Shop Closures (South Shields)
Mrs Emma Lewell-Buck (South Shields) (Lab)
I am very grateful for being given time in the Chamber today for my first Adjournment debate. I chose today’s subject because of the strong attachment my constituents feel to King street. The shopping street that runs through the heart of our town has always been at the centre of public life in Shields. Today, I will be explaining some of the challenges it faces, but in spite of them, King street and South Shields still have a huge amount to offer visitors—not just shops but our beautiful coastline, beaches and parks. We also have great plans for the future, and I am excited about the changes on the way.
King street has always been part of community life in South Shields and has historically been popular with shoppers from across the region. Generations of families, including mine, have pride in and are fond of our high street, with its friendly banter of our local market traders, retailers and locals. We have always had a strong local and tourist presence, but even in my lifetime I have seen changes to our King street. In recent years, a number of businesses have departed, leaving vacant shop fronts behind. In the last three years alone, retailers in and around King street such as HMV, Curry’s and JJB Sports have shut down, as well as local sellers such as Thompsons TV. Thompsons opened as a family business run by three brothers in 1930, selling wirelesses and later all kinds of other electronics. It was a fixture in our town for the best part of a century, before financial pressures forced it to close last year.
In February, Marks & Spencer announced the sad news that it too would be ending its 80-year presence in Shields. M&S had always been one of our most popular stores and attracted large numbers of shoppers to King street. Shoppers and businesses tell me that in the three months since M&S’s closure, there is already a noticeable drop in footfall in the town centre. When I spoke to Marks & Spencer after the announcement, it explained that the store simply did not have the customer base it used to have. There are a number of reasons for that. The global recession has resulted in less spending power in the pockets of my constituents. This, combined with the rise of online shopping, large supermarkets and out-of-town shopping and entertainment complexes, means people spend less money in town centres than they used to. In 2013, it was reported that for every £100 of disposable income, our residents were spending only £3.70 in our town centre.
However, just because people’s shopping habits have changed does not mean that our high streets need to decline. Out-of-town shopping centres are not new, and online shopping has been popular for some years, but it is in the last couple of years that we have seen the rate of closures speed up on King street. I believe that the decline in people’s incomes is one the main factors, and the Government need to take responsibility for that. Of course, high streets need to adapt to changing times as well, and since securing this debate I have been contacted by constituents with creative and innovative suggestions on how to support King street. Our council, too, is looking to regenerate the town centre through its ambitious 365 project, but we need a central Government policy that supports businesses and empowers local communities as well. However, it simply is not happening.
At complete odds with their localism agenda, the Government have taken away the protections offered by the use class system which allowed communities a say in shaping their high streets, and have made it easier for payday lenders, pawnbrokers, fast-food takeaways and betting shops to set up. Research conducted by the Local Government Association found that the clustering of such outlets has discouraged people from visiting their high street. Our King street has a current vacancy rate of approximately 21%, compared with the national average of 12%. When I wrote to the Secretary of State last month to express my concerns about King street, the Minister claimed that the UK’s high streets were starting to “bounce back” and that vacancy rates are falling, but on King street we have seen a new set of closures in the last few months.
King street is not alone in the challenges it faces. Let me briefly recap the government’s record: more than 50,000 shops standing vacant, a disproportionate number of them in the north; business rates having risen by an average of £1,500, with one in 10 small businesses spending more on business rates than rent; and more payday loan shops, betting shops and pawnbrokers on our high streets than there were in 2012. The Government are unclear about what approach to take. Bill Grimsey neatly sums it up, saying:
“We’ve seen reviews, pilots, future high street forums and more. But none of these initiatives are making much impact and there is a frustrating sense of policy being conducted in the margins. The need to grasp the nettle is bigger than ever.”
In his letter, the Minister pointed to the business rate package announced in last year’s autumn statement as a solution. Although this support is welcome, it does not appear to have benefited King street, where the majority of retailers I speak to still say that business rates are their No. 1 concern, and where closures have continued since the changes took effect in April. Mr Blake, owner of Premier Furnishings & Carpets, said his business rates are so high that they are actually double his rent and most weeks he goes without a wage. Another retailer told me that she no longer expects to make a profit; breaking even is a good week for her business. Another told me she cannot afford staff, so needs to work longer hours, yet her profits continue to fall.
The Forum of Private Business, towards the end of last year, found that action on business rates is the No.1 demand from small businesses, and judging by the discussions I have had with retailers, that is still the case on King street. Labour Members are listening to businesses, and we know we need to go further to support them. We have committed to reversing the hike due to take effect in April 2015 and then freezing rates for 2016. That will help some 1.5 million businesses, including shops, save up to nearly £450 over two years.
It is not just business rates that are crippling our local retailers, but the decline in footfall. As I mentioned, Marks & Spencer left our high street after 80 years in South Shields, explaining that it had seen a downward trend in custom in recent years but that the drop had been most noticeable over the past two or three. Sadly, the loss of M&S has meant that there is less activity on King street, and since its announcement other stores, including Mothercare and Thorntons, have shut down. Retailers and constituents have consistently expressed concern to me regarding footfall, and they agree that the decline began some three to four years ago. One local store manager estimated the store had seen a 20% decline in customers in the past year alone. Mr Hedley, a local cobbler, told me that he feels that in the past year things have been worse than they have ever been for small businesses. It is no coincidence that as people’s incomes are falling, shopping on our high streets is also in decline. Mr Hedley has been in business for 29 years and he wants to know why the Government did not reduce business rates to help businesses such as his during the economic downturn.
The Government’s decision to delay the revaluation of business rates is one factor in all this. The Minister will know that both the Business, Innovation and Skills Committee and the Portas review noted the difficulties that was creating for the retail sector, particularly in towns where businesses are already struggling. It is disappointing for these retailers that the Government have failed to recognise the urgency of the situation.
The cost of living is also at the heart of the issue, and it is little wonder that when levels of poverty have soared under this Government, people have less money to spend on their local high street. It is quite simple: if people are well paid, they will spend money in their local economy and if they are not, the local economy will suffer. The Opposition understand that, which is why we want to get rid of exploitative zero-hours contracts, tackle failure to pay the minimum wage and introduce a jobs guarantee to get people back into work.
The Minister also wrote in his letter to me that
“it is for councils, businesses and communities to decide what their high streets and town centres will look like in the future”.
There is no shortage of ideas in South Shields. Pop-up shops have been allowed to occupy vacant units, and the council has worked with local businesses to offer a parking refund scheme. Last year, I also hosted an event in South Shields as part of Labour’s small business Saturday, with a Christmas market and special offers from local retailers. That small business Saturday gave our town a small boost and resulted in an estimated £500 million being spent across the UK in small and independent shops.
As I mentioned earlier, our council has embarked on a transformative project, the 365 project, which will see more than £100 million invested in our town centre and bring new visitors to Shields. The Haven Point leisure centre opened last year and will soon be joined by a new library and a cinema. Our council does not own any of the shops on King street. I agree with it that the wider town regeneration will act as an incentive to bring businesses back to our high street.
My constituents and I have welcomed these developments and the council’s plans, and we look forward to welcoming new visitors to Shields all year round. By attracting new visitors, we can also make our town a more attractive place for business, but the regeneration will take time. As I have highlighted in this debate, we need some action from the Government to help our retailers. Local authorities and communities have no shortage of ideas for improving their town centres, but they need a national Government who will enable them to turn those plans into reality. That means giving them more say over the kinds of shops that open on their high streets, as my hon. Friends have proposed.
The Minister’s letter to me stated that Government
“cannot and should not look to bail out or prop up ailing high street businesses.”
We are talking about not any one business, but the long-term future of our towns, and protecting the communities in which people live.
The reason why closures in King street stir so much passion in Shields is that the area is personally important to the people who live there—people like me who shop there every week and who have fond memories of being a child and going to the bustling and lively street, as I did with my parents and my Gran. That is not something that the Government should ignore. They could take away that sense of powerlessness that people feel now by giving them control and a sense of ownership over their area.
My constituents and I are proud of our town and of our council’s plans for the future, and we are not too proud to ask this Government to make the changes needed. King street, and high streets like it across the country, are endangered by the coalition’s plans.
I hope the Minister will consider a few points in his response. What assessment has he made of the way falling incomes are affecting our businesses? Does he agree that his Government need to target extra support for businesses in areas where vacancy rates remain high? Will he do more to support councils and communities such as mine by giving them more power to oversee the types of shops that are opening in their community? I hope the Minister will be able to offer some good news to my constituents today.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I congratulate the hon. Member for South Shields (Mrs Lewell-Buck) on securing this debate. It is always good to have a chance to discuss the situation on our high streets and to highlight the great work that is going on all over the country to develop them. Many local councils are committed to the regeneration of their town centres and to longer-term programmes, such as the £100 million plan, South Shields 365, which aims to regenerate the area. The plan includes a new central library and digital media centre; improvements to the market square and the public realm; new integrated transport, retail, leisure and cinema facilities; and a new food store, as well as a new multi-storey car park and other surface-level car parking.
If high streets are to remain at the heart of our communities, they need to be more than simply places to shop. We must be brave enough to admit that they are changing and that they need to change. They need to be vibrant and viable places where people live, shop, use services and spend their leisure time, both during the day and in the evening. They are no longer just somewhere to shop.
It is good to see the recent signs that the UK’s high streets are starting to recover. Overall, vacancy rates have started to reduce, and reoccupation rates for the high street are much higher—
Mrs Lewell-Buck
If that is the case, how does the Minister explain the fact that more shops are shutting on my high street, month after month? If there is a sense of recovery, why is it not being felt in towns such as mine in the north?
Brandon Lewis
If the hon. Lady will let me continue, I will give her some examples. At 70%, reoccupation rates are higher than they are for shopping centres or retail parks. A recent report from Experian highlighted the systematic change that is under way in our town centres, with traditional occupiers making way for a wider range of services—a mix of leisure, including food, and the night-time economy. Any area has to look at what is right for it and drive change. I am sure that the hon. Lady will want to work with her local area to work out what is right for that community and drive it forward. Areas are doing different things; her area has to look at what is right for it.
The hon. Lady mentioned the comment from Bill Grimsey about the plethora of things that the Government have done. She is right. There are town teams; there are Portas pilots; there is the future high streets forum. There is a menu of options for people who want to get involved and take their high street forward. That is a positive thing. It means that towns, villages, market squares and high streets can choose from that menu what is right for them and apply it to their area, rather than being restricted, as the Opposition would have it, to a one-size-fits-all. We do not believe in that. We believe that it is right to be committed to helping communities to adapt, but to be clear that there is not a one-size-fits-all solution.
Every town is different and has to address the problem at a local level. That is why we believe that the visions, plans and ideas for town centres must come from the areas themselves. I will touch in a minute on the powers that we have provided. Contrary to what the hon. Lady said, we have given a phenomenal amount of powers and opportunities to local areas to design their own future. It is for councils, businesses and communities themselves to decide what their high streets and town centres will look like in the future. The consumer will drive what the high street will be, not a Government body, be it local or central Government.
Just recently, we have worked with the future high streets forum to publish a model to deliver good local leadership, sharing best practice—a key part of delivering successful change. That model was developed by the forum, based on an analysis of the activity in some of our Portas pilot towns. I will say more on the forum in a moment. The Department for Communities and Local Government is funding a support programme for town teams, of which there are 333 across our country. That helps them to develop the vision and tools that they need to tackle the issues in their area.
Mrs Lewell-Buck
I thank the Minister for giving way again. It is all well and good giving towns and our high streets opportunities to decide what they want to do, but if retailers and businesses will not come because the business rates are too high, that will not solve the problem.
Brandon Lewis
The hon. Lady makes a good point, and I am surprised that she has not convinced her council to discount the business rates using powers in the Localism Act 2011, which allows local authorities to discount the business rates by 100% if they want. Many of the small, independent businesses that she referred to are able to benefit from the small business rate relief that this Government have taken forward and doubled for another year. About 300,000 business across the country will benefit from small business rate relief. We have also brought in a new £1 billion package on business rates that gives a discount of a further £1,000 to those with a rateable value of under £50,000. We must remember that the local authority can go even further and give a bit more. I will outline that a bit further in a moment.
The Chancellor announced a comprehensive package of support—the largest business rate package of support—before Christmas. We recognise that high streets are changing, and we are helping to put in place a framework of support to see that change through.
In a Deloitte report not that long ago, the No. 1 issue raised was the importance of parking to the modern high street and town centre. It is not just about business rates. We have consulted on local authority parking enforcement and recently announced a range of reforms that could help the high street. We have to ensure that people can get to the high street and park affordably and easily in order to encourage them back to the high street; we should not use some of the policies of yesteryear that discourage car use.
We are restricting local authority use of CCTV for parking enforcement, introducing a 10-minute grace period and extending the powers of traffic adjudicators. The business rate support package is the biggest package of support in more than 20 years. It includes capping the retail prices index increase this year, and a £1,000 discount for premises with a rateable value of up to £50,000. That includes shops, pubs, cafes and restaurants, and it places a clear, sharp focus on benefiting the high street.
To help small businesses, we have extended the doubling of the small business rate relief for another year and changed the rules to allow those taking on an extra property to keep their relief for an extra year. To help tackle vacant properties, we have introduced a new reoccupation relief, halving business rates for 18 months for businesses taking on long-term empty retail property. Those measures will make a huge difference to the small shops and local traders that are essential to town centres across the country.
Mrs Lewell-Buck
Does the Minister realise that freeing town centres from regulation means that payday loan shops and betting shops now proliferate on the high street? Far from allowing communities to make decisions, he has taken decisions away from them.
Brandon Lewis
Again, I suggest that the hon. Lady talks to her council about using the powers that it already has. It could use article 4 powers to deal with the issue, should it wish to.
Brandon Lewis
I shall just make a little more progress.
We must bear it in mind that this package is worth about £1 billion to businesses in England, of which about £500 million will benefit retail in England, making the point that this is about the whole high street, with a mix of leisure, retail, hospitality and services. We are also undertaking a review of business rates administration that will look at longer-term reforms to make the system even more transparent, efficient and responsive to economic circumstances.
The hon. Lady touched on planning. We have lifted planning restrictions to increase the flexibility of use on high streets, making it easier for communities to look to their future with a smaller retail core and encourage people to come back to live in town centres. Over the summer, we will consult on further changes to allow the high street to respond to changing demand, and perhaps to enable restrictions on payday lenders and betting shops in a way that goes beyond the powers that local authorities already have.
Looking wider, the only sustainable way to raise living standards and create employment is to grow our overall economy. This Government are systematically putting in place the measures that businesses want and need to thrive. We took action on corporation tax and national insurance contributions. Corporation tax has been reduced to 21% and will fall again next year, to 20%. We are also easing the tax burden on small shops. Since April this year, every business and charity has been entitled to an allowance against their national insurance contributions. Up to 1.25 million businesses will benefit, with around 450,000 of them taken out of paying employer contributions altogether. Over 90% of the benefit of that allowance goes to small businesses with fewer than 50 employees. Retail is one of the major employers of young people, and we are making it cheaper to take them on by abolishing employer contributions for those under 21 who earn up to £813 per week.
There is only so much national Government can do. We can put the framework in place. It is right that we do that, and we will continue to take opportunities where we can to help and support at a national level, but everyone needs to play their part, from local authorities, businesses and communities working together to develop the vision and solutions for their areas, to Government, retail, local government and business leaders working together in the future high streets forum. The forum has been key in bringing together leaders across multiple sectors to drive forward new ideas and policies.
I mentioned the recent report on leadership; the forum has also worked closely with Government and the Association of Town and City Management to develop the great British high street awards for 2014. The competition was launched just last week, and today we have launched the social media portal that goes with it. The competition will recognise and celebrate the strides taken and the hard work done by high streets and their communities.
Many high streets are now thriving because they have changed to serve their changing communities. Different places will change in different ways and at different paces. South Shields has an ambitious project, which I think is exciting and offers real opportunity for the future. Local authorities can look at measures such as improving access to services, making it easier to click and collect on the high street, or offering more fun and variety. The competition we are running will highlight what can be achieved, and what is being achieved, when there is a strong partnership between local authorities, businesses and consumers. We are looking to town teams or local partnership bodies to nominate themselves, backed by their communities and Members of Parliament, so I encourage people to get involved and get behind their local town teams and partnerships.
We will continue to support councils, businesses and communities. I remind the hon. Lady that if business rates are the key issue in South Shields, we have given that authority the power to discount business rates by as much as it wants—even by 100%. High streets are evolving. We have to embrace the future, and everyone has to play their part, not just in regeneration but in identifying and celebrating what works. We will continue to do that.
Question put and agreed to.