With our latest impact report soon to launch, our Policy Lead Will Thomson shares some of our latest thinking on place, and how this is informing our decision-making.
One thing we know from our Covid-19 & Communities data work is that place has played a key factor in determining the severity of the economic impact of this pandemic. We saw the overall economy contract swiftly and immediately during the first national lockdown (down 33% compared with 2019), but this effect was not uniform – with certain parts of the country seeing a greater impact through the lockdown period.
Figure 1: Monthly Regional Year on Year Spending
Notably, we saw an early differential impact between cities and coastal areas, with the greatest health exposure in densely-populated areas and the sharpest economic decline in coastal areas reliant on visitor spending.
As time has progressed, we’ve seen the geography of the economic impact shift. While some places have seen a return to normal spending patterns, other areas – notably places like Leicester that had to introduce the first local lockdowns during the summer – have continued to struggle, ultimately recovering at different paces. Recent data suggests that areas with a higher proportion of local trade have sustained economic activity better than other areas of the country; and that local lockdowns have an overall negative impact on spending, especially on the hospitality sector.
Figure 2: Spending in ‘local’ areas vs England & Wales
Credit: Tortoise Media
Interestingly, two of the worst impacted places earlier in the year – Wadebridge and Penzance - saw a surge in spending towards the end of the summer (as high as 80% over 2019 in Wadebridge), which reflected the easing of restrictions, increased domestic tourism and policies to stimulate the economy like Eat Out to Help Out over August. Yet despite this more recent spike in economic activity, both towns still have a deficit in overall spending this year when compared with 2019, and they will continue to struggle as they enter low season – not to mention the added pressures of the second lockdown.
Figure 3: Wadebridge spending
Credit: Tortoise Media
The news of a vaccine has lifted hopes that a return to some sense of normality may be on the horizon, but we must be realistic in acknowledging that the economic impact of the pandemic is only just beginning to be felt, and it is likely to be severe and long-lasting. Sectors like hospitality, tourism, arts and culture have been devastated, with many businesses forced to shut or operate at a loss due the collapse in trade. Large retail chains that were already struggling to stay afloat have seen an accelerated collapse into insolvency – even the likes of John Lewis has had to close stores and make cutbacks. In the months ahead we are likely to see even more business failures and job losses, alongside a mounting private sector debt burden that could further weigh down the economic recovery.
We will soon be publishing our latest impact report, which will highlight how we are thinking about place when it comes to our decision-making. We have seen how the pandemic has exacerbated existing inequalities between and within places – especially those that were already economically at-risk due to pre-existing levels of deprivation, job insecurity and low wages. The pre-Covid ‘levelling up’ policy agenda which focused on towns and high streets that had previously been overlooked or ‘left behind’ now has even more urgency.
We want to ensure that our funds and programmes are reaching those areas that are most in need of support, and so we are taking a more intentional approach to allocating our funding – using data to inform where this money is best spent.
Over the next year, building upon the Corona Shock trackers we’ve been publishing in partnership with Tortoise, we are planning to create a more focused set of high street trackers that compare places with strong social purpose high street infrastructure with a matched sample to monitor change and divergent outcomes over the long Covid-19 recovery. In doing this, we hope to find answers to some important questions about where and how we invest in places:
- What high street composition best sustains local economic activity and what role does social infrastructure play in bolstering this resilience?
- Which sectors and businesses have been able to recover and bounce back, and under what conditions?
- Are there specific business ownership models (e.g. community or employee ownership) that perform better than others and should we be directing more funding towards these?
- Has Covid-19 precipitated a long-term restructuring and localisation of high street usage away from large cities to towns and suburbs due to increased home working and, if so, how should we respond to this?
The data we gather from this granular economic analysis will provide a crucial resource for understanding how places are recovering and where our investment can have the most impact. We don’t yet know the full extent to which Covid has fundamentally changed the ways we live and work, nor do we know how long it will take to repair the economic and social damage caused by this pandemic. What we do know is that some places will struggle to recover without significant levels of support, and we must ensure that our funding is reaching these places effectively and equitably, to create fairer communities.