Countryside communities that could play a much bigger role in helping the nation recover from the financial crisis are being held back, a report warns today.

Rural communities will never reach their full economic potential because the planning system frustrates growth, the document says.

The Cheltenham-based Commission for Rural Communities (CRC) also highlights the need for massive improvements to broadband and mobile networks.

And it says the Government's decision to scrap regional development agencies could mean future support is limited to urban areas.

The CRC is a Government-funded body that will itself be abolished next year, as the coalition tries to reduce the nation's deficit.

So the report being launched today – Agenda for change: releasing the economic potential of England's rural areas – will be one of its last.

CRC chairman Dr Stuart Burgess said: "More of the potential of our local rural economies can and should be realised.

"Following this Government's emergency budget it is clearer than ever that helping the release of this potential must be a big part of the next stage of our national economic growth."

He said he was pleased the Government was committed to introducing measures to ensure the rapid roll-out of superfast broadband across the country.

As the Daily Press has reported, broadband speeds tend to be much slower in the West's rural areas, holding back small and medium-sized firms – and much of the countryside, include swathes of Somerset and Dorset, have never had good mobile phone connections.

The report says the Government should use specific investment funds, such as a share of the Digital Switchover budget, to deliver modern communications infrastructure.

Ministers want new, smaller Local Enterprise Partnerships to replace regional development agencies, setting a deadline of yesterday for proposals.

There has been concern these new bodies will focus on cities and larger towns, as they are likely to be based on travel-to-work areas.

The CRC says they "should work to support economic growth in rural areas as part of their mainstream functions and programmes".

The report also says the planning system "continues to frustrate business operation and expansion in some, but not all, rural places".

Reforms are vital to reduce inconsistencies between places, and stop the planning system unnecessarily restrict economic growth based on assumptions of what are appropriate rural businesses.