ALEX BRUMMER: Ministers have helped strangle our High Streets… now they MUST throw the lifeline that could save them
You don’t have to venture far to notice the sad state of many of Britain’s urban High Streets.
Once-thriving market towns and city centres are tragically on the wane.
The clues are obvious: empty, boarded-up shops with ‘For Sale’ or ‘To Let’ signs, pop-up charity stores selling second-hand wares, down-at-heel betting shops and money exchange outlets.
The clues are obvious: empty, boarded-up shops with ‘For Sale’ or ‘To Let’ signs, pop-up charity stores selling second-hand wares (stock image)
The causes of this devastation are manifold. But it does not take a genius to recognise that governments have been big contributors through unfairly punitive business rates.
Ministers have shamefully failed to understand that High Streets are more than just the shops they host — they are a community hub, providing essential services for people.
As well as suffocating under excessive business rates (which have also hit big store groups such as House Of Fraser, Toys R Us, BHS and Debenhams), shops are suffering from poor local infrastructure and exorbitant parking charges.
Most egregious is the brutally unfair competition from tax-avoiding online giants.
As well as suffocating under excessive business rates (which have also hit big store groups such as House Of Fraser, Toys R Us, BHS and Debenhams), shops are suffering from poor local infrastructure and exorbitant parking charges (stock image)
A welcome voice to this debate comes from Dave Lewis, the chief executive of Britain’s dominant grocer, Tesco.
Although he has skilfully managed his firm through today’s hostile retail environment, yesterday he wrote in the Mail, urging the Government to introduce a sales tax on internet giants that could be used to fund support for struggling High Street shops.
As Tesco seeks to maintain its market share in groceries, homeware, electronic goods and much else, it, too, is facing an assault from digital behemoths based in California’s Silicon Valley that pay derisorily low taxes.
Once-thriving market towns and city centres are tragically on the wane (stock image)
They avoid high business rates by operating out of cavernous warehouses on out-of-town industrial parks and brownfield sites, which qualify them to pay low levels of rates.
Amazon, for example, paid just £63 million in business rates in Britain last year, despite reporting sales of £8 billion.
The fact is that it is a genuine act of leadership for Dave Lewis — whose supermarket chain is viewed by some small shopkeepers as the ‘enemy’ for having a national network of around 3,400 stores that often undercut their own prices — to take on the politicians.
He has called for a 2 per cent levy on digital retailers in order to raise at least £1.5 billion to be used to relieve the burden on traditional retailers.
In recent years, some ministers have reacted positively to the Mail’s Save Our High Streets campaign. Treasury money has been given as a lifeline, as well as business rates relief for hundreds of thousands of small retailers.
Amazon, for example, paid just £63 million in business rates in Britain last year, despite reporting sales of £8 billion (stock image)
Such measures have, in lots of cases, meant the difference between survival and closure.
However, yesterday, in response to Mr Lewis’s rallying cry on behalf of generally Conservative-voting shopkeepers, we were treated to a naive and irresponsible response from Liz Truss, Chief Secretary to the Treasury and a Tory leadership hopeful.
In the guise of being a Thatcherite who believes in ‘lower, simpler taxes’, she argued that ‘whacking a 2 per cent bill on online shoppers will just jack up the cost of living’.
For a senior Government minister with direct responsibility for managing the public finances to be so dismissive of a proposal from one of Britain’s most respected retailers is disrespectful.
A welcome voice to this debate comes from Dave Lewis, the chief executive of Britain’s dominant grocer, Tesco
It also flies in the face — perhaps deliberately — of her boss, Chancellor Philip Hammond, who is trying to bring the digital giants more firmly within the tax system.
He passionately believes that Google, Amazon, Facebook and the like have, for far too long, been given a free ride at the expense of other retail enterprises in Britain, and at serious cost to the taxpayer.
If Ms Truss really believes in simpler and lower taxes, she might want to explain to the public how a government of which she is a part came to preside over a retail sector that represents 5 per cent of the nation’s total output, but which pays 25 per cent of the country’s business rates.
However, yesterday, in response to Mr Lewis’s rallying cry on behalf of generally Conservative-voting shopkeepers, we were treated to a naive and irresponsible response from Liz Truss
Tesco’s business rates bill, for example, has doubled to £700 million over the past decade.
One of the reasons is that central government has passed on more and more responsibilities — such as the provision of social care — to local authorities, which, in turn, have had to fund such services by hiking business rates.
It is true that online shopping has brought huge benefits. It has allowed people to compare prices at the click of a mouse, buy more cheaply and get items delivered to their home or work address without the time and cost involved with travelling to town centres.
But the great danger is that, instead of lowering prices and increasing choice, the rise of internet retail giants will eventually kill the High Streets and give them a monopoly that would allow them to hike prices and reduce choice.
It also flies in the face — perhaps deliberately — of her boss, Chancellor Philip Hammond, who is trying to bring the digital giants more firmly within the tax system
What we have is most definitely not a free market but a system with inbuilt unfair competition.
Of course, critics of Tesco will argue that it is a bit rich for its boss to come to the defence of Britain’s shopkeepers when its market dominance in the Nineties and early 2000s led to smaller rival stores closing.
There is some truth in this. But Tesco has also invested heavily in town centres — with more than 1,700 convenience stores across the country — helping to revivify many town centres and acting as an anchor store that attracts shoppers back to the High Street.
Also, as a pioneer of online shopping, Tesco is not asking the Government for any special favours.
With an estimated 30 per cent share of online grocery sales, it would be the biggest payer of the 2 per cent online levy proposed by Mr Lewis.
For her part, the claim by Liz Truss that the tax would hit families’ pockets shows a total misunderstanding of Britain’s grocery market.
No-frills German chains Aldi and Lidl have grabbed 12.7 per cent of the market — meaning that Tesco founder Sir Jack Cohen’s adage ‘pile it high and sell it cheap’ is truer than ever, and small shops are suffering very badly.
No-frills German chains Aldi and Lidl have grabbed 12.7 per cent of the market (stock image)
Ms Truss, as Chief Secretary to the Treasury, ought to realise that the current competitive marketplace — with cost-cutting on items ranging from pints of milk to cabbages and plasma TVs — is among the reasons why families are benefiting from an inflation rate that is below the Bank of England’s 2 per cent target and which is outstripped by household incomes.
In any case, if a new levy on digital giants were used to lower business rates, it would not only ease the pressure on the most hard-pressed stores, but it might also encourage them to lower their prices, too.
In general terms, raising taxes is never the answer to any economic problem. But the crisis on Britain’s High Streets means that the rulebook must for once be ignored.
Government ministers must act fast to implement this imaginative and long overdue proposal to end what has become a scandalous tax injustice.
Those serial tax-avoiding billionaire owners of global digital giants must be forced to pay their fair share and give Britain’s little High Street stores — which are the bedrock of so many local communities — a chance to survive.
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