Economists pinpoint UK local authorities in greatest need of support post-Covid-19 – new research

New research has enabled economic experts to pinpoint the UK’s local authorities most in need of the government’s £4.8 billion Levelling Up Fund.

In a newly created index measuring the economic impact of Covid-19, the highest priority local authorities for support include Blackpool; Barking and Dagenham; Newham; Liverpool; and Great Yarmouth, whereas Rushcliffe; South Cambridgeshire; and Waverly rank last in line for support.

Led by Professor John Gathergood, experts at the University of Nottingham have combined granular-level data to create a new Index of Covd-19 Economic Impact which ranks local authorities by the severity of the economic impacts of Covid-19 in real-time, sourced from the UK’s leading providers of geo-specific activity data. Working with researchers from Warwick Business School and Chicago Booth, the researchers combine this index with pre-pandemic data measuring affluence at the local level to identify areas that have been doubly-hit by existing deprivation and negative Covid-19 impact.

The local authorities which have been hardest hit by Covid-19 in England are Blackpool and Great Yarmouth, where the pandemic has compounded the effects of underlying deprivation. The most affluent local authorities which have been least affected by Covid-19 include South Cambridgeshire and Rushcliffe.

In Scotland, Aberdeenshire and East Dunbartonshire have been least affected by long-term deprivation and the effects of Covid-19, whereas Renfrewshire and Glasgow City have experienced the most severe effects. In Wales, Newport shows high levels of long-term deprivation and worst effects of Covid-19, in contrast with Flintshire and Wrexham which have been least affected.

The news follows Prime Minister Boris Johnson’s recent ‘levelling up’ speech, in which the government’s approach has been criticised for using data from before the pandemic to determine fund allocation. The Nottingham experts, from tracktheeconomy.ac.uk, suggest policymakers should combine this data with the new Index of Covid-19 Economic Impact, that gives accurate, real-time data on which to make decisions.

Professor John Gathergood said: “It is clear that some areas in the UK are suffering the double effect of existing deprivation and a large negative hit from Covid-19. When deciding on how and where to prioritise levelling-up across the UK, it is essential that the government looks at data on the effects of Covid-19 on local areas.

Local areas have had very different experiences of the pandemic, with some benefiting from working from home as people spend more of their time living and working in the suburbs, whereas central city areas and rural towns have been particularly affected. Our index allows government to understand where new needs are emerging, alongside the measures they already have of longer-term deprivation. Only with the latest data can the right judgments be made about where to allocate the £4.8bn funding.

Academics at the University of Nottingham partnered with Experian, Fable Data and Huq to source data from consumer and company credit files, transaction-level data on consumer spending and geolocation. These granular data sources allow the researchers to track, at the local authority level, consumer and business financial distress; measures of how much people travel; and consumer spending — which Nottingham experts used in previous research to understand the Covid-19 pandemic by studying local lockdowns and regional inequalities.

The researchers have also drawn data from the University of Nottingham Decision Maker Panel (derived using ONS employment survey data) to measure firms’ expectations for future investment and growth at the local level.

The new index measures the severity of Covid-19’s economic impact using the latest real-time data to the end of June 2021, relative to a pre-pandemic 2020 baseline. For local authorities in England, the researchers then compare this with the underlying economic situation of the local authority before the pandemic using pre-Covid-19 Indices of Multiple Deprivation (IMD) from the Department of Housing, Communities & Local Government. Together, these data sources provide a view of the long-term economic situation of local authorities versus their Covid-19 economic experience.

English Local Authorities with Highest and Lowest Economic Need: Rankings by Composite Measure of Economic Need

No. Local Authorities

Top 10: Most Economic Need

  1. Barking and Dagenham
  2. Blackpool
  3. Great Yarmouth
  4. Liverpool
  5. Newham
  6. Haringey
  7. Tendring
  8. East Lindsey
  9. Nottingham
  10. Luton

Bottom 10: Least Economic Need

  1. Harborough
  2. Bracknell Forest
  3. Eastleigh
  4. Ribble Valley
  5. Fareham
  6. Mole Valley
  7. South Cambridgeshire
  8. Surrey Heath
  9. Waverley
  10. Rushcliffe
Notes: Local authorities in England. Author calculations derived from Office for National Statistics, Experian, Fable Data, Huq, Decision Maker Panel (derived by Will Rossiter & Konstantinos Karagounis, Nottingham Trent University) datasets. Composite measure applies 75% weight to English Index of Multiple Deprivation (2019) and 25% weight to our Real-Time Index.

Neil Stewart, Professor of Behavioural Science at Warwick Business School, said: “The strongest recovery in spending is seen in online spending in the “commuter belt” areas in outer London and the surrounding localities and also in areas of high second home ownership, where working from home (including working from second homes) has significantly displaced the location of spending.

“Year-on-year spending growth in November 2020 in localities facing the UK’s new tighter “Tier 3” restrictions (mostly the midlands and northern areas) was 38.4% lower compared with areas facing the less restrictive “Tier 2″ (mostly London and the South). These patterns had been further exacerbated during November 2020 when a second national lockdown was imposed. To prevent such COVID-19-driven regional inequalities from becoming persistent we propose governments introduce temporary, regionally-targeted interventions in 2021.”

This work is supported by UK Economic and Social Research Council (ESRC) under grant number ES/V00486/1 ‘Real-time evaluation of the effects of Covid-19 and policy responses on consumer and small business finances’.

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