Future of Town Centres and High Streets

Simon Danczuk Excerpts

Tuesday 17th January 2012 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

I congratulate the Backbench Business Committee and the hon. Member for Nuneaton (Mr Jones) on securing this important debate. The state of our high streets and town centres is important not only for our local economies and for providing jobs, but for strengthening our local communities. I think that setting up the Portas review of the high street was an inspired decision by the Government, although Members will not be surprised to hear that I have concerns about how the Government are supporting the retail sector.

Retail is our country’s largest private sector employer and accounts for 20% of the UK’s gross domestic product. The sector accounts for 40% of employment for the under-20s and pays 28% of all business rates. Now that the Government have achieved a youth unemployment level of over 1 million and failed to replace the public sector jobs that have been cut with private sector jobs, we can see how important the sector is to the health of our economy.

The retail sector’s prospects for 2012 are not good. Hardly a day goes by without another high street brand going into administration; Peacocks has already been mentioned. Consumer confidence is exceptionally low. Although that is clearly impacting on the larger retail multiples, it is also having a devastating impact on independent retailers, a group of businesses that do not always have a voice—or rather, are not always heard—in debates about the economy. That is why I believe that commissioning the Portas review was an inspired decision. It inevitably shines light on the smaller retailers that provide the diversity and quality customer service that enhance our high streets.

There has been much press coverage of Rochdale’s town centre in recent months, not least because McDonald’s has decided to leave, and because we have a disproportionate number of charity shops. In reality, however, our town has a great retail offer. Businesses such as Chantilly, 25 Ten, Denis Hope, Bragg and the Number Ten Gallery are perfect examples of the high-quality independents that enhance Rochdale’s high street, but Rochdale, like towns throughout the country, needs the Government to act more quickly and responsibly.

[Bob Stewart (Beckenham) (Con)]

It is terribly important to point out that the issue is not just about retail, but about attracting people into town centres. Beckenham used to be a wonderful place to go, but it is getting shoddier and shoddier, and we need more funding to make such areas good places for people to go—even if they are going there not to spend any money, but just for social reasons.

[Simon Danczuk]

I agree, and the Portas review makes the point that town centres are not just about retail, but about being a community magnet that brings people in for a variety of reasons. One problem is that the Portas review was delayed for months, and came to us late, but it is also disappointing that the Minister has decided not to respond until the spring.

The review makes a host of recommendations, practically all of which I welcome, but it also pushes a disproportionate amount of responsibility on to local government. We all know that towns such as Rochdale have received devastating cuts from this Government, so it will not be easy for local authorities to implement some of the recommendations, such as discounted business rates. Local councils can help with national market day, and set up town teams, as Members have said, but it is for central Government to take responsibility for the major issues affecting our town centres.

On planning, as the review recommends, the Government must put the town centre first, and following their consultation on the national planning policy framework, I get the impression that they will. I believe that they will make that change to the draft NPPF.

But the Government need to go further than the review, and we would benefit from looking at how credit insurance works in the retail sector, and at how the lack of credit insurance for wholesalers and suppliers makes it difficult for businesses to manage cash flow and, ultimately, to survive. A Government scheme to assist suppliers with credit insurance would certainly help.

The review makes some welcome recommendations on business rates, and Mary Portas is right to highlight the adverse impact of business rate levels on our high streets. In Rochdale, retailers that are closing have cited high business rates, but the Government have just introduced the biggest hike in such rates for 20 years—an increase of 5.6%. That is just not sustainable for small businesses on our high street.

[Mark Tami (Alyn and Deeside) (Lab)]

Does my hon. Friend agree that there is also a problem with bank lending to enable high-street shops to invest and bring their businesses up to the standard that we all expect in this day and age?

[Simon Danczuk]

That is absolutely right. Bank lending is a real problem for small businesses, and one that the Government need to address in terms of the larger economic situation.

Returning to business rates, I also highlight the problem with the Valuation Office Agency. I recently had a Rochdale bar owner attend my surgery, describing how the VOA had told him that it assumed his takings would be about £179,000 per year—a figure that he could only dream of achieving. I know from my own dealings with the VOA that its performance leaves a lot to be desired. Not only is it difficult to deal with, it is also slow to act. Thousands of businesses in Greater Manchester have appealed against the new business rate valuations, yet the VOA admitted that in 2010 it could deal with only 3% of the appeals made, leaving a massive backlog that still needs clearing. The VOA is now refusing to publish what percentage of appeals are successful—presumably to discourage businesses from challenging its valuations. We should not underestimate the impact that business rates and the VOA are having on the high street. I urge the Government to give those issues more urgent attention.

I started by mentioning consumer confidence. We cannot underestimate the adverse impact that our country’s economy is having on our high streets. For all the tweaks and adaptations that can be made locally, it is the level of unemployment, the fear of becoming unemployed, the lack of credit for small businesses and high inflation that will make or break our high streets.

To conclude, the Portas review provides worthwhile recommendations on which the Government can act, but there needs to be urgent action, and the Government need to recognise the effect that their economic policies are having on our high streets.