Rochdale’s outspoken boutique owner Paul Turner-Mitchell continues his dogged campaign for real rescue measures for the UK’s High Streets
After days of silence, a Government minister broke cover yesterday to discuss the fact that events of the last few weeks have seen almost 20,000 high street jobs under threat or already lost.
But instead of reflecting the real sense of urgency that’s rippling through the retail sector, the Business Secretary, Vince Cable, calmly announced that there was no crisis on the high street. Ignoring the fact we’ve just seen a surge of high street names go bust, nearly 4,000 stores collapse last year and empty shop levels reach a record high, Vince kept a straight face and said: “I am not sure I would describe it as a crisis.”
It wasn’t that long ago when Vince talked of the economic challenges facing the UK being “the equivalent of war”. If that’s the case then this is perhaps the moment he hoisted the white flag.
But arguably his most interesting contribution to the woes on the high street was his remark, apropos of nothing, that a bank style bailout for retail was “inappropriate”. Nobody, as far as I am aware, is asking for this. That he went on to preclude retail, and indeed the high street, from the Government’s “industrial strategy”, (whatever this is) is telling of how poorly the Government regard jobs created by the UK’s largest private sector employer.
It’s easy, as Vince did yesterday, to pass off the problems of Jessops, HMV Group and others as “changes in consumer habit”, but this ignores deep structural problems like a completely out of date taxation system in the form of business rates that penalises businesses on the high street.
When Jessops in Manchester’s Trafford Centre pays business rates of £4,000.00/m2 compared to an Amazon fulfilment centre in Doncaster calculated at £44.00/m2 then the injustice is laid bare for all to see. I see this discrepancy time after time and with the huge burden of additional overheads It’s getting harder and harder for high street businesses to stay in the game. Business rates for an ASOS distribution centre in Barnsley, for example, are calculated at £40.00/m2. In contrast the rates for a unit in a Rochdale shopping centre are £1,080.00/m2.
Earlier this week a forlorn notice adorned the once proud window of the now empty Bollingbroke Bookshop in Battersea, south London. On it the owner had written in felt tip a final note to his customers. It read:
To all my faithful customers, after 31 years of trading I am having to shut down the shop because of high business rates.
Last year, in extremely tough trading conditions, the Government introduced the biggest increase in business rates in 20 years. How Vince squares this with his plan for economic recovery is anyone’s guess, but it had the opposite effect on the high street, saddling traders with excessive overheads many simply couldn’t afford.
For a long time now business rates have been the elephant in the room that all politicians will do everything possible to avoid. Why? Because it’s the easiest tax to collect and Treasury mandarins have long labored under the illusion that the high street is a golden goose that’ll keep laying eggs.
But what everyone from local authorities, politicians and treasury mandarins fail to realize is that a tax system stuck in a 1990s model that’s hopelessly out of touch with how retail is evolving is holding the high street back and stifling growth.
Business rates and especially the Valuation Office Agency need a massive overhaul to reflect a different world from which they were made for.
According to Local Data Company figures there are just 18 empty shops in Vince’s leafy constituency of Twickenham. Across the North West there are now 6,560 empty shops. This represents a crisis in my book and as insolvencies increase the Government will have to write off billions in unpaid VAT, PAYE and business rates. That’s a lot of golden eggs that won’t be laid.
Saving the high street will require radical thinking from ministers not complacency. Bringing creaking tax systems into the 21st century should be first on the list. It’s not bailouts we need, Vince, but a level playing field.