The Conservative party leadership contender Rishi Sunak has announced he wants to ‘slash the number of empty shops by 2025’. The former Chancellor says he plans to ‘make sure that they are turned into thriving local assets, supporting skills, local businesses, economies and creating jobs.’
However, the home delivery expert ParcelHero says Mr Sunak’s High Street plans may be high on ambition, but they are low on detail and doomed to fail unless he scraps two of his own former policies.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says: ‘Should he win the Conservative party leadership race, it’s encouraging that Mr Sunak has highlighted the plight of retail as one of his priorities. However, much of what he says is simply a re-visiting of existing Government regeneration plans, which would give local authorities the power to hold a rent auction when a town centre shop has stood empty for over a year.
David Jinks MILT: Sunak's 'dangerous' plans' must be reassessed
These plans are already in the “Levelling Up and Regeneration Bill” that is set to resume its passage through committee stage on 6 September. Mr Sunak’s additional promise that he will slash the number of empty shops is encouraging, but it’s notable that he gives no actual target.
When the Government initially announced its regeneration bill, it was revealed that there are 58,000 shops empty across the UK. How many of them must reopen to qualify as a success for Mr Sunak?
In fact, the number of empty shops in UK High Streets and shopping centres has recently fallen for the third quarter in a row, so it seems Mr Sunak is already pushing against an open shop door.
According to the British Retail Consortium and the Local Data Company, the overall store vacancy rate in Great Britain fell to 14% in the second quarter of 2022. That’s a 0.1% improvement since the first quarter of the year and 0.5% lower than the same period last year. These are not exactly earth-shattering figures, but at least they are pointing in the right direction.
The truth is that the former Chancellor must readdress two of his pet policies before he stands a chance of reopening a substantial number of stores. The first is that he must commit to lowering business rates on commercial High Street properties, something he has been markedly reluctant to do.
Before the pandemic, a study released by ParcelHero showed Britain’s business rates were the highest in Europe and higher than France and Germany’s combined. In fact, for many years they were over the equivalent of 3.4% of GDP, compared to the rest of the EU where countries typically raise 0.65% of GDP through similar taxes.
It is true that many retailers enjoyed a rates 'holiday' during the height of the pandemic, thanks to swift action by Mr Sunak. However, they must not return to their full pre-pandemic rate next year, as they were set to do when he was Chancellor.
Secondly, Mr Sunak’s dangerous plan to introduce an Online Sales Tax, which he pushed forward earlier this year through a consultation with businesses, must be scrapped. Though designed to protect the High Street, it is likely to do exactly the opposite.
His department’s discussion document was titled “Sales Tax: Assessing an option to help rebalance taxation of the retail sector”. But that implied there is a difference between online sellers and High Street sellers that needed rebalancing. That is a ridiculously outmoded idea. From small craft stores to huge fashion chains, retailers should now sell online as well as in-store.
That means the many High Street retailers who have been sensible enough to integrate online and in-store sales would, under Mr Sunak’s existing plans, face the double whammy of High Street business rates plus a new tax on their online sales.
We’ve been critical of Mr Sunak’s retail plans, but at least he has discussed the issue. His opponent, Liz Truss, has been largely silent on any plans for the High Street. We’ve learned from her controversial supporter, Culture Secretary Nadine Dorries, that Ms Truss is a canny shopper, allegedly spending just £4.50 on Claire’s Accessories earrings, but little about Ms Truss’ ambitions for retail.
For further information, ParcelHero’s influential report '2030: Death of the High Street' has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030. Read the full report here.