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Ann McKechin

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This Rudderless Government Must Adopt a Strategy for Our Fading High Streets

Posted: 25/01/2013 00:00

If 20,000 automotive workers lost their jobs in one month, it's likely that a crisis summit would be swiftly convened at Number 10, urgent questions would be asked in Parliament, and MPs across the country would rush to champion the skilled workers facing unemployment in their constituencies. The same is not true for the loss of over 60,000 jobs in the UK retail industry in the last two years, reflecting the closure of over eighty high street chains. Even the plight of the three big names to have faced administration so far in 2013 has done little to sharpen the government's senses. In the space of a month, Jessops closed with 2,000 jobs lost, Blockbusters closed with 4,000 jobs at risk and HMV, employing 4,300, entered restructuring with an uncertain future.

When these chains called in the administrators, few in government seemed to greet the news with the sense of urgency it deserves, with ministers blithely stating that market forces and shifts in consumer habits are something they can do little about. Vince Cable, the secretary of state for business, innovation and skills, was of this opinion when I questioned him on Tuesday this week. Asked about the recent wave of closures, the secretary of state didn't seem to isolate how damaging last year's VAT rise was to the high street, or the effect that squeezed incomes among the lowest paid, who tend to spend their money rather than saving it, is having on local shops. Nor had he had any conversation with the devolved administrations about what could be done, despite the problem being UK-wide. At the same time, his department's PopUp Britain initiative pledges to "support Britain's most promising retail entrepreneurs, providing access to sought-after High Street spaces": as usual, this government tinkers at the edges, and misses the real challenge facing retailers in the UK.

Of course, technological progress is inevitable. I don't think many of us would question that the widespread disruptive power of the internet, with its tendency to upend traditional business models, has posed a tricky question to the high street. Music downloads and eBooks are here to stay, as are the cameraphones that have heaped pressure on traditional camera retailers like Jessops. The rise of out-of-town shopping centres, situated far from the communities they serve, continues unabated. Yet the demise of Comet shows that even retailers who had previously moved to out-of-town locations are being hit by the increase in online shopping. At a time when it's possible to buy almost everything on the web, the government must look urgently at how best to enable our high street shops, and the communities they serve, to thrive.

Ministers have a variety of policy levers to pull. Firstly, they should cut VAT to provide the essential demand stimulus the economy needs. Until a recent crackdown, websites such as Play.com were able to avoid VAT altogether by trading from the Channel Islands. Now it's time for this government to help onshore business for once and reduce this tax to help shops and consumers alike. Secondly, business rates, set to rise in April, should be frozen for those most at risk. The bill for the increase is estimated to cost £175 million. At a time when many chains are struggling to stay above water, the Chancellor's lack of action on rates sends a strong signal that this government are very much not 'open for business' as they so often claim to be. Thirdly, the government should heed the recommendation made by Mary Portas in her review of the High Street and require direct ministerial approval for all new out-of-town shopping centres. This was the only recommendation that the government didn't agree to enact, yet it is probably the most important. We should follow countries like France, which requires far more stringent approval processes, including detailed analysis of the impact out-of-town developments have on existing local retailers, before planning permission can be granted. Lastly, the scourge of vacant properties on the high street should be tackled. The new Distressed Retail Property Task Force is a good place to start in persuading both banks and landlords to be realistic about the value of empty shops on their books. Until they can be persuaded to reduce the rents they are asking for, a virtuous circle of new occupancies and rising retail activity is a long way off.

Accounting for 11% of GDP and directly employing 4.1 million people, the retail (and wholesale) sector trumps the entire financial services industry, which employs 1.2 million people and accounts for 10.4% of GDP. A sector employing such a large number, including many of our society's lowest paid workers, should surely be seen as strategic priority for the government to support. Instead, they seem content to sit by and watch as the sector hemorrhages jobs. With over 30 shops closing every single day in the UK, many being replaced by a seemingly never-ending supply of pay-day lenders and betting shops, the government needs to come up with more solutions than 'town teams', 'pop-up shops' and pocket-change grants to local authorities. It's time for the government to put shopkeepers above bankers.

 

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