Northern towns on track to turnaround half a decade of underperformance with signs of local town-led recovery as people work where they live

• New analysis of proprietary Post Office data reveals that struggling towns in the north of England are experiencing strong growth following the first lockdown.
• Towns like Huddersfield and Wakefield outside Leeds, and Mansfield on the edge of Nottingham have had the largest boost in local economic activity as citizens work where they live in response to Covid-19.
• In some cases, the rebound in economic activity from May to July has reversed the contraction experienced during February to April this year. However, some of the economic indicators remain fragile.
• The data suggests commuter towns in the shadows of more affluent cities may have a unique chance to narrow the gap with their neighbours.

Under-performing towns are set for a regional revival in response to Covid-19, according to a new analysis of Post Office data by the Centre for Economics and Business Research (Cebr) released today. It identifies encouraging signs of economic growth in towns that have been historically left behind and which may be benefitting from a re-purposing of place as a consequence of the pandemic.

The report, Turnaround Towns, analysed 10 towns in northern England with lower than average growth over the past five years and four metrics from the Post Office which act as a reliable proxy for local economic activity.

Key findings:

• Bedroom businesses and marketplace selling is on the up as a result of the pandemic: Nine of the 10 places analysed saw increases in usage of the Post Office’s Drop & Go service during May to July, a reliable proxy for more individual entrepreneurial pursuits like buying and selling on marketplace platforms, of up to 38% compared to the preceding three-month period. Almost half the towns also saw increases in Drop & Go during February-April, suggesting that being able to sell goods online was a factor in maintaining income for many during the height of lockdown.
• Home shopper returns suggest increased footfall on local high streets: The return of items bought online to Post Office branches soared in all towns across May to July by as much as 62%. That contrasts to an average fall of a third in returns during lockdown. Trips to return items in lunch breaks or around working hours appear to be far more likely to be happening locally, bringing with them associated benefits for local businesses as more people frequent local high streets.
• Business deposits are returning, slowly: Takings from small businesses increased across May to July in seven of the 10 towns by up to 12%. This is encouraging but is not yet making up for an average reduction in deposits of 12% across lockdown. There are outliers. Cash deposits in Sunderland numbered 64,000 in May-July 2020, exceeding pre-lockdown figures in November 2019- January 2020 of 62,000 – a vibrant return for SME activity in the area.
• Many are still using cash: Cash withdrawals grew by up to 11% across May to July in six of the towns analysed, and in three towns these increases reversed declines in cash withdrawals experienced in the previous three months. Huddersfield in particular saw the total value of cash withdrawals rise from £2.66 million in the three months to January 2020 to £2.74 million in the three months July 2020, exceeding pre-lockdown levels. The data highlights that cash is being taken out more often more locally and this implies an increase in local spending.

A recovery ranking based on an aggregation of these metrics estimates that Mansfield, Wakefield and Huddersfield have experienced the largest boost since the spring lockdown, achieving scores of 25-27%. If the performance on the recovery ranking can be translated into equivalently higher Gross Value Added (GVA) output, this would represent a transformation in these towns’ fortunes. Given their proximity to the cities of Nottingham and Leeds respectively, the data suggests changes in how we live and work post pandemic could be a significant driver of the revival that could see them emerge economically stronger than before.

Post Office Chief Executive Nick Read said: “Many towns have long been in the economic shadow of nearby cities so it is encouraging to see strong signs of growth and revival as more people work where they live. Post Office will play its part helping people to withdraw and deposit cash locally to them as well as send parcels to anywhere in the world.”

Jeevan Singh Skayee, Postmaster for Moldgreen Post Office, Huddersfield, said: “The past few weeks have felt as busy as Christmas as more and more local customers are coming to use our services. Being able to withdraw cash either at our ATM or over the counter has been incredibly popular. We have always had a more elderly customer base given we’re about 1.5 miles from the centre of Huddersfield but increasingly younger customers have been popping in. It has been nice to get to know more of the local community as they drop off their parcels or take out some cash.”

Cebr Managing Economist Josie Dent said: “We did not expect to see such a strong recovery in towns that have traditionally struggled. For many of these towns to have cancelled out the depth of the contraction they faced in lockdown is extraordinary. Policymakers should take note to nurture these green shoots of the recovery going into what will no-doubt be a challenging autumn.”

The Post Office and Cebr have put forward a set of recommendations for policymakers as part of the report:

• Build high streets for local need: Despite people spending more time living and working in their local area, research by Public First for the Post Office in late April revealed that nearly a third of the population (32%) felt their local area was getting worse rather than better. Drivers of this include closure of high street shops (60%) and closure of services like banks and Post Offices (38%), highlighting a clear correlation between amenity closures and local dissatisfaction. To sustain regional recovery, policymakers must have a better understanding of the minimum amenities required for a high street to be a destination, from pharmacies to financial services.
• Protect the right to cash: Free ATMs and bank branches are disappearing across the country, yet there is still a real and present demand for cash. The Treasury should follow through on its commitment to legislate to preserve access to free cash withdrawals.
• Encourage business and entrepreneurial collaboration: Flexible or co-working spaces have become synonymous with some of the world’s biggest cities. But as an increasing number of people wave goodbye to the daily commute, there is an opportunity for local towns to catch up to their city neighbours and provide similar flexible working spaces. Establishing more local spaces for co-working, collaboration and increasing productivity will draw more workers to spend time in their local area and on their high street, driving footfall and encouraging local SME activity to cater to their needs.