Take a walk down nearly any High Street in any small or large, inland or seaside, village, town and city in the country and you know there is an economic challenge. Of course, there are a small number of places which seem to have escaped. But, at the other end of the scale, there are town centres where shop units alternate between charity and betting shops and struggling retailers and empty units.
In February this year, the all-party Select Committee, which I chair, published a report on the High Street in 20301 . Our inquiry had taken place over a turbulent 6 months for the high street. Barely a week had gone by without headlines pronouncing the ‘death of the high street’ or a major retailer announcing a restructuring or a fall in profits. And nothing has changed this year.
An enormous change has taken place in retail in recent years. The traditional pattern of making purchases in physical stores, both in and out-of-town, has been profoundly disrupted by the growth of online shopping.
The Committee was united in concluding that unless urgent action was taken, we feared that further deterioration, loss of visitors and dereliction may lead to some high streets and town centres disappearing altogether. We said that High streets and town centres needed urgently to adapt, transform and find a new focus in order to survive.
We were convinced that high streets and town centres will survive, and thrive, in 2030 if they adapt, becoming activity-based community gathering places where retail is a smaller part of a wider range of uses and activities. Green space, leisure, arts and culture and health and social care services must combine with housing to create a space that is the “intersection of human life and activity” based primarily on social interactions rather than financial transactions. Individual areas will need to identify the mix that best suits their specific characteristics, local strengths, culture and heritage. Fundamentally, community must be at the heart of all high streets and town centres in 2030.
Achieving the large-scale structural change needed for our high streets and town centres to survive will require interventions led by local councils, using all their powers and backed by government funding and private investment. The Committee made a whole range of recommendations as to how these initiatives could and should be implemented.
However, it was also clear that, given the rapid changing retail environment, there needed to be action on business rates, not just to re-introduce some tax fairness between on-line and high street retailing, but also because business rates form such a large part of the government’s plans for local government finance in the future.
The government claimed that it undertook a fundamental review of the business rates system in 2015–16, concluding that business rates should remain. This was a classic example of sticking your head in the sand, hoping that, by the time you take it out, the problem will have gone away. It hasn’t. That’s why the all-party Treasury Select Committee has launched its own inquiry into the business rates system and its impact on businesses2 .
Today, the government has published its response3 to our High Street report.
Let me call it ‘disappointing’ – a profound under-statement!
It appears that the government is simply unwilling to make the radical change required that reflects the realities of modern commerce and gives shops on the high street a fighting chance It is absolutely clear that the current taxation system places an unfair burden on high street businesses compared to those that conduct their businesses wholly or substantially online.
On this, I am completely at one with, John Allan – the President of the CBI and Chairman of TESCO – who today called for a reform of the business rates claiming the system is now “unsustainable”. He complained that the Government had only “tweaked” the system in recent years, adding: “The more sticking plaster we add, the greater the signal that the system is broken and in need of a fundamental rethink.”
We need a system that spreads the tax burden fairly and is responsive to market changes. Rather than examining the range of radical options to the taxation system that we proposed in order to save the high street, which it simply dismisses as too challenging, the government has decided to stick to the status quo.
It’s the latest example of a government which has become totally paralysed by Brexit, unwilling to take the tough, but necessary, decisions on the domestic policy agenda to secure local communities where people want to live, work and play. The government is fiddling while our town centres are burning.
It’s a High Street low.