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Bruno Rost

Head of PR

Public Sector & Business Strategies

Experian

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bruno.rost@uk.experian.com Email

 

 

 

Experian reveals the FAMILIES AND COUNCILS WORST HIT BY THE RECESSION

 

  • Full cost of recession yet to hit local and central government finances
  • New heat maps show councils and communities that will be hit hardest
  • Fastest recovery forecast for London, Edinburgh and major northern cities

 

For the first time, Experian has combined its data on consumers, businesses and local economies[i] to create unique ‘heat maps’ that show the local authorities and households which will be hardest hit by the recession, and which areas in the UK will emerge from the recession the strongest.   

 

Published today in Experian’s latest Insight Report, the analysis shows that the full impact of the recession - in terms of unemployment, debt, fraud and increasing demand for public services – will not hit local and central government finances for several months. In some areas, it will be felt for many years after economic growth resumes.

 

The impact facing councils over the next decade

 

Experian’s research combines three separate indicators – household financial stress, economic growth potential and long term unemployment risk – into an overall measure which identifies which local authorities will be most impacted by recession over the next decade [See Map 1 below]. The ‘heat map’ illustrates:

 

·        The ‘three band’ impact of the recession, in which the South, from Kent through to Cornwall feel the least impact; the Midlands, Wales and the North East the severest impact, and Scotland in the middle. 

·        Local authorities such as Chester-le-Street, Sedgefield and Wear Valley are going to be the hardest hit.

·        London boroughs such as the City of London, Westminster and Kensington and Chelsea will see relatively less impact.

 

Charlotte Hogg, Managing Director, Experian UK & Ireland, commented: “The tremors of the recession may have been felt in many households and businesses, but the local and central government now needs to brace itself for the aftershock. So far, the public sector has been largely cushioned by government investment and spending. But with unemployment rising, revenues falling and the need for public spending cuts, local authorities need to think how they can do more for less.” 

 

 

Map 1: Overall impact of the recession on Local Government 2010-2020

 

 

Top 20 Local Authorities Most impacted by recession

 

TOP 20 LOCAL AUTHORITIES least impacted by recession

Local Authority

Recession impact index

Local Authority

Recession impact index

Chester-le-Street

326

City of London

64

Sedgefield

270

Kensington and Chelsea

67

Wear Valley

217

Westminster, City of

67

South Tyneside

216

Richmondshire

67

Newcastle-upon-Tyne

207

Wandsworth

69

Tameside

207

Kingston-upon-Thames

69

Wansbeck

202

Camden

69

East Dunbartonshire

194

Elmbridge

69

Redcar and Cleveland

192

Winchester

69

Merthyr Tydfil

191

Bracknell Forest

70

Powys

188

Chiltern

70

Blaenau Gwent

175

Hart

70

Rhondda, Cynon, Taff

171

Epsom and Ewell

70

Erewash

168

Wokingham

70

Hartlepool

159

Windsor and Maidenhead

70

South Ayrshire

158

Surrey Heath

71

Blackpool

157

Waverley

71

Sefton

156

Mole Valley

71

North East Derbyshire

155

Reigate and Banstead

71

Blyth Valley

152

South Buckinghamshire

71

 

 

A picture of household financial stress in the UK

 

Experian’s Insight Report also creates a picture of household financial stress in the UK – mapping out those areas of the UK and types of people that will suffer the most from the recession’s immediate effects and its aftermath.

 

By looking at a range of factors including: levels of personal debt, income, long term employment prospects, assets and savings, the map reveals that:

·        The biggest financial stress ‘hotspots’ are scattered across Wales, Scotland and The Midlands.

·        The least affected are in London, parts of East Anglia and the commuter belt.

 

According to Experian’s Mosaic analysis, the families experiencing the greatest levels of financial stress include:

·        Upper floor living people - young single people on limited incomes, renting small flats from local councils or housing associations

·        Elderly Needs - older pensioners who have found their retirement incomes eroded by inflation and are dependent on state pensions

·        Claimant Cultures - families with a history of state dependency, some have semi-skilled jobs with modest incomes, many are unemployed, sick or single parents on state benefits.

 

 

 

Map 2: The recession and household finances 2008-2010

 

 

 

Top 20 Local Authorities Suffering most financial stress

 

TOP 20 LOCAL AUTHORITIES SUFFERING LEAST FINANCIAL STRESS

Local Authority

Household Financial Stress Index

Local Authority

Household Financial Stress Index

 Blaenau Gwent

123

City of London

48

Kingston upon Hull, City of

121

Kensington and Chelsea

51

Inverclyde

120

Westminster

55

Glasgow, City of

119

Wandsworth

55

Wolverhampton

118

Richmondshire

58

Merthyr Tydfil

118

Camden

62

West Dunbartonshire

118

Hammersmith and Fulham

62

Sandwell

118

Kingston upon Thames

70

South Tyneside

118

Barnet

70

Walsall

117

Islington

72

Conwy

117

Merton

73

Christchurch

117

Lambeth

73

Thanet

117

Elmbridge

73

Tendring

116

Cambridge

75

Newport

116

St. Albans

76

North East Lincolnshire

116

Haringey

77

Caerphilly

116

Oxford

77

Knowsley

115

Chiltern

78

Sedgefield

115

Southwark

78

Gateshead

115

Wokingham

79

 

 

 

Charlotte Hogg comments:   This is a critical time for local authorities and there are many things that can be done to mitigate the impact of the recession. These include identifying those businesses that are key to future local economic development and providing them with near term help to survive; providing tailored programmes to help families facing long term unemployment and supporting those facing new financial pressures and unable to stay in their homes or communities.  It is important to use insight to understand these local challenges and use this information to help drive preventative and rehabilitative measures.” 

 

”In parallel with delivering support to meet new needs, local authorities will also need to optimise their incomes – reducing fraud and collecting from those who can pay. Fraud rises with unemployment, and increases in fraud can be tackled through the use of predictive fraud modelling to prioritise cases and adapt communications strategies to engage high-risk people quickly.

 

”Another key area for local authorities is the collection of debt.  Public sector organisations need to ensure they are maximising their revenue collection by identifying those that cannot pay from people that have the means to but won’t. Private sector experience indicates that up to 30 per cent of this debt may be collectable. Each additional one per cent of known outstanding public sector debt recovered would realise a further £300m to the public purse.”

 

Prospects for growth

 

Experian’s Insight Report also explains that in addition to dealing with the impacts of the recession, local authorities need to be aware of the longer term economic prospects of their areas so that they can put in place effective plans to support local economic development and support the drivers for resilience.

  

Looking ahead over the next ten years, the report examines the drivers for growth, identifying areas likely to regain previous levels of prosperity, or conversely suffer persistent unemployment and deprivation problems. Those areas likely to:

 

·        See higher levels of economic growth include London, Edinburgh and Leeds as well as a number of other major northern cities[1].

·        Take longest to recover from recession include many Scottish locations such as Dumfries and Galloway, East Dunbartonshire, South Ayrshire and Argyll and Bute as well as English local authorities including Copeland, Malvern Hills, Weymouth & Portland, West Somerset and Stafford.

 

Charlotte Hogg comments: “Through understanding the drivers for economic growth at a more detailed local level, policymakers can ensure communities become more resilient to the effects of recession whilst at the same time planning strategically for future growth. This means using information better to identify local economic strengths and weaknesses such as skills gaps, employment needs, market competitiveness, innovation and ensuring that investment opportunities are targeted where they are most needed.” 

 

Map 3: Local economy growth potential 2010 – 2020

 

 

About Experian


Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2009 was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.

For more information, visit http://www.experianplc.com.

 

 



[1] To show what this means across the UK, summary index of growth potential for local areas has been created, based on Experian’s UK local and regional forecasting service.   This unique growth index combines forecasts of output and employment growth for local authority areas for the period 2010 to 2020. It focuses on post-recession recovery and longer-term growth potential, which will strongly influence the extent to which localities regain previous levels of prosperity, or conversely suffer persistent unemployment and deprivation problems.  These growth forecasts, in turn, reflect the structure of local industry, and the skills of local residents, together with projected patterns of population growth and migration.  The areas likely to see higher levels of economic growth during 2010-2020 are in and around London, England’s major northern cities, and Edinburgh. 

 

 

 

 

 

 

 



[i] Experian collects and forecasts information on many aspects of local economic performance, and we have used this together with data from the Office for National Statistics (ONS) to compile and combine indicators of three aspects of the recession’s impact: on local businesses, unemployment and household financial stress. These indices compare trends and prospects for each local authority area with those for the ‘average’ local authority over the period of the recession and its immediate aftermath (2008-2010), as well as our predictions for longer term growth prospects for local economies (2010-2020).  

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