High Street Rental Auctions

David Simmonds Excerpts

Wednesday 26th February 2025 Westminster Hall

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve with you in the Chair once again, Mr Vickers, and to have been present for this wide-ranging debate. I am sure the hon. Member for Bournemouth West (Jessica Toale) will be pleased: anyone watching this debate, and seeing so many of our colleagues over in the main Chamber debating issues around family businesses, will welcome the focus that this debate brings to our high streets, that large and important part of our economy.

We are debating these issues at a time when, based on the figures across the country, growth is down, jobs, vacancies and hiring are down, investment by businesses in the UK is down and inflation is up. While there is always a political debate to be had about the causes behind those factors, it is clear that last October’s Budget had a significant impact. It is important to consider how measures such as the one at the anchor of this debate, high street rental auctions, can be used to address those challenges by local and regional authorities and by the new mayors that the Government are proposing to bring in across the country.

Our high streets have faced many interrelated pressures in recent years. Members have referred to the impact of online shopping on consumer habits and the impact of the covid-19 pandemic. When our high streets and retail were to some extent closed, or significantly restricted, it drove a rapid change in consumer behaviour that we see reflected in patterns of business investment across the country. All those issues have created a challenge for our local businesses in making sure both that their prices remain competitive and that they can draw in both the staff and the customers they require.

Members have also referred to the impact of out-of-town shopping centres. Although many of our high streets and local business communities have been able to change and adapt, others have found it an ongoing challenge. At the tail end of the last century, I worked in a local bank on the village high street in Pinner in my constituency. That bank is no longer there—only the Nationwide remains as a financial provider on that high street—but there are no vacant units today because other forms of business have opened up, principally in hospitality. That has been a significant change in the way that high street operates. It is a great pleasure to represent a constituency with seven local high streets; I regularly host surgeries in those hospitality businesses as an opportunity to find out what is going on, and I know that many other Members do the same.

The pressures that Members have described in this debate can be seen quite starkly in the figures. In the period between March 2020 and March 2022, we saw a loss of a net total of 9,300 retail units across the country. Some were converted into residential accommodation. Government policy, over many years and from all parties, has recognised the demand for housing and the changing nature of the high street, and that has enabled the conversion of those properties, where appropriate, to provide much-needed homes. Often, because of the nature of those conversions, they have provided additional customers for the remaining premises on the high streets. However, at the same time we have seen the loss of many cherished local businesses such as those Members have spoken of, and others, particularly independent retailers, continue to struggle.

The high street rental auction policy was introduced under the previous Government in the Levelling-up and Regeneration Act 2023. It was one of several measures taken by that Government, and it granted local authorities for the first time a power through a new initiative designed to bring new life to persistently vacant properties. When retail units are persistently empty, sometimes there are problems with absentee landlords and it can be enormously difficult to force the issue and bring the units back into use. Rental auctions are a significant new idea, alongside the investments through the future high streets fund and other schemes designed to ensure that high streets across the country remain sustainable.

There will be much debate about the impact that that policy has had, especially given the changing habits of our constituents. However, when we look at the feedback from independent organisations in particular, there is a great deal of concern that, even set alongside the benefits that this policy could bring, the overall business environment is having a significant negative impact both on the viability of high street businesses and business in general, and on retail in particular.

In recent comments, the British Retail Consortium comments said that the Government’s measure to increase the rate of employer national insurance contributions—that single policy alone—is likely to lead to a net loss of 160,000 jobs over the next two years, in particular because of its impact on those large numbers of people who are in lower-paid, but flexible and part-time work. Most of us will have heard from businesses in our constituencies that they remain extremely concerned about that bigger issue. There is also concern in respect of the changes being introduced to non-domestic rates—business rates—an assessment that has been shared by a very wide group of professionals.

The Altus Group, a real estate company, released some research recently estimating that the big reduction in business rates discounts for retail, hospitality and leisure firms, which go from 75% to 40% in the next financial year, will result in a 140% increase in business rates bills at individual business level for around a quarter of a million high street premises in England. To put that into real money, an average shop currently paying £3,589 in business rates will see that bill rise to £8,613 from next April. Pubs, which many Members have cited in debates here and elsewhere, would see a typical bill rising from £3,938 to £9,451 a year. All these things represent significant increases in costs imposed on local businesses.

We recognise in particular the shift under way in how larger high street premises will be treated. I know some of those changes in business rates have been described as an Amazon tax, but it is clear that they will have a particular impact on places such as larger supermarkets in town centre locations, which often provide the parking and the anchor store that brings people into our towns. The Conservatives therefore remain extremely concerned at the impact that that has.

I am sure the Government will challenge us and say, “Well, what is your policy?” Clearly, we are in Opposition these days, and we did not have the opportunity to set out in Government a Budget to address this wider range of issues, but we know that preserving that strong growth and that steady and high rate of employment—the 4 million more people in work when we left office, and the halving of youth unemployment—was down to our sustained focus on the economy to sustain the buoyant high streets and local employment, the growth and the living standards that we all expect.

In conclusion, while this policy is important, we need to continue to see it as part of a package of vital measures that are there to sustain not just our high streets, but the commercial life of our nation. It is usually the voice of very big business that is heard in Parliament—a very large commercial concern with a public affairs team will find it very easy to make Parliamentarians pay attention to what it says—but around 70% of people employed in this country work in an enterprise with less than five staff in total.

The vast majority of our constituents, the vast majority of people who work in our country, are in shops and small enterprises. We need to make sure that, while their collective voice can be difficult to translate, their interests are at the heart of our thinking and the role that those small businesses play is visible. Our neighbourhood is vital to our quality of life. There is a reason why post-war planners, setting out to build large new areas of social housing, chose to make sure that there were retail units and shop fronts on those sites, so that people had ready access to the sense of community that they support.

We need to make sure that that is sustained, but sustained in the context of a world that is changing. As part of a Government and as politicians, we cannot second-guess or indeed directly change consumer behaviour through intervention, but we can support a wide range of businesses to ensure that we serve the widest possible interests of our community. For example, the shift to supermarket retail has helped to ensure that the UK has the second most affordable food, compared with household budgets, in the world. The shifting nature of our high streets means that, while there is less retail, there is more affordable hospitality and more of the good-quality, flexible and well-paid jobs that go with it.

Demographic change is also significant. As the ageing population of our country looks for more hospitality close to home, it creates an opportunity for those businesses. We have seen retail units implementing schemes such as soft play, as larger numbers of children in local communities drive the changing face of local businesses and create new opportunities, benefiting those children socially and benefiting local employment.

But I finish where I started. We are about to embark on a massive process of top-down local government reorganisation. We need to make sure that throughout all that turmoil, with policies such as high street rental auctions, what has been done for the high streets fund and the changes in business rates, we do not lose sight of how important our high streets and small businesses are. The consequences of the Government’s Budget can already be seen not just in business confidence and sentiment, but in the reducing numbers of jobs and vacancies, in falling investment and in rising inflation.

The Government have an opportunity to listen not only to the Opposition, but to professionals and business owners, who are politically neutral but have the interests of businesses in these communities at heart. The Government have the chance to make changes in the wider interests of our nation.