Coronavirus menace could kill off our high streets – only a bold Budget can pull them back from the brink – The Sun

ROWS of empty shelves and loo rolls hauled away by the trolley-load — if recent days have shown one thing, it's that Britain's shops are its lifeblood.

When flourishing, our high streets provide jobs and build communities, but today they are facing a perfect storm, one that threatens real damage to the fabric of our nation.

For years, our precious stores have been battered by blow after blow – from the 2008 financial crisis to the rise of online giants like Amazon.

Only this week, new figures showed that in February there was a drop of eight per cent in the number of shoppers in our town centres.

Piled on top of this is the outdated, unfair system of business rates, whose gross flaws have turned it into a giant engine of retail decay.

Now comes another bruising uppercut in the form of coronavirus, which is increasingly disrupting normal life.

Chancellor Rishi Sunak must consider urgent action to save our stores

As the pandemic spreads and ever greater restrictions clamp down on day-to-day routine, our high streets could be abandoned.

And in a climate where profit margins are eye-wateringly tight, businesses like hair salons, fashion outlets and cafes will fail to survive.

As he prepares to deliver his Budget tomorrow, the Chancellor Rishi Sunak must consider urgent action to save our stores – or face losing thousands more for good.

Crisis and collapse

In an interview at the weekend, Mr Sunak said the Government “stands ready to give the NHS whatever it needs” to cope with the coronavirus crisis.

But healthcare is far from the only sector where state support is urgently required.

The high street also desperately needs official backing if it is to avoid collapse.

Without vibrant high streets, urban centres just become ghost towns, devoid of any soul or sense of belonging

The scale of the present retail crisis is alarming.

The Centre for Retail Research reports that no less than 1,211 shops have closed since the start of the year, with the loss of more than 18,000 jobs.

One recent study by the firm Parcelhero forecast that by 2030 half of Britain’s existing shops will have gone, leaving just 120,000 stores on the high street.

Such an outcome would be a disaster for our country.

This decline is not only ruinous for the economy and job creation, but it undermines wider society.

Nation of ghost towns

Without vibrant high streets, urban centres just become ghost towns, devoid of any soul or sense of belonging.

That point was spelt out graphically this week by Steve Murrells, the Chief Executive of the Co-Op, who explained how research by his organisation found that towns with the largest number of vacant shops also have “the lowest community well-being scores.”

In an impassioned plea for the Government to combat social isolation, Mr Murrells argued “that without a common place to spend time and socialise, people’s collective wellbeing suffers".

The system we have got at the moment is absolute lunacy.

He is absolutely correct. I see this for myself in my home town of Margate, where the rows of boarded up shops in the centre create a mood of permanent despair.

In fact, for all the recent talk of regeneration in the Kent coastal town, it remains in the top one per cent of most deprived neighbourhoods in England.

Keeping business as usual

In the wake of Coronavirus, the Chancellor this week must take steps to ensure that businesses can still function through the crisis.

Among the measures he should consider is a temporary suspension in VAT or employers’ national insurance so firms don’t suddenly run out of cash.

He might also introduce a scheme whereby tax payments could be spread out over a longer period.

But if the roots of a retail revival are to go deeper, then the Conservative government will have to embark on genuine reform of business rates, which are currently penalising too many retailers.

Transitional relief? I call it comic relief. It needs to be scrapped.

“Business rates are having a catastrophic effect on the high street. The system we have got at the moment is absolute lunacy,” says Tony Brown, the former chief executive of the retail chain Beales, which is now being closed with the loss of 1,000 jobs.

As Mr Brown points out, in some cases the rates bill for a Beales store was 10 times as much as the rent, an unsustainable position.

In this second decade of the 21st century, the Government is meant to be encouraging enterprise, but this mismanaged, unjust system does the exact opposite.

Cyber favouritism

As the commercial equivalent of the council tax, the uniform business rate — which is set by central government but collected by local authorities — is a levy paid by companies, supposedly based on the notional rental value of the premises they occupy.

But it has become badly distorted by continual tinkering and changes in retail practices.

Ministers still like it because it brings in a large amount of revenue, over £25billion-a-year, and it is difficult to avoid.

But it is riddled with absurdities and inconsistencies.

For a start, it bears no relationship to how a retail business is performing.

As John Webber, head of ratings at Colliers International global estate services company, puts it, “retailers are paying a disproportionate slice of UK business rate bills, and this burden is based purely on the size and value of their properties, no matter how well their businesses are doing.”

The Government has tinkered with business rates for years, but all this has achieved is more frustration and complexity.

In addition, it is a tax that punishes high street firms while favouring cyberspace and out-of-town operators with far cheaper premises.

In a justifiably angry recent outburst, James Daunt, the head of the Watersones book chain, complained that the business rates system is “hollowing out the high street” and shifting work “to God-awful warehouses".

In a classic example of this destructive bias, the business rates bill for Amazon in 2018 was just £63.4million, despite UK sales of nearly £8.8billion.

Yet the fashion chain Next, with 500 stores, had to pay a business rates bill almost £40million more than Amazon.

High street swindle

The trouble doesn't end there.

Businesses with a property of a rateable value of less than £12,000 are eligible for 100 per cent tax relief, whereas stores with a property value of over £51,000 get no relief at all.

In addition, firms can be hurt by transitional relief, which is meant to act like a shock-absorber in gradually phasing in changes in the size of tax bills after any revaluation of properties.

Transitional relief might be beneficial when rental values are rising because it gives business ratepayers several years to adjust to increases.

Real reform is needed so that the spirit of enterprise is rewarded rather than punished.

But since the last valuation in 2017, retail firms increasingly inhabit a world where commercial rents are falling.

Because transitional relief also slows down reductions in bills, this means that many businesses are now paying far more than they really should, given the lower values of their properties.

In one branch of Poundland in Blackpool, for example, the business rate should have fallen by 46 per cent between 2010 and 2017 because of the drop in rental values.

Instead, misnamed transitional relief means that by 2021 it will have gone down in real terms by only 13 per cent.

“Transitional relief? I call it comic relief. It needs to be scrapped,” says Poundland’s boss Barry Williams.

Time for real change

The Government has tinkered with business rates for years, but all this has achieved is more frustration and complexity.

Real reform is needed so that the spirit of enterprise is rewarded rather than punished.

Buoyed by their recent election result, the Tories talk about “levelling up the economy” through major infrastructure projects and new transport links.

But if they really want to make an immediate difference, they will focus on helping our high streets.

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