People in “red wall” northern constituencies face a debt “avalanche” as Government covid support ends, threatening Boris Johnson’s levelling up plans, a study shows.
More than 40 per cent of households in the hardest hit towns and cities in the north and midlands have fallen into debt during the pandemic, according to the analysis by think tank Centre for Cities.
Researchers found that people in richer neighbourhoods in predominantly southern cities cut down on luxuries in the pandemic and reduced their outgoings more than people in poorer areas in mostly northern – cities.
Those in the North spend proportionally more on food, bills and other essentials which meant that as a result, for every £1 that people from less affluent areas saved, people in richer areas saved £12.
The data showed 56 per cent of people in Hull were likely to be in debt as the city moved out of Covid, 54 per cent in Bradford, 47 per cent in Liverpool, 44 per cent in Blackburn and 44 per cent in Burnley.
Pockets of southern England are also struggling, particularly London and cities reliant on the aviation sector such as Slough, Luton and Crawley where people in both richer and poorer neighbourhoods have seen their financial situation worsen in the last year.
By contrast, 80 per cent of people in Exeter are likely to have saved money during the pandemic, 79 per cent in York, 67 per cent in Aldershot, 66 per cent in Reading and 66 per cent in Norwich.
The think tank recommended a package of support including a specialist debt relief scheme for people who have incurred Covid-related debt. This debt should also not affect people’s credit scores.
It also proposed keeping the £20 Universal Credit uplift, a measure that would support local economies by keeping money circulating and would be popular with the public.
Third, it recommended keeping the Job Retention Scheme for sectors that still cannot operate at full capacity such as travel and aviation. This would support people in places such as Crawley, Luton and Slough where the local economy depends on their airports.
Centre for Cities’ Chief Executive, Andrew Carter, said: “The pandemic has left this country more divided than ever. While people in mostly prosperous southern cities and towns have accumulated £150 billion of savings, many less affluent people in the North and Midlands will face an avalanche of debt as Government support ends later this year.
“The Government is withdrawing financial support far too quickly for people in places that have been hit hard by the pandemic. Not only will this set its levelling up agenda back significantly, it also risks levelling down many previously affluent parts of southern England such as Crawley.”