Exploring how local areas are planning for economic recovery post Covid-19 with Lichfields

In the wake of recent government policy and funding announcements designed to fuel economic recovery across the UK, leading consultancy firm and Pagabo partners, Lichfields have conducted research into how local areas plan to respond in both the long and short term to the impact of Covid-19.

How are local areas responding?

To explore how different areas are responding to the economic impacts of Covid-19, Lichfields have carried out a survey with local authorities and Local Enterprise Partnerships (LEPs) across the country in order to gather local views on prospects and priorities for economic recovery over the coming months.

How is Covid-19 impacting on local economies?

It’s clear to see that the Covid-19 pandemic is causing huge disruption in the UK’s economy with April 2020 recording the sharpest monthly GDP decline on record.

Unsurprisingly, the severity of the unfolding economic crisis was strong amongst Lichfield’s survey respondents, with over three quarters describing Covid-19 and associated lockdown as having a ‘major impact’ on their local economy so far.

An ‘uneven’ economic impact

In the UK we have seen Covid-19 economic impacts play out very unevenly across different sectors of the economy, reflecting their relative exposure to the pandemic disruption and associated lockdown restrictions.

The bounce back ability of the construction sector has been a huge positive amongst this and our importance as a sector has been echoed on many occasions by the Prime Minister and his associates.

Despite this, industries including hospitality, recreation and education have taken a huge hit financially. Research has also seen retail, healthcare, real estate and manufacturing bearing the brunt of initial economic impacts. While service-based sectors such as ICT, professional services and business admin have found the impacts to be less serve.

Prospects and priorities for economic recovery

Reflecting on the severity of the initial impact from Covid-19, most respondents were understandably cautious about prospects for local economic recovery over the next six months, with 85% citing ‘weak’ or ‘very weak’ prospects.

There was by contrast a considerably more positive outlook for 2021. But despite this long-term optimism, over half of local areas surveyed by Lichfields expect to see significant challenges and barriers to local economic recovery for the next 12 months.

Some of the challenges outlined during this research include:

• Strong local reliance on sectors and supply chains severely disrupted by COVID-19 and associated lockdown (inc tourism/ hospitality, aviation, higher education, manufacturing).
• Risk of significant longer-term unemployment as government subsidies (such as the Job Retention Scheme) are withdrawn, potentially worsening existing socio-economic inequalities.
• Ability of local business base to ‘restart’ and trade viably with social distancing restrictions in place
• Sharp decline in demand for commercial premises, leaving many local business units (especially in already struggling high streets) vacant
• Reduced income from public assets to be able to fund public services and local recovery responses

To combat this many of the respondents have begun to develop or have now developed a strategy to help support economic recovery within their local area.

These tend to focus on continued business support, responsive skills provision, and enhancing critical infrastructure to enable local economic resilience. There was also a strong focus on maximising localised approaches to recovery, for instance by strengthening local supply chains as well as locally focused public sector procurement.

Many of our framework agreements are locally focused, providing local authorities with a compliant route to market when appointing a contractor, consultant or supplier within their local area, wherever they are located in the UK. View our frameworks to find out more.

Strategy and resources

Whilst it is likely to take some time for the full effects of Covid-19 to work their way through the economy, Lichfield’s survey shows that many local authorities and LEPs have used their initial recovery response as an opportunity to reset longer term strategy, for instance to build future resilience within the local business base and respond to wider structural shifts brought about by the pandemic.

Nearly three quarters (71%) of respondents said they plan to revisit and update their current economic development/ growth strategy to reflect Covid-19 challenges and opportunities and to ensure that locally-driven growth initiatives and objectives are ‘fit-for-purpose’ in a rapidly-changing economic environment.

A lack of sufficient resources

Despite the need for and clear evidence of economic bounce back strategies being put in place, 70% of respondents to Lichfield’s survey were of the view that their local authority/LEP does not have sufficient resources to effectively respond to the economic impacts of Covid-19 in their local area.

Key challenges relate to staff shortages, budget cuts and availability of funding to deliver key projects. These were all common issues pre-covid but are set to be exacerbated in the coming months.

On a more positive note however, the recent impact has prompted strong partnership across and between local areas, with 82% of the organisations surveyed working in partnership with others (such as local authorities, LEPs, Combined Authorities, Government etc). This has involved intelligence gathering, sharing good practice, and jointly developing Covid-19 recovery plans.

Shaping effective local recovery responses

A key takeaway from the research conducted is the need for local areas to understand how they can draw upon their unique economic credentials in order to effectively respond to the current challenges faced.

Drawing on the survey feedback and their experience of developing Covid-19 economic recovery plans across the country, Lichfields have set out some practical pointers and factors for local areas to consider below as they work through the initial economic response and begin to lay the foundations for longer term recovery.

Some practical pointers  

• When compiling action plans, distinguish between existing interventions (already in the pipeline) that can be accelerated to support the recovery response Vs bespoke interventions to tackle COVID-19 circumstances. Is there scope to fast track existing projects to ‘shovel ready’ status to take advantage of current government funding opportunities?
• Whilst Local Planning Authorities are encouraged to continue progressing new Local Plans, they will need to demonstrate that their accompanying evidence base has given due consideration to COVID-19 and the short, medium and longer term implications this could have on local economic growth prospects. Government will also be keen to see how local planning policy is being used to encourage economic recovery, through for example enhanced land use flexibilities and developer incentives.
• Remember not to lose sight of the longer term economic goal as short term recovery responses are prepared and implemented
• “In the midst of every crisis, lies great opportunity” and we have seen a range of growth and innovation opportunities emerging from the pandemic and the behavioural changes this has induced.

The research conducted by Lichfields is extremely valuable and it will be fascinating to see how different local areas respond to the economic implications of Covid-19 in the coming months.

With a loss of commercial investment and an increase in costs to respond to the pandemic, one thing that is going to be key in this is how each local area can ‘capitalise on their uniqueness’ in order to stimulate economic recovery. Those areas that can embrace this will be best positioned to combat the economic barriers that they face. 

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