Ministers urged to provide rescue package for ailing high streets

MPs committee report suggests online sales tax and more help for local authorities

The government should consider taxing online sales, deliveries or packaging and cutting property taxes for retailers as part of a package to help revive the UK’s ailing high streets, according to an influential group of MPs.

In a report published on Thursday, the housing communities and local government committee says local authorities need more help, including extra cash, to redevelop town centres. It also suggests an overhaul of planning regulations, including scrapping rules that allow developers to turn offices into flats without special permission.

Clive Betts MP, the chair of the committee, said it was likely that “the heyday of the high street primarily as a retail hub is at an end”. However, he added: “This need not be its death knell. Local authorities must get to grips with the fact that their town centres need to change; they need to innovate, setting out a long-term strategy for renewal, reconfiguring the town centre and finding new ways of using buildings and encouraging new independent retailers.”

Betts said dated planning policies and unfair business rates, which are a tax based on the value of property occupied by a business, were “stacking the odds against businesses with a high street presence and this must end”.

The demand for change comes after several well-known high street names have disappeared or been forced to drastically reduce their store numbers as they struggle to cope with online competition, a general slowdown in consumer spending and rising costs from business rates. Other factors include the lower value of the pound against the dollar and the euro.

In November, retailers called for decisive action from the government after data showed the number of shops, pubs and restaurants lying empty had soared by more than 4,400 in the first six months of this year.

About 70,000 retail jobs were lost in the final months of 2018 and nearly a third of retail businesses plan to lay off staff in coming months, according to a report by the British Retail Consortium industry body, which was published last month.

The HCLG committee report says the government “needs to go further and faster” to help those with traditional high street shops.

“Tax reforms are needed to level the playing field between online and high street retailers, and we urge the government to investigate all the options in this area, including an online sales tax,” Betts said.

The detailed 79-page report was compiled after weeks of evidence from retailers, including the Sports Direct founder, Mike Ashley, who suggested a 20% tax on online sales.

Helen Dickenson, chief executive of the British Retail Consortium, welcomed the committee’s proposal to reform business rates. She said: “The select committee are spot on when they say, ‘retailers are paying more than their fair share of tax’. In fact, retail accounts for 5% of the economy, pays 10% of all business tax and shoulders 25% of the UK’s business rates bill.” She described the rates system as “damaging and outdated” and “a major factor in store closures”.

However, she said a tax on online retail would do more damage than good: “With eight of the top 10 internet retailers also having physical shops, it is clear that an online tax would further damage the high street.”

The HCLG report welcomes the government’s recently introduced Future High Streets Fund, which is designed to help reinvent town centres. Under the terms of the scheme, local authorities can bid for grants of up to £25m each from the £675m fund. However, the committee says the fund is not big enough and does not meet the scale of the challenge.

Town centres need more government funding and private sector investment if “meaningful change is to be achieved”, the report states.

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That change should include putting health, education, leisure and administrative offices in town centres alongside retailers.

The committee said the government should also overhaul planning rules to make compulsory purchase orders, which councils use to buy underdeveloped properties, less cumbersome and expensive.

It also found the introduction of permitted development rights (PDRs), which allow property developers to convert offices into homes without planning permission, undermined community-led plans and meant that town centres were less busy during the day. It urged the government to suspend further expansion of PDRs and evaluate their impact.

Contributor

Sarah Butler

The GuardianTramp

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