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High streets and town centres in 2030

Report Summary

Author: Housing, Communities and Local Government Committee

Date Published: 21 February 2019

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Contents

High streets and town centres today

The six months over which our inquiry took place appeared to be the most turbulent for the high street so far. Barely a week went by without headlines pronouncing the 'death of the high street' or a major retailer announcing a restructuring or a fall in profits.

Video: High streets and town centres - report animation

An enormous change has taken place in retail in recent years. The traditional pattern of making purchases in physical stores, both in and out-of-town, has been profoundly disrupted by the growth of online shopping. The impact of this on our high streets and town centres in the form of store closures, persistently empty shops and declining footfall is clear for all to see.

Against this concerning backdrop, we make a set of recommendations to Government, local government, local communities, retailers and landlords to be acted on now.

Unless this 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.

An intervention leading to large-scale structural change

We believe that high streets and town centres can survive, and thrive, by 2030 if they adapt. Our vision is for activity-based community gathering places where retail is a smaller part of a wider range of uses and activities and where green space, leisure, arts and culture and health and social care services combine with housing to create a space based on social and community interactions.

The Committee is recommending:

  • achieving the large-scale structural change needed will require an intervention led by the local authority, using all its powers and backed by cross-sector collaboration. However, given the financial pressure faced by local authorities, central government funding will be needed for this, as well as significant private sector investment.
  • the Government’s £675 million Future High Streets Fund is aimed at trying to kick-start this intervention and, based on the evidence we received, we believe it reflects the right approach. However, given the scale of the challenge, its funding needs to be enhanced and, for this, we recommend that the Government considers using revenue generated from the reforms to business taxation that we propose.

But the Future High Streets Fund is only one part of the solution. Local intervention, while essential, needs to be accompanied by further action by central government and at local level, as well as by retailers and landlords, to create the conditions for high streets and town centres to flourish in the future.

Central government action

High street retailers are paying more than their fair share of tax, while online retailers are not contributing enough: we heard that Amazon UK’s business rates amounted to approximately 0.7% of their UK turnover,  while high street retailers are paying considerably more, with business rates as a proportion of turnover ranging from 1.5% to 6.5%.

The Government has announced the introduction of a Digital Services Tax in April 2020 to address issues related to historic avoidance of corporation tax. However, this does not address the imbalance between online and high street retailers. The Government needs to go further and move faster to level the playing field between online and high street retailers.

The Committee is recommending:

  • we recommend that the Government urgently assesses the main proposals that we received in evidence, including a sales tax, an increase in VAT, an online sales tax and ‘green taxes’ on deliveries and packaging, and make recommendations for change to provide fast relief to high street retailers.
  • The revenue raised should be used to support the high streets in the following ways:
    • a reduction in business rates for retailers in high streets and town centres;
    • a 12-month holiday for high street retailers from rates increases which result from invest-ments to improvements in property; and
    • an increase in the funding available to local areas through the Future High Streets Fund.

Planning is crucial to high street and town centre transformation. Given this, the Government should ensure that planning powers are fit-for-purpose, sufficiently responsive and up-to-date and undertake a comprehensive review of planning as it pertains to the high street.

In particular, we believe that permitted development rights (PDRs) risk undermining the strategic vision that a community has developed for its high street or town centre.

The Committee is recommending:

  • the Government should suspend any further extension of PDRs, pending an evaluation of their impact on the high street. Policies should reflect the wide variety of local circumstances. Councils should be actively encouraged to develop town centre masterplans and use their powers positively to renew their town centres. Where PDRs conflict with particular designations in the Local Plan or other established planning documents, councils should be given greater freedom to suspend PDRs in the affected area.

The Government has announced that the Future High Streets Fund will be accompanied by the creation of a Future High Streets Task Force, which the Minister described as a “national re-source” and “a central knowledge base”.

The Task Force should be much more than a 'talking shop' and, in combination with the Fund, must provide real and tangible support directly to local areas.

Among other things, we recommend that it should:

  • be staffed by experts with front line experience, including academics, planners, lawyers and developers;
  • second experts to provide direct support to local areas on all aspects of high street and town centre transformation, as well as providing advice and support in writing or over the phone;
  • collate data, good practice examples, case studies and guidance for local areas to access, but also proactively disseminate this information and advise local areas on how to interpret and apply it to their own circumstances; and
  • provide advice and support to all stakeholders involved in high street and town centre transformation, including retailers and place management partnerships and Business Improvement Districts (BIDs), and to all areas regardless of whether they have received funding from the Future High Streets Fund.

Local action

We recommend that action is taken at local level to create visionary strategies for high streets and town centres which have the backing of the local community, to support local traders, to facilitate parking and to develop the role of place partnerships.

The Committee is recommending:

  • Local Plans must be living documents, regularly updated to capture and reflect changing trends, and must be forward looking, anticipating what will happen in five years' time. They should be supplemented with dynamic strategies covering specific high streets and town centres. We recommend that all local areas should also develop an overarching vision setting out the direction for the future of their high streets and town centres.
  • We were attracted by the idea that BIDs should be replaced with community improvement districts but recognise that legislative changes might be needed to implement this. We encourage the Government to consider how this might be done and, in the interim, recommend the appointment of community representatives to BID panels in order to encourage a more balanced approach in their work.

Video: High streets and town centres - inquiry launch promotional video

Retailers

With online shopping only set to grow in the future, we heard that, to compete and be successful, high street retail needs to carve out a separate role, focusing on providing “experience” and “convenience”.

The Committee is recommending:

  • that retailers make an asset of their physical retail space and their staff by creating opportunities to interact with customers that cannot be found online. In addition to being well-stocked with interesting products, this could include providing personal shopping services, advice and consultations, using social media and investing in staff training and the store itself.
  • in many places, store opening hours do not reflect the fact that many people need and want to be able to shop at the end of the day after they have left work. If they cannot shop on the high street at their convenience, they will shop online or at an out-of-town retail centre instead. Retailers should conduct research with shoppers to find out whether their opening hours are meeting people’s needs and adjust them in accordance with the results on a local, shop-by-shop basis.

Landlords

Landlords are often the least visible stakeholders in high streets and town centres but are among the most important. We heard that disparate property ownership and lack of landlord engagement are key barriers to high street and town centre transformation and that high rents are affecting retailers’ profitability.

The Committee is recommending:

  • we encourage all landlords to recognise that the retail property market has changed and to take an active approach, providing their tenants with good quality properties on a flexible basis and investing in and reconfiguring properties for new uses. Further, we encourage them to fully engage in local partnerships working on high street and town centre transformation and to consider the potential for further investment to help bring plans to fruition.
  • in the next twelve months, the Government task the Law Commission with reviewing the Landlord and Tenant Act 1954, Part II, assessing in particular whether the law as it currently stands is impeding the emergence of a landlord tenant relationship which is more appropriate for the current retail environment.
  • property-owner BIDs could play an important role in bringing landlords into local discussions about high street and town centre transformation. We recommend that the Government revives the legislation needed to create such a body at the earliest opportunity.

Conclusion

We firmly believe that our high streets and town centres can have a better and more balanced future ahead of them if our recommendation are followed. This will require a shift from the retail focused activities of high streets and town centres today to new uses and purposes which foster greater social interaction, community spirit and local identity and characteristics. With a properly planned strategic intervention led by the local authority, with the backing of local stakeholders and the wider community, we can redefine our high streets and town centres and ensure their long-term sustainability for future generations to come. 

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