Report highlights positive signs of recovery

A new report from Devon County Council has highlighted that while the economic impact of the coronavirus pandemic has been more widespread across Devon than previous recessions, there are positive signs of recovery.

Devon’s economy shrunk by almost 10% last year - in line with the UK average, but future recovery is expected to be a “mixed picture” in the county.

The economic update has tracked the rapidly changing situation through the use of Government statistics, commissioned studies and forecasts, and information gathered directly from the business community.

Recovery forecasts from Oxford Economics, commissioned by Devon County Council, show that economic output and unemployment is expected to recover by next year. However, recovery is forecast to be slower in all of Devon’s district areas outside of Exeter - particularly in Mid and West Devon.

The report states that the “vulnerabilities” of the economy “are being felt most significantly in Devon’s market and coastal towns”. This includes town centres in Barnstaple, Bideford, Ilfracombe, Newton Abbot, and Teignmouth.

Reliance on the national Job Retention Scheme, or furlough, in Devon was above the national average in July 2020, with just over 33% of eligible employees furloughed. At the end of May this year, just under 8% of eligible employees across Devon were still furloughed. The sectors remaining most reliant on furlough were arts, entertainment and recreation, accommodation and food, transport, and retail/wholesale.

However, there has already been a strong bounce-back in recruitment, particularly in manufacturing, hospitality, personal services and agriculture. The occupations in highest demand currently include hospitality staff, office admin, customer service, registered general nurse and care workers.

Delivery drivers are in much higher demand than before the pandemic and there has been a dramatic turnaround in the demand for Chefs as hospitality has re-opened.

There have also been a number of recent positive investments and bid submissions:

- Government infrastructure funding for the A361 North Devon Link Road, reinstatement of the Okehampton to Exeter rail line and upgrading the A382 between Newton Abbot and the A38;
- A £12.2 million programme of bids has been submitted by Devon County Council to the Government’s Community Renewal Fund, to help generate around 620 jobs, support the creation of 400 new businesses, and help 3,000 people to retrain;
- Devon County Council has invested almost £4million into the former Flybe Training Academy and leased it to Exeter College to run it as The Future Skills Centre, providing the region with a specialist facility for the delivery of training for high-tech jobs in engineering, digital, construction and clean growth;
- The designation of the Plymouth and South Devon freezone which is forecast to bring in over £100m investment in the next six years and could create 9,000 jobs over the next 10 years;
- Exeter Aerospace has taken over Flybe’s aircraft maintenance facility at Exeter Airport, creating 100 jobs;
- Appledore Shipyard has been bought by owners of Harland and Wolff shipyard in Belfast and intends to restart operations at the Appledore site.

Unemployment levels are falling, with Universal Credit claimants down to 3.6% in June this year. Although this is higher than the 1.8% recorded in March 2020, it is down from 5% in May 2020. The largest rise in Universal Credit claimants in Devon were among under-25s, with a 144% increase, and over-50s, up 153%, between March 2020 and March 2021.

Retail footfall in the South West by the end of June this year was 80% of the equivalent week in 2019, slightly higher than the 75% average across the UK.

Many food and drink businesses remain affected by the inability to operate at full capacity, and tourism businesses anticipate the pandemic will have lost 34% of their turnover.

Devon County Council has launched a £6 million recovery programme to provide help and support in four key areas – small and medium enterprises, employment and skills, the green recovery and the hardest hit towns and communities.

Councillor Rufus Gilbert, Devon County Council Cabinet Member for Economic Recovery and Skills, said: "The economic impact of COVID-19 on the county is the worst in living memory and unfortunately not all businesses have survived the lockdowns over the past year. The Bank of England predicts the economy will bounce back to pre-Covid levels by the end of this year, but in Devon that may not be until next year. Whenever we get there, we need to ensure that we build back better.

“For Devon to emerge stronger than ever, longstanding issues with low wages, lack of affordable homes and career opportunities will need to be addressed. Our ambition is for Devon to be a leader in the green economy, for people across the county to have the opportunity to learn new skills, for businesses in Devon to have the opportunity to grow, and for more businesses to be attracted to the county.

“There are critical shortages of staff in social care and health which are vital to the wellbeing people across the county. This is at the top of the agenda for Team Devon and the Devon Integrated Care System.

“We will be doing all we can to make sure that young people can make choices about education and skills so that they can fulfil their potential.

“By building upon the close working relationships that have been established through Team Devon in response to the pandemic, we want to develop a bid to Government for devolved powers for Devon. We will need to see what the Levelling-Up White Paper has to offer but we need to be ready to deliver a devolution deal for Devon that can play a vital part in economic recovery and meet the needs of all our residents and businesses.”

Millions of pounds of grants and loans have been available in the Devon County Council area over the past year to help businesses through the pandemic lockdowns.

By the end of May 2021, more than £570 million had been paid out through the Bounce Back Loan Scheme, and almost £322 million through the Coronavirus Business Interruption Loan. The highest take-ups for both loans were in southern and eastern Devon.

Almost £110 million of Local Restriction Support Grants had been paid to businesses by the end of March this year, with almost £22 million of additional restriction grants and over £64 million of “restart” grants paid up to the end of May 2021.

Team Devon is a public and private sector partnership network which draws together expertise across business, education, skills, community and public sector organisations. It has developed an Economy and Business Recovery plan with the backing of business representatives, Devon’s County, District and City Councils, the Heart of the South West Local Enterprise Partnership, Dartmoor National Park and Devon’s MPs. It has outlined a series of programmes and projects with the potential to create 30,000 new jobs, 80,000 new training places and secure investment of £550 million, generating £2.8 billion of additional economic output.