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In the battle to win the hearts of Conservative Party members, both potential prime ministers have promised to do more to tackle the decline of the British high street. Given the attention this issue receives, they have had plenty of recommendations to choose from.
Predictably, business rates reform has topped both candidates’ lists. Jeremy Hunt plans to significantly expand the number of businesses which pay no business rates. Qualifiers for the Retail Discount Rate – occupiers of properties with rateable values below £51,000 – will see their discount increase from a third of their bill to 100 per cent. Boris Johnson has also promised new exemptions, but specifically for free-to-use cash machines.
Cutting business rates bills is always an appealing offer to business, providing a quick financial boost for those struggling to continue trading. But when it comes to helping the high street this proposal is not as attractive as it sounds.
Neither Hunt’s nor Johnson’s plans are well-designed to effectively and sustainably tackle decline. Short-term relief for businesses would be lost in the long-run as rents adjust. But the more fundamental flaw is that these plans ignore the reasons why businesses are struggling to pay their bills.
As we’ve set out before, the combination of a lack of jobs located in city centres and limited spending power of customers in low-paid work makes it hard to sustain the shops, restaurants and services which line high streets. Policy must tackle these underlying issues if it is to reverse decline.
In light of this, the suggestion that free cash machines are the answer is no more than a gimmick. Few customers will be enticed back to high streets simply by the lure of free ATMs. Their decline is proof of falling demand for their services, and this is not something the government should try to fight.
A second, more promising, proposal is to make it easier to change the way the high street is used. Johnson has announced that if he becomes Prime Minister he will consider a new, broad ‘A’ use class which does not distinguish between specific uses. The Government has already committed to exploring a similar, but less substantial, reform in its response to the Planning Reform Consultation in May.
Converting a shoe shop into a restaurant would be faster and cheaper as it would no longer require the usual planning system approvals. This flexibility would benefit high streets. Retail is becoming an ever-smaller presence and the UK’s most thriving city centres are focusing more on food, drink and leisure. Flexible planning alone will not cure the high street – a conversion will only be successful if there is money to spend in the new restaurant. But adapting commercial space to keep up with evolving customer needs is a vital part of the solution.
Finally, Johnson has said he will increase the £675 million Future High Streets Fund that Government is allocating to town and city centres fighting decline. A bigger pot of money would facilitate larger investments or allow the Fund to reach more places, and so is a positive step. But its success will of course depend on how it is spent. If investment focuses on jobs rather than shops then it has potential.
This announcement to extend the Fund must not be used to distract from cities’ urgent need for greater and more sustainable funding. Rather than one-off funds for specific purposes, it would be better to ensure local government has sufficient resources which it can choose to invest in high streets.
This debate shows that the next Prime Minster will prioritise the health of city centres, whoever wins the leadership contest. But while the intention is positive, the quality of the proposed solutions is mixed. Tackling the underlying economic weaknesses of many cities is the only way to permanently improve the fortunes of the high street.
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