High streets across the UK are in need of dramatic reforms to business rates and tax systems if they are to survive, a government inquiry has found.
The housing, communities and local governments (HCLG) select committee’s investigation into the future of the high street has concluded that high streets must find a “new focus” as they cater to the changing needs of communities. The report noted that current progress was being hampered by crippling business rates and uneven tax systems.
Urgent reforms to the business rates system and a possible tax for online retailers were recommended as measures to “level the playing field” between store and online.
Landlords also came under criticism in the findings, which concluded that they “need to recognise the retail property market has changed and be more receptive to negotiating lease terms with retailers in financial difficulty”. A government conciliation service for the renegotiation of rents was also suggested.
The committee also concluded that leisure, arts and culture should play a more important role in future high streets, and that retail should no longer be the sole focus, as retailers shift their store offers to meet the demands of the modern shopper.
Clive Betts, chair of the HCLG committee, stressed that the findings indicated that current strife for retailers need not be a “death knell” for the high street: “Local authorities must get to grips with the fact that their town centres need to change; they need to innovate, setting out a long-term strategy for renewal, reconfiguring the town centre and finding new ways of using buildings and encouraging new independent retailers.
“Dated planning policy must be reformed to reflect the needs of modern high streets and town centres. Business rates must be made fair. They are currently stacking the odds against businesses with a high street presence and this must end. Tax reforms are needed to level the playing field between online and high street retailers, and we urge the Government to investigate all the options in this area, including an online sales tax.”
“At a local and national level, government must create a framework that allows high streets and town centres to thrive,” he added.
Initial responses to the committee recommendations were positive. Ed Cooke, chief executive of property company Revo, commented: “The select committee’s recommendation that proposals for an online sales tax should be assessed urgently, and that complete alternatives to business rates should be considered, increases pressure on government to look properly at the damage wrought in town centres by this uncompetitive tax. The market has changed dramatically since the 2015 review, and government must recognise and act swiftly on this new reality.”