Use returned business rate relief to help save the UK’s troubled high streets

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The Covid-19 pandemic has pushed many UK businesses deep into financial crisis, but not all have suffered equally. In fact, the pandemic has produced some unlikely winners in the retail sector.

Originally published in the Financial Times. Vidhya also sits on the UK government’s High Streets Task Force.

Those categorised as providing “essential” services have in many cases increased their revenues and profits. So, I was pleased to read this week that B&Q has joined Tesco, Sainsbury’s, Aldi and Morrison’s, among others, in returning more than £2bn of the business rate relief they collectively received. Clearly, these retailers didn’t need it.

But there have also been many losers. Many on the high street have experienced such punishing losses that retailers including Debenhams and Topshop owner Arcadia are on the cusp of permanent closure.

Of course, the decline of British town centres predates coronavirus — it’s been decades in the making. But the impact this year of two national lockdowns, a constantly shifting tier system, increased homeworking and the growth of online shopping has battered high streets further. Unless the government takes action to support a radical rethink, they may not survive.

Chain retail can clearly no longer be the backbone of the high street. Instead, we need to rebuild on the back of local and independent businesses that are committed to their areas, deliver a diversity of services and enable communities to come together and connect.

According to data from the government’s High Streets Task Force, “multifunctional” town centres that are dominated by such businesses have seen footfall hold up better compared to city centres where chains dominate. Smaller independent shops and community businesses should therefore have a viable future. However, these businesses currently need support to get them through to the other side of the pandemic.

To secure their future, Chancellor Rishi Sunak should channel the £2bn in returned business rate relief into a dedicated new fund to support struggling small, independent and community businesses. That would allow us to reinvent high streets as civic spaces fit for the 21st century, as retail expert Bill Grimsey has argued.

At least 10 per cent of the new fund should be set aside to enable community businesses to buy strategically important high street properties over the next five years. Community organisations will need funding to help build their capacity to take on this task. The money should also be used to pay for initial feasibility studies, actual building purchases and, critically, revenue support to underpin the early running costs of these properties.

The benefits are clear. Community ownership brings diversity and stability to the high street. It also boosts local economies, as a recent London School of Economics report showed. Community trusts and community-owned businesses already own and manage thousands of buildings and spaces across the UK. If properly supported, they have the capacity to do more — as we already know from a similar scheme operated by the Scottish Land fund.

The Observer building in Hastings is a prime example of the difference such a fund can make. Disused for more than three decades with no significant investment despite 13 different owners, it fell into a state of dereliction. When White Rock Neighbourhood Ventures, a community business, bought the property in 2019 for redevelopment, it drew on 66 different grants and loans to cover the costs. The fund I have proposed could have accelerated that process significantly.

This story is repeated across the country: Union Street in Plymouth has been regenerated from the bottom up by community business Nudge Community Builders; and in Midsteeple Quarter, a community-led initiative, is turning high street buildings into a mix of living and work quarters in Dumfries.

These community-owned spaces give local people a chance to shape the future of their town centres and hand them a stake in the high street’s future. The process also brings them into the conversation with local government and private owners about how to develop and reimagine spaces.

Now is the time to act. Every town centre could have a proportion of its space owned by the community. This would help prevent a dismal proliferation of shuttered shopfronts, while creating spaces for community and leisure centres, cafés, health services, pop-up shops and more. High streets need to diversify their buildings’ use, and quickly, if we are to halt the decline of British town centres.