12 Monday June 13 2022 | the times
News
British household spending will shrink
next year, the CBI has warned, as it
called on the government to take meas-
ures to stimulate business investment
to prevent a wider economic downturn.
The organisation’s latest economic
forecast slashes growth this year and
next and predicts that household
spending will turn negative next year as
a result of surging inflation squeezing
living standards.
The business lobby group, which rep-
resents 190,000 companies, predicts
that the economy will grow by 3.7 per
cent this year, down from an earlier
projection of 5.5 per cent, and by only
1 per cent in 2023.
Rain Newton-Smith, chief econ-
T
hree years ago on a
rainy day in March,
the Duke and
Duchess of
Cambridge were
taken along the Lytham
Road in Blackpool to see
what life was like in
England’s most deprived
neighbourhood (Tom Ball
writes).
Mark Ashworth, who lives
there, remembers how the
couple walked along the
moribund terraces, peering
into old guest houses where
the “no vacancy” signs still
hung, unaltered in decades.
He offered them a cup of tea.
They declined politely.
Outwardly, not much has
changed since 2019, when
Bloomfield — the ward that
Lytham Road intersects —
was ranked first out of 32,
wards and neighbourhoods
in the government’s indices
of deprivation report that
year.
Once the pride of Britain’s
seaside resorts, attracting
20 million tourists each year
in the 1950s, the town has
suffered from years of
economic decline, tied to
falling visitor numbers and
terminal neglect from central
government.
Last week a junior minister
publicly described Blackpool,
as well as Birmingham, as
“godawful” at an event in
London to launch the
government’s new digital
strategy.Lynn Williams, the leader
of Blackpool Council, gave
an angry riposte: “We know
we’ve got a lot of social
inequalities to deal with and
we’re actually meant to be
working with the
government to deal with
those as part of the levelling-
up programme, so... it’s just
frustrating.”
In a town where an ailing
tourism sector has yet to be
replaced or even buttressed
by any other stable form of
work, unemployment stalks
the land.
“Apart from seasonal work,
there’s nothing to do here
because Blackpool put all its
eggs into the tourism
basket,” said Ashworth, 37,
who himself is unemployed.
The official rate of
unemployment in Blackpool,
as measured by those actively
seeking work, stands at 6 per
cent, a little above thenational average of 5.9 per
cent. However, this figure
masks a further 26 per cent
of the population who are
also out of work but not
actively seeking it and who
receive other out-of-work
provision, such as incapacity
benefits or universal credit.
This figure, which was first
reported by The Spectator
and which was published by
the Department for Work
and Pensions, is the highest
in the country. Of the
roughly 20,000 people in
Blackpool who are out of
work and not seeking it, 43
per cent are deemed to have
a long-term illness, according
to the government’s joint
strategic needs assessment.
This is significantly higher
than the national average of
25 per cent, though not
surprising. As well as having
the lowest life expectancy in
the country, Blackpool isplagued by mental health
disorders, which accounts for
half of those who are unable
to work through sickness.
Nearly one in five people in
the town suffer from GP-
diagnosed depression.
Ask most people in the
town where the root of this
unhappiness lies, and they
will tell you that it is housing.
A few streets back from
the Golden Mile you enter a
grid of tightly packed
tumbledown houses. Many of
these are former bed and
breakfasts that have been
turned into cheap and poor-
quality private rented
accommodation.
“When I was a kid it wasn’t
like this,” said Oliver Clews,
27, whose family has run
donkey rides on the beach
for over a hundred years.
“People used to own their
own houses and go out to
work every day. That doesn’treally happen any more. The
problem is they let it all get
so deprived it’s difficult to get
it back to where it was.”
It was perhaps in
acknowledgement of
Blackpool’s housing crisis
that on Thursday Boris
Johnson visited the town to
deliver a speech in which he
laid out plans to help people
“turn benefits to bricks”, by
enabling lower paid workers
to use their housing benefits
to buy homes.
For Williams, the “proof
will be in the pudding”, as it
will be too for the
government’s levelling-up
agenda that has earmarked
the seaside resort as one of
20 places around the country
to receive a “King’s Cross-
style turbocharge” — in
reference to the once
dilapidated area of London
now smoothed over with
upmarket coffee shops,boutiques and arty street
furniture.
The details of this scheme
have yet to be announced,
and so far levelling-up for
Blackpool has consisted of
bidding, in competition with
other local authorities, for
small pots of cash. In 2020
Blackpool received
£39.5 million from the Town
Deal for seven projects,
including a new road to the
airport and a new youth hub,
and is also about to receive
money from the £1.5 billion
Brownfield Fund, to be
shared with 20 other
authorities.
Having lost £1.4 billion to
austerity, though, the council
remains woefully
underfunded in dealing with
the housing crisis.
“So far we have only been
able to bid for money within
specific parameters like
heritage and highways,
which doesn’t necessarily
help with things like
housing,” Williams said.
Paul Swinney, director of
policy and research at the
Centre for Cities, said that if
levelling-up were to work for
places like Blackpool, it
would need to get to the
heart of the problems that
face each individual area,
rather than “spending small
pots of money on cosmetic
programmes that smarten up
the edges, as has largely been
the case so far”.
Pride of Place, which has
helped secure £700 million
investment since 2012, works
with the council to bring
together private and public
investment. One of the
central pillars of its
ambitious plans is the North
Atlantic Loop, a superfast
fibre-optic cable that was
installed under the sea in
October 2020, linking
Blackpool to the United
States, Dublin and Denmark.
Blackpool wants to
reinvent itself as “Silicon
Sands”, a digital hub for tech
businesses taking advantage
of one of the fastest internet
connections in Britain. Andy
Charles, director of Pride of
Place, said: “Opportunity has
been lacking in recent years,
but there is a huge amount of
talent here. We need to find
ways to put that talent to
good use and make sure it
isn’t wasted.”
Our approach to jobs isn’t
working, James Kirkup, page 25Blackpool is
eager to turn
the tide on
deprivation
Oliver Clews says people used to own their houses and go out to work but “that doesn’t happen any more” following a collapse in tourismNew warning on household spending
unhelpful,” he said. “The government
should take a completely different dir-
ection and force talks to the negotiating
table. Every business in Northern Ire-
land will tell you there is a firm landing
zone. It is not time for grandstanding; it
is time to do a deal.”
He said that international businesses
were starting to “short the UK” as fore-
casters expected growth to stagnate
next year and the government re-
mained on a collision course over the
protocol. “We are seeing global compa-
nies saying maybe the UK is not a good
place to invest right now,” he said. “I
genuinely believe we can change this.”
Some analysts have warned that the
pound will decline further against big
currencies such as the dollar as inves-
tors take a bearish position on the UK.The Organisation for Economic Co-
operation and Development said last
week that growth would stagnate at
0 per cent next year as a result of
squeezed household spending.
Danker warned that the country was
facing a grim summer with drama over
the protocol rumbling, the country’s
largest nationwide rail strike due later
this month and a record cost of living
crisis caused by surging energy prices.
“As 2023 stands the UK looks to be the
worst performing major economy on
growth,” he added.
The CBI expects that a technical re-
cession, defined as two negative quar-
ters of economic growth, will be avoid-
ed largely as a result of growth in busi-
ness investment, spurred by the gov-
ernment’s super deduction tax breakthat is to end next year. The CBI esti-
mates that capital investment will grow
by 4.1 per cent this year but fall to 1 per
cent next year when the deduction
ends. Investment growth will turn neg-
ative by the end of next year, the fore-
cast warns. The CBI is urging Rishi
Sunak, the chancellor, to provide a per-
manent successor to the super deduc-
tion to help to increase the country’s
chronically low business investment,
the worst among the G7 economies.
Newton-Smith said that a perman-
ent investment tax break would lead to
additional investment of £40 billion
annually by 2026, putting the UK
ahead of its peers such as Canada and
Italy. She said: “This would help put up
growth significantly beyond a 1 per cent
forecast in 2023.”Mehreen Khan Economics Editor
ANTHONY DEVLIN FOR THE TIMESomist at the CBI, said the UK was strug-
gling to cope with a “toxic recipe” of
shocks. “This is a tough set of statistics
to stomach,” she said. “War in Ukraine,
a global pandemic, continued strains
on supply chains, all preceded by Brex-
it. Productivity is flatlining with wages
unable to keep up with inflation.”
The CBI criticised the government’s
negotiating stance on the Northern
Ireland protocol. The Conservative
Party is poised to lay out unilateral
measures to override parts of the agree-
ment with the European Union.
Tony Danker, the CBI director-
general, urged the government not to
break its international agreements.
“The Europeans are being inflexible
about the protocol but at the same time
measures to take unilateral action are