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How politics is affecting the high street: there’s more at risk than just economics

Parliament may be prorogued, but the high street isn’t and as the politicians battle it out for Brexit and bravado, the high street is still fighting for its life, with figures last week revealing that a net 1,234 stores shut on Britain's top 500 high streets in the first half of the year, up on the same period last year. A couple of months ago, in the race for the Conservative Party Leadership, I analysed the policies that the likely candidates, Jeremy Hunt and Boris were proposing to help bolster the high street.   

We all know the outcome, but interestingly, Hunt the self-proclaimed entrepreneur was certainly more progressive in his thinking and did have some good ideas to revitalise the high street. He pledged to exempt hundreds of thousands of small businesses from business rates, scrap taxes for nine out of then high street shops and reform the current Retail Discount rate, so that businesses which qualified for the discount would see their entire business rate bill cancelled. At present, those with a rate value below £51,000 are eligible for their bill to be cut by one third.

Additionally, one of Hunt’s best trailed policy announcements was a promise to cut corporation tax from 19% to as low as 12.5%, a policy which has been costed at £13bn a year, however he did receive some flak from the Institute for Fiscal Studies.

So, let’s look at what Boris pledged and whether it was helpful or hot air. He announced that he wants to introduce 100% business rate relief on free-to-use ATMs.  His rationale; to curb the closure of ATMs and keep as many as possible open in town and city centres so shoppers can always withdraw money.   

While this may appeal to shire Tories of a certain vintage, the trouble is the Boris approach is as feasible as owning a unicorn. In a contactless world, less and less people are drawing out cash when you can tap a card or your phone. The subsidies he is proposing would not allow for the cash machine to be free as it still needs to be maintained, filled, connected and bank charges apply which make the model loss making for any operator especially if it is used infrequently. More poppycock from the master of poppycock.

Johnson also talks about wanting ‘a range of bureaucratic and legal barriers to business to be swept away’ to allow high-street shops to flourish. This includes an ‘overhaul of town and country planning laws that easily allows the conversion of one form of premises i.e. a shop, cafe, pub or hot-food takeaway to another, as currently it can be a very lengthy process’.

One option being to introduce a new “A” class business category covering shops, financial and professional services, restaurants and cafes. The measure would also allow existing shops to easily offer additional services. But hold on Boris, the problem isn’t the lack of ideas for shops, it’s the fact that business rates and rent are killing shop owners. They close and people aren’t therefore going to the high street. This idea is completely flawed, it’s not about quick change of ownership of shops, it’s about re-imagining the high street. Oh and one small oversight, the planning laws are not actually in his power to change.

He also called for the immediate unlocking of a £675m government fund, which towns can bid for to help spruce up their high streets. Numerous towns have applied with successful bidders announced in Spring 2020. That £675m will not go far and it will be interesting to see how the government chooses which towns are more worthy of the fund. But let’s face it, while this is a good start, the high street needs more than a spruce. The government need a strategy that re-imagines the high street with innovative ideas. The model isn’t just broke, it’s completely flawed and the only way to save the high street is to come up with a disruptive strategy that challenges the status quo.  

The UK has seen an erosion in community spirit and cultural integration and with the high street often the conduit to both, there’s more at risk than just economics. So, if Boris doesn’t end up dead in a ditch, let’s hope he has as much balls for the high street as he does for Brexit.

 

Daniel Todaro, MD at Gekko.

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