The Retail Sector - Business, Innovation and Skills Committee Contents

2  The Portas Review and the BIS Retail Strategy

The High Street still has a massive value to companies, which we should not underestimate. [Brandon Lewis MP, Minister for DCLG][10]

The Portas Review

6. The Prime Minister commissioned Mary Portas, a retail expert and broadcaster, to carry out an independent review of the retail sector, with specific reference to the High Street. The Portas Review: an independent review into the future of our high streets was published in December 2011, and contained 28 recommendations.[11] The recommendations covered various issues concerning retail in the High Street, including: the setting up of Town Teams; the proper management of High Streets; the empowering of Business Improvement Districts (BIDs) to take on more responsibilities; and the setting up of pilots to test out the different strategies for High Street regeneration. The Portas Review also had three recommendations concerning Business Rates:

    • Government should consider whether business rates can better support small businesses and independent retailers;
    • Local authorities should use their new discretionary powers to give business rate concessions to new local businesses;
    • Government should make business rates work for business by reviewing the use of the RPI as the means of uprating the business rates multiplier each year, with a view to changing the calculation to CPI.[12]

7. According to the Government's evidence, all bar one of the recommendations in the Portas Review were accepted by the Government in its document High Streets at the Heart of our Communities: the Government's response to the Mary Portas Review, published in March 2012.[13] They did not accept the linking of Business Rates to CPI. In evidence to the Communities and Local Government Committee, it was obvious that Mary Portas had wanted the Government to go further:

    […] if we are going to get businesses back on to the High Street, whether they are new businesses or some of the bigger businesses, we need to have some incentives, and Business Rates seem to be the biggest stop for growth at the moment. […] If nothing is done about Business Rates, we will not see the development of new and exciting ideas. If we look at this country, one of the things that we are about is great innovation. If you look at the history of retail even, so much came from this country, and I think we would be suppressing the new green shoots that would come into it. Also, some of the bigger businesses that would look to come back onto it will not be coming back.[14]


8. Evidence submitted to our inquiry both supported the intentions of the Portas Review and the resulting 27 Portas Pilots that benefitted from Government money. However, the majority of evidence we received argued that the review did not go far enough. Intu Properties plc wrote that it did not think that the Portas Pilot generated significant results.[15] F Hinds, a family-owned and run jewellers, wrote that "the Portas Review and other initiatives are welcome and helpful, but it is hard cash and profit and loss which will dictate what happens".[16] The Association of Town and City Management (ATCM) wrote of the need to go beyond the Portas Review:

    The Portas Review is likely to be seen as a watershed moment in town centre retailing, taking problems and solutions which have been well rehearsed from within the industry and communicating them to a wider audience. However, the UK Government, Parliament, and indeed, the BIS Select Committee, must ensure the focus is wider than the solutions offered in the Portas Review alone.[17]

9. Brandon Lewis, Minister for DCLG, said that the "whole point" of the Portas Pilots was that they bid for money for specific projects and that the funding delivers those projects.[18] The DCLG's paper The Future of High Streets: Progress since the Portas Review, published in July 2013, highlighted the amount of money allocated to the Pilots:

    27 Portas Pilots were set up last summer, 24 supported by Government and a further 3 backed by the Mayor of London. Government gave £2.3 million to the areas involved in the programme as well as a package of support.[19]

10. The British Property Federation (BPF) welcomed the Portas Review, but wrote that "much of the initial focus has been on the short-term and arresting decline but we feel a lot more work is needed to realise the long term aspirations of the pilots and town teams".[20] It described the work that it had done with the Portas Pilots, and highlighted the lack of preparedness on the part of town teams:

    As a key industry stakeholder, the BPF has been engaged with the pilots from the early stages and has worked with other industry bodies, including the British Council of Shopping Centres, to provide pilots with free support and advice. However, take up of advice has been sporadic largely due in part to the unpreparedness of the town teams and a lack of understanding on how to translate their ideas into a strategic business plan which considers the short, medium and long term vision of the area. A freedom of information request by the Independent newspaper indicated that only a small proportion of the £1.2 million awarded to the pilots has been spent and whilst we agree that the emphasis should be placed on communities harnessing and combining their energies, we do feel that it highlights a lack of clear planning and support.[21]

11. Supplementary evidence sent in March 2013 from Paul Turner-Mitchell, a retail expert, also highlighted the low percentage of money that had been spent to date:

    Funding was awarded for pilots that demonstrated a 'transformational vision', but a breakdown of the money spent shows that authorities have spent very little of their award on delivery and the bulk of it on bureaucracy and administrative costs. Examples include travel and hospitality for DCLG meetings, project coordinator salaries, charges for business representatives attending town team meetings and backdated claims for putting together Portas Pilot bids including video production.[22]

Paul Turner-Mitchell submitted the results of his Freedom of Information requests, stating "Freedom of Information requests reveal that of £1 million awarded to the first 12 pilots last May only £135,000 has been spent".[23] These figures are no longer current, but they are the most up-to-date figures which are publically available:
PilotAmount Received Amount Spent
Dartford£79,500 £17,251.04
Liskeard£100,000 £5,195.72
Market Rasen£98,599 £32,520.00
Stockton£92,000 £4,755.00
Bedford£51,260 £2,346.40
Bedminster£100,000 £37,678.71
Stockport£100,000 £0.00
Croydon£100,000 £4,950.00
Newbiggin£94,300 £7,870.18
Margate£100,000 £111.47
Wolverhampton£100,000 £11,817.00
Nelson£100,000 £11,477.00




 Ev w83 Paul Turner-Mitchell, as of March 2013

12. In September 2013, when Members of the Communities and Local Government Committee questioned Mary Portas on the fact that only 13% of the Portas Pilot money had been spent, she replied:

    There should have been real guidance from Government on what a Town Team should be and the mix that would create a really powerful Town Team. There should have been clear guidance on what that was—where you pull together councils with trade associations with landlords with retailers with people who are all the stakeholders and residents. […] There should have also been guidance on where and how was the best way to spend money. A lot of these people are just apprehensive on what to do with it. For some of them, in hindsight, when I visited the towns, it took about six months for the money to come through.[24]

13. We questioned the DCLG and BIS Ministers in October 2013, on how much of the Portas money had been spent by local authorities, and who was auditing the funds. Brandon Lewis MP replied that all the money has been allocated but "if you do not mind, I will come back to you to make sure you get exactly the correct figure for that. I will get a note to the Committee".[25] As of February 2014, we had not received a note from the Minister.

14. The Government allocated £2.3 million to fund the Portas Pilots, yet has not been able to provide evidence of how or indeed whether that money has been spent by local authorities. In its response to this Report, the Government should include how much of that money has been spent, as was promised to us by the DCLG Minister in October 2013. There is no readily-available data on the allocation of the funds, and, as far as we are aware, no organisation is auditing the funds. While we appreciate the fact that the Department for Communities and Local Government is responsible for this funding, the Department for Business, Innovation and Skills has the policy lead for retail and must ensure that data is made available on whether and how the Portas Pilot funding has been spent. These are public funds and, therefore, the use of this money needs to be assessed for value for money, and effectiveness. Together, the BIS and CLG Departments must decide how this assessment is carried out.

BIS Retail strategy

15. Just under a year after publication of the Portas Review, the Department for Business, Innovation and Skills outlined its approach to the retail sector in the BIS Retail Strategy, published in October 2012, followed by A Strategy for Future Retail, published in October 2013. The Strategy outlined the contribution that the UK retail sector brings not only to the economy, but to the wider community, stating that:

    The UK retail sector is big, complex and very diverse. It includes world class international companies, innovative independents, and many retailers struggling to survive in an extremely competitive environment with rapidly changing consumer habits. […] Beyond its purely economic value as a sector in itself, retail underpins local economies and plays a vital role in delivering public policy (and providing social value) in areas such as public health, employment and skills, environmental sustainability and community cohesion. Retail is often considered to be a sector in need of less attention than other parts of industry: it 'just happens'; is not mobile; does not participate in overseas activity; and is not subject to foreign competition. None of this is true.[26]

16. It also highlighted the need for better regulation at a national level, by disseminating knowledge transfer of the retail sector and by undertaking a retail STEM skills gap analysis. It focussed on local issues, stating that the Government will:

    Work with local partners to better understand market conditions and challenges and to undertake activities that maximise retail's contribution to growth in local economies through identifying opportunities and sharing best practice.[27]

17. The first paper, although only 10 pages long, had the ambitious aim of describing what the Department was doing to "support retail growth in the short term at international, European, national and local levels". The succinctness of this paper was not lost on the Association of Licenced Multiple Retailers:

    The BIS retail sector is an extremely concise framework document outlining five workstreams through which the Government aims to support the retail sector. Given the economic importance of the retail industry—and the role of eating and drinking out within it—we are surprised at the brevity of the document.[28]

18. The National Federation of Retail Newsagents welcomed the Strategy, but were disappointed that it featured few of the practical proposals set out in its own submission, such as Business Rates, competition, planning, and alcohol pricing:

    Working with stakeholders to 'disseminate findings' or 'share best practice' or promoting other policies, such as the Local Enterprise Partnerships, does nothing in itself to tackle the genuine issues faced by those who literally work on the shop floor.[29]

19. In the retail strategies, the Government's answer to tackling the demise of the High Street is to shift responsibility onto local areas, local authorities and local communities to use their powers as they see fit to revitalise their local High Streets. Some help is given from Government funds—such as funding for the Portas Pilots—but the majority of help is from local government. When confronted with issues concerning local retailers suffering under the crippling effects of Business Rates, Brandon Lewis, the Minister for DCLG, replied that local authorities already have the power to offer Business Rate relief, if they feel that businesses need to go into a particular part of their town, and need an extra boost to get it going.[30]

20. However, local authorities are suffering from reduced income and greater expenditure. In such straitened times, local authorities are far less likely to give Business Rate relief. Indeed, when questioned on the fact that Great Yarmouth local authority, in his parliamentary constituency, has not offered Business Rate Relief, Mr Lewis replied that "if the council in Great Yarmouth, like any other, wants to see its town centre really flying, they should look carefully". But later, he qualified his answer, by saying that "we do have one big issue there that the council is trying to deal with at the moment, but that is linked to the cost of dealing with asbestos".[31] The Minister recognised the fact that local authorities have competing claims on their reduced budget, and the granting of Business Rate Relief might not be considered a greater priority than dealing with asbestos.

21. We recognise the good intentions behind the Portas Review and the brief Government retail strategies of 2012 and 2013, and the documents have resulted in useful national discussions about the retail sector and, specifically, the demise or otherwise of the High Street. However, the Portas Review stressed the need for a review of Business Rates, while the Government strategies mentioned Business Rates only in passing. Furthermore, the strategies demonstrate a deliberate 'hands-off' approach to many of the issues facing the retail sector, and instead encourage local communities, including local authorities, businesses and organisations, to boost their own local areas. However, this encouragement comes without any meaningful finance or any coherent and effective plan.

22. The BIS Retail Strategy had no mention of the possibility of retail being included within BIS's Industrial Strategy programme. Our evidence highlighted this fact, stating that the retail sector suffered as a result of the removal of funding from the Sector Skills Council coupled with the fact that there was no industry partnership for retail. Martin-Christian Kent, representing the National Skills Academy, told us:

    We are in a no-man's land since last April [2013] when the core funding went from the Sector Skills Councils to the vision for industrial partnerships and the roll-out of industry partnerships. We really are in a sort of no-man's land as to what happens. […] It is really a critical time for the industry, as for others, but given the size of it and its dependence on things like apprenticeships, I really do think it is going to be quite critical.


    A lot of industry is slightly dumbfounded by the fact that, given the size of the tourism and visitor economy—with hospitality, retail, and passenger transport—it is not part of that industrial strategy, given it employs one in five people. I think they feel, at one extreme, disappointed, dumbfounded and highly frustrated.[32]

23. Michael Fallon, Minister for BIS, justified the Government's decision not to have an industrial strategy for retail:

    [Retail] is not a sector that requires an enormous amount of government expenditure in terms of capital support for very high-cost research and development. It is not a sector where there are very high barriers of entry into the sector. It is, at the moment, a very successful sector, growing strongly, extremely competitive and not in need of the kind of long-term framework that we have put in place for aerospace or life sciences or some of the other major industries.[33]

24. We are not convinced that the success of the Retail Sector should be given as a reason for it not needing an industrial strategy. As with other sectors where Industrial Strategies are proposed to build on areas of strength, there is an opportunity to use policy to support even greater success in the future. The Government should include the retail sector in its Industrial Strategy programme, and we recommend that the Government rectifies this omission at the earliest opportunity.

10   Q394 Back

11   Mary Portas, The Portas Review: an independent review into the future of our high streets, December 2011 Back

12   ibid Back

13   Ev 118 Back

14   Oral evidence taken before the Communities and Local Government Committee on 2 September 2013, HC 612-i, Qq 46 and 48 Back

15   Ev w54 Back

16   Ev w45 Back

17   Ev 158 Back

18   Q417 Back

19   DCLG paper, The Future of High Streets: Progress since the Portas Review, October 2013, page 5 Back

20   Ev 170 Back

21   Ev 170 Back

22   Ev w82 Back

23   Ev w82 Back

24   Communities and Local Government, Committee, High Streets and Town Centres, Monday 2 September 2013; Q6 Back

25   Q417 Back

26   Department for Business, Innovation and Skills, BIS Retail Strategy, October 2012, page 1 Back

27   BIS Retail Strategy, page 7 Back

28   Ev w12 Back

29   Ev w67 Back

30   Q398 Back

31   Q399 Back

32   Qq309 and 310 Back

33   Q430 Back

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Prepared 4 March 2014