Odette Priestley recently installed some fancy heated umbrellas on the pavement outside her family-owned bakery in the middle of a sprawling business park about 25 miles west of London.
The idea was to lure customers back into the café on the Slough Trading Estate as more of its 10,000 workers drift back to their offices. “Things have been getting busier,” said Ms Priestley, in a reference to how the easing of coronavirus restrictions imposed by the government in March has increased business activity on the estate.
But a big cloud hangs over Slough: the plunge in the number of flights at Heathrow airport, just down the road from the Berkshire town. “There’s a whole knock on effect on the town’s economy because so much is tied to the airport,” said Ms Priestley.
She added that her bakery had seen business in locations near Heathrow — shops and cafés close to what is the UK’s largest aviation hub — fall by up to 90 per cent.
Traditionally a growth town thanks to its proximity to London and Heathrow, Slough is now counting the cost of its dependence on the aviation industry after governments across the world imposed restrictions on travel at the start of the Covid-19 pandemic. More than a quarter of Slough’s working age population is employed either directly in aviation or indirectly through industries such as logistics and hospitality.
In August, the latest month for which figures are available, flights at Heathrow were down 64 per cent compared with the same time last year, having fallen to practically zero in March. The airport dealt with just 1.4m passengers last month, down from 7.7m in August 2019.
Slough is far from alone in reeling from the impact of the severe downturn in aviation. Other airport towns in the UK, such as Luton and Crawley, next to Gatwick, have also been badly affected. The pain is set to continue as the government persists with a requirement for arriving passengers in the UK to quarantine for 14 days unless they are coming from a country on an official list of safe nations.
Ms Priestley is not the only person worrying about the lack of activity at Heathrow. At Eton Travel, two miles down the road from Slough town centre, Ken Thompson has seen his business crater.
Eton specialises in corporate travel, dealing with large international companies such as Hitachi that have offices in the so-called M4 corridor, but it has not earned a penny since just prior to lockdown.
Mr Thompson has been forced to use the government’s job retention scheme for 73 out of Eton’s 93 employees. He is in a state of shock at what has happened to the company. “It has been like a rug whipped out from beneath our feet,” he said. “I have never seen anything like it.”
Slough’s inhabitants have been major users of the job retention scheme, with 34 per cent of workers on furlough for at least a three-week period between March and the end of July, according to a study of 63 of the UK’s largest cities and towns by the Centre for Cities, a think-tank. That ranks Slough the fourth highest in the country.
Slough has also had the largest rise in claimants for unemployment-related benefits among the same 63 cities and towns between March and August, going up by 5.4 percentage points to 8.4 per cent, well above the national average, the Centre for Cities study found. Luton recorded the second largest rise and Crawley the fourth.
Unlike much of the economy, where there is at least hope of a recovery, the aviation industry is downbeat. “It is not just the rules — it is also a question of confidence,” said Chris Tarry of Ctaira, an aviation consultancy. “That’s going to take time to come back.”
Research from the consultancy Oxford Economics outlines a “central case” of UK airline passenger volumes falling by 62 per cent this year and taking until 2023 to recover to pre-pandemic levels. In terms of Heathrow, this would lead to a loss of 37,000 jobs associated with the airport by 2021, said the consultants.
Aviation businesses are already retrenching. Swissport, the ground handling group which last month announced a financial restructuring, warned that up to 4,000 UK jobs might go unless there was a speedy recovery at Heathrow, Gatwick and Manchester airports. British Airways, which is responsible for 55 per cent of flights at Heathrow, has spoken of cutting staff numbers by 30 per cent.
While admitting that the aviation slowdown has been a shock, Labour-controlled Slough council is putting a brave face on the situation. “We haven’t got all our eggs in one basket with Heathrow,” said council leader James Swindlehurst. “We are very adaptable . . . We have reinvented ourselves before and we can do it again.”
Nonetheless, Mr Swindlehurst thinks there are things the government could do to recognise the aviation sector’s specific problems. He would like to see the furlough scheme, which is due to expire in October, extended for aviation, and also some willingness to countenance targeted state financial support for the industry.
But chancellor Rishi Sunak has so far resisted lengthening the furlough scheme, and he has pulled back from providing focused assistance to airlines and airports. France and Germany, by contrast, have both targeted multi billion euro support at aviation.
“There is a risk that if there’s no certainty at the end of furlough in October, there might be a knee-jerk reaction to just let people go,” said Mr Swindlehurst.
Longer term, Slough council is hoping that urban regeneration will deliver alternative sources of employment if flights at Heathrow remain subdued.
The Abu Dhabi sovereign wealth fund Adia acquired two old shopping centres in the middle of Slough four years ago and plans to turn the site into a “central business district” featuring up to 201,000 square metres of office space and 1,100 new homes. There are also plans to redevelop a former university campus.
Mr Swindlehurst is making plans to help reskill workers so they can shift into the construction sector, which he anticipates will be one of the fastest sectors to rebound from the downturn.
However, neither of the redevelopment schemes earmarked for Slough are yet shovel ready, and remain at a relatively early stage in the planning process. Some property experts have questioned whether Adia might wish to reassess the demand for office space if corporate behaviour changes as a result of coronavirus.
And in the meantime, the clock is ticking on the government’s furlough scheme. John Holland-Kaye, Heathrow’s chief executive, warned last week that without government assistance, the company would have to start laying off more staff.
He called for Heathrow to be exempted from business rates, which cost it £120m a year, and also for ministers to introduce Covid-19 testing at airports instead of resorting only to the government’s quarantine arrangements.
Slough’s inhabitants are not holding their breath. Sue Sibany-King, who runs the Slough Food Bank, is expecting a surge in demand when the furlough scheme ends. “It went crazy in March and April when we went up from our usual 60 to 80 parcels a week to over 250,” she said. “I am confidently expecting it to go shooting up again.”