District Matters

Facing unprecedented and uncertain times

May 2020

In my last column I said that the world has changed. What we have yet to discover is exactly what the changes will be.

There are some things we know:

• 7 million people are furloughed and, for many this will be a prelude to redundancy and unemployment.
• We know that economic growth in the UK has gone into reverse, GDP fell 2% in the first quarter and by an estimated 5.8% in one month alone.
• The latest Bank of England projections for the economy are for a fall in GDP of 30% and an unemployment level of 9% in the middle of the year.
• All the forecasts and market intelligence are that many companies will cease to exist. There are estimates that 1 in 3 SME's will fail.

In short, we are facing the biggest economic downturn for centuries. I am not sure that most people have fully understood the implications of this yet. It seems to me that many people are assuming that we will recover from this fairly quickly and the world will then continue much the same as before.

Locally we now are getting much clearer on a number of things. The most significant of which is that the District Council finances have taken a huge hit. The total impact, up to now of COVID-19 is £8.15 million. We have received funding from government of £1.343 million leaving a shortfall of £6.8 million. Contrast this with the County Council who had a total impact of £29.4 million and have received £24.68 million. It would appear as though central government did not grasp the negative impact on revenue; in our case we estimate our lost income is £6.6 million. Strong representations have been made about this and there is hope of a third round of funding that may go some way to addressing this. Councils in tourist areas appear to be particularly affected.

What we are doing now is lobbying as hard as we can for more funding and developing scenarios projecting the impact over the next 5 years. In all honesty, we do not expect to have the full shortfall covered, so as the position becomes clearer we will have to decide how to react. It is inevitable that very difficult decisions will have to be made fairly swiftly. It would be fair to observe that none of our councillors expected this but times have changed and we have to adapt to them.

This leads neatly on to the next key issue, as a District tourism is our second biggest industry employing an estimated 7,000 people. It also underpins our retail industry and town centres, particularly in Stratford-upon-Avon itself. All the estimates are that hospitality and tourism will be the last industries to recover. Long haul tourism in particular. Furthermore, hospitality, tourism and retail will find it particularly challenging to cope with social distancing requirements as we emerge from lockdown. We can expect our local economy to take a heavy hit this year and probably next. We are spending considerable time and effort getting the message across that we will need substantial help to maintain our tourist infrastructure whilst demand recovers. Indications are that the message is being heard but the UK in general does not appear to appreciate the economic significance of tourism.

However successful we are, it would be unrealistic to expect our tourist industry, retail and town centres not to change significantly. We are in the process of putting together a group to explore what the impacts might be and what we may be able to do to help.

It was good to see Stratford coming back to life on Saturday; it restored a feeling of normalcy. However there is no doubt that many people will see these numbers of people as a threat. When the guidance was ‘stay home', decisions were easy. Now the guidance is more nuanced I suspect that no one will be content. I fear that one of the issues over the next few, or even many weeks will be the tensions increasing across society. There are no easy answers or solutions although I anticipate many people, who do not have to make the decisions, will think that there are.

We are facing unprecedented times and a huge measure of uncertainty. I think that we need to watch carefully how things unfold and be ready to react rapidly. We also have to be careful not to suffer the unintended consequences of hasty action.