This Government is leaving the high street to die

High streets can still be valuable places. But instead of tackling the underlying causes of their decline, Nick Boles has focused on superficial solutions

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The Independent Online

Nearly two years on from Mary Portas' review of the high street, it seems the Planning Minister Nick Boles and the MP Brandon Lewis have decided that the high street doesn't have a future, or at least not as a retail destination.

Having publicly accepted but tacitly ignored most of the recommendations in the Portas review that they could actually do something about, such as rates and parking, ministers instead concentrated on the more PR-friendly options like X-factor type competitions and TV shows.  These gave the impression of engagement without the need to actually do anything tangible. 

Demonstrating this indifference to the real problems facing retailers, the Chancellor hammered them with the largest increase in business rates for 20 years on virtually the same day local towns submitted their applications to be become Portas Pilots in 2012. This added £350m to the overhead bills of the sector, or a little under 20 times the budget for the pilots.  As if that wasn't enough, he added another £175m to the bill this year, just in case we were getting too comfortable.

Now Mr Boles has announced the latest in a long line of final solutions, which this time seeks to wipe away the spectre of the boarded-up shop by simply allowing property owners to convert them to residential use - something many landlords and a few retail pundits have been advocating for some time now.

So after ignoring the plight of the high street, throwing a celebrity and a few ill-informed ministers at it, and finally dropping a bit of spare cash they found down the back of the Treasury sofa in its general direction, ministers now aim to kill off this long running debate by handing a magic bullet to the property developers and landlords who caused many of the difficulties in the first place.

Ask any retailer, large or small, what the problems are on the high street and they'll tell you. Rents are too high and by association business rates, based on rental values, have piled on the agony to the point where the commercial property model no longer makes any sense. 

Ask any shopper why they don't visit the high street and most of them will quote high parking charges and a lack of interest in the clone towns that have developed as a result of landlords following the money. The antithesis of this is of course the out-of-town mall where free parking and a proactive letting policy creates an environment people want to visit. Along with online shopping, these retail Meccas have done their bit to depress footfall in local high streets, but they have also set the agenda for what consumers expect from a day out at the shops.

Why are those lessons not being learnt by central and local government? Why are they in fact presiding over local policies that in many cases create the polar opposite of the shopping centre experience?  Perhaps it's political dogma, but more likely it's the fact that, even though the retail sector as a whole probably employs more people and generates more tax revenue than a car plant or a bank, it's too disparate to have the same sort of political clout.  No one is ever going to lose an election because a couple of corner shops have closed.

When past governments have made noises about lease reform and rent control, the cry from those in the property sector has been to let the market decide - and what competitively minded entrepreneur could argue with that? Unfortunately though, the market has long been distorted by other factors not immediately obvious to the uninitiated.

Many landlords are locked into equity to loan deals that have made it preferable for them to leave shops empty and marketed at entirely unrealistic rents, rather than have a tenant paying one that's affordable. Agreeing to lower rents, in response to the less buoyant times we all now live in, would trigger a revaluation of their assets, many of which are used to back large banks loans or mortgages.  This is partly behind the recent love affair with 'pop-up' shops, where more viable rents are charged on a temporary basis which have less impact on the headline valuation.

By giving property owners the opportunity to re-task shops into residential, Boles will in many cases allow them to realise the equity mired in over-valued properties. But in so doing he's also potentially depriving small retailers and entrepreneurs of valuable incubation space for new businesses which should be rented at bottom-of-the-market prices. Rather than reducing the start-up and maintenance costs for small enterprise - which I believe would kick start a high street renaissance - this latest proposal would wipe away those opportunities where they do exist.

If this plan doesn't remove all the retail premises from a given area, which it may well do in some instances, it will leave those that are left at a premium. It would thereby re-ignite the commercial property bubble that brought us to this stalemate in the first place, making those premises that are left unattainable by any but the chain stores that already clog up our town centres.

And once this process is underway it may not be exclusively applied to down-at-heel areas where most of the un-lettable stores currently languish.  After all, who'll want to live in locations like that? I'm already hearing stories of landlords letting otherwise viable properties deteriorate to add weight to their argument for a planning decision on change of use.

When leases come to an end on existing stores, landlords will have the option to kick out otherwise viable businesses in favour of more lucrative re-development options. This could even allow them to circumvent protections offered to tenants under the Landlord and Tenant Act. Not only will that be putting thousands of small retailers and their employees on the scrap heap, it'll also do very little to convert town centres into the 'social hubs' much vaunted by Mr Boles and Mr Lewis.

Moreover, from the perspective of an exchequer hooked on the cash cow of high street business rates payments, the unintended consequences of a reduction in local tax income seem not to have been considered in this latest masterplan.

I don't dispute that retail units should be given more flexibility in terms of use. Shops don't always have to remain as shops - but they shouldn't simply be hived off under the guise of regeneration. To my mind that's akin to a surgeon amputating an arm to cure a broken wrist.

What's needed is decisive action from government to control rents and rates as well as planning rules to restrict over-occupancy in certain use categories. It's been done in other countries, such as the US, and in ways that support both retailers and landlords to provide benefits in terms of social currency and civic regeneration, as well as making simple economic sense. But it requires a visionary administration that's prepared to engage with the key structural issues that have already been laid before it time and again.

Our high streets are too valuable to be left entirely to market forces. Sometimes socio-political engineering can be a good thing, and it's certainly worth a try before hitting the nuclear button.  I still believe town centres have the potential to be valuable resources to both small entrepreneurs and local communities. Let's not sell them off for a quick buck and an expedient political fix while other alternatives remain.