Alex 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.