Response to the Department for Business, Energy and Industrial Strategy (BEIS) Select Committee Inquiry on the Impact of COVID-19 on Businesses and Workers

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City-REDI / WMREDI have collated information from a range of contributors as a response to the Department for Business Energy and Industrial Strategy (BEIS) Select Committee inquiry on the impact of COVID-19 on businesses and workers. It covers a variety of topics from identifying the complex and far-reaching impacts of the crisis to economic modelling and policy insights from past and international experience. Below are the key points and insights of the evidence on enhancing local resilience:

The uneven spatial impact of the COVID19 economic crisis.
  • Whilst this is a national-level economic shock, place-specific characteristics will significantly determine its local impact. The economy will be impacted by both an external shock (impact on manufacturing due to supply chain disruption) and an internal one (impact on services). Local economic resilience to the COVID19 crisis will depend on a range of factors and complex interrelationships.
  • There is significant spatial variation in the distribution of unemployment, businesses and shares of employment in sectors that are currently in lockdown. 42% of Wellingborough’s local businesses and 39% of employment in the Isles of Scilly are in industries affected by the shutdown.
  • Our economic modelling shows that a 3-month lockdown in the West Midlands services only could mean a 5% drop in the annual GVA, putting 65,000 jobs at risk.
  • In the short run (Q2 2020) up to 460,000 jobs could be impacted by the COVID19 crisis in the West Midlands Combined Authority.
  • West Midlands’ large manufacturing sector and local supply chains, business structure and prevalence of the education sector suggest the region may be particularly vulnerable. Approximately 20% (20,500) of businesses and 15% (188,000) of employment is in sectors directly affected by the lockdown.
  • The ability to work from home ranges across occupations and industrial sectors. As a result, it varies from one place to the other. This presents opportunities and challenges for local economies.
Factors enhancing local resilience
  • Our review of business support in the UK, Spain and Ireland and of short-time working in France and Germany show that ease of access to support is paramount. Continuing access to professional/occupational training and opportunities for digital skills development for staff on short-time working is also important. Evidence on support measures from China highlights an emphasis on business support on transforming/ optimising business models, increasing risk resistance capability and online vocational training.
  • Volunteering can significantly assist during the crisis as well as during the recovery period with evidence suggesting strong links between voluntary activity and the ability to gain, maintain and improve employment.
  • Evidence from previous recessions indicates that while exits to unemployment take place rapidly, (re)entries to employment take longer. From a policy perspective key priorities to address challenges of heightened unemployment are:
    1. investment in new active labour market programmes for those out of work;
    2. refocusing skills and training to support recovery;
    3. an integrated and coherent offer to support young people;
    4. an orderly withdrawal from the Job Retention Scheme;
    5. use of existing local partnership arrangements to ensure policies are joined up at a local level;
    6. planning for the future to achieve high quality more productive employment with improved opportunity and security.
  • There is a need for improvement on advice, support and legislation on homeworking in order to maximise the benefits and minimise the costs of homeworking for local economies.
  • Universities have a central role to play in the local and national resilience performance during the recession and the recovery stage. From research and innovation to expenditure that supports local demand. Our estimates identify the significant variation of multiplier effects from student spending in different UK regions with up to 2% of GVA and employment generated in the West Midlands. These multiplier effects are under threat with the expected reduction of student numbers.
  • The decision to end of the lock-down is extremely complex. A potential sequence based on other countries’ experience is:
    1. Schools and universities (with specific measures such as different lunchtimes, enhanced cleaning, smaller classrooms, increased reliance on e-learning, etc.);
    2. Commercial activity (retail) with possible gradation (e.g. the maximum number of people allowed, etc.);
    3. Social activity measures (restaurants, cafes, etc.), with possible gradation (restricted opening hours, the maximum number of people allowed, etc.);
    4. Mass gatherings (e.g. festivals, concerts, etc.);
    5. The gradual reintroduction of transport services / phasing out of travel restrictions (private cars, trains, planes – then buses later etc.).

Download the full response to BEIS.


City-REDI / WM REDI have developed a resource page with all of our analysis of the impact of Coronavirus (COVID-19) on the West Midlands and the UK. It includes previous editions of the West Midlands Weekly Economic Monitor, blogs and research on the economic and social impact of COVID-19. You can view that here.

 


This blog was written by Dr Tasos Kitsos, Research Fellow, City-REDI / WM REDI, University of Birmingham. 

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Disclaimer: 
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WM REDI or the University of Birmingham

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