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Review of the Rural Petrol Stations Grant Scheme Final Report

3 BACKGROUND TO THE RPSGS

Rurality, social inclusion and impacts of fuel price

Scotland has a high degree of rurality, which is reflected in the 8-fold urban-rural classification used in the Scottish Household Survey, and which is shown in Figure 1 below. Rural Scotland as a whole comprises 17.6% of households, with small towns comprising a further 12.7%. Within the rural classifications, the proportion of households is as follows:

• accessible rural - settlements of less than 3,000 people and within 30 minutes drive of a settlement of 10,000 or more = 11.6%;
• remote rural - settlements of less than 3,000 people and within a drive time of between 30 and 60 minutes of a settlement of 10,000 or more = 2.87%; and
• very remote rural - settlements of less than 3,000 people, over 60 minutes drive of a settlement of 10,000 or more = 3.1%.

Figure 1 Urban Rural Classification of Scotland

Rural Scotland experiences a high level of car dependency. Data from the Scottish Household Survey shows that 82% of the survey population in accessible rural areas, and 72% in remote rural areas, made their usual journey to work by car (either as a driver or passenger), compared to 60% in large urban areas, and 68% as an overall average. Latest Census statistics show that car ownership is higher amongst rural households - across Scotland as a whole, 34% of households do not have a car or van, whilst in the Highland Council area, for example, the equivalent figure is 25%.

However, research has shown that those living in rural areas are more likely to be 'structurally' dependent on cars, as opposed to 'consciously' dependent, that is, the former has little alternative to car ownership given the limited choice of other means of travel and the necessity to travel, whilst the latter may perceive a need to use the car for reasons of comfort and convenience ¹. Moreover, those on lower incomes often own a car at great financial cost to themselves, and through a lack of choice rather than a desire to maintain a car.

There are a range of variables influencing car ownership, and more importantly, car dependency. Some variables that have been identified include income levels/occupation of head of household, household composition, residential location, and stage of life/age-group (ibid). SHS results show that car use rises as incomes increase and is dependent on age (Figures 2 and 3 respectively).

Figure 2 Effects of income on car use (All Scotland)

Figure 3 Effects of age on car use (All Scotland)

These data are supported by previous research on impacts of fuel price rises on rural Scotland, which argues that over the short term some rural residents will make changes to absorb fuel price increases, and that those on low incomes are likely to feel these impacts more than those on higher incomes. Over the longer term, individuals are forced to make significant lifestyle changes, such as change of job or home. The research has suggested that those on low incomes are less dependent on cars although for many households in rural areas owning a car is a necessity, and can therefore be a financial burden for those with limited income.

Statistics ² show that more rural and remote areas in Scotland encounter lower weekly earnings compared to the Scottish average, as Table 1 shows. The average gross weekly pay for full time workers across Scotland is 436.76, compared to 355.60 for the Borders LEC area, and 326.08 for Skye and Lochalsh LEC area.

TABLE 1 WEEKLY EARNINGS

Rural services

Local services are essential to the vitality and viability of any area. Rural Scotland in particular suffers from a lack of local services, with remoter areas in particular struggling to maintain communities and population levels. Significant efforts have been made by the Scottish Executive to maintain an adequate level of services through various programmes, the Rural Transport Fund being one such funding stream.

A study ³ in 2000 highlighted the importance of local services to rural communities in Scotland, in particular retailing services including local village/grocery shops, banks and Post Offices. The report, prepared by the Scottish National Rural Partnership for Ministers, commented on the crucial role of rural transport, and the high degree of dependency of rural residents on the car, and consequently, rural petrol stations: "Scattered rural communities are often heavily dependent upon the car as their only means of access to services and we are very much concerned over the impact of the rising cost of petrol and the dwindling number of rural petrol stations. For some rural communities petrol stations are the only local retail outlet and we recognise their value, along with the particular difficulties they face because of their low turnover".

Further research ⁴ on the availability of rural services in rural Scotland placed petrol stations as one of 20 key services that were known to be important to communities. The study highlighted the often diverse role of petrol stations, acting as outlets for confectionery and newspapers, heating or cooking fuel such as coal and bottled gas, with some combined with a village shop/convenience store or a post office.

In an analysis of drivetimes to rural petrol stations, the report found that only 80% of households are within a 15 minute drive of a petrol station in rural Scotland compared to over 99% in urban Scotland and 97% in small towns. Furthermore, 30% of households in remote rural Scotland are more than 15 minutes drive from a petrol station and 29% of households in very remote rural areas more than 30 minutes away.

Figure 4 Drivetimes for petrol stations

Lack of access to services has been linked to poverty levels and social exclusion ⁵. Moreover, retention and support of local services is strongly advocated in a number of key research reports, including those cited above, as this reduces the need to travel (and thus car dependency decreases), and helps to sustain local communities.

The RPSGS

The RPSGS was first introduced in 1998 as one component of the Rural Transport Fund. Its genesis followed a study undertaken on behalf of the Scottish Executive that identified rural petrol stations as being particularly vulnerable to closure, predominantly because of price competition and regulatory requirements that placed significant burden for capital expenditure on some petrol stations.

Because of the benefits that were recognised to arise from the maintenance of rural petrol stations, the RPSGS was introduced. The grant is available to some petrol stations to cover capital expenditure on fuel supply equipment including new storage tanks, vapour recovery equipment, pumps and associated pipework. Funds are usually available to cover a maximum of 50% of total works costs, although guidance states that this can be exceeded in exceptional circumstances.

Some eligibility criteria are placed on businesses in order to target grant payments to both smaller and more rural filling stations. Rurality is tested through a requirement that the petrol station be more than 30 minutes drive time from the edge a town with a population of more than 30,000. Awards are only for sites more than eight miles from any other petrol station and the grant is targeted towards smaller businesses through a requirement that stations are only eligible if total fuel sales are less than one million litres per annum.

In April 2000, the scheme was extended to assist with the installation of tanks and dispensers for the provision of liquid petroleum gas (LPG). Petrol stations eligible for this funding should meet the same sales volume and distance from urban area criteria as for other stations, but the distance criterion is amended such that there should not be other LPG suppliers within 15 miles.

The scheme is administered on behalf of the Scottish Executive by HIE and SEn through the network of LECs. Currently the budget for expenditure is 400,000 per annum. At the time of commencement of this study (January 2004) 55 petrol stations had received RPSGS funding. Of these 55, 18 have successfully applied for the installation of LPG equipment.

Objectives for RPSGS

At the introduction of the RPSGS, its stated objective was to "support the retention of a sustainable and accessible network of fuel supply throughout rural Scotland". This objective has remained and has been enhanced by the expansion of the scheme to incorporate the provision of LPG equipment.

Although we are not aware of an agreed objective for that expansion, we would suggest that it could be stated as "to enable a reasonable level of access for rural communities to a more sustainable vehicle fuel".

It is our consideration that these remain valid output objectives from the RPSGS. The outcome objectives are felt to be different, however, and could be stated as:

• to maintain the sustainability of rural communities through the retention of essential services; and
• to minimise disincentives to tourist visits to rural Scotland arising from the transport system.

In these respects, the objectives of the RPSGS are similar to many other rural funding initiatives in Scotland.

In order to effectively assess the contribution of the RPSGS to date and to appraise options, it is beneficial to define a broader range of output objectives for the scheme. Our proposed output objectives are additional to those stated above and are:

• to avoid increases to the financial and time costs to local residents, businesses and tourists of accessing fuel;
• to minimise the environmental disbenefits arising from the supply of fuel; and
• to maintain those other services that depend on the continuing operation of a petrol station.

Comment on long-term objectives

The environmental agenda is an important one, and is rightly recognised in national policy on appraisal of transport schemes through STAG. However, the role of the RPSGS in the wider context of sustainable development and global warming needs to be considered in the long term. The Scottish Executive is committed to renewable energy sources, having published National Planning Policy Guidance on Renewable Energy, and a consultation paper on Scotland's Renewable Energy Potential beyond 2010. The Scottish Climate Change Programme commits the Executive to raising the overall proportion of electricity generated from renewable sources to 18% by 2010. The consultation paper accepts that current fuel sources are predominantly finite, and that alternative sources have to be found. Moreover, in the longer term, lifestyles may have to change to recognise the limits on our currently energy-intensive way of living.

It is acknowledged in many quarters that rural areas are inevitably more dependent on car travel than urban areas, where alternatives are easier to sustain with more dense populations. However, it is important that the RPSGS is consistent with wider policy objectives, and that it helps to maintain the vitality of remoter communities. The inevitable shift towards more sustainable and renewable sources of fuel is particularly important for rural areas in maintaining the viability of communities.

Other funding with similar objectives

In its review of October 2002, the Scottish Executive identifies 20 different services worthy of accessibility analyses. These include a variety of services including those for education, personal finance and retail (including fuel supply).

There is a variety of other funding initiatives that promote the sustainability of rural communities in Scotland. Although many of these are not directly transport-related, they have similar outcome objectives to RPSGS and are worthy of comparison with the petrol stations scheme. The main funding sources are introduced below ⁶.

Leader + funds rural development, European Union

Leader+ is a European Union funded programme that aims to encourage and support rural communities in taking an active role in local development. It helps to utilise environmental and cultural resources, local know how, employment, and entrepreneurial spirit, while promoting sustainable development. The three key funding aspects of the Leader+ programme focus on pilot development projects, co-operation between rural areas, and networking.

In Scotland there are 13 individual Leader+ Action Groups, each of which has a theme e.g. Moray, North Highland, East Fife, Lomond and Rural Stirling, Tyne/Esk Action Groups have the theme of improving the quality of life in rural areas; the Action Groups of Argyll, the Islands and Lochaber, Cairngorms, Dumfries and Galloway, Scottish Borders, have a theme of making the best use of natural and cultural resources; and Northern Isles, Western Isles, Skye and Lochalsh Action Groups have the theme of the use of know-how and new technologies to make the products and services of rural areas more competitive.

Scottish Objective 3 Programme (2000-2006), European Commission

The Scottish Objective 3 European Social Fund (ESF) Programme supports training and development activity across Lowland Scotland.

The Programme has five Priorities for action, which are:

• Priority 1 - Raising Employability
• Priority 2 - Addressing Exclusion
• Priority 3 - Lifelong Learning
• Priority 4 - Competitive Economy
• Priority 5 - Addressing Gender Imbalance

Public sector/voluntary organisations including local authorities, local enterprise companies, higher education institutions, further education colleges, local enterprise trusts and voluntary sector organisations can all apply for funding. Private sector organisations and individual businesses cannot apply in their own right for ESF. All of Lowland Scotland i.e. excluding Highlands and Islands is covered by the programme. However Priorities 2.2 and 2.3 are geographically targeted on urban and rural Community Economic Development areas respectively.

Rural Strategic Support Fund, Scottish Executive

This fund provides funding to bodies working at a national level to establish and provide support to local rural partnerships, and provides funding for other groups which wish to promote rural community capacity building at a local or national level. The fund includes providing support and advice for communities in taking forward local needs assessments and local projects; and enabling rural communities to link into local and national policy processes. General office expenditure is classed as eligible expenditure under the fund, and the maximum amount of grant payable in year one is 25,000. Recommended maximum amounts of RSSF funding in year one for each type of partnership are as follows: 25,000 for a Strategic Partnership; 20,000 for a District Partnership; and 15,000 for a Community Partnership.

Better Neighbourhood Services Fund, Scottish Executive

This fund has been ongoing since 2001, and aims to support pathfinder initiatives to improve services in Scotland's most deprived neighbourhoods. The purpose of the fund is to enable local authorities and their community planning partners to improve services to those living in disadvantaged neighbourhoods. This should be done through the community planning process, demonstrating the delivery of social justice targets and the involvement of the community concerned in the process. The resources available should be used to develop the quality and/or quantity of local services to deliver real and substantial improvements for local people that can be set out and measured under local outcome agreements. Priority should be given to services that address Social Justice priorities. The funding has been targeted at the 12 local authorities across Scotland with the most deprived areas, which includes some rural areas. The areas to benefit from the funding within these areas are decided locally. Specific services have not been recommended for targeting by Ministers, beyond the desire to meet Social Justice objectives, although they would welcome service for children or for the elderly. Local Outcome Agreements have to be formulated, to ensure that outcomes and outputs are planned and monitored closely.

Scottish Rural Partnership Fund

The SRPF is an annual competitive fund with a budget of 3.123m in 2003/04. The Fund invites applications from not-for-profit community and voluntary organisations and partnerships for a variety of rural development projects. The scheme was established in 1997, and is split into three strands:

Rural Challenge Fund - Offers capital and revenue grants to rural projects, which propose innovative ways of tackling rural problems or create wider opportunities for rural areas. The funding is primarily intended for local projects, but national bids, which benefit rural communities across Scotland and which have local backing, may be considered. Grants of up to 50% of eligible costs are available for a period of 1 to 3 years, subject to a maximum overall grant limit of 50,000.

Rural Strategic Support Fund (RSSF) - Offers revenue grants to cover the core costs of establishing Local Rural Partnerships, along with grants for minor capital items. However, funding can also be made available to other groups wishing to promote rural community capacity building at a local or national level. For Local Rural Partnerships, a grant is available to fund up to 50% of eligible costs in the first year, declining to 33% in the second year and 16% in the third year. For local or national capacity building projects, outside Local Rural Partnerships, a grant of up to 50% of the eligible costs is available for up to 3 years, subject to a ceiling of 50,000

Local Capital Grants Scheme (LCGS) - Offers mostly capital grants to assist local, voluntary and community organisations to provide new or upgraded community premises for educational, social or recreational activities. Local Authorities that submit a prioritised list to SEERAD each year administer applications. Grants are available for up to 50% of the eligible costs, subject to a ceiling of 100,000. In addition, the relevant Local Authority must be committed to match fund every project to 25% to the eligible costs.

Projects that are currently ineligible for support from all these strands of the SRPF include:

• businesses and profit-making bodies
• activities associated with agriculture and fisheries
• existing projects and projects where the match funding will come from another Scottish Executive Department, Whitehall Department or an agency of the Scottish Executive.

The SRPF is currently under review, and a consultation paper was launched in 2004. An evaluation of the fund has also been published in 2004.

Small Projects Grant Scheme, Forward Scotland Partnership Programme

This is a grant scheme tailored to support community projects that contribute to sustainable development, i.e. activity that seeks to improve the integrated social, economic and environmental aspects of the community. Issues might include waste, energy, natural environment, special needs issues etc. Applicants must be able to demonstrate community participation in the planning and implementation of their project. They must also be able to address the Environment and at least one of the other two themed issues listed in the application form (Environmental, Social, Economic) and must have long term management and maintenance plans for their project.

Non-profit making, community based organisations across Scotland e.g community council, voluntary organisations, clubs etc., are eligible to apply.

The scheme is designed to support activities that make a community stronger or more able to manage a project. Therefore funding should be sought for feasibility studies, business plans, publications, websites and training courses. The scheme will not contribute to the day to day running of an existing project, activities that have already taken place or foreign travel.

Grants from Communities Scotland

A number of grants are available from Communities Scotland, a Scottish Executive agency ⁷. Their aim is to work with others to improve the quality of life for people in Scotland by regenerating disadvantaged communities and helping deliver better housing. Some of the grants on offer include the following:

Rural Empty Properties Grant (REPG) - the grant provides financial assistance to bring existing empty properties that are below the tolerable standards back into residential use for rent to local people. Estates, farmers, other landowners and private landlords can apply and there are a number of prioritised areas e.g. in Angus, Angus Glens, Highland Perthshire and Strathearn. There are a number of conditions imposed on the grant, as follows: the grant is only available for existing property for renting to local people; it is not available to provide housing let on a tied or agricultural tenancy basis; second and holiday homes are excluded; the owner of the property is directly responsible for finding a suitable tenant, collecting the rent and otherwise managing the property; rents should be affordable to local people and be no lower than rents charged by housing associations or local authorities for comparable houses and no higher than the market rents applying in the commercial sector.

Rural Home Ownership Grant (RHOG) - RHOGs are provided to local first time buyers within prioritised areas of rural Scotland, to help them become first time homeowners, usually by building a new home or renovating an empty property or, in exceptional circumstances, by buying a property on the open market. The RHOG fills the gap between the maximum level of mortgage the applicant can raise and the cost of the new home. If the property is sold within ten years then the total amount of grant must be repaid to Communities Scotland.

Grants for medium sized projects and grants for large projects, Community Fund, and UK Grants Programme 2003-05, Comic Relief

The UK-wide Community Fund gives grants primarily for projects that aim to meet the needs of those at greatest disadvantage in society and also for projects that improve the quality of life in the community. Funding is available to voluntary organisations, for capital and / or revenue expenditure.

The UK Grants Programme aims to tackle poverty and social injustice by helping people to make lasting positive change in their lives and their communities. Voluntary organisations and self-help groups are eligible to apply for funding, and in particular groups that reach the most disadvantaged and who give a voice to people who are often not heard, helping them to take control of their lives and raise awareness of their needs. Applications are accepted under the following five programmes:

• Fighting for Justice
• Supporting Young People
• Refugees and Asylum Seekers
• Domestic Abuse
• Local Communities Working For Change

Transforming your space, New Opportunities Fund

This programme aims to fund projects across Scotland that will improve local environments, enabling communities to make them safer, healthier, greener, cleaner, better designed, more welcoming and accessible to all. Community organisations such as Community Councils or local community groups can apply, as can organisations from the public, private or voluntary sector acting on behalf of local communities (and with the full engagement of the communities). Both Revenue and Capital expenditure is eligible under the fund - the Capital strand could include such things as the acquisition or leasing of buildings, land, equipment or vehicles, construction work, fixtures and fittings. Projects may be funded for up to 3 years.

Conclusion

Although the RPSGS has objectives that specifically relate to the retention of a sustainable and accessible fuel network, this is just one of the services that contribute to what many people consider to be acceptable quality of life in rural areas. There are many other initiatives that aim to provide a range of other rural services and also contribute to the maintenance of quality of life.

Comparison between these funds, and the outcomes of each, is beyond the remit of this study or the scope of its research. What is clear, however, is that the provision of rural fuel supply is an important contributor to sustaining communities, but can only meet this outcome objective is it accompanied by the other initiatives that maintain a range of other services.

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