I beg to move,
That this House has considered the Eleventh Report of the Housing, Communities and Local Government Committee, High Streets and town centres in 2030, HC 1010, and the Government response, CP 84.
It is a great pleasure to serve under your chairmanship, Mr Stringer. It also gives me great pleasure to discuss the report by the Housing, Communities and Local Government Committee on high streets and town centres in 2030. I thank everyone who contributed to our inquiry, including our witnesses. We took a range of evidence from retailers, councils, landlords, planners and academics, and we came to our conclusions after eight evidence sessions and two visits. I thank the Committee staff for their work in putting the report together.
The reason why the Committee decided to conduct this inquiry is, I think, pretty obvious. The decline of the high street is a matter of concern to Members across the House because it is a concern to our constituents and the general public. The change—the reduction in the number of people shopping, in some cases the empty shops, and in the worst cases the decay and deterioration across villages, small towns, larger towns, cities and district centres—is almost entirely down to online shopping.
Some 20% of sales are now done online: the highest percentage anywhere in the world. That has happened in the UK over a fairly short period—the past 10 or 15 years—and in many cases the use of shops and the reaction of councils and the Government have not kept pace with that very rapid change. We as politicians cannot and should not want to halt it, but we must look at what we can do to mitigate its impact and address the situation.
We concluded that the days when the high street was 100% retail—for much of the 20th century, people went to their high streets or town and city centres to shop—have gone, and that there now needs to be a strategy in each area, backed by the local community, initiated by local councils and supported by local traders, to create a different approach to the activities on the high street. We concluded that if high streets and centres are to survive and thrive by 2030, they must become
“activity-based community gathering places”,
with a reduced retail element and a wider range of uses, including green space, leisure, arts and culture, health and social care, and housing, with the community at its heart. Retail will be there, but there will be a number of other activities drawing people in. People will be drawn in by the coffee shops and leisure activities, and then they will go shopping, which will be an important part of a wider experience. That is what we see for the future, and our report looks at ways in which we can get there.
We concluded that local councils have a really important role to play in developing that approach. They need to work with their communities and businesses, and try to create a sense of place for the area, which might be very different from the place next door. On one of our visits, we went to Stockton, which had been badly hit by the loss of retailers. It was putting on bike rides, fun runs, marathons, outdoor theatre and other activities to try to encourage people, particularly in the summer months, to come into Stockton centre and use the retail facilities. We heard about Malton, which is successfully branding itself as a place to go for food. Centres can identify themselves in different ways to show that they are an attractive place for people to come to.
Business improvement districts, where local businesses come in, can play an important part. We were pleased that the Government accepted our recommendation that community representatives should be encouraged to sit on BIDs. BIDs should be about not just business, but community. That is in keeping with our general recommendation to change the whole approach of high streets from simply retail and business to wider community uses.
A key issue from a council perspective was local plans, which should be living mechanisms that are kept up to date. We urged all local authorities to adopt
“living documents, regularly updated to capture and reflect changing trends,”
which
“must be forward looking, anticipating what will happen in five years’ time.”
Local authorities should have dynamic strategies for the high street of the sort we have just talked about. We were pleased that the Government basically accepted that all local plans should be reviewed every five years, and that town and city centre strategies should be looking at least 10 years ahead. They were on the same wavelength.
All I would say to the Government is, go look at the cuts of about 50% that councils have made to their planning budgets. When planning departments prioritise planning applications, they often lack staff with the capacity and capability to think ahead and do the necessary local plan work. There is a concern that councils often have not caught up with the rapid change in online shopping, and therefore their local plans are out of date and do not reflect that change. They are not looking at the changes that they need to make to the land use in their town and city centres.
When we went to Darlington, it was readily accepted that a whole retail area might simply have to be closed down, and that a completely different use might have to be found for that part of the town. It is very simple maths: if 20% of the shopping that was done on the high street 30 years ago is now done online, we need 20% fewer shops. We do not want that to happen in a pepper-potted way, which would simply mean a bit of decay everywhere; we need to concentrate it and change how that land is used in the future.
We recognise that, as part of this process, the Government’s £675 million future high streets fund was helpful. It was there for councils and businesses to tap into and use for this change process. Of course, we do not think it is enough, although the Government do: that is one point of disagreement. We also made the point that the taskforce that the Government set up— Sir John Timpson came along and talked about it—is a really helpful way forward, but we said that it cannot be a talking shop. It must be a place where councils and others can go and get real, hard advice, and where we can collect examples of good practice. Very often, what is done in one area can be learned from and implemented in another. That is something that we can greatly benefit from.
We identified two additional areas of interest where local government is trying to work with business to change, and where change is needed from central Government. The first is compulsory purchase orders. We learned that where councils try to change land use in an area, they often have to compulsorily purchase some properties. Again, we are pleased with the Government’s response. They accepted that and said that they will review the whole process, which is cumbersome, long-winded, time-consuming and costly.
A slightly more difficult area was permitted development rights, for which the Government consulted about extensions at the same time. We said that before the Government further extended permitted development rights, it would be helpful if they carried out an assessment of the impact on the high street of their previous extensions to those rights. The Government did not agree to that, which is disappointing. It is always good to have an impact assessment on what has already happened before doing something else, but we disagreed on that.
We were clear that permitted development rights should not be allowed to get in the way of a local plan that tries to change the fundamental land use of part of a centre. If a local authority is trying to change buildings from retail into housing, leisure or a park, for example, it is not helpful if someone converts the odd shop into a house a few months before that local plan comes into effect. The local authority would then have to say, “Actually, you did that under permitted development rights, but now we have a local plan, which means we need to compulsory purchase those properties and fundamentally change the land use.”
There ought to be a proviso that if a local plan is going to re-designate an area and affect particular properties, it is not helpful to have permitted development rights for the same properties at the same time. The Government need to think carefully about that. At the end of the day, it is not helpful to the individuals to be given that freedom, which is not really a freedom.
The biggest issue on which we disagree with the Government is that of business rates. Every bit of evidence we received showed that there is a problem. I am serving as a guest on the Treasury Committee, which is conducting an inquiry into business rates, and exactly the same sort of evidence is coming forward. Not everyone has the same solution; some want wholesale reform of business rates, while others simply want some changes to make them fairer, but the demand for change was pretty consistent. The reason is that it is considered unfair that Amazon pays 0.7% of its turnover on business rates, and it took quite a bit of extraction to get that figure out of Amazon, while high street chains spend between 1.5% and 6.5% of their turnover on business rates—in other words, more than double, and in some cases it is 10 times as much.
That simply is not fair—this is about the element of fairness. People on the high street are trying to trade at a significant cost disadvantage. Only the Government can alter that. Simply altering business rates will not change the high street back to how it was 20 years ago, but there needs to be a recognition that shopping habits are changing and that taxation policy ought to change in line with that.
We recommended that the Government look at a number of options: an online sales tax, an extension to VAT, a green tax on deliveries, or anything to reflect changing shopping habits. That money could be used to reduce the general business rates paid on the high street, to give a holiday when a business carries out improvements to stop an immediate rise in its business rates, or to add to the Government’s fund to help high streets. The Government had all those options—we were not totally prescriptive—but they came back and said no; they did not want to do anything at all.
The Government said that they were bringing in lots of reliefs, which they are, but a point that has been made to us quite strongly is that although the sticking plaster of reliefs is a welcome and useful mechanism, lots of those sticking plasters on top of one another becomes an unsightly and terribly confusing mess. Lots of people said that the system was now really confusing, with a number of reliefs in place. The evidence that I heard at the Treasury Committee evidence session the other day clearly suggested that the need for so many reliefs so frequently indicates that the basic system is flawed and in need of more substantive review.
Interestingly, Sir Amyas Morse, in his retirement swansong before the Committee at our evidence session on local authority finance—he is normally forthright in his views—said:
“I am concerned as to how realistic basing everything on business rates really is…it is concerning as to whether something that is based on a square footage formula in the modern day is going to be terribly relevant to measuring business activity… Even though it may be convenient to go forward with it now, I cannot believe it will endure forever, because it is just such an odd way of trying to measure business activity.”
He is right. Business rates are easy, and we are probably not going to tear them up, forget about them and change them tomorrow, because they are relatively easy to collect—that is a great benefit of them—but thinking that all business taxation at local level should rely on square footage is something that goes back historically, because it was an easy thing to do when everybody shopped in a shop. Ministers have to think a bit about the longer term.
Sir Amyas said that the situation will not endure forever. Well, Ministers do not tend to endure forever. Perhaps this Minister has other aspirations but, realistically, at some point a Minister will have to grasp the nettle and consider, if not completely scrapping business rates, then at least recognising that reform has to happen in the light of changing shopping habits. That is the big issue on which we really want to push Ministers, because at some point this is going to change, and we cannot carry on disadvantaging our high street retailers in the meantime.
As I explained, local government has a role here in developing strategies and local plans; central Government have a role in looking at changes to business rates, compulsory purchase powers and other things; and retailers also have a responsibility. I mentioned that Stockton is doing interesting things, and I asked, “Is bringing all these ventures into Stockton centre really helping?” They said, “Yes, sort of, but when we asked some of our retailers how many more people they got through their shops, they said, ‘Not that many, because we close at 5.30.’” Retailers have to understand that they have to change their approach to suit the customer—that is really important. We heard other examples of retailers, even small ones, using social media to advise their regular customers of changes to products in their store.
Landlords also have to get real. There are still landlords with completely unrealistic retail unit asset values on their books, based on rental values as they were 10 or 15 years ago. Some big retailers are proactive and engaged. They engage in BIDs and look at how they can improve their shopping facilities, while others just see them as a money-making venture. We saw examples of shops lying empty, but there was a long lease, so the landlord was just sitting there and getting the money in, and had no real incentive to go and find another tenant. There have to be changes in that respect.
We asked the Government to review the Landlord and Tenant Act 1954, and they say that they will look at whether that should be reviewed. That was a helpful response. However, we also asked the Government at least to consider how they might look again at upward-only rent reviews, and they said, “No, we’re not going to interfere in contracts between landlord and tenant.” We only asked them to look at that. I hope that they might have another think about looking at it, because it was raised with us on a number of occasions.
There are challenges not merely for local government, but for central Government, retailers and landlords. We have said that there are real challenges. We can all see the challenges and problems on our high streets. We were worried and we said in our concluding remarks:
“Unless…urgent action is taken, we fear that further deterioration, loss of visitors and dereliction may lead to some high streets and town centres disappearing altogether.”
Given what has happened over the past 10 or 15 years, and if another 10 or 15 years are spent going in the same direction, we can see that happening.
We cannot predict what lies ahead, but online sales have doubled in the past five years, so it is almost certain that they will grow. The situation will not stand still. People will not reverse their shopping habits but carry on in very much the same direction, which will further undermine retail sales on the high street—it is bound to.
In our report, however, we said that provided that everyone, including the Minister—who is present, while others are not, so we will direct this to her—considers and puts into place our recommendations, high streets and town centres can have a better future. That will require a shift from retail-focused activities to new purposes and uses that foster greater social interaction, community spirit and local identity.
I am pleased to recommend the report. I hope that we can all work together to have it implemented. Many of our recommendations have been accepted by the Minister, but I have pointed out some that have not; I hope she will give us an even more helpful response about those today.