High Streets

Robin Walker Excerpts

Tuesday 1st March 2016 Westminster Hall

[Mark Menzies (Fylde) (Con)]

I beg to move,

That this House has considered the future of high streets.

It is a great pleasure to serve under your chairmanship, Mr Chope. I am delighted to have secured this timely debate as the Budget fast approaches. I am also pleased that hon. Members from all parts of the House have taken the time to come along this morning.

It is almost four years since Mary Portas published her review of the future of Britain’s high streets. Contained within were 28 recommendations for improving our town centres, many of which are yet to be implemented. I sought this debate not because I think that all the recommendations should have been implemented—I do not—but because the health of our high streets has not improved significantly in the past four years. It is important to highlight the challenges that shops on Britain’s high streets continue to face, to raise the profile of the issue once again, and to encourage the Government to take some relatively straightforward steps to alleviate the burdens that are threatening the existence of small, independent businesses across Britain.

I know that colleagues will want to raise issues particular to their constituencies and to bring ideas to the table, so I will focus my remarks on several key points. The challenges faced by high streets are many and varied, including tough competition from online retailers and supermarkets, excessive parking restrictions and/or charges, and the proliferation of tax break-benefiting charity shops. Many of the symptoms are also causes of the steady decline in the fortunes of small, independent retailers on UK high streets. Equally, it is neither possible nor desirable to alter many of the factors that put these retailers out of business: for example, it would be retrograde in the extreme to prevent supermarkets from opening small stores or to somehow thwart customers’ choice to shop online. However, there are four measures that, if enacted, would have an immediate and positive impact on our high streets, shifting the balance back in favour of small businesses. In this wide-ranging area of debate, I will concentrate my remarks on those suggestions and make the case for taking urgent action.

First, charity shops should be reclassified under the Town and Country Planning (Use Classes) Order 1987 so that the local authority’s permission is required to change the use of a shop to a charity shop. Secondly, the mandatory rate relief for charity shops should be reduced from 85% to 50%. Thirdly, the sale of new goods in charity shops should be monitored and the restrictions enforced more effectively. Fourthly, business rates should be reduced and the system, which unfairly punishes property-intensive industries, should be simplified.

[Mr Robin Walker (Worcester) (Con)]

I congratulate my hon. Friend on securing this important debate. He will recall that in the last Parliament the Select Committee on Business, Innovation and Skills carried out an inquiry on the future of our high streets and retail, and it recommended fundamental reform of business rates. With the Chancellor due to announce his Budget soon, does my hon. Friend agree that it is vital to reduce that burden on our city centres and high streets?

[Mark Menzies]

My hon. Friend makes a valid point. The Treasury is always listening, so it will be aware of the Business, Innovation and Skills Committee report and will have heard my hon. Friend’s comment. I am sure that the Chancellor will include such a measure in his Budget.

In the lead-up to the Budget, the Treasury is making encouraging noises suggesting that my point about business rates may finally be addressed. Although we must continue to apply pressure to ensure that business rates are made less onerous, the issue has been considered extensively, so I intend to focus predominantly on my first three points. Similarly, I have campaigned heavily over the past four years to relax Sunday trading legislation, but there is little point in raising the matter again today because the Government have included measures in the Enterprise Bill to devolve the power to relax such restrictions. The fact that local authorities will have the power to zone Sunday trading hours to help high streets and city centres over out-of-town retail parks is particularly welcome, and I encourage the Government to continue their endeavours. In that and many other areas, the Government have shown themselves to be willing to carry through necessary reforms, regardless of attempts by vested interests to sustain the status quo. I shall use this opportunity to encourage Ministers to act similarly on charity shops.

Napoleon famously said that we were a nation of shopkeepers. I wish that we were. In recent years, we have increasingly become a nation of charity shopkeepers, as high streets up and down the country have been filled with charity shops. There are currently over 10,000 in the UK, and their number increased by 30% between October 2008 and October 2011. In my constituency, the scale of the increase has been impossible to ignore: there are now 15 charity shops in St Annes and less than three miles down the road, in the centre of Lytham, there are nine more—with, I am informed, another two on the way.

Let me state clearly that I recognise the value of charity shops. Each shop raises thousands of pounds a year for good causes and serves an excellent practical purpose as a place for people to dispose of unwanted possessions in the knowledge that they will not be wasted. Equally, they provide a community space for local shoppers and volunteers, filling shopping space that in some cases would otherwise go empty. However, the question has to be asked: are we heading towards saturation?

Charity shops are not universally welcomed by shoppers or by other retailers, who can struggle to compete. As someone who worked in the retail industry for 15 years before being elected to Parliament, I not only recognise but welcome the competitive nature of the business. If there is no market for a shop’s goods, if it cannot attract customers and if it cannot make a profit, it must inevitably close. It is not the business of Government or any other institution to support a failed enterprise that has no future. The problem is that we are not even allowing retail businesses to attempt to attract customers or to try to make a profit; in fact, we are denying them the chance to open in the first place.

No potential future shopkeeper, all of whom should frankly be applauded for being willing to enter such a difficult industry, can possibly compete with a charity shop. An ordinary retail outlet will largely employ its staff. Over 2.7 million people work in over 270,000 shops across the UK. From next month, all those businesses will pay the majority of their staff at least £7.20 an hour, rising to £9 an hour by 2020. Those who want to set up a shop should be commended for providing valuable new employment opportunities for local people. In contrast, according to the Charity Retail Association, only some 17,000 people are in paid employment in charity shops. Before one even begins to consider the multiple and varied tax breaks on offer, charity shops work because they have an unpaid, volunteer workforce of around 213,000 across the country. When one considers that fact and the value we attach to making work pay in this country, I suggest that we agree—at least we should agree—that it is far better to have a business in shop premises than a charitable organisation manned purely by volunteers.

Again, that is not to say that charity shops are intrinsically problematic. They most certainly are not. The fact that charity shops are staffed by volunteers is actually a good thing. Many of us know from our own communities that charity shops often provide enormously valuable opportunities for a diverse range of people to come together, including those with disabilities and those who have been out of the workplace for a long time. The problem is simply that there are too many shops and the numbers are ever increasing. Shoppers on our high streets are suffering from a lack of variety as a result. Indeed, many charities are struggling to find volunteers because of competition from other charity shops. It is now time to enact solutions, rather than to merely consider this oft-diagnosed problem. That is why my first suggestion is that charity shops should be reclassified under the 1987 order, leaving only commercially operating enterprises in class A1 and enabling local authorities to prevent the saturation of high streets with charity shops.

As I have already outlined, Lytham and St Annes are increasingly saturated with charity shops. Local councillors are frustrated at their lack of power to prevent a further increase in numbers. Although I entirely agree that it is far better to have a charity shop than no shop at all, it is often assumed that a charity has taken out a lease because there is no competition from prospective businesses to move into the premises. That was indeed the case in many parts of the UK, particularly after the 2008 recession, but it is often not the case, particularly in affluent areas. In Lytham, a shop recently announced that it intended to move, leaving its existing premises vacant. I know for a fact that a local business owner would have been pleased to have the opportunity to move in and to make a go of setting up an enterprise there, with all the resulting employment opportunities and benefits to the local economy. Remarkably, however, competition for the premises was not the fair competition that I spoke of earlier, because it came from a charity shop.

No landlord thinking purely about the bottom line, as is to be expected, would choose to rent their shop to an untried, untested business that is forced to pay staff at least £7.20 an hour, with exorbitant business rates on top—not when they can reach agreement on a long-term lease with a charity. I know of cases in Lytham of leases being negotiated for terms of up to 10 years. Charity shops do not need to pay their staff, they do not buy the majority of their stock, and they pay at most 20% of the rates of other retailers. That is not fair competition; it is a complete distortion of the bargaining power of the two parties, which we have now entrenched in law.

Mary Portas stated in her 2011 review:

“start ups should be the number one priority when it comes to giving discounts. The business rate discounts that charity shops enjoy builds a disadvantage into the system that is causing a problem. Landlords are choosing the safe option of charity shops and small new retailers aren’t getting a look in. There will be no growth and innovation now or in the future if we don’t address this.”

Of course, if good landlords who cared about their local communities were a universal commodity, there would be no need for local government to step in. Clearly, however, we cannot leave landlords to self-regulate the complexion of our high streets. Powers must be given to local authorities to enable them to determine whether an area needs yet another charity shop, or whether to allow new businesses the opportunity to establish. If, after a reasonable period of time, no small independent retailer has come forward to take on a lease, it would be perfectly reasonable to allow a charity to take on the premises. The power would mean simply that local authorities could refuse to grant planning approval for a change of use from a shop to a charity shop.

Recently, action has been taken to streamline and to speed up the planning system in this area under the Town and Country Planning (General Permitted Development) (England) Order 2015. I see no reason why further swift action cannot be taken to make a relatively straightforward change to differentiate charity shops from other shops. I see no grounds that render such an approach unreasonable. A charity shop is clearly different from a commercially run shop in all the ways I have outlined. The law has built in the differences. I would therefore give short shrift to any claim that a change in classification would give cause for judicial review. That would be a base excuse for a Government to use if they wanted to avoid taking such action. Ultimately, our commitment to localism was a large reason why a Conservative Government were elected last May. It is important that the Government carry through on our commitment and allow local people to develop high streets that work better for them.

I will speed through the rest of my recommendations as they are far less controversial and have been suggested widely before; also, I am conscious that several other Members wish to contribute to the debate. The second proposal that I urge the Government to adopt is to reduce the mandatory rate of relief from business rates from 80% to 50%. The idea is not new and it was proposed as a positive way to level the playing field between charity shops and other businesses in a Welsh Government consultation which was completed in July 2013. The consultation was supposed to form the basis of discussion between the devolved Administrations and the Government, but no outcome has yet appeared. I make the proposal again in the hope that the Government will carefully consider implementing it.

As the Welsh Government report makes clear, the professionalism and commercial focus of the charity shop industry has increased markedly over the past 20 years. As a result, the detailed recommendation was that the amount of rate relief available for larger charity shops occupying premises of higher rateable value should be restricted to an upper rateable value limit of £36,000; all charity shops should receive 80% rate relief on the first £12,000 of the rateable value; charity rate relief should be reduced from 80% to 50% on the next £24,000 of rateable value; and for rateable values in excess of £36,000, business rate relief should fall to zero, but in tiers. All charity shops would therefore receive some rate relief from business rates, but the amount of relief they received would be reduced in stages. Those seem to be perfectly sound, well thought through proposals—made, it is worth mentioning, by a Labour Administration—especially when set in the context of a proliferation in the number of charity shops.

I also want a change to the way in which rateable value is calculated for charities with more than one premises in the same town, in order to avoid a loophole in the system. It is right to question whether charities should receive the same rate relief on their second or even third premises on the same high street; if they did not, there is no cause to believe that charity shops would be forced to close as, lest we forget, they have little to pay in overheads and should be paying virtually nothing in stock costs. Equally, such a measure would incentivise the foundation of charity shops in smaller premises, favouring smaller, often local charities over what are now, frankly, large national chains. The results of such changes can only be positive. They would level the playing field between commercial and charitable operations, and put some extra money in the hands of Government. Given that, I cannot imagine why it has not already been done.

The Welsh Government consultation also recommended the introduction of my third proposal: to enforce and monitor more effectively the extant restrictions on the sale of new goods in charity shops. If charities are found to be trading in new goods, particularly in areas where commercial shops are selling the same products, relief from business rates should be reduced or even removed. Again, powers should be given to local authorities to enforce that effectively.

In Lytham, of the 71 shops in the town centre, 69 sell a range of goods that the nine charity shops also stock, including cards, clothes, books, pictures, artificial flowers and general domestic goods. Inevitably, some of those goods have to be new. I do not advocate charities being prevented from selling Christmas cards, for example, or certain other new products that have long been associated with fundraising initiatives. I recognise that many charity shops sell only a limited amount of new goods and that roughly 85% of goods sold in charity shops are from donations. However, some of the larger charity shops in particular are making considerably more than the average 6.8% of income for which the sale of new goods in UK charity shops supposedly accounts.

As charity shops, especially those belonging to large national chains, become increasingly professional in the way they market and sell goods, it is important to restate the principle that only businesses paying full business rates should be allowed to compete with one another. Only businesses should be allowed to purchase stock to sell, while charity shops should endeavour to have close to 100% of sales in donated goods. As the number of charity shops increases, so does the amount of competition between them. It can no longer be guaranteed that charity shops are abiding by either the principle or the law on the restriction on the sale of new goods. Not only should charities be reminded of their obligations not to undercut retailers that do not benefit from charity shops’ volunteer workforce or tax breaks, but those obligations should be enforced with powers given to local authorities.

On business rates, only yesterday the highly respected British Retail Consortium warned that the pressures of, in particular, higher wage costs as a result of the national living wage and the apprenticeship levy, coupled with the overall pressures that high street retailers continue to face, could lead to the loss of 900,000 jobs over the next 10 years. Of the 270,000 shops in the UK, up to 74,000 could shut, with the impact greatest in Wales and the north of England. If that dire warning is not sufficient to elicit a response in the Budget this year, I do not know what will.

For too long we have ignored the plight of small retailers and allowed exorbitant duties to cripple their ability to compete with online and large out-of-town retailers. There is still a place for small high street retailers. People enjoy shopping in their local towns and the variety that a multiplicity of retailers affords. It is not the case that small shops are obsolete. Retail is an industry overburdened with taxes and red tape. The Government recognised that and conducted a review of business rates last year. Now, however, it is time for action. Clearly, some form of property tax will continue to be imposed on retailers, but it would be a welcome relief to all businesses if the Government capped the national multiplier now. Rateable values must be assessed with greater frequency, with open market valuations made more sympathetic to retailers. The whole system must be simplified, with all reliefs and exemptions kept in particular review.

We have a real opportunity not to sustain high street retailers artificially, but to lift much of the pressure from their shoulders. If the Government are going to impose—as they are right to do—a national living wage, they must ensure that the tax burden is lifted in a corresponding fashion. Also, we want more people in work on a better wage. If retailers are forced to close in great numbers, neither of those objectives is fulfilled.

I could cover many more points, but I am sure that other speakers today will do so. My plea to the Government is to take action on business rates and to address the unequal balance between charity shops and small retailers. For too long, both Conservative and Labour Governments have been reluctant to tackle these issues, and they have intensified to the extent that no action is no longer an option. My constituency does not need another charity shop. Local people want small businesses to be given a chance to succeed and, in future, I hope that they can.

--- Later in debate ---

[Sue Hayman]

We certainly are.

Despite all that has happened in recent years, Maryport still struggles. It has some excellent independent shops, but it also has a lot of charity shops, which have been mentioned, and too many empty units to be the thriving centre that it deserves to be.

Last time I was there, a local shopkeeper said to me that she was fed up with people thinking that her shop was a charity shop, because there are too many charity shops in the area where her shop is. Specialist independent shops are the anchor of our high streets and are a key factor in encouraging people to come in and shop there, and that also includes local pharmacies. We have an excellent local pharmacy in Cockermouth called Allison’s, which is really concerned about some of the Government’s proposals on pharmacies, so if that could be taken into consideration, I would be grateful.

We need to look at the significant increase in internet shopping and the impact that that has on our town centres. Town centres can compete by offering the great shopping experience that I have talked about, but internet companies really do need to pay the same taxes, so that they do not have the different profit advantages that they currently have.

[Mr Robin Walker]

On that point, does the hon. Lady agree that the Government could, in their reform of business rates, alter the balance of the burden between category A high-street retail and warehousing? All those internet companies need warehousing and delivery to get their goods to market, but category A high-street retail currently has a premium, which belongs in the 1960s rather than in the 21st century.

[Sue Hayman]

The hon. Gentleman makes an excellent point, and I completely agree.

Cockermouth also has a beautiful high street. It is well known for speciality shops and art galleries, and its tree-lined Main Street has a statue of Lord Mayo, who was formerly the MP—he was later assassinated, so I am hoping that history does not repeat itself.

What would I particularly like the Government to do? The first thing, as we have said, is to make sure that business rates do not discourage small, independent shopkeepers. I was therefore also disappointed, as other hon. Members were, to hear that the retail rate relief scheme is not going to be continued beyond April this year.

Cockermouth chamber of trade and commerce has talked about the business improvement district schemes. It wanted to set one up and looked into it, but were advised by Allerdale borough council that the costs of administration meant that only shops with a rateable value greater than £11,000 would be included. That cut out most of the shops in Cockermouth and meant that it was just not feasible, so it would be good if the Government could look at how smaller independent retailers are able to participate in a BID scheme to help to improve the local shopping experience.

Finally—I will wind up, because I know another hon. Member still wants to speak—I make a plea to the Government about business insurance. I am sure that everyone here is aware that Cockermouth flooded terribly just before Christmas. That was the second time in six years. Main Street was also completely dug up in 2014, mainly to do with the drainage work that was needed following the previous floods, so flooding has had an enormous impact there. Some shopkeepers there have already said that they are not going to re-open, partly because of the stress, but a lot of it is to do with the lack of insurance. Others are privately telling me that they cannot do this again. If we do not sort out insurance for shops in relation to flooding, and particularly for small independent retailers, Cockermouth Main Street as it is now will disappear. That cannot be allowed to happen. It would be a crime, so I urge the Minister, please, to talk to me about this in the future—I would be really appreciative if he did.

--- Later in debate ---

[Mr Jones]

I have a number of points to cover but I will say, very quickly, that the relaxation is showing benefits, particularly where redundant offices are being converted for residential use. As the hon. Gentleman mentioned, that is now an important part of the high street. Areas that do not want to go along with the relaxation of planning regulations can invoke an article 4 direction if they so wish.

I am keen to continue celebrating the passion and commitment found in high streets and town centres up and down the country. We have recently celebrated the success of the Great British High Street competition 2015, and have been bowled over by the quantity and quality of the entrants. This year, applications almost doubled as more than 230 high streets applied. I hope that figure will more than double again for next year’s competition and I am looking forward to seeing lots of entries from across the country.

I hope that a number of hon. Members here will promote their local areas. We have had a healthy spirit of competition in the Chamber today. It is good to see Lancashire against Yorkshire. It is not necessarily the war of the roses but many of our local areas competing, which is healthy. Examples include Bishy Road in York, which was the winner of this year’s competition, as the hon. Member for York Central (Rachael Maskell) mentioned. By working collaboratively, local traders have turned around an area that was once run down and suffering from chronic vacancies into a community hub where local people now shop, meet their friends and tweet about how great it is to go to the famous street parties. That is great news. As I understand it, the traders are even looking into developing a community app to allow people to browse their shops and see whether their friends are nearby on Bishy Road, which is a fabulous idea.

Public reaction to the Great British High Street awards has been absolutely incredible. Nearly 200,000 people voted in the competition and there were more than 30,000 tweets about it, which shows just how much people value and care for their local high streets.

While there is a lot of good news for high streets, in some places retail spaces that have seen better days remain. The Government cannot and will not rest on their laurels, and I am working hard to develop a range of support to help high streets thrive. I strongly believe that we have reached a crossroads for high streets and town centres. We need to act to make them fit for purpose for today’s consumer.

My vision is for high streets to be vibrant and viable places where people live, shop, use services and spend their leisure time during the day and in the evening. The Government aim to promote mixed high streets with a stronger range of retail and leisure and, crucially, more residential opportunities.

[Mr Robin Walker]

The Minister is making an excellent and reassuring speech. He mentioned the residential opportunities—the opportunities to live around our high streets. Does he agree that more could be done to support the “living over the shop” agenda, ensuring that we convert more of the empty space above shops into residential accommodation?

[Mr Jones]

I thank my hon. Friend for that intervention. As usual, he makes a pertinent and important point. It is certainly something that I am looking into currently. The Government are helping people to achieve their dream of home ownership as Government-backed schemes have helped more than 200,000 households to buy their homes since 2010. High streets and town centres are great places where many young people may well want to get on the ladder to buy their own homes, and it is an important use of the brownfield sites that many of us have in our constituencies.

I am working with retail leaders and the sector through the future high streets forum to deliver a range of initiatives to support high streets. Together with my co-chair, Simon Roberts of Boots, we will be leading work to help high streets to restructure and become more responsive to today’s consumer. John Walden, the chief executive of Argos, is helping the high streets to digitise and we will be looking at ways to help high streets to learn from the finalists of this year’s Great British High Street competition.

In addition, we are looking at what more we can do to strengthen the influence that business improvement districts have over decision making in our local areas. We have consulted on changes to private parking to encourage people to drive to their local shops without fear of being hit by unfair penalties. I will soon be announcing the outcome of that work.

We are extending Sunday trading hours to help meet the needs of local businesses and communities, and to help them compete as shopping habits change. Online sales continue to grow at a significant rate and we want local retailers to have the flexibility to adjust their hours to enable them to compete.

I do not have time to cover all the points in the debate but I would like to cover some of them. My hon. Friend the Member for Fylde made a pertinent speech in which he mentioned charity shops. Charitable organisations play an important role in all our constituencies and bring in about 200,000 volunteers who work in our communities. I hear what he says about business rates relief for charity shops. The Government have no plans to change that but we are looking carefully at all business rate reliefs. My right hon. Friend the Chancellor will report back in the Budget. My hon. Friend the Member for Fylde made an important point about new goods and ensuring that charity retail relief is not abused. He made some sensible comments and there is merit in looking into that.

Hon. Members made a number of points about business rates, and I am sure they have all those comments on the record. The Chancellor will be delivering a Budget shortly and I am sure that the Treasury will have listened intently to today’s debate. The hon. Member for York Central made some important points about Bishy Road including on the importance of strong local leadership, and on local areas creating an identity and offering something that the internet and out-of-town shopping cannot offer. That is important and we all need to understand that local areas need to do that.

A number of other questions were asked and I will, perhaps, write to hon. Members about a number of them. It is quite obvious that this is the latest in a series of debates that shows the importance of high streets and town centres to our local communities. It shows the enthusiasm that hon. Members have for our town centres. I will take away a number of the points raised today because it is a fact that the Government are committed to town centres and high streets, and to looking at ways in which we can help local areas to improve their town centres and high streets for their communities.