par, if not exceeding that delivered by NGOs.
It would be easy for rural estates to assume that they are future proof given many hundreds of years’ existence. But this would be a risky assumption. The world is changing at a pace and the future is uncertain - we need to transform to meet the demands of the people and planet around us. We need to ensure that society wants us to exist. If we don’t do this we won’t. If you need proof just look over the border into Scotland.
Mega trends tell us that over the next 10 years there will be a global population increase of 1 billion people. The UK has seen a population increase of 10 million since the mid 60’s, with official predictions suggesting a further increase of 10 million by 2039. People are living longer and having fewer children, as a result the fastest growing segment of the population will be the over 65’s. In housing terms this presents a real challenge. Yet we also need to ensure young families have both homes and employment. This all impacts on the number and type of houses needing to come to market, particularly in rural areas. We live in a contested countryside and rural estates and rural surveyors need to influence and lead. Affordable housing needs to be delivered in the context of an overall strategic plan – linking demographics, economic growth and jobs. Estates should be in the centre of this thinking but usually are not.
How will we achieve this?
Primarily through relationships. Your knowledge and expertise is critical when it comes to developing stakeholder relationships. Going above and beyond existing relationships will facilitate transformation and innovation within rural estates. Unusual partnerships and collaborative working will allow communication from ‘inside the estate’ to the local community. You need to ensure that the local statutory bodies, regulators and people within positions of influence have a clear understanding of the potential that rural estates can offer. Whilst also being sensitive to others agendas; seeking solutions to problems faced by society. Politically – owners of rural estates will never be flavour of the month whatever colour of government - so you need to dump the stereotyped tweed and brogues and move into a different space with a new and compelling offer – separating ownership from outcomes and family from business.
Rural Estates are in a unique position to be able to respond to many global trends. We can help to protect the environment, increase biodiversity through landscape scale conservation, manage natural resources through high standards of agriculture and land management practices, all the while contributing positively to society and providing much needed food, energy, housing and employment, directly and indirectly. Finding profitable business models in these spaces requires analytical, market and strategic skills – can Rural Surveyors provide them?
The trend of rapid urbanisation impacts on how we plan for the future too. In 1800 only 2% of the world’s population lived in cities, now, in 2016 it is 50% and growing. Infrastructure investment will centre on cities – rural estates have an increasingly important role in rural infrastructure delivery to bridge the gap. A huge opportunity with much potential. Dark fibre; commercial space; catchment management to prevent flooding; green infrastructure as enablers and mitigators for development.
Rather than holding firm to a chocolate box image of the countryside, it is time for us to raise our eyes to a dynamic future, where estates understand their contribution and what they have. For example Natural Capital. At Clinton Devon we have published last week a State of Nature report on our 3,000 acre SSSI heathland – cataloguing over 3,100 species. We are starting now on the overall Estate and will use this to work with our tenants and others to inform and encourage joined up thinking for landscape countryside stewardship and innovative ways of providing space for nature.
The Institute for the Future is a California-based research organisation forecasting technology, social and economic changes and identifying emerging trends. It predicts that "Land management will be at the centre of a debate about demand for food, competing with demand for fuel, carbon management, development and human health”.
With that in mind, the only way in which we will be able to achieve successful stewardship of our rural areas is if all parties, including owners and managers of land, local communities, decision makers and political influencers embrace a new openness with a willingness to learn from each other and consider new ideas. With openness comes risk, yet being professional and showing that you are seeking to go far beyond simple compliance will help mitigate it.
Technology and innovation will continue to transform our approach to the issues faced in rural England and encourage increased productivity from those who manage land and those who derive their business from it directly or its setting. Equally innovations in the form of social media will ensure that everything that everyone does is fully scrutinised and discussed by individuals and groups far and wide. No longer is there a hiding place because you farm on a remote hill top or you run a waste business a long way from an urban centre.
For those still occupying polarised positions as to the way the countryside should be cared for and managed, some of these developments may seem threatening. For others they provide an opportunity to inform, lobby, influence and learn. Why try to come up with the ideas yourself when you can ask nearly four billion people online to help?
What rural estates and their professional advisors need to be demonstrating is leadership of change.
The potential for improving our natural environment and wildlife is huge, as is the potential for new and innovative industries, sympathetic to their environment and transformed traditional industries sustaining future outputs of food and fuel.
The stewardship of rural England inevitably requires a certain degree of philanthropy, although where agriculture, forestry and rural businesses have been successful, and long serving through generations, there have inevitably been sound economics underpinning them. Reasonable financial returns to those managing land encourages cross subsidy and in some cases direct funding, of non-market goods such as public access, amenities and education.
As the English economy continues its journey through austerity, generation of income will need to be just as an important policy objective as funding public goods and services. Indeed, new understanding will need to be developed to recognise the contributions of all parties in the stewardship of rural England.
The only thing holding back the radical new approaches which may be needed is our imagination. Traditional views on farming, forestry, conservation and development will have to be re-thought and all parties will need an open mind.
None of this is new. In 1888, a predecessor of mine and conceivably one of the first rural surveyors, Robert Lipscomb said:
“….our power for good or evil in this world’s affairs in a countryside is enormous. You may do much, very much, to make many hundreds of people of all grades prosperous and contented, or the reverse… When I compare my work with the work of most professional men I envy very few; if any, of them… And if you are a lover of nature as well as of your work; if every bird and beast of the field, every flower of the hedgerow, every change of the developing season… have an interest for you… how can your life ever be dull? How can it be otherwise than full of interest, and therefore of happiness? But far and away above any satisfaction of this kind – above every satisfaction which you can experience – is the inward knowledge that you can look the whole world in the face and say that you have done your duty, and something more than your duty”.