A glimmer of hope for local retailers?

It is a well-documented fact that the high street as we know it is continuing to struggle, as larger out-of-town retail parks and outlets dominate the retail sector.

Recent statistics show that almost one in seven shops on the high street remain closed, and while Christmas shopping is in full swing, January will once again result in closure for many more businesses.

We have all seen the campaigns asking consumers to shop locally to try to ‘save’ high street businesses. A number of us may shop at a local Christmas market this December, but the bulk of our expenditure will still go on bigger retailers. The ease of an out-of-town retail park with free parking and the ‘best deals’ offered online still deter us from shopping at our once beloved high street.

High street retail space no longer commands a premium and new businesses cannot afford the rent that sought-after locations attract. When additional costs and business rates are also added to the list of outgoings, it’s sometimes impossible for smaller retailers to survive.

The news that the business rates system is to be overhauled is therefore welcome for smaller retailers. The Local Government Association (LGA) suggests that business rates should be set locally rather than by central government, and in particular that councils should have the ability to introduce local reductions at their discretion.

In addition, the redistribution of sums collected from business rates should be kept at a local level, as should any decisions regarding growth in business rates levels. The LGA suggests that 50 per cent of the income raised by business rates collection should be retained locally, and there is an argument that this percentage should be further increased when the system is next reviewed in 2020.

The impact of operational business rates reduction schemes can be seen at Sutton Council, where new start-ups and expanding small businesses were offered 50 per cent off business rates. Sutton Council also provided support to businesses by assisting with the preparation of their business plans. These schemes helped reduce the number of vacant business premises in the borough from 517 in 2010 to 426 in 2014.

A change in the control of business rates will give councils greater flexibility to determine reductions in business rates for particular businesses that they want to attract to their high streets. These reductions could be tailored in cooperation with local residents to support the kinds of shops and businesses they would like to see back on their high streets.

The introduction of greater local powers would be a step in the right direction for small businesses, particularly given the ongoing debate as to whether or not devolving powers from central government is a viable option for England. It will be interesting to see what control over changes to business relief is in fact relinquished by central government, and the impact, if any, that this will have upon the ongoing ‘rescue’ of the high street. SJ

Gwen Jones is a commercial solicitor at Gordon Brown Law Firm