Beyond lockdown: rebuilding our South East Midlands economy

Scenario planning, asking the right questions and being agile in our ability to adapt our response as things change. The next three months is critical.

As we turn our attention to life beyond lockdown, there are immediate challenges faced in understanding and responding to the scale of the economic impact of COVID-19.

On 14 May, we brought together a group of leading economists and development policy specialists for the first of our Beyond Lockdown discussion series.

New thinking

Chaired by Peter Horrocks CBE, discussion participants talked through key considerations for local areas within SEMLEP in restructuring and adapting to reduce the severity of the economic impact on communities, whilst taking advantage of opportunities that arise.

Through our Beyond lockdown discussion series, we are working through the challenging questions business are asking themselves, considering how we influence not when the Government withdraws the short-term measures in place, but how this is done. We are discussing the market and policy choices we face, what role the South East Midlands and the Oxford-Cambridge Arc region will have and, what the potential is for Covid-19 to turbo-charge positive changes to the way we work, live and do business.

What is data telling us?

Testing OBR and Bank of England estimates out in the South East Midlands, SEMLEP’s senior economic analyst Claire Ackroyd, talked through our initial findings [https://www.semlep.com/economic-recovery-strategy/] of the possible impact on each local area in the SEMLEP region, assessed against the business make-up and sectors based in each.

“Through our Local Industrial Strategy (LIS), says Claire, “we have a huge wealth of data and understanding about our economy built up over several years. This has enabled us to develop a clear evidence-based set of economic priorities to pursue a stronger, more inclusive, and sustainable economy to 2050. Whilst our eyes are still set on these long-term goals, we’re reviewing our LIS implementation to ensure attention is placed on the short to medium term rebooting of the economy as lockdown eases.” 

Describing the situation as “off the scale”, Christine Doel, Director at SQW, tackled a question on whether – or when - we’re likely to see structural changes to local economies.

Drawing from national ONS business survey data, Christine considered those sectors which have furloughed over half of their workforce, alongside those which have switched their operations to working remotely. 

“These observations are a national snapshot from the early weeks of lock-down but they perhaps hint at the types of structural changes that may start to emerge. In terms of timing, economic change is not a long-term possibility; it is a process which is already underway.

What “after” will look like is uncertain and it will vary from place to place, but it will certainly be different from “before”, and possibly radically so” Christine said. 

Talking towns and smaller cities, Christine reflected on the Government’s 2019 policy and investment commitments.  She noted that these will be even more important in the context of economic recovery.

“When you consider how businesses will respond, and whether people will want to, or be able to, go back to the same commuting patterns of the past… Is it the case that some smaller towns could eventually redefine their role?  And what might be the implications for commercial property?” Christine asked.

Know your crises

David Marlow, MD of Third Life Economics suggested that we’re still in the crisis management and disaster relief phase of our response but what’s critical, is to know your crisis.

The first three months is crucial to getting the economic plan agreed, in place and beginning implementation.  Economic recovery has to be integral to other Covid19-related strategies, such as health and infrastructure. “But, said David, “success will be defined by our ability to vary and innovate around it”, not by compliance with it. Ask lots of ‘what if’ questions and be flexible.

“There will be a lot of pressure to return to where people are comfortable… beware of burnout. Otherwise there’s “risk of an imbalance between pursuing the ‘new’ and returning to the ‘old’ normal.”

Over the medium-term, “it’s likely that we’ll see the acceleration of pre-existing trends” including adoption of AI and robotics, through to greener travel.” There will be new dynamics that come to the fore said David Marlow.

“Although there will be major structural challenges, upheaval and pain within the labour market, could different types of work eventually be revalued?” asked Christine Doel.

A suite of solutions

Chris Parkhouse DL, Founder and Managing Director of Deyton Bell, considered what support may be required and suggested that, although businesses may want to recover as quickly as possible, it may take longer than expected for some to do so, and they will need help.

Discussing the current financial measures, he believes that while these are welcome, loans and tax deferral will one day need to be paid back, and staff will one day need to be paid again, so clearly businesses need to be viable to do this. “I hope I’m wrong, but I worry that current short-term interventions may potentially be storing up longer term problems, rather than creating permanent solutions”.

Chris discussed the need for a broad range of ongoing support, including support for traditional businesses, community programmes, high-growth/high-GVA businesses, start-ups and for recovering entrepreneurs who may be badly damaged by the current situation, as well as employment and skills support for lower-skilled workers.

“We need a blended suite of solutions, not just one… [Otherwise] ultimately the State carries the can.”

Participants on the ‘Rebuilding a resilient economy discussion included:

Claire Ackroyd, Economic Analyst, SEMLEP
Judith Barker, Director of Programmes and Governance, SEMLEP
Pat Brennan Barratt, Principal, Northampton College
Hilary Chipping, Chief Executive, SEMLEP
Jon Corbett, Director, Barclays Bank
Christine Doel, Director, SQW
Professor Sir Peter Gregson, Vice Chancellor, Cranfield University
Nick Goss, Managing Director, Goss Consulting
Peter Horrocks CBE, Chair, SEMLEP
David Marlow, Managing Director, Third Life Economics
Chris Parkhouse, Managing Director, Deyton Bell
Alice Seabrook-Martina, Regional Engagement Lead, SMMT
Mike Todman, Relationship Lead, Cities and Local Growth Unit
Cllr Richard Wenham, Deputy Leader, Central Bedfordshire Council

The second Beyond lockdown discussion will be held on 18 June, and will look at how we can best respond to sector and place needs. 

If you would like to ask any questions about the development of the recovery strategy or our discussion series, please contact us. 

Arthur Le Geyt, Economic Analyst at arthur.legeyt@semlep.com
Karen Clarke, Communications Manager at karen.clarke@semlep.com