What’s next for the UK’s high streets?

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Our aims to put community at the heart of town centres, by Policy Manager, Nick Plumb.

Nick Plumb, Policy Manager

(12 minute read)

It is now widely accepted that the dominant model of the high street is in decline. The consumption- and retail-driven norm has suffered a range of setbacks – from the growth of out-of-town shopping centres in the 90s to the increasing ease and ubiquity of online shopping.

This trend hasn’t escaped our policymakers. Schemes such as the Future High Streets Fund were introduced to ‘renew and reshape town centres and high streets in a way that drives growth, improves experience and ensures future sustainability’. This aspiration to reimagine is a step in the right direction, however we need to be bolder in our ambition.

Moreover, this task as been made harder by the huge shifts we’re beginning to see as a result of the covid-19 pandemic, which has accelerated many of these trends. Footfall in city centres is struggling to recover to pre-pandemic levels, Amazon’s stock has risen dramatically as people have turned to online shopping, and the economic impact of lockdowns and social distancing looks set to force many business on the high street to close their doors for good. This calls for us to be bold and imaginative, as we conceive of a new civic high street fit for the twenty first century.

Putting down roots

Despite the challenges this uncertainty can bring, in many ways it points to the sorts of debates we should have been having about high streets before the pandemic jolted us into action. Over the course of the pandemic, there has been a resurgence of community spirit, a renewed connection with local areas and very little desire to return to habits of old. This changing context could point to the revival of local, secondary high streets, alongside traditional central focal points.

There has been some interesting variation within these trends, with towns seeing high street footfall return to pre-pandemic levels more quickly than cities, for example. All of this points to the complex nature of high street decline. With complex problems, there is no easy fix. However, the future of the high street is something that has interested Power to Change for some time, because we see huge potential for the role of community businesses to contribute to a reimagined model for the high street. They are locally-rooted and trusted, and they serve as a ‘destination place’ – increasing footfall on the high street, and so bringing people in to use other local businesses.

A reimagined high street will, of course, look different in different places but we believe there is no route to genuine high street renewal without a greater element of community involvement. A move to a civic high street model with community at its heart, is more of a recalibration than a new idea. Diverse town centres providing civic functions – such as education, health and professional services, a public space to gather and an inclusive evening economy were a feature of our places in the past, but not for half a century. As we look to set out the high street model for the next half a century, there are barriers that will need to be overcome.

Barriers to be overcome

In recent weeks, Power to Change has hosted a series of events to explore some of these challenges in more detail. We’ve discussed local governance mechanisms; explored the barriers to ownership and control many communities face; heard about the steps private sector developers can take to enable greater community involvement in the high street; and sought to sketch out the principles that should underpin a new civic high street model.

Governance

There is a lack of access to governance at a local level which can connect communities with the levers that drive town centre regeneration. Without meaningful access to formal mechanisms, too often community involvement is ad hoc, and dependent on the benevolence of bigger players in a local place – whether that’s developers or local government.

Hyper-local governance models do exist. There are 10,000 town and parish councils across England. However, many of these are in rural areas. Just 30% of England is covered by a parish council, compared to 70% of Wales. Since their introduction in 2011 via the Localism Act, Neighbourhood Forums have coexisted alongside town and parish councils, as well as being established in places without parish councils – by groups with an interest in setting local planning parameters.

Community improvement districts

The discussions we’ve been convening are to explore a model of governance which is suitable for urban settings. We need to develop new models which bring together local stakeholders to make decisions about the ways to build places which are economically vibrant, socially inclusive, support people’s wellbeing and deliver greater sustainability. So, we are calling for the piloting of Community Improvement Districts (CIDs).

It is an idea that builds on the Business Improvement District (BID) model. In places like Scotland, CIDs have developed out of existing BIDs, as local businesses have sought to involve a greater range of stakeholders in local regeneration. Equally, CIDs could be established in places currently without a BID but involve local businesses in their governance and decision-making. Initially proposed by Professor Tony Travers at the London School of Economics in a paper in 2011, the idea has been reinvigorated in recent years by work from the Centre for London. The Centre’s new research project on Community Town Centres, of which we’re one of the funders, will seek to explore in more detail how CIDs will work in practice.

Ownership and transparency

Ownership of high street property and space is a persistent challenge for communities. The arguments in favour of community ownership are well-versed. Asset ownership provides communities with a stake in their local place, helps drive economic regeneration, and provides a sustainable income base for communities. However, all too often this is an unattainable goal for many communities wanting to play a bigger role in their high streets and town centres.

Greater data transparency

Research carried out for Power to Change by James Child, Head of Retail and Industrial Research at EG, shone a light on the connection between ownership and rates of property vacancy on the high street. It found that the biggest owners of vacant units are real estate and property companies (one in four) and overseas investors (over one in five). Just one in ten vacant units are owned by the public sector or social sector. Understanding this mix at a local level can be a headache for communities.

So, we’re pleased to see some progress towards clarifying this often-opaque picture. The Government is piloting local public registers of ownership based on Land Registry data, together with a wider rollout of a public beneficial ownership register of all property by 2021 to identify overseas owners. One of the most pressing things we need to see reformed is full transparency around commercial property ownership on the UK high street. As vacancies go up, in line with the economic challenges brought about by Covid-19, having a clear sense of who owns what on the high street is going to be vital for those of us thinking about how we drive social and economic regeneration.

The role of local government

We think this move to greater transparency might be accompanied by greater use of Compulsory Purchase Orders (CPOs) by local government. CPOs are often a last resort, only used when other forms of communication have broken down. However, there is a clear rationale for local government to take a more active role in the management and curation of its local high street. One route for doing this could be to use CPOs more proactively to secure long-vacant assets for future community use. In Wales, the government has recently strengthened the compulsory purchase powers available to local authorities, as they seek to get on the front foot on high street reimagination.

As our research with LSE earlier this year laid out, local government has a clear role to play in ensuring community access to high street locations. This might be through CPOs or the direct transfer of land and buildings using community asset transfer (CAT). Secured leases and meanwhile use also have a role to play. All this is to say that local government needs to play a strategic role in supporting community involvement in the high street. The payback councils would see is clear – greater footfall, stronger individual identity for town centres and more resilience through a diversity of property uses. However, research found that less than half of councils in England have a CAT policy. This needs to change as we look to build back better from the pandemic.

A buyout fund

To really tackle the challenges that the high street faces in the coming months and years ahead, government should introduce a £250m Community Buyout Fund as an extension of its Towns Fund commitment. The fund would support communities ready to take ownership of high street assets and learns from the successes of the Scottish Land Fund. It should include initial feasibility funding, capital funding for building purchase and critically revenue funding to support the early running costs of the building.

How private sector developers can deliver social value

The levers of control for the UK’s high streets are substantially in the hands of landowners – often investors with large property portfolios and limited capacity to become involved in multiple conversations about the curation of the places in which they own property. So, alongside work to develop new governance models and greater clarity around ownership, there is an emerging conversation about the way landowners and developers can develop community-oriented models.

For many community businesses, access to high street property is the factor that enables them to grow beyond their start-up phase and move towards a sustainable future. However, in places with high property prices, market rate rental can be prohibitively high. Legal and General have introduced a turnover-linked lease, where tenants pay a minimum percentage of turnover rather than fixed rents – with a separate rate for start-up, independent businesses compared to better established chain businesses.

In other places, landowners have linked low rental costs to social outcomes. Where a community business can deliver against a set of social outcomes, such as community wellbeing or skills development, these outcomes can be used to ‘top up’ rent to a nominal market rate.

It’s important to note that developers are beginning to look at this in both business and social value terms. From a business point of view, having a diverse, busy high street (in part driven by a vibrant community business sector) is likely to increase footfall in commercial properties. Others are looking at their social value responsibilities in a more intentional way. There is growing recognition that partnership with -and support for – local community businesses represents a significant step forward on social moving beyond box ticking and lip service.

As we convene further conservations on the future of the civic high street, we will be seeking to learn more from these private sector innovations – how they might be scaled up and designed in a way which works for communities and private owners.

Summary of recommendations

  • Pilot community improvement districts
  • Radically increase transparency of commercial property ownership
  • Make full use of local government CPO powers
  • Take a strategic approach to community ownership through the development of local government CAT policies
  • Establish a £250 million Community Buyout Fund
  • Develop social value and lease models in the private sector which support community involvement in the high street

 

Where next?

To build a Civic High Street fit for the twenty first century, we will need new policies, mechanisms and partnerships of the kind outlined in this piece. We’re at a critical juncture, caused by years of decline and exacerbated by the pandemic. Our ambition is that places across the country can develop a co-designed and shared local vision for the long-term direction of their town centres. To ensure this is the case, now is the time for central and local government and the private sector to be bold. Join us on this journey, as we aim to put communities at the heart of future town centres.

This essay is part of Power to Change’s ongoing work on high streets. If you are interested in our work in this area, please contact Nick Plumb, Policy Manager.