Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.
As we await next week’s Budget, it should not just be retailers who are hoping that, somewhere amongst the Chancellor’s spreadsheets there may be some encouragement for the UK’s high streets. Our high streets and town centres, so often at the very heart of our communities, are clearly facing huge challenges, but they are also deeply symbolic. It’s difficult for communities to believe in a new economic future when their town centre is partially boarded up.
Reviving them is not about the retail sector alone – it’s a wider social issue, hence public policy makers’ legitimate and real interest. The huge growth in online shopping is the key accelerant in this change, but it would be wrong to point a finger of blame at the likes of Amazon. The truth is that the change is consumer driven, as it is with all disrupted industries, from taxi cabs to newspapers. Moreover, Britain is brilliant at online trading and many thousands of “new retail” jobs have been created in Logistics, IT, and e marketing.
Traditional retailers also recognise that they need to evolve to differentiate themselves from online, focusing more on the personal touch and the face-to-face experience you can’t get from a screen. As the former Managing Director of John Lewis, I fervently believe that our high streets can carve out a viable and valuable place for themselves in twenty-first century commerce. As West Midlands Mayor, I also believe they can once again become the focus of our communities.
However, retailers are right to expect an even playing field as they take on this challenge. While the retail sector has been disrupted by evolving technology, tax policy has not kept pace. The high street is bearing the weight of this inertia. It is widely reported that Amazon’s UK Corporation Tax bill last year was a meagre £4.6 million. Incredibly, this figure was lower than in the previous year. As their market share grows, they are paying less.
The question of where a company is domiciled and where profits are recorded clearly needs exploring. The Chancellor’s commitment is therefore very welcome, as it’s clear that the tax difference between online retailers and their traditional competitors needs rebalancing, and quickly. International agreements may be necessary to properly deal with what is a global issue, but in the meantime we can not afford to do nothing. It is also right that the Government is prepared to look again at the age-old issue of business rates. Many small businesses have already been taken out of paying business rates, but we must ensure that tax policy keeps pace with change, which means continued review.
Nevertheless, tax alone won’t solve our challenge, nor will denying the forces of change. Instead we must reshape the high street experience. We are social beings, and our high streets and town centres can be remodelled to bring us back together with our neighbours.
Retailers, local authorities, landlords, the hospitality industry and consumers can together create a new kind of high street.
For a start, retail, hospitality and experiences can combine powerfully more often, for example by integrating more coffee shops with public services, providing useful revenue streams and promoting footfall. Birmingham’s second biggest library, for example, was saved from closure by the addition of a community-led café, turning public service users into customers. It’s now thriving. Waitrose has harnessed the “experience economy” to great success too, offering in-store cookery schools where customers learn how best to use the ingredients on the shelves. In Dorridge, Sainsbury’s have built not only a new store, but a doctor’s surgery surrounded by smaller retail units, again mixing public services with commerce.
We also need to take advantage of powerful trends that could breathe new life into the high street. The rise in urban living, particularly among younger people, is releasing disposable income in city centres. In the first decade of this century, the number of 25 to 29 year-olds living in city centres tripled. And as the Centre for Cities has pointed out, providing homes within walking distance of workplaces gives people more cash and free time to spend it.
We should think, therefore, about how we can accommodate affordable residential property alongside retail to encourage a revival around our high streets. This could mean repurposing surplus business premises to provide quality urban housing. Another trend is towards sustainable co-working spaces, such as The Exchange in Moseley, Birmingham. Our start-up hot beds are too often focussed on bespoke office space in higher rent areas – why not drive this dynamo into every town centre?
So ideas and trends are beginning to emerge to start reinventing our high streets. Shops will still populate the high street of tomorrow, but they will be different to the outlets of today; specialist retailers, mixed-use spaces, local shops and some new concepts we don’t even know about yet. Traditional business must learn to evolve quickly, to disrupt the disruptors, and give high streets new relevance. Local policy makers can also make a decisive difference by riding these emerging trends. And by beginning to reform taxation policies that put the high street at a disadvantage, the Government can light a way to a brighter future for businesses across the UK.