High Street Rental Auctions

Vikki Slade Excerpts

Wednesday 26th February 2025 Westminster Hall

[Vikki Slade (Mid Dorset and North Poole) (LD)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I congratulate my neighbour, the hon. Member for Bournemouth West (Jessica Toale), on securing this important debate. It is great to see four new Members from Dorset here this afternoon, which shows what a fantastic place it is to visit. I agree with the hon. Member for South Dorset (Lloyd Hatton) that high streets are, of course, the beating heart and the identity of a place, but they also hold—as the hon. Member for Lichfield (Dave Robertson) mentioned—the communal memory of the people who live in, work in and visit a place.

I remember the high street of my youth, in a little town in Edenbridge, Kent. I used to visit the independent chemist, which doubled as a gift shop, to buy presents for my mum—I am sure she never liked them—and I would go to the big town for summer holiday shopping with stores like C&A and Chelsea Girl, and department stores like Allders and Debenhams. But those high streets were symptoms of their time, and I am sure that our grandparents would have been shocked by the identikit towns that we have had over so many years. It might be right and proper that some of those brands have succumbed to what is going on now—there is the negativity around online buying but also the trend toward second-hand and vintage shopping, which is actually quite a positive move.

Almost 13,000 retailers shut their shops last year, and according to a recent report, retail institutes warned that a “perfect storm” of higher costs and red tape means that one in 10 shop-floor jobs are expected to disappear by 2028. We need to make these moves with that as a background. But many places are bucking the trend and I hate to be negative about places, so even Bournemouth—which has had so much negativity—has had increase in footfall of 12.5% year on year. We need to congratulate those amazing businesses that are making the difference.

We must also think about what the high street means for us now: a combination of shopping, entertainment, living, working, playing, studying and, as my hon. Friend the Member for Taunton and Wellington (Gideon Amos) says, post offices. We Lib Dems welcome all the ideas to shape and support our high streets and town centres. Of course, local and national governments have a vital role to play, but the issue is not rent; it is business rates. Landlords say that rates are now higher than the rents that they can command in many cases, so a scheme that addressed that would be the most welcome. I am sure that the Minister will tell us about the new lower rate for retail, hospitality and leisure, but we need something substantially different from the current model.

I entered politics a long time ago on a local level to reform business rates, so it is great that I have finally made it to this position, and can hopefully make an impact. Lib Dems want to see business rates replaced with a commercial landowner levy to create a more level playing field, shifting the responsibility from tenant to landlord, and also ensuring that high streets can compete against businesses that do not have the same overheads. In abolishing the broken business rates system, we would look to tax the land value of commercial sites, not productive investment, because that is the problem—at the moment, we tax business investment, which impacts productivity and wages. The biggest impact would be on small businesses in deprived areas. They would then be a part of the regeneration of a space through wider community development, which can work alongside rental auctions. We welcome the current discussion paper on business rates reform. Can the Minister update us on when we can expect that to move forward?

On the rental auction initiative, the Lib Dems are concerned about the potential costs of the scheme for local authorities. Although the programme has funding allocated to it, it is not clear whether local authorities would be able to use this to take on leases to help them to enable business growth and start-ups to take off. There is no doubt about the financial burden on councils at the moment, and I am deeply concerned about whether there is the capacity and desire in some places to deliver something on the scale that is needed.

The industry also has doubts about the new auction system and whether it will have the desired effect. I agree with the hon. Member for Bassetlaw (Jo White) about hospitality fit-outs. Someone can spend £30,000 just like that on a small independent café, and that money is not going to come from just anywhere, particularly in the limited amount of time that these auction leases will be arranged for.

The funding available to create vacancy lists is welcome. Economic development teams have an amazing opportunity to drive the vision for their area forward; I am concerned that landlords may not understand the other innovative uses for their buildings, whereas a local authority has the ability to go out and scout for other businesses that might want to come into an area. There is an opportunity through the scheme if the funding can be used in a more flexible way. I am interested to know how councils can use the funding if they do not have property that they can put forward and auction now, but want to get ahead of the game. Any building sitting empty for more than 12 months is a long time, and the rot will already be setting in, so getting ahead of the game would be really useful.

A local council also shared that the high street rental auction is a big stick with which to beat up landlords who are not willing to engage. I read in The Business Times of a business lawyer who said:

“The question however remains: are we genuinely operating within a market of idle landlords who require this intervention? If the regulations only offer a solution for the minority and do not tackle the root cause of a greater economic issue around demand and affordability…these detailed provisions may not be the ‘breath of new life’ the government envisages.”

I am also concerned that the power will not do very much in small towns. It is understandable that the big towns such as Mansfield and Bournemouth might well see some benefit from this, but smaller places such as Broadstone or Wareham, or even Swanage and Wellington, might actually be invisible to the big councils as they look to the areas with a significant problem. One or two long-standing empty buildings in those smaller towns can have just as much of an impact, but they are unlikely to be worthwhile with the moneys coming to councils to make the scheme work.

My final point is on the reasons a property might be empty—there may be very good reasons. If councils are to use this power effectively, we must help landlords to bring properties into use if they simply cannot afford to do so otherwise. The high street rental auction requires landlords to bring properties up to the minimum energy efficiency standards—if they do not, they potentially face criminal prosecution. That could cripple landlords financially. What plans are there to support landlords who may wish to improve their stock but for whom doing so is not commercially viable?

Across my Mid Dorset and North Poole constituency, businesses have cited the huge costs associated with operating, which are affecting confidence and putting them off investing in physical property. Soaring energy costs, the increase in national insurance contributions, worries about the impacts of some measures in the Employment Rights Bill and international insecurity mean that taking on a high street premises is probably more difficult right now than it has been for a long time. What considerations are the Government offering to businesses that want to invest but are worried about then having an immediate revaluation of their rates—as in the case of Hall and Woodhouse, which I raised last month?

Without sustainable financial support for councils to eliminate the other issues around town centres, from rough sleeping to public transport initiatives and funding for police to deal with antisocial behaviour, I fear that the scheme may have a minimal effect and be counterproductive. It is a good start: I give credit to the previous Government for starting it, and I hope this Government will finish it, but I would like to know how it will be made more interesting and effective for a broader range of towns.