Author: Jacqueline Button
Last month I wrote about the Government’s appointment of Mary Portas, the Retail Tsarina, to carry out a review aimed at “halting the decline of the High Street” with particular emphasis on clone towns and vacancy rates. Now the Labour Party have launched a 4 point plan to “put the heart back into Britain’s High Streets”. The announcement on their website is, unsurprisingly, full of criticism of the “Tory-led Government” and its “VAT hike” but it’s worth looking beyond the party political posturing at their ideas.
Labour begin by stating that 14.6% of retail premises in the UK are currently empty with vacancy rates rising. This is at odds with Colliers International who say that 13.3% of units are empty and vacancy rates are falling. Either way, this is too large a figure and Labour are right to give some thought to the issue.
A 4 point plan sounds brief enough to make an impact but long enough to provide some substantive, practical ideas but in fact, although Labour reel off lots of facts and figures, they give little depth to the plan and no information as to how it would work in practise.
VAT
The first part of the plan is a temporary VAT cut back to the old rate of 17.5%. Labour do not say how temporary this is to be but presumably they are talking about months rather than weeks or years. Last year the British Retail Consortium predicted the VAT increase to 20% would cost 163,000 jobs over 4 years and reduce consumer spending by £3.6 billion over the same period. Apparently the cut, as well as saving jobs and increasing spending, will put £450 back into each family’s pocket. Labour don’t explain how this amount is calculated or point out that in order to make a dent in the £3.6 billion everyone would have to spend their £450 on the High Street and not on the internet or a well-deserved holiday away from economy-induced stress.
The obvious problem with this suggestion is, in a time of tax rises and spending cuts, where is the 2.5% saving to be made? The plan doesn’t deal with that.
DIVERSITY
Jack Dromey MP, the Shadow Local Government Minister, said, “One of the things I hear from my constituents is how the character of the local High Street has changed”. His constituency is in Birmingham but presumably he isn’t referring to the changes brought about by the arrival of Selfridges and the rejuvenation of the Bull Ring which even the most reactionary shopper would see as positive.
Labour say they want to introduce a retail diversity planning clause, putting communities in charge of the future of their local High Streets. They don’t say in which legislation this clause is to go or expand on the rhetoric. Assuming that they mean that every High Street shouldn’t be occupied with the same big brands, this isn’t dissimilar to the coalition’s (that’s the Tory-led coalition, by the way) and Ms Portas’s opposition to Clone Towns.
So how would this diversity clause work? In a shopping centre or a street where there is only one landlord like Marylebone High Street the landlord can (to an extent) control the tenant mix. In most High Streets there are multiple landlords each keen only to let his premises on the best terms. The only way to control the tenant mix would therefore be through planning law operated by local authorities.
In planning terms, retail is currently classified as A1 use. Therefore if a retailer wants to use an office (B1) or a warehouse (B8) for retail use they have to apply to the local authority to change the use of those premises which the authority will either grant or refuse. But if a big retailer wants to use premises previously used by a small retailer no consent is needed. Similarly there is no way under planning law to stop a whole row of pound shops opening up or to prevent one retailer opening multiple units in one street.
Labour’s diversity clause is beginning to look like a whole statute and even when the parliamentary draftsmen’s work is finished the local authorities’ in interpreting the law and processing the applications it generates will have only just begun. Each community will need a street full of stationers to supply the amount of red tape needed to prevent the retailer with the best bargaining position (as opposed to the best fit in the street) moving in.
COMPETITION
Labour’s third prong is to create a “competition test” which would (somehow) lead to “greater choice and lower prices for shoppers” and ensure a “level playing field between small and large shops”.
Again, with no explanation of how this idea will be translated into reality or even what it really means we can only speculate. Labour’s planning statute will have to define a “small shop” and a “large shop” (will this be based on square footage, turnover, profit, number of outlets, number of employees or number of noughts in the chief exec’s salary?) and somehow ensure that a certain percentage of units in a town will be reserved for independent retailers.
The reality of this, of course, is that landlords will be faced with empty shops if the “big shop” quota for their town has been used up or forced to reduce rents to accommodate an independent who cannot pay the market rent. So whilst this may lead to greater choice for shoppers it won’t necessarily lead to lower prices and may lead to financial difficulties for landlords. Hardly a way of injecting new life into the economy.
INNOVATION
Labour’s fourth idea, to enable councils to pursue innovative uses for empty shops such as cultural, community or learning services is their best although it is hardly innovative in itself and is little different than landlords granting leases to charity shops on the basis that at least the rates are covered even if no rent changes hands. However, at least Labour have grasped the concept that an occupied (even if non-trading) unit is better than an empty one and this is certainly an idea which could help some towns where shop vacancies are high and other usable space is in short supply.
The biggest flaw in Labour’s plan is what they don’t cover: town centre car parking charges have, like VAT, been “hiked” whilst most out of town shopping centres provide free parking. Business rates are high and in some places crippling (rates in St Albans are higher per square foot than Oxford Street). Instead of nebulous ideas about diversity and competition these are solid, easy to grasp issues which Labour could have addressed but chose not to.
Since Ms Portas’s appointment the (Tory-led) Government has been quiet on the issues of the High Street, consumed as it has been with other problems. Unfortunately Labour chose a launch date for its plan of 25th July when the news was dominated by the potentially disastrous political games in the US and the tragedy in Norway so their ideas (whilst flawed) have not been as widely publicised as they might have been. The problems of the High Street aren’t as immediate as the phone-hacking scandal or as far-reaching as the US debt crisis but they need addressing quickly and thoroughly. So far, neither the Government nor the Labour Party have been quick or thorough enough.
