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UK's main parties urged to take firmer action on retail turmoil ahead of poll


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UK's main parties urged to take firmer action on retail turmoil ahead of poll

Whichever party wins the U.K. general election on Dec. 12 must take stronger action to save the U.K.'s high streets from further decay, senior industry figures said.

The election manifestos of both the Conservative and Labour Party — the two parties with the best chance of forming the next government — acknowledge the turbulence afflicting the country's retail sector, and its impact on shopping streets in its towns and cities. The Conservative manifesto includes sections on "Regenerating Towns" and "Thriving High Streets," while Labour's manifesto states that the U.K.'s "high streets are being decimated by store closures and job losses."

As of the end of November, 38 midsize or large retailers in the U.K. this year had gone into an insolvency process known as administration, with 1,663 stores and almost 43,000 employees affected, according to data from the Centre for Retail Research. In 2018, 43 companies entered administration, with 2,594 stores and more than 46,000 employees affected.

Melanie Leech, CEO of the British Property Federation, an industry body representing companies involved in property ownership and investment, welcomed some of the measures proposed in the manifestos, but said more decisive action was required to rescue the nation's town and city centers. "We don't really get a sense in either manifesto of what the vision is for the future of our high streets," she said in an interview. "These are great measures for helping to improve the high street experience, but they are not measures that are going to drive wholesale transformation and reinvention of our high streets."

Plans for planning

Leech encouraged a much greater role for local planning authorities in "reinvigorating" the country's high streets. This would require a substantial increase in financial support for local planning departments, she said. Local government authorities suffered large cuts in funding from central government, and restrictions on borrowing in the wake of the global financial crisis as the Conservative government imposed a raft of austerity measures.

"Local authority planning departments have been cut more than any other department in local authorities over the last few years," said Leech. "Unless we can really restock those planning departments with the skills they need at all levels, particularly at senior level so that you can really get strategic planning back at the forefront of how local authorities address these issues, then I think they will continue to struggle to really tackle this."

Business rates, or property taxes, is another area the two main parties have pledged to address to boost the U.K. retail and retail property sectors. The Conservatives are promising a "fundamental review of the [business rate] system" and to further reduce business rates for retail businesses and to lower rates for grassroots music venues, small cinemas, and pubs. Labour said it will "review the option of a land value tax on commercial landlords as an alternative [to business rates] and develop a retail sector industrial strategy."

Still, both parties' plans around business rates need much more clarification, Leech said. "We're no closer to understanding what that means in practice or believing that that means the people who need help now will get it," she said. "Clarity around a path to deliver on the business rates reforms everyone agrees that we need would be good."

Any new government must also deliver on plans to shift the balance of power in retail away from large e-commerce operators, such as Inc., who have dented the revenues of brick-and-mortar retailers in recent years, said Walter Boettcher, director of research and forecasting at Colliers International UK. The last Conservative government under Prime Minister Theresa May introduced a Digital Services Tax in 2018 that will put a 2% tax on the revenues of search engines, social media platforms and online marketplaces that derive value from UK users. The tax will take effect from April 2020.

"The advantage the e-commerce companies have had is linked to their cost base just being so much lower," said Boettcher. "Anything that levels the playing field is probably going to assist retail. It's long overdue."