Claims for Universal Credit and Jobseeker’s Allowance soared in Cambridgeshire as the area’s economy suffered a contraction of “historic significance,” an economic report says.

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A report by Metro Dynamics and commissioned by the Cambridgeshire and Peterborough Combined Authority, says the fall in economic output in the wake of the Covid-19 pandemic across the county is “far exceeding the worst effects of the 2008 recession”.

The report says modelling estimates Cambridgeshire and Peterborough’s economy contracted by £1.39 billion from April 1 to June 30, which equates to a 21.9 per cent annualised rate of decline.

“The local economic situation is bad, but not quite as bad as first forecast,” the combined authority said in a statement, adding an earlier estimate for the same period projected a £3.7 billion fall in output.

The number of Jobseeker’s Allowance claimants rose by 147 per cent across the county, to just over 3,000, from February to July, compared with an 86 per cent increase nationally.

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In the same time period the number of Universal Credit claimants rose by 107 per cent to a “record high” of 60,910, compared to a 90 per cent national increase, according to the report.

The report says: “Whilst it is important to discount the increase that was occurring anyway due to Universal Credit rollout, and the fact that Universal Credit figures will include many who are furloughed and may not ultimately be unemployed, it appears increasingly likely that some structurally higher unemployment is locked in for at least the short/medium term.

“With very limited activity occurring in new job advertisements (particularly in lower paid/skilled roles outside construction) it is likely that some people who have recently lost their jobs will remain unemployed for some time to come.”

More than one in four workers received support via the government’s furlough scheme in Cambridgeshire and Peterborough, the report says.

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The figures for the economic slump and rising numbers supported by Universal Credit and Jobseeker’s Allowance are broadly in line with comparable areas in the country, the report says.

“It appears as though the economic freefall of April and May has since stabilised and there are some early indicators of economic activity resuming in quarter three, such as businesses across most sectors reopening their doors, shoppers cautiously returning to high streets and workers to offices,” the report says.

But for the workers the picture is not necessarily improving, with unemployment forecast to rise further, although the report does say “for labour markets it is simply too soon to tell whether the worst has passed”.

The largest fall of any one area was the professional, scientific and technical sector in Cambridge, which the report shows “declined substantially” in the second quarter, accounting for six per cent of the lowered output across the entire combined authority area.

Across the area high streets “have been slow to recover and activity remains well below pre-lockdown levels”.

The Cambridgeshire and Peterborough Combined Authority approved the first draft of its Covid-19 local economic recovery strategy at its board meeting on Wednesday (September 30).

The authority’s director of business and skills, John Hill, told the board: “This does provide us with what we need now. A blueprint for a portfolio of interventions that can be mobilised rapidly in October for the end of furlough.”

He said of the combined authority’s plan: “It has a very ambitious and optimistic vision to lead the nation out of recession by accelerating the recovery, rebound and renewal of our economy and achieving our ambition of doubling gross value added in a more digitally enabled, greener and healthier and inclusive way than before.”

A second draft of the plan will return to the board in November.

The leader of Fenland District Council, Chris Boden, said: “It is massively important that we make what difference we can in promoting local economic recovery, and I have to say I think it’s important that we don’t over promise what we can do in the short term, because in the short term most depends upon what will happen to the national economy. But to the extent that we can locally make a difference some of those differences can and should be massively important.”

The economic report from Metro Dynamics says: “The trajectory from here can be influenced but not controlled.”

In a statement the combined authority said it will be using the insight from the report to target its support to “business hardest hit and businesses that, with additional support, can achieve significant growth and power the local economic recovery”.

It said its growth hub is committed to helping local businesses confront the challenges of Covid-19 through targeted support and awareness campaigns, as well as signposting businesses to relevant national support schemes.

Mayor James Palmer said: “We know almost all sectors across Cambridgeshire and Peterborough have been and continue to be affected by the impacts of the lockdown and we have to accept that with the furlough scheme ending next month, this is likely to get worse before it gets better.

“As this report highlights, there is still a lot of uncertainty around how quickly individual sectors will recover and for now we remain focused on giving as much support as possible to businesses and workers across Cambridgeshire and Peterborough.

“We are offering a multitude of support, including our free dedicated 1-2-1 hour-long consultations with an experienced business adviser, who will discuss your needs and provide guidance on how to access relevant support.

“We are continuing to monitor everything very closely and are regularly talking to business leaders and colleagues in central government to ensure we are targeting our support to those sectors that need it the most.

“My message to anyone who is worried is reach out and contact the combined authority growth hub, we will do what we can to support your business and get you the advice and support you need.”

The chairman of the Cambridgeshire and Peterborough business board, Austen Adams, said: “Covid-19 has inevitably damaged our short-term growth projections and support is essential in managing our way back to the levels of economic prosperity we richly deserve and as quickly as possible.

“This report provides us with a factual appreciation of where we are today, and it will enable us to more effectively target support and interventions at areas with the greatest need.

“We are focusing on both areas where the impact has been most damaging and areas where with the right additional help and support even greater levels of ambitious growth can be created than before Covid-19 hit.

“There may be some difficult decisions to make along the way, we need to balance support across these two areas.

“Cambridgeshire and Peterborough are blessed with talented people and resources, combine this with an entrepreneurial spirit and a solid evidence-based assessment to work from and we can move forward together with speed, accuracy and purpose.”