There are places in England that suffered stunning losses
The UK appears to be on the way out of the depths of pandemic despair. The success of vaccine roll-out has meant that the end of the year-long winter is finally in sight. But there are places in the country which will wake from the economic hibernation, whenever the end comes, to discover a much deeper abyss than their neighbours.
Take the city of Peterborough in the east of England. The total amount of income its businesses’ tills have taken from consumers since the pandemic started is down by about one third. Not for a week. Not for a month. But across 49 weeks.
Peterborough’s experience is akin to having had the kind of lockdown that the average towns endured during the very first fortnight of lockdown in England – and then having had it continue for almost a whole year with no break. Other towns adapted, recovering to stem losses to an average of just 7 per cent of total expected receipts. Peterborough is one of the places where businesses could not.
This finding is one of many alarming findings of a new element to Tortoise’s Corona Shock tracker. We have published a new league table today showing, for each week, the total losses incurred by each town area in England and Wales since the start of the pandemic – now 49 weeks in total – compared to the takings in the same periods of previous years.
Our dataset is based on bank data, and it reflects spending direct from a sample of bank accounts to named merchants. The sample contains at least 12 per cent of bank customers in each part of the country – and lets us see where money is being spent. The data, shared with us by SIB, the regeneration charity, allows us to see which areas are in the most need of economic support in England and Wales.
Our previous measures were focussed on week-to-week changes in spending. They allowed us to see how weekly spending bobbed up and down as measures came in. It would let us see, for example, the surge in spending that accompanied the brief unlocking in England in early December and the lockdown that followed. This is very easily apparent, even in the weekly totals (so, too, is the monthly rhythm as people wait for paycheques before spending).
But by calculating the total losses since March suffered by businesses in towns, calculated as how much less has passed through towns’ tills compared to the previous period in 2019, we can see how big the holes are that policy needs to fill.
Peterborough, the little city on the fens, is the biggest loser. It is a distribution and travel hub. There are huge losses in the ward containing the local IKEA depot. Bridgewater, another distribution town, has started making heavy losses in the past month to join it. Ashford, Crawley and Folkestone – other hubs – are in the same bracket.
The other top places for losses are taken up by university cities: York, Oxford and Newcastle have all seen their takes down by about one quarter.
Conversely, one of the things that is now clear is that resort towns – the focus of my biggest fears over the summer – have largely proved quite resilient. A lot had suffered huge losses by losing their spring season, but a return to more normal summer – and an extended season – allowed a lot of them to make back a lot of their losses.
At the very toe of Cornwall, Penzance succeeded in making up most of its losses. Money passing through its tills was down by 51 per cent between 24 March and 6 July. It had, however, closed the hole to around 10 per cent for the year by early October. It has held that position ever since – now at around 12 per cent. A good late summer nearly offset the spring.
St Austell and Newquay, which was one third down in June, recovered all of its losses by 12 October and is actually at evens now. Many of the South West resort towns have similarly bounced back on this basis: putting on more business at the peak and into the autumn has offset early losses.
This is, however, not universal: Kendal in the Lake District did not recover rapidly over the summer. It is still 13 per cent down.
We have chosen to use so-called “Travel To Work Areas” (TTWAs) – statistical geographies that try to bind together town centres and their suburbs in one economic unit. If you switch to other geographies, though, other clear patterns emerge.
Take parliamentary seats: these are much littler than the TTWAs. The top ten reveals a very clear pattern that is less clear from a higher altitude: areas near airports are suffering particularly acutely. That is what links Hayes and Harlington (Heathrow), Luton South (Luton) and Crawley (Gatwick), for example.
Looking across the parliamentary seats also reveals that the political parties may have quite different interests for recovery. The Greens’ one seat in Brighton is a day-trips, tourism and higher education nexus. No wonder it has been clobbered. The Lib Dems are particularly strong in tourism-reliant areas – particularly pretty university towns. That comes through in their heavy losses.
The seats gained by the Tories at the last election from Labour – which include the so-called ‘Red Wall’ seats – are about 4.5 per cent down on the previous year. This puts them in a slightly better position than the national average.
Hazel Blears, former communities secretary and the chair of SIB, characterises the government approach as: “We’ll give you enough money to tide you over and then you can go back to your original business model and everything will be hunky dory. And I don’t think that’s the answer, right? Certainly not for the small towns… If he doesn’t do something quite different, they’re gonna drown. The life raft is going to sink, right?”
Blears is particularly concerned about piling businesses and towns up with debt – even government-back debt. She has made an appeal, in a Slow View for Tortoise, for another approach: “Instead of giving more debt to companies, we should be seeking to put money in in exchange for shares in the business. The public should take a stake in the businesses it is supporting.”
Our data, recast to local authority level, also suggest that the government’s proposals for regional support certainly seem very ill-targeted at plugging holes in pandemic-ravaged areas. The “Levelling-Up Fund”, intended to fix long-term gaps, has not been more generous to local authorities whose businesses have suffered the deepest short-term hit.
When you look at the distribution of the so-called “Priority 1” local authorities, which are eligible for the most support, they are not obviously carrying much heavier pandemic losses than either the “Priority 2” or “Priority 3” towns.
These graphs show the distirbution of losses suffered by the LAs in each priority band. If Priority 1 areas had been harder hit, the bars would tend to be higher at the left than in the other categories – meaning more Priority 1 LAs were in the heavy-loss categories. If anything, Priority 3 areas have been hurt the most.
One of the issues that arises from the data is that patterns of spending have radically changed. Grocery store spending has not given up its losses during relaxations in lockdown.
Furthermore, online and offline spending patterns are deeply disrupted. A handful of towns have seen surges in spending – usually because they happen to have an online businesses based locally – Milton Keynes, Leeds and Halifax, for example. Hammersmith, in West London, saw a collapse in sales in January thanks to the sinking fortunes of a local online holiday company. Lowestoft has seen a sudden explosion in spending for the opposite reason: bookings for an online holiday broker are now being booked in a business by the town’s harbour.
The clearest example of the switch from offline to online remains visible in two London districts: Hoxton, home to Amazon and other e-tailers, versus the venerable West End, home of Oxford Street and St James. One has seen a boom, the other has been a desert.
Indeed, one curiosity of this whole process has been the extent to which spending in Hoxton tracked the severity of lockdown restrictions across the UK: people moved shopping online when their local shops were shut. The Amazon ward (which contains other businesses, too) handled 6.8 per cent of all the cash moving out of bank accounts in England and Wales in one week in late November.
There are hints, incidentally, of unlocking running ahead of schedule in that data. The West End has started recovering and Hoxton had started falling back in February – ahead of the relaxations.
The big lesson of this latest update is that the regional variation in losses is large enough that government needs a clear regional vision for how it will support towns to get through the coming months and then to bounce back from this horrific year.
Some of the old ways are not coming back. And the places that have suffered the most are not the places which suffered the most dramatic single-week falls – they are places for which lockdown has been a long, unrelenting attrition.