Levelling the retail playing field to rejuvenate town centres

The move from High Streets to online retailing has been accelerated by the pandemic. High Streets need to be repurposed, but retail shops will remain integral to town centres, and a greater variety of shops would help to regenerate interest and activity.

High Street shops face disadvantages compared with online retailers – high business rates in town centres, lower costs for online retailers operating from out of town warehouses, and avoidance of taxes on profits by international online operators. These inequities are a disincentive for people to open shops in town centres.

My solution is to change the cost structure of retailing to create a fairer environment and to encourage the opening of bricks and mortar shops in rejuvenated , vibrant town centres which will be seen as centres of creativity and interest.

The solution is this – firstly, abolish business rates for retail operations of any sort. The exemption from business rates for charity shops enables them to open on High Streets and now there are many of them in many town centres. Their number proves that the absence of business rates acts as a strong incentive to open a shop. Abolishing business rates across all retailers including online removes some of the cost advantages of operating from out of town warehouses.

Total income generated from business rates amounts to c £22bn per annum. I don’t know the proportion represented by retail, but an assumption could be 50%, ie £11bn. This would need to be recouped in some way, and the second part of my policy addresses this.

The second policy plank is to introduce a levy on UK sales (not profits) across all retail operations, both bricks and mortar and online. This levy would create a level playing field whereby multinational online retailers would contribute based on their sales in this country, countering their practices of avoiding taxes by moving profits offshore.

The results of these 2 policies would be:-

Reducing costs to bricks and mortar retailers, encouraging them to open on High Streets because of zero business rates. I would hope that smaller, niche and creative retailers would be likely to open in smaller retail units, creating an interesting and attractive mix of shops and helping to rejuvenate town centres. While the sales levy would impact on profits, for many retailers the abolition of business rates would more than offset this cost.

Removing some of the unfair advantages enjoyed by online retailers. The attraction of online shopping is here to stay, but the playing field is tilted in favour of online and this needs to be redressed. The sales levy would capture a contribution from online retailers which they currently escape.

The sales levy removes some of the distinction between bricks and mortar and online, potentially encouraging retailers to operate in both spheres, possibly from the same premises in town centres for smaller operators.

Retail sales in the UK are c £400bn per annum. A sales levy of 3% would raise c£12bn, replacing my assumed £11bn lost through the abolition of business rates. This makes the changes cost neutral, and a higher levy could raise further funds. This could be a good thing to do, if the levy is used in a creative way, and this forms the third plank of my policy.

The third policy plank requires that the retail sales levy would be ring fenced and released to councils with the purpose of improving and repurposing the ambience of town centres. This would include the creation of leisure areas, parks, arts centres, exhibition areas, performing spaces etc. , making town centres attractive in a number of ways, including but not restricted to shopping and hospitality.

To repeat the main policy points :-

1. Abolish business rates for retail operations.

2. Replace business rates with a levy on UK retail sales, irrespective of the form of retail operation.

3. Use the revenue raised by the sales levy to change the physical attributes of town centres in creative ways, transforming them into places with a broad cultural attraction.

Clearly , more work needs to be done on the financial calculations, but in principle I believe this policy would have a real and immediate impact on the problems besetting our town centres.

 

 

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