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AMAlex Morton is Research Director for Housing, Planning and Urban Policy at Policy Exchange.

Politicians love
to talk about evidence-based policy making. They also love to talk about the
need to raise peoples’ living standards. Yet there is an area of policy that
currently goes against both, and simply pretends nostalgia and central control
is the way forward.

Retail is
undergoing a huge shift. It is responding to the way that people prefer to
shop. No longer do people need to head to one of many local high streets – they
can click and get it delivered. As a result in the surge of the internet, only
desirable retail destinations in their own right will survive. This is the
fundamental driver of many retailers’ difficulties.  There is no longer
any need to go shopping. But people may still want to go
shopping. The 14 per cent vacancy rate in our shops masks a variation among high
streets across the country. In well run and attractive high streets the number
of boarded up shops is below 10 per cent, while in other areas it is well above 20 per cent.

Business rates
are not the main problem. Neither are online/offline taxes. Amazon may underpay
corporate taxes, but so does Starbucks, hardly an online retailer. 
Business rates may be £6 billion or so but retailers’ sales are worth some £300
billion – in other words just two per cent or so of total sales. The key is that retail
as social activity is the future, and this means change. But policy has lagged,
with negative economic and social consequences.


In the mid-1990s a
policy titled Town Centre First emerged that restricted the development of
out-of-town retail outlets. Subsequent studies show this policy has had a major
impact on the cost of living. Even using low academic estimates of 25 per cent productivity losses, and applying this only to food and clothing, Town Centre
First is costing the average household close to £1,000 a year. As a result of
this out of date policy, large companies simply moved into towns, occupying
smaller and less productive stores. They didn’t lose out–customers did.

The argument put
forward against out-of-town shopping is that it would weaken our nation’s
social fabric. This flies in the face of evidence. A YouGov poll found
that by two-to-one people go with other people to out-of-town centres, whilst
most trips to high streets are solitary. So arguments for Town Centre First are
completely back-to-front. Town Centre First must end. It is socially and
economically harmful, and as polling by YouGov found, it is opposed by voters
across all parties given the higher costs it imposes.

The answer to
retail’s current difficulties is not to limit competition. It is to give high
streets the powers to compete. All too often, some councils pursue ideological
obsessions that mean hard- working shopowners are left struggling. Despite the
fact that parking and car access are the second most important issue for shoppers,
many councils pursue anti-car policies that drive away (no pun intended)
consumers. While our ageing population thinks well maintained public toilets
are key, many have been closed by councils in recent years.

In our report, we
propose that poor performing councils have their powers transferred to
management companies run by retail experts. These retailers would take over
decisions on issues such as planning, parking and the location of amenities
such as toilets and ATM machines. Empty premises could be  converted into
gyms and offices and shops could be knocked together to create more viable
spaces. They will be able to stop clusters of ugly shops and vacant shops
blighting high streets and driving customers away. This gives high streets a
level playing field with larger single landlord centres.

There are
measures that can and should help small retailers compete – minimising
regulation, a short term freeze on retailers’ business rates. But even after
this, some of our high streets that are not the main high street in a town or area
either need to massively shrink or completely convert to other uses. In some
cases, helping to solve our housing crisis by converting to homes is the best
way forward. This is best done in a co-ordinated way and policymakers need to
recognise this.

The ost of living
will be one of the dividing lines of the next election. With retail policy,
politicians finally have a chance to show they are on the side of hard pressed
voters. The time has come for 21st century retail policies to suit
the needs of the 21st century customer.

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