The Treasury Could Save the High Street – By Giving Everyone £100 Vouchers

Ending "lockdown" must come with ongoing support, and in phases, in order to kickstart high street spending, Joe Lynam and Chris Leslie write.
The Treasury must help our high streets bounce back.
The Treasury must help our high streets bounce back.

The much desired “V” shape recovery in consumption may well be illusory, but policy-makers must surely try hard to get there. Certain “offline” sectors could bounce back from lockdown relatively well – hairdressing, garden centres, pharmacies maybe. But for most on the high street, it could take many months as demand returns tentatively, especially from customers who have adapted to online alternatives for the first time.

This will doubtless compound the meltdown of Britain’s shopping streets. Stores were closing at an alarming rate before the crisis. A tenth of high street stores lay empty last October – well before coronavirus struck. Many familiar brands had ceased trading. How many retailers, landlords and town planners must yearn for such a figure now?

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Alas, we should not only be focusing on how many chains or individual shops end up winding up entirely, but rather count how many will open back up.

After three months of no income, many retailers may decide to wind up their companies entirely because the world of consumption is set to be so different.

Of those shops which do re-open, how they serve customers and what products they sell will have to be reappraised entirely by their owners.

“The government’s exit strategy cannot simply be about unwinding lockdown; it must also provide the financial adrenaline to jolt the economy back into life.”

Social distancing and mitigation measures are not incompatible with the gradual return of widespread business activities. Shops and workplaces will need to adjust significantly, varying hours, limiting customer proximity, protecting staff. The psychological impact of the lockdown will make many people wary of circulating for some time to come – and the shielding of vulnerable and older customers will itself reduce footfall for businesses probably for the rest of this year.

Can retail turnover recover in such an environment? Customers may refuse to wait for 20-30 minutes just to enter a store and even when inside, they won’t enjoy the process of shopping as before. It takes an incredibly patient shopper to queue up for ages and then be directed to follow arrows through a store, maintaining a distance of 2m from the person in front, particularly if only to buy one or two items. You may be discouraged from hanging around or touching and feeling the very products that you were interested in buying – lest you pass something on to someone else.

So, in order to survive, shops will hold fewer products – because sourcing them from wholesalers impacted by the virus and closed borders just can’t facilitate niche or specialist items. Thus a smaller range of products could lead to the ”ALDI-ficationof what were bountiful retailers.

New ways to funnel customers through stores, following specified routes, picking, scanning and paying at self-service machines themselves before exiting through a different door could mean shopping without having any human interaction at all – the ”IKEA-fication” of stores.

All of this still won’t be enough to save retailing as we know it. The latest ONS statistics already show retail sales collapsing at the fastest rate on record, even when accounting for online goods.

Regulators and governments will have to step in. The government’s exit strategy planning cannot simply be about the process of release from lockdown; it must also provide the financial adrenaline to jolt the economy back into life. A rapid rebound may not be completely realistic, but that shouldn’t stop us striving for as close to the “V” shape recovery as possible.

Online businesses will be able to weather this storm more effectively than the high street, helped of course by lower overheads and no business rates. But when lockdown eventually ends, specific and tailored interventions to get the high street and ”offline businesses back on their feet must begin. Three measures in particular should form the basis of a time-limited high street reboot plan:

First, at the point of easing of lockdown, there should be a total relaxation of shopping hour restrictions including Sunday shopping, as some MPs have started to demand, so that customer “bunching” in a narrow range of hours can be eased, especially for that set of shops where very high demand for services is likely at the outset.

Second, we should actively encourage traffic into town and city centres for the first couple of months after lockdown, so there should be a nationwide suspension of town centre parking charges and an easing of parking and congestion charging restrictions to make it easier for the public to return to their shopping habits on the high street.

Third, the Treasury should introduce a time-limited High Street Voucher Scheme, worth £100 for each UK citizen, that can only be redeemed in offline retail premises (who normally pay business rates) within two months of the end of the lockdown phase. If the vouchers are not redeemed within those eight weeks, their value would cease. A “use-it-or-lose-it” incentive for everyone to return to the high street, following any adapted social distancing rules, would be the kickstart that the offline economy needs. The £7billion maximum cost of such a scheme could allow £200m for local authorities to administer and distribute vouchers rapidly. Vouchers are preferable because there is a risk that cash would simply be saved rather than spent. And voucher schemes have worked successfully in other times of economic recovery, for instance in Belgium with energy costs or with car scrappage schemes, which could also be considered again.

We cannot assume that the high street will bounce back unless policies actively drive footfall into our town centres and as soon as possible. Offering more debt to firms worried about their prospects simply cannot have the right stimulating impact. One-off interventions may cost the taxpayer in the short term, but tumbleweed town centres won’t generate revenues for the Exchequer any faster.

Exiting lockdown won’t be easy and safeguarding public health must be paramount. But now is the time to think through how best to inject new life into a dangerously ailing economy – especially our high street retailers who, once gone, may never return.

Chris Leslie was MP for Nottingham East and Shadow Chancellor of the Exchequer in 2015

Joe Lynam is a Presenter on the BBC World Service and former Business Correspondent


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