How the UK high street was hit by the pandemic: look up your area

What do Manchester, Dartford in Kent and Tower Hamlets in east London have in common?

None of them is a priority for the British government’s “levelling-up” agenda to bring more development to struggling towns and smaller cities of central and northern England. But they are among the places in the UK whose high streets have been worst hit by the economic cataclysm the pandemic has wrought over the past two years.

The list comes from a data set obtained exclusively by the FT which provides granular detail on British spending patterns at a very local level.

Using the sample, which contains a significant slice of consumers in every area of the country, readers across Great Britain can look up how their own towns, counties, neighbourhoods or local train station areas perfomed.

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It reveals how the lockdowns and homeworking of the past two years have created a deep crisis for the high streets in some big cities — just as the political consensus has become that public policy should focus less on large urban areas.

Central London, perhaps unsurprisingly, has been hardest hit — and by some margin. With its international connections, tourism, office-based economy and concentrations of hospitality businesses, the centre of the capital has faced a uniquely dreadful time.

The data also demonstrates clearly that areas which depend on an airport have suffered heavily. In the list of the 10 worst affected areas, Luton relies on an airport, while Crawley includes Gatwick.

But some conclusions cut against the political conventional wisdom. Scotland and Wales have done better than almost every English region despite their stricter public health measures.

Most of all, the geographical difference within England is striking. Many of the areas in the so-called red wall, mostly midsized towns in the former industrial heartlands of the Midlands and north, have outperformed wealthier areas. The worst hit neighbourhoods are concentrated in larger cities, while the south has been more affected than the north.

Poorer people may have fared worse than their wealthier neighbours during the pandemic, but it is not the case that poorer towns took the biggest hits.

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In a 2021 speech on levelling up, Boris Johnson, the prime minister, contrasted two neighbouring cities in Yorkshire, struggling Bradford and prosperous Leeds. Spending in Leeds businesses since March 2020 has slumped. Bradford’s sales totals have barely flickered.

In November, Johnson visited the constituency of Blyth Valley in Northumberland, which has been a target for levelling-up funding. According to the FT data, local sales have grown through the pandemic.

The government’s levelling-up agenda, which is broadly supported by the main opposition parties, is focused on redressing the effects of decades of stagnation in these poorer places which suffer low wages and weak productivity.

But the pandemic has created a new category of troubled towns: places where salaries are high but where the high streets are carrying huge losses and are struggling to cope with changes to working patterns.

“The government is rightly focusing its political energy on a certain type of northern midsized town,” says Hazel Blears, a former Labour secretary of state for local government and chair of Social Investment Business, a regeneration charity which gave the FT the underlying data. “But after a cataclysm like this, you cannot just hope that all these other places will sort themselves out.”

Will Jennings, a professor of public policy at Southampton university, says the pandemic could make the government re-examine some of its priorities. “As we look to recover, we are going to need an approach that recognises that places hit hardest by the pandemic are not the same as the left-behind places that have been the focus of recent political argument,” he says.

There is no doubt that Britain’s big cities are still economically stronger than a lot of struggling towns and cities whose already-troubled high streets were less affected by the pandemic. Some of the bigger cities have the potential to quickly bounce back.

Bar chart of Total and most recent figures  showing Regional changes in in-person spending

But new problems may be emerging. If changes to working patterns stick, the government will need to think about how to deal with high-productivity urban areas which also have hollow high streets.

“The economy, and even local economies, amount to much more than the high street,” says Paul Johnson, director of the Institute for Fiscal Studies. “But the patterns here showing how relatively poorly London has done are replicated in much of the data we see, particularly data related to the labour market.”

Neighbourhood watch

The FT’s data set is based on card spending by a sample of British bank customers. The sample covers consumer sales to a set of cardholders at any merchants whose card payment machines are linked to a fixed geographical location. Depending on the area, it captures between 12 and 27 per cent of bank customers and details spending flows of £79bn since early 2019.

The FT will use the data for a series of articles on the future of the high street over the course of the year.

This fine-grained data allows analysis at the level of the neighbourhood — a necessity for revealing how the cascade of losses in cities deepened into city centres.

London, for instance, contains wide variations. Across the capital, total sales since March 2020 were down 26 per cent on the levels one would have expected based on pre-pandemic levels.

But “Zone 1”, the commercial and tourist centre, has suffered a 52 per cent drop in sales. The City of London, within that zone, has been the hardest-hit local authority: since March 2020, spending in the Square Mile has fallen 69 per cent.

Bar chart of Local authorities with highest total in-person spending fall (%) since March 2020 showing Top 10 losers

This is driven by localisation, particularly working from home: sales in Zone 4, a slice of the city’s inner suburbs, were down by just 9.4 per cent.

“These figures show what we have said all along — that businesses in the Square Mile rely on footfall from office workers,” Catherine McGuinness, policy chair at the City of London Corporation. “So they have faced exceptionally difficult trading conditions during the pandemic, with the reintroduction of guidance to work from home last month yet another disappointment.”

Other major cities have also been badly hit for similar reasons: Greater Manchester, which includes boroughs around the city, was down by 12 per cent. But the borough of Manchester, the heart of the city itself, took a 32 per cent hit.

In Scotland, spending in Edinburgh was down by 19 per cent, while Glasgow dropped 21 per cent: in those two cases, the scale of the fall is thrown into particular relief by the high performance of neighbouring areas.

East Lothian, a local authority which tumbles from the southern edge of Edinburgh down the east coast, had the best performance in the country, with shops reporting a total 12 per cent rise in in-person spending across the whole period since March 2020. East Renfrewshire, on the edges of Glasgow, saw a 7 per cent rise.

Both places benefited from having commuter areas whose residents earned their money from the cities but stayed local to spend it. One East Lothian official told the FT that the area had preserved more midsized high streets than in other parts of the country — something that proved a boon during the lockdowns.

Bar chart of Total in-person spending rise (%) since March 2020 showing Top 10 winners

FT analysis, using new Ordnance Survey data on high streets, reveals that places that did well tended to be in very mixed zones, where shops are small in physical size and have a small number of flats above them.

Scotland and Wales also benefited from the structures of their economies. Across Britain, less populated areas with fewer local jobs in services did better. Areas with above-average employment in manufacturing, construction, agriculture and fisheries have tended to do best of all.

Online boosts total spending

Online spending rose nationally, with the amount going on groceries doubling from its previous level and the online money devoted to hospitality, including meal deliveries, almost tripling. Total spending recorded in the FT sample is now higher than before the pandemic — largely because of online spending.

Trying to assign this spending to particular areas, however, is difficult. For example, South Somerset’s figures — online sales rose 174 per cent — are flattered by customers ordering from Screwfix, a national building and DIY supplies retailer based locally. It employs 1,200 people in the area, has run training schemes with the local college and sponsors a stand at Yeovil Town football club.

The places where some companies record revenues can sometimes see little direct impact. Hackney’s online sales figures have been boosted by the presence of a number of multinationals, such as Amazon, logging sales to the area, however this has likely brought only modest economic benefit to the London borough.

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Some local councils are calling for a shake-up in taxation to adjust to the surge in online sales and provide help to high streets.

Rachael Robathan, council leader of the City of Westminster which includes London’s leading shopping areas, has called for an online sales tax which could be used to “enable targeted relief for bricks and mortar businesses and allow them to compete on a level playing field with internet retailers”.

However, Sam Bowman, a fellow at the Entrepreneurs Network, says the government should not try to preserve the status quo. “It would be wise to work out how we make it easier for commercial properties to be used for things that people want,” he says. “We definitely should not be starting from a position of worrying about how we protect city centre commercial landlords from having to cut their rents.”

What comes next?

The pattern of lost sales revealed by the data is a challenge for the government. One implication is that some state support schemes at the start of the pandemic, including an array of loans, grants and tax holidays, may have been poorly targeted.

Andrew Carter, chief executive of the Centre for Cities, a think-tank, says “business support [during the peak of the pandemic] was more effective at shielding firms in our less prosperous places from the pandemic than those in our biggest and most economically important city centres”.

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But there is little policy, at present, to address the possibility that the old ways of office working and living may not be returning — and to manage the transition to whatever comes next.

“We need to focus our investment strategies,” says Blears, “both on the places that can build on pandemic progress and rise out of longer term difficulties — and those that are facing unanticipated new struggles.”

Carter adds that the priority for policymakers still needs to be troubled midsized places which will “continue to grapple with the same economic problems that they had before Covid-19 hit.”

“Our biggest cities will probably bounce back quickly if workers, tourists and other visitors return,” he adds.

The real problem for the government is what happens if they do not.

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