Experts warn Blackburn faces 'avalanche of debt' if covid support stops

Experts are warning people in many parts of Northern England, especially Blackburn, and the Midlands face an ‘avalanche’ of debt as Covid-support is phased out this summer.

Stats show 44% of neighbourhoods in Blackburn are likely to have fallen into debt over the pandemic.

That's according to new research from Centre for Cities think tank in partnership with Clarion Housing Group, that challenges the idea that people’s finances have benefited from lockdown.

They warn that the Government’s roadmap for withdrawing Covid-support will hit people in the North and Midlands disproportionately hard and, in a blow to the levelling up agenda, risks leaving the UK more divided than ever.

They said division between homeowners and people in social housing are also likely to increase, with social housing residents and people on low incomes far more likely to have fallen into debt during the pandemic.

The report showed during the pandemic people in richer neighbourhoods in predominantly southern cities cut down on luxuries and reduced their outgoings more than people in poorer neighbourhoods in – mostly northern – cities who spend proportionally more on food, bills and other essentials.

As a result, for every £1 that people from less affluent areas saved, people in richer areas saved £12.

Because of this, experts said people in around half of neighbourhoods in Blackburn and Burnley are likely to have been pushed into debt trying to meet the cost of essentials due to pandemic job losses, furlough and a lack of savings.

• Catherine Price, Town Centre Manager for Blackburn Improvement District, said support needs to continue for the town: "People are strong and people are resilient and everybody's pulling their socks up and getting on with the job at hand and doing their absolute best...and no doubt we will get through it, but we just could do with that extra help and recognition that we've been through the mill and so we do need that support.

• "It's been such a difficult time and I've had businesses on the phone in tears not knowing what's going to happen with their business. I had many people just really fearful that they wouldn't have a business to go back to.

• "The government has a really strong levelling up agenda but I think it needs to take in account those areas that had more restrictions throughout than other areas and and those areas that might have been struggling before and therefore the impact is greater like with Blackburn."

On the other hand, it's believed cutting non-essential spending has helped people in wealthier places save money.

People in Exeter and York are found to be the biggest financial beneficiaries of lockdown, with those living in eight in ten neighbourhoods being more likely than not to have boosted their savings.

Four of the five cities where people are most likely to have saved money during the pandemic are in Southern England while the top five places where people are most likely to have fallen into debt are in Northern England – three in the Red Wall.

Cities where people are most likely to have fallen into debt:

• Hull

• Bradford

• Liverpool

• Blackburn

• Burnley

• Cities where people are most likely to have saved money:

• Exeter

• York

• Aldershot

• Reading

• Norwich