The High Street

Simon Danczuk Excerpts

Tuesday 21st May 2013 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

I am pleased to serve under your chairmanship, Mr Davies, and delighted to have the opportunity to introduce this debate on the future of our high streets. Let me start by saying that, as it is a widely recognised barometer for the performance of our economy, it is especially worrying to have seen more retail chains go into insolvency in the past 12 months than ever before. Yesterday’s British Retail Consortium report, showing that the number of empty shops has reached a new high, adds to a growing sense that our high streets are experiencing a short and painful decline, which the Government, I will argue, are not doing enough to address. First, however, I want to put into context the value of our high streets in terms of retail, as a focal point for communities and as a generator of social capital and civic pride.

As retail is the traditional home of Britain’s biggest private sector employer, it is worth noting that the latest figures from the House of Commons Library show that the retail sector employs 4.2 million people—more than 15% of our work force. It accounts for 34% of all turnover in the UK and, according to the British Retail Consortium, employs 40% of all those aged under 20. UK retail sector sales were worth more than £311 billion in 2012. It is a massive sector and an important rung on the employment ladder for young people.

However, high streets are more than just a place of commerce. They are dynamic hubs of social activity where enduring social bonds are formed that help to create strong and vibrant communities. Local high streets are also a strong source of civic pride; they can help shape a keen sense of local identity, common heritage and local values.

If we take all that into account, it is hard to imagine a future in Britain without the high street playing a substantive role in community life, but as we all know, high streets currently face enormous challenges and many local high streets are fighting for their lives. Faced with that threat to such an important economic and social driver, it is incumbent on Government to act. In the early days of the coalition, Ministers at least gave the impression that they recognised that. The Minister responsible for high streets—the Minister for Housing—said in November 2010:

“My colleagues and I are committed to tackling these challenges head on. After all, our high streets need to be centres for economic growth as we move towards the recovery.”

Two and a half years later, those words have a distinctly hollow ring. Instead of commitment to tackling the problems, Ministers have shown indifference. Indeed, their actions have made things worse. They have not only failed even to give a full response to Mary Portas’s 2011 review, but, year after year, they continue to ignore calls from business groups for some respite on business rates. Every year, the Chancellor of the Exchequer keeps piling millions of pounds on to the bills of retailers, which is causing insolvencies everywhere. And whereas Mary Portas, the Government’s high street tsar, said in her report that the high street had reached “crisis point”, the Secretary of State for Business, Innovation and Skills blithely claims that there is no crisis on the high street. Those are not the actions of a Government committed to tackling a serious problem. They are the actions of Ministers with their heads in the sand.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is making powerful points. Does he agree that the biggest boost that the high street could get would be to be on a level playing field with Amazon, which is not paying taxes in this country at the moment?

[Simon Danczuk]

My hon. Friend makes a very good point. I will come to the point about Amazon, and not just in relation to business rates; corporation tax is also an issue.

Let me examine the flagship Government policy to tackle the problems facing our high streets—the much talked about Portas pilots. I was an initial supporter of the Portas review and I thought that the pilots were a good idea, but that was before the previous Minister responsible for high streets, who is now the Minister without Portfolio, turned what should have been a serious policy exercise into a farcical circus. Further help was on hand from Optomen Television, which managed to hijack a Government policy and turn it into a reality TV series.

I should like at this point to praise the current Minister responsible for high streets for distancing himself from the antics of his predecessor. He has had the good sense to change the ridiculously titled Future High Street X-Fund to something that is more appropriate to public policy, instead of trying to ape Peter Kay’s last spoof reality TV show. The High Street Renewal Fund sounds much more dignified, but the damage has been done.

It is a year this Sunday since the first wave of Portas pilots was announced. The retail grade magazine, The Grocer, reports that an “emerging findings” report was supposed to be published this April, but has now been shelved. People close to the situation are quoted as saying that there have been

“teething problems including concerns over corporate governance.”

They go on to say that

“having a formal audit-style report may not have been worth the paper it was written on.”

When will the Government’s “emerging findings” report be published, and when will the Government respond to Mary Portas’s recommendations?

Ministers called the Portas pilots the

“vanguard of a high street revolution”.

However, they have been not so much a revolution as a revelation—the revelation that we need substance, not just public relations, to deliver real change.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I thank my hon. Friend for securing this very important debate. Does he agree that there is a very important role for local authorities and local business groups in helping to encourage businesses? For example, in Hackney, we are trying to develop outlet retail, to boost the local high street, on Mare street. That one-to-one engagement with businesses is very important at local level, in addition to whatever might happen nationally.

[Simon Danczuk]

I could not agree more. However, the engagement of businesses has been successful in some areas, but very unsuccessful in others, not least in terms of some of the pilots.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I congratulate my hon. Friend on securing this important debate. Local people in Houghton tell me that they are concerned about the growing number of fast-food and takeaway outlets on the high street there. They want a better retail offer; they are concerned about the damage that that is doing. Should local people not be offered a greater say in the planning of high streets? In the current circumstance, local people feel powerless to stop that and feel as though they do not have a say on the offer available to them on their town centre high street.

[Simon Danczuk]

My hon. Friend makes a very good point. It is one that the Leader of the Opposition, the leader of the Labour party, addressed just before the county council elections in terms of planning abilities for local authorities so that they can shape their town centres and high streets more effectively.

[Justin Tomlinson (North Swindon) (Con)]

Surely customers currently dictate that, because market forces will determine which shops are viable.

[Simon Danczuk]

My response to the hon. Gentleman’s point is that the high street is too important to communities simply to be left to the free market. There is a requirement for intervention both nationally and locally.

It has been widely reported that many of the first and second-wave Portas pilots have spent hardly any money and some have spent nothing at all. Did Ministers not award the pilots to towns that already had ready-to-go plans to transform their high streets? At a time when urgent action was needed, everyone anticipated that the pilots would hit the ground running. Instead, most of them have withdrawn into a shell and are in a state of paralysis. It now looks as though some of the plans had been drawn up on the back of an envelope and were nowhere near viable. Can the Minister explain how long those pilots are supposed to last? Will they carry on struggling to put plans together indefinitely?

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank my hon. Friend for securing the debate and I praise the work that he has done in Rochdale. The debate has been quite partisan so far. I am a bit more favourable towards what the Government have done so far. I think that the Portas review was quite a good piece of work. However, I share my hon. Friend’s concern about where the money has been spent and the fact that it has not been spent in some towns. Our experience in Stalybridge is the opposite. We have done some great work, but without any resources. I just wonder whether the Government will be able to say something about how they might get resources to town teams who are doing very good jobs in their areas if places that have been pilots have not been able to do the things that they wanted to do already.

[Simon Danczuk]

That is an interesting intervention: if money is not being spent in some pilot areas, surely it could be moved to areas with more innovative approaches that are ready to hit the ground running. It would not be fair to tar all pilots with the same brush. I am aware of excellent work that is making a real difference in Market Rasen and Nelson, both of which have shown strong leadership and rich community engagement.

Given the problems, it is no wonder that the Co-operative Group recently—just this week—demanded a review of the Portas pilots. If ever a programme illustrated the disconnect between Whitehall and local communities, this is it. The e-mail exchange that has come to light between Mary Portas’s team and officials from the Department for Communities and Local Government serves to highlight the problems. An example of how Government officials let TV companies set public policy can be seen in an e-mail about local councillors and residents arguing over their high street. A member of Mary Portas’s team e-mailed the DCLG stating:

“In TV terms the fight between the bureaucrats and the passionate citizens could be great”.

That Government officials were having such a conversation beggars belief. The Portas pilots were supposed to be about improving local high streets, not creating arguments for argument’s sake to make good TV. Robin Vaughan-Lyons, chairman of the Margate town team said that people had been left in tears by the antics of Mary Portas’s film crew. He told The Grocer, not a publication given to sensationalist reporting, that they

“are a group of people who are more interested in publicity and being on TV than they are in helping Margate and they have been deliberately encouraged by the film crew to make personal attacks on us.”

We should all celebrate bringing together volunteers to form town teams, for which people give up their time freely to help make their community a better place to live. Surely that is what the Prime Minister envisaged as the big society in action. How disgraceful that Government officials colluded with a TV company to sow seeds of division in communities and stoke up resentment simply to create a dramatic storyline for an hour of tawdry TV. That is not the government by citizens for society that the Prime Minister promised us, but government for television. As one soap opera inspires another, the Minister who was responsible for high streets made sure that the Portas pilots spawned other funds and initiatives. The Government’s high street innovation fund is one such example.

In her review of December 2011, Mary Portas underlined what she wanted councils to do:

“This should be game-changing stuff and thoughtful engagement, not just the usual suspects round a table planning the Christmas decorations.”

How do Ministers square that, I wonder, with the fact that many thousands of pounds from the high street innovation fund has been spent by councils on Christmas lights and hiring Santa Claus and reindeer? Last month was the launch of high street champions, an initiative to support high streets by partnering them with large businesses, but only in the pilot towns. Obviously, it is good to see businesses working together, but I am not convinced that matching big national chains with independent businesses is the best approach.

[Meg Hillier]

There can be exceptions. Tesco was born in Hackney on a market stall in Well street, which has great challenges. The local manager had the freedom, after, it has to be said, some negotiations with headquarters, to refuse to have a fresh meat counter because there was a butcher outside the door and to refuse to have a fried chicken counter because of the number of fried chicken shops in the street. Where partnership works, it works well, but, as my hon. Friend highlights, it is challenging for the individual managers of big stores.

--- Later in debate ---

[Simon Danczuk]

My hon. Friend makes an important point. The question is about how Government can affect the situation locally. There are lots of examples of good practice at a local level, but we have not had a strong sense of direction or leadership from the Government on town centres and high streets.

Rather than talking about high street champions, I would like the Government to consider funding digital champions: experts in multichannel retail, who can make a real difference and work with the independent retail community to help it embrace multichannel retail to supplement shops and safeguard its future. Independents make up 69% of all shops, and we need to do everything we can to safeguard their presence on our high streets.

When we look back on high street policy carried out by the coalition Government, we see that the multitude of headline grabbing initiatives have blinded us to the elephant in the room that is causing the most damage on the high street. I refer of course to business rates. The Government have collected an extra £500 million over the past two years through increased business rates, and yet they have spent only £20 million on the Portas pilots. Week in, week out, businesses in Rochdale tell me that the tax is far too high and is dragging them close to the brink. Research published this year by the Forum of Private Business shows that 94% of small business owners think that business rates are far too high. There is a growing sense that the Government see the high street only as a cash cow to milk to exhaustion.

The sense of injustice is further embedded by the Government’s decision to postpone next year’s business rates revaluation. While London property prices continue to rise, business owners in more affluent metropolitan areas can breathe a sigh of relief knowing that the Government will keep their rates artificially low, but many northern businesses, which have seen property prices fall by 40% in some areas, have to pay the top-of-the-market 2008 rates until 2017. We end up with the absurd scenario of Burnley effectively subsidising Bond street, and Rochdale subsidising Regent street. Business rates for an Amazon fulfilment centre in Doncaster are calculated at £44 per square metre, yet for an out-of-town Comet store in Rochdale, which as we know subsequently closed, they were £125 per square metre. Even worse, the rates for one unit in a Rochdale shopping centre are calculated at £1,080 per square metre—24 times more expensive than the rates Amazon pay in Doncaster.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing the debate and I am pleased to serve under your chairmanship, Mr Davies. Does my hon. Friend agree that, although business rates show no flexibility, landlords are being flexible over rents? Business rates represent a barrier to trade.

[Simon Danczuk]

I completely agree with my hon. Friend. I have seen properties in Rochdale with business rates that exceed the price of the rent; that cannot be right. There is a significant and serious problem with business rates. There is no doubt that they are past their sell-by date. Will the Minister use today’s debate to acknowledge that this prehistoric tax regime is unfairly holding businesses back and is not fit for purpose? The Valuation Office Agency needs an urgent overhaul and business rates desperately need reform.

Many people are of course already doing their bit to try to reform our high streets and move away from the chain stores’ monopoly, to give a new generation of people the skills to set up new and diverse businesses. I pay tribute to Retail Ready People, an initiative led by vInspired and the Retail Trust, which works with young people in Rochdale to help them set up a pop-up shop on the high street. It is working all over the country to give young people the skills and confidence to take over empty shops.

[Andrew Percy (Brigg and Goole) (Con)]

I congratulate the hon. Gentleman on securing the debate and on his attempt to blame the coalition for many of the problems with our high streets—it is inventive, if nothing else. Amazon is a big employer of my constituents. Last year I tried to help secure transport for people from my constituency to work there. It is an important local employer that he has bashed a couple of times. Does he want Rochdale business rates to move towards Amazon business rates or does he want Amazon business rates to move towards Rochdale business rates? If it is the former, can he tell us where the money will come from?

[Simon Danczuk]

It is neither. My hon. Friend the Member for Blackley and Broughton (Graham Stringer) made the point that Amazon is not paying full corporation tax, and there is a discrepancy in business rates, so I suggest that we need to overhaul the whole business rates system. It is simply not fit for purpose.

I am aware that many other voices are not locked into the myopic consensus that characterises Government thinking on the high street. One of them is that of Bill Grimsey, a turnaround specialist, who was formerly the chief executive of Wickes, Iceland and other companies. I met Bill recently, and he explained that town centres cannot be saved as pure retail destinations. Technology is already influencing how we shop, and in the future everything will change. What is required, he argued, is a holistic approach to creating vibrant high streets that addresses housing, education, health, entertainment and shopping.

[David Mowat (Warrington South) (Con)]

I congratulate the hon. Gentleman on securing the debate. He has not yet addressed something that probably costs retailers more than business rates: credit card interchange fees. If they were reduced to what Europe has said the cross-border level should be, £1 million would be put into every MP’s high street. That is an enormous amount of money. Would the hon. Gentleman therefore give the Government credit for acting on credit card interchange fees through the recent consultation, and does he hope that we can make progress? That would make a substantial difference, by putting demand into local economies.

[Simon Danczuk]

I welcome that intervention. I am not very familiar with the issue, and it has not been raised with me in relation to the high street, but the hon. Gentleman makes an interesting and important point, about which I am keen to learn more.

We need a fully focused, committed approach by Government, not another dose of dilettante PR. Currently, it is hard to know who is in charge of high street policy. Let us just spend a moment trying to make sense of where the change we need is coming from.

The Business Secretary turned up at the recent Retail Week Live conference and talked about accepting Mary Portas’s 38 recommendations, when there were only 28. The Secretary of State for Communities and Local Government is constantly in the newspapers, using emotive language to talk about car parking charges while he continues to cut council budgets to the bone. A Department for Communities and Local Government Minister claims that the unfair business rates revaluation delay is right, despite not one voice in retail supporting the move. The Minister with responsibility for Portas pilots and high streets carries out the role on a part-time basis while he tends to his main duties as housing Minister, and today we have a planning Minister addressing this high street debate.

I say to the Minister that someone needs to get a grip. We need a full-time high streets Minister and clear, strong leadership from the Government. Only then might the Prime Minister’s woolly rhetoric about ensuring that high streets are at the heart of every community start to mean something.

[Several hon. Members]

rose—