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Story Publication logo April 11, 2013

Britain: Blackpool Struggles as Benefit Cuts Bite

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Britain's government is engaged in the steepest deficit reduction of modern times. A team of...

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From his shop a stone's throw from Blackpool's seafront, Sahir Sodawala has few illusions about the faded holiday resort's modern economy.

"There's Poundworld, Poundland, Pound Shop, 99p Stores, B&M, Home Bargains . . . there's a lot of competition out there," says Mr Sodawala, the proprietor of rival Pound Store.

Thermal underwear and chocolate Easter eggs jostle for space outside his store; inside, a young man bargains to buy a £3 "popper" – a liquid legal high – for £2 and reacts as if he has won the lottery when Mr Sodawala agrees.

Blackpool's economy has long reflected the limited financial horizons of a benefit-dependent population: discount stores, charity shops and takeaways make up its retail spine. For such businesses, life is about to get even tougher.

Research commissioned by the Financial Times shows that benefit cuts, beginning this month and continuing until 2015, will mean Blackpool loses more than £900 ($1,380) a year for each working-age resident, more than anywhere else in the country.

"Even now, it's quiet. If you're cutting people's money, it's going to get even more quiet," says Mr Sodawala. "The recession, the weather, the cuts . . . it just keeps on piling up."

These are blows Blackpool is ill-placed to sustain. Once its rococo Winter Gardens conference centre played host to the annual gatherings of major political parties: from its podium Margaret Thatcher in her pomp prescribed tough economic medicine to recession-hit 1980s Britain.

The political elite deserted in the past decade in search of better rail links and smarter restaurants. The town is still struggling to find a 21st-century identity, hampered by a low-skilled labour force and seasonal economy. Almost one in four working age adults claims unemployment or incapacity benefit, double the national average; an equal number work in a public sector that is inexorably shrinking.

Yet in Blackpool, Fylde and Wyre Credit Union, which offers low-interest loans to people on benefits, Mike Barry, operations director, says most claimants are "oblivious" to the impact welfare reforms will have.

As household cash contracts, he predicts: "Local businesses will have less footfall [and] less income."

Private landlords, who accommodate one in four Blackpool residents, double the national average, are "absolutely terrified" at the threat to their cash flow from housing benefit cutbacks, says Mr Barry.

His business model is under threat. "If we start losing money because people simply haven't got it to give back to us then it could be that we [have] to re-evaluate the level to which we can be involved in that sector of the economy," he says. That could leave Blackpool's most vulnerable seeking payday lenders and loan sharks, he says.

The government hopes that, as more people are forced off welfare into the labour market, increased economic dynamism will offset lost benefits. Alan Cavill, the council's assistant chief executive, says such optimism "doesn't feel right".

Low wages and lack of mobility mean people often cannot travel far to seek work and jobs are hard to come by in Blackpool. When the council recently hosted a recruitment day for a call-centre, a note was taken of how people got there: 90 per cent had walked.

In a fried chicken shop in the shadow of the town's famous tower, an assistant talks sardonically of "payday" when benefit cheques have been cashed and a queue starts to form five minutes before the doors open. Will claimants still keep the cash registers ringing when their income diminishes? As an unseasonably icy wind blows outside, he can only wait and wonder.



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