PARLIAMENTARY DEBATE
High Streets and Town Centres in 2030 - 13 June 2019 (Commons/Westminster Hall)

I beg to move,

That this House has considered the Eleventh Report of the Housing, Communities and Local Government Committee, High Streets and town centres in 2030, HC 1010, and the Government response, CP 84.

It is a great pleasure to serve under your chairmanship, Mr Stringer. It also gives me great pleasure to discuss the report by the Housing, Communities and Local Government Committee on high streets and town centres in 2030. I thank everyone who contributed to our inquiry, including our witnesses. We took a range of evidence from retailers, councils, landlords, planners and academics, and we came to our conclusions after eight evidence sessions and two visits. I thank the Committee staff for their work in putting the report together.

The reason why the Committee decided to conduct this inquiry is, I think, pretty obvious. The decline of the high street is a matter of concern to Members across the House because it is a concern to our constituents and the general public. The change—the reduction in the number of people shopping, in some cases the empty shops, and in the worst cases the decay and deterioration across villages, small towns, larger towns, cities and district centres—is almost entirely down to online shopping.

Some 20% of sales are now done online: the highest percentage anywhere in the world. That has happened in the UK over a fairly short period—the past 10 or 15 years—and in many cases the use of shops and the reaction of councils and the Government have not kept pace with that very rapid change. We as politicians cannot and should not want to halt it, but we must look at what we can do to mitigate its impact and address the situation.

We concluded that the days when the high street was 100% retail—for much of the 20th century, people went to their high streets or town and city centres to shop—have gone, and that there now needs to be a strategy in each area, backed by the local community, initiated by local councils and supported by local traders, to create a different approach to the activities on the high street. We concluded that if high streets and centres are to survive and thrive by 2030, they must become

“activity-based community gathering places”,

with a reduced retail element and a wider range of uses, including green space, leisure, arts and culture, health and social care, and housing, with the community at its heart. Retail will be there, but there will be a number of other activities drawing people in. People will be drawn in by the coffee shops and leisure activities, and then they will go shopping, which will be an important part of a wider experience. That is what we see for the future, and our report looks at ways in which we can get there.

We concluded that local councils have a really important role to play in developing that approach. They need to work with their communities and businesses, and try to create a sense of place for the area, which might be very different from the place next door. On one of our visits, we went to Stockton, which had been badly hit by the loss of retailers. It was putting on bike rides, fun runs, marathons, outdoor theatre and other activities to try to encourage people, particularly in the summer months, to come into Stockton centre and use the retail facilities. We heard about Malton, which is successfully branding itself as a place to go for food. Centres can identify themselves in different ways to show that they are an attractive place for people to come to.

Business improvement districts, where local businesses come in, can play an important part. We were pleased that the Government accepted our recommendation that community representatives should be encouraged to sit on BIDs. BIDs should be about not just business, but community. That is in keeping with our general recommendation to change the whole approach of high streets from simply retail and business to wider community uses.

A key issue from a council perspective was local plans, which should be living mechanisms that are kept up to date. We urged all local authorities to adopt

“living documents, regularly updated to capture and reflect changing trends,”

which

“must be forward looking, anticipating what will happen in five years’ time.”

Local authorities should have dynamic strategies for the high street of the sort we have just talked about. We were pleased that the Government basically accepted that all local plans should be reviewed every five years, and that town and city centre strategies should be looking at least 10 years ahead. They were on the same wavelength.

All I would say to the Government is, go look at the cuts of about 50% that councils have made to their planning budgets. When planning departments prioritise planning applications, they often lack staff with the capacity and capability to think ahead and do the necessary local plan work. There is a concern that councils often have not caught up with the rapid change in online shopping, and therefore their local plans are out of date and do not reflect that change. They are not looking at the changes that they need to make to the land use in their town and city centres.

When we went to Darlington, it was readily accepted that a whole retail area might simply have to be closed down, and that a completely different use might have to be found for that part of the town. It is very simple maths: if 20% of the shopping that was done on the high street 30 years ago is now done online, we need 20% fewer shops. We do not want that to happen in a pepper-potted way, which would simply mean a bit of decay everywhere; we need to concentrate it and change how that land is used in the future.

We recognise that, as part of this process, the Government’s £675 million future high streets fund was helpful. It was there for councils and businesses to tap into and use for this change process. Of course, we do not think it is enough, although the Government do: that is one point of disagreement. We also made the point that the taskforce that the Government set up— Sir John Timpson came along and talked about it—is a really helpful way forward, but we said that it cannot be a talking shop. It must be a place where councils and others can go and get real, hard advice, and where we can collect examples of good practice. Very often, what is done in one area can be learned from and implemented in another. That is something that we can greatly benefit from.

We identified two additional areas of interest where local government is trying to work with business to change, and where change is needed from central Government. The first is compulsory purchase orders. We learned that where councils try to change land use in an area, they often have to compulsorily purchase some properties. Again, we are pleased with the Government’s response. They accepted that and said that they will review the whole process, which is cumbersome, long-winded, time-consuming and costly.

A slightly more difficult area was permitted development rights, for which the Government consulted about extensions at the same time. We said that before the Government further extended permitted development rights, it would be helpful if they carried out an assessment of the impact on the high street of their previous extensions to those rights. The Government did not agree to that, which is disappointing. It is always good to have an impact assessment on what has already happened before doing something else, but we disagreed on that.

We were clear that permitted development rights should not be allowed to get in the way of a local plan that tries to change the fundamental land use of part of a centre. If a local authority is trying to change buildings from retail into housing, leisure or a park, for example, it is not helpful if someone converts the odd shop into a house a few months before that local plan comes into effect. The local authority would then have to say, “Actually, you did that under permitted development rights, but now we have a local plan, which means we need to compulsory purchase those properties and fundamentally change the land use.”

There ought to be a proviso that if a local plan is going to re-designate an area and affect particular properties, it is not helpful to have permitted development rights for the same properties at the same time. The Government need to think carefully about that. At the end of the day, it is not helpful to the individuals to be given that freedom, which is not really a freedom.

The biggest issue on which we disagree with the Government is that of business rates. Every bit of evidence we received showed that there is a problem. I am serving as a guest on the Treasury Committee, which is conducting an inquiry into business rates, and exactly the same sort of evidence is coming forward. Not everyone has the same solution; some want wholesale reform of business rates, while others simply want some changes to make them fairer, but the demand for change was pretty consistent. The reason is that it is considered unfair that Amazon pays 0.7% of its turnover on business rates, and it took quite a bit of extraction to get that figure out of Amazon, while high street chains spend between 1.5% and 6.5% of their turnover on business rates—in other words, more than double, and in some cases it is 10 times as much.

That simply is not fair—this is about the element of fairness. People on the high street are trying to trade at a significant cost disadvantage. Only the Government can alter that. Simply altering business rates will not change the high street back to how it was 20 years ago, but there needs to be a recognition that shopping habits are changing and that taxation policy ought to change in line with that.

We recommended that the Government look at a number of options: an online sales tax, an extension to VAT, a green tax on deliveries, or anything to reflect changing shopping habits. That money could be used to reduce the general business rates paid on the high street, to give a holiday when a business carries out improvements to stop an immediate rise in its business rates, or to add to the Government’s fund to help high streets. The Government had all those options—we were not totally prescriptive—but they came back and said no; they did not want to do anything at all.

The Government said that they were bringing in lots of reliefs, which they are, but a point that has been made to us quite strongly is that although the sticking plaster of reliefs is a welcome and useful mechanism, lots of those sticking plasters on top of one another becomes an unsightly and terribly confusing mess. Lots of people said that the system was now really confusing, with a number of reliefs in place. The evidence that I heard at the Treasury Committee evidence session the other day clearly suggested that the need for so many reliefs so frequently indicates that the basic system is flawed and in need of more substantive review.

Interestingly, Sir Amyas Morse, in his retirement swansong before the Committee at our evidence session on local authority finance—he is normally forthright in his views—said:

“I am concerned as to how realistic basing everything on business rates really is…it is concerning as to whether something that is based on a square footage formula in the modern day is going to be terribly relevant to measuring business activity… Even though it may be convenient to go forward with it now, I cannot believe it will endure forever, because it is just such an odd way of trying to measure business activity.”

He is right. Business rates are easy, and we are probably not going to tear them up, forget about them and change them tomorrow, because they are relatively easy to collect—that is a great benefit of them—but thinking that all business taxation at local level should rely on square footage is something that goes back historically, because it was an easy thing to do when everybody shopped in a shop. Ministers have to think a bit about the longer term.

Sir Amyas said that the situation will not endure forever. Well, Ministers do not tend to endure forever. Perhaps this Minister has other aspirations but, realistically, at some point a Minister will have to grasp the nettle and consider, if not completely scrapping business rates, then at least recognising that reform has to happen in the light of changing shopping habits. That is the big issue on which we really want to push Ministers, because at some point this is going to change, and we cannot carry on disadvantaging our high street retailers in the meantime.

As I explained, local government has a role here in developing strategies and local plans; central Government have a role in looking at changes to business rates, compulsory purchase powers and other things; and retailers also have a responsibility. I mentioned that Stockton is doing interesting things, and I asked, “Is bringing all these ventures into Stockton centre really helping?” They said, “Yes, sort of, but when we asked some of our retailers how many more people they got through their shops, they said, ‘Not that many, because we close at 5.30.’” Retailers have to understand that they have to change their approach to suit the customer—that is really important. We heard other examples of retailers, even small ones, using social media to advise their regular customers of changes to products in their store.

Landlords also have to get real. There are still landlords with completely unrealistic retail unit asset values on their books, based on rental values as they were 10 or 15 years ago. Some big retailers are proactive and engaged. They engage in BIDs and look at how they can improve their shopping facilities, while others just see them as a money-making venture. We saw examples of shops lying empty, but there was a long lease, so the landlord was just sitting there and getting the money in, and had no real incentive to go and find another tenant. There have to be changes in that respect.

We asked the Government to review the Landlord and Tenant Act 1954, and they say that they will look at whether that should be reviewed. That was a helpful response. However, we also asked the Government at least to consider how they might look again at upward-only rent reviews, and they said, “No, we’re not going to interfere in contracts between landlord and tenant.” We only asked them to look at that. I hope that they might have another think about looking at it, because it was raised with us on a number of occasions.

There are challenges not merely for local government, but for central Government, retailers and landlords. We have said that there are real challenges. We can all see the challenges and problems on our high streets. We were worried and we said in our concluding remarks:

“Unless…urgent action is taken, we fear that further deterioration, loss of visitors and dereliction may lead to some high streets and town centres disappearing altogether.”

Given what has happened over the past 10 or 15 years, and if another 10 or 15 years are spent going in the same direction, we can see that happening.

We cannot predict what lies ahead, but online sales have doubled in the past five years, so it is almost certain that they will grow. The situation will not stand still. People will not reverse their shopping habits but carry on in very much the same direction, which will further undermine retail sales on the high street—it is bound to.

In our report, however, we said that provided that everyone, including the Minister—who is present, while others are not, so we will direct this to her—considers and puts into place our recommendations, high streets and town centres can have a better future. That will require a shift from retail-focused activities to new purposes and uses that foster greater social interaction, community spirit and local identity.

I am pleased to recommend the report. I hope that we can all work together to have it implemented. Many of our recommendations have been accepted by the Minister, but I have pointed out some that have not; I hope she will give us an even more helpful response about those today.

Order. I intend to call the SNP spokesperson at 2.30 pm. Five Back Benchers are indicating that they wish to speak, so the arithmetic is straightforward: there is no need for a time limit.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests—namely, that I am a director of Stanfords, a travel and cartography business, and, with my sister, a joint owner of a small commercial high street property.

It is a pleasure to follow the Chair of our Select Committee, the hon. Member for Sheffield South East (Mr Betts), who gave a good synopsis of the inquiry and of the report. I will share a number of the points that he made, but I will try not to duplicate.

This issue affects not just every high street but, by that very fact, every community. Every constituency has areas we can think of that are seriously struggling to cope. High streets face difficulties due to a long-term shift in the way people shop, rising costs and the fact that consumer demand is struggling and changing. That perfect storm of rising costs and weaker demand means that we need to rethink the role and character of our town centres or high streets.

I will focus on three areas. First, town centres are not dead—that is certainly the view of the Government and of our Committee—but an awful lot of them are in intensive care, and some may not make it. We need to free our high streets. Look at the different reasons cited for the problems: restrictive planning arrangements, a heavy burden of taxes and charges, and an unwillingness of some retailers to rethink their business model—as we have heard—and of building owners to reconsider how they collaborate with their near neighbours. Town centres therefore need to change. The requirement, as the report rightly says, is to move towards a broad range of communal activities. Fundamentally, for a town centre to succeed in the future, it must be a place where people want to meet, to shop, sure, and to socialise, to go to a movie, to keep fit, to meet friends or to eat and drink—all those different activities. In different locations, however, the exact priorities will be different depending on local demand.

The concept of a place where people want to meet means that a successful town centre not only has to be able to adapt from where it is now but has to be free in the future to adapt as consumer demand continues to change. It needs to have a public realm that is attractive, welcoming and safe. That is about functional and aesthetic design and about engagement with the community. I totally endorse the point about adapting BIDs, including having community representatives. The other element of the notion of a place where people meet is that access has to be convenient. As Members present understand, beneath that is a whole raft of issues including the location and pricing of parking, alternative means of transport to the town centre, walkability and the interactions of pedestrians, cyclists and so on.

Secondly, on flexibility, the Chair of the Committee rightly pointed out other planning issues, but one of the critical ones is use classes. I understand why in the past they were established but, frankly—I say this as a surveyor —they have become too complex and counterproductive. Some argue, “We just need to tinker a little with the use classes, remove some of the sub-categories and everything will be fine.” I strongly disagree. We need to establish a single town centre use, which is consumer-facing and embraces a wide range of activities. I recognise that there might be an argument for food preparation to be a subset, on the grounds of public health, but to my mind, the notion of that town centre use class, which would allow movement of activities, is crucial for town centres to have flexibility.

Alongside that, ensuring that building owners, businesses and local authorities change their mindsets is important to flexibility. That is about the quality of local leadership, which was clear from the evidence to the Committee. Often the distinction between neighbouring towns is the calibre of local leadership. Mark Williams, director of the Hark Group, said:

“Leadership must come from the local authority, for the reasons I have said: it is their town and it should give very clear direction as to what it wants.”

That is true, but with one caveat: the local authority cannot do that on its own; it has to work in partnership. Property owners and other stakeholders need to collaborate. The collaborative nature of forums such as BIDs where everyone involved works together is important. I would like to see BIDs strengthened with new powers, capabilities and membership.

Finally, on digital taxes and online competition, I am disappointed by the Government’s response to the report—although I recognise the hand of the Treasury, probably, rather than of the Ministry. I take the view that we must ensure that all retailers pay comparable tax rates, unlike now. Online retailers have an inherent competitive advantage, as the Chair of the Committee rightly pointed out. Within retailing, we need to shift to a much stronger emphasis on turnover, rather than on fixed property costs.

I have seen several good propositions, such as a simple consolidated tax for smaller businesses or—from Tesco—an online sales levy. A reduction in the business rate would allow such an online sales levy, to ensure that, from the Treasury’s point of view, the revenue is balanced and, from the competition point of view, the online retailer and the bricks-and-mortar retailer are able to compete fairly. There is a good opportunity there. I simply say to the Minister, I hope that we will see more lateral thinking on that.

Finally, in my book, this issue affects every single community. We need to see action, in particular if we are not to see the very heart of many of our communities disappear altogether.

I welcome this report, and add my thanks to the Chair of the Committee, the hon. Member for Sheffield South East (Mr Betts), and everyone who contributed to it.

Town centres and high streets matter because they are the hearts of our communities. They are the places where people come together to access goods and services, to meet each other and to enjoy leisure time. People often feel a strong sense of connection to their place and they enjoy local distinctiveness as part of their identity. People enjoy the relationships they have in their local town centres, with the shopkeepers and café owners who serve them, with the voluntary sector organisations they encounter, and with the public services that they can access in such locations.

Our report found that unlike in the 1990s, when high street decline was linked to the wider economic recession, and the threat of the internet was only beginning to loom on the horizon, the issues facing town centres now are much more fundamental and structural. I will high light a number of issues covered by the report that are affecting the town centres and high streets in my constituency.

Whether in West Norwood, East Dulwich, Brixton West Dulwich, Dulwich Village, Herne Hill or Crystal Palace, I am proud of the distinctiveness of the town centres and high streets in my constituency, the independent businesses, which serve their communities, and the sense of place and community, which they help to foster. Businesses in my constituency are really suffering. Rents in London are going up, and rents feed into the calculation of business rates. One owner of a hugely popular, much-loved local shop contacted me to say that following the recent revaluation, his rateable value had increased by 110%, and his bill by 34% once transitional relief had been applied. Added to that, he told me that he is being squeezed by increases in employers’ national insurance contributions and his rent. His turnover is substantially down as a direct result of online competition.

In West Norwood next week we will see the closure of the last bank in the town centre, when Barclays shuts its doors for the last time. That is a particular blow in an area with a high number of elderly and disabled residents, and one that will further increase financial exclusion in that part of my constituency and harm the wider town centre. Trade will be driven away as people go to other places for their essential banking transactions and choose to spend their money elsewhere.

The relaxation of permitted development rights is already a disaster, resulting in poor-quality homes in the wrong locations and no affordable housing or contribution to services and facilities. The good examples of office-to-residential conversion generally would have achieved planning consent in any event, so PDR has simply facilitated the delivery of poor-quality homes. For town centres, the Government have proposed further expansion of permitted development rights to enable shops to be converted to residential. That would be an unmitigated disaster for town centres. It is true that in many town centres there is too much retail space, but how and where to reduce that and introduce other uses is a strategic decision that should be taken by the local authority, in consultation with the community. Allowing landlords that freedom runs the risk of gap-toothed high streets up and down the country, rather than the sensible consolidation of a retail heart where it is needed.

Our report is right to identify the critical nature of strong local authority leadership in supporting healthy town centres, but planning departments have been cut to the bone under nine years of austerity. Thriving town centres need a strong vision, effective partnerships between councils, businesses and the community and investment in the public realm, increasingly with a focus on sustainability and climate change at their heart. We need to clean up the air in town centres, deliver safe routes for walking and cycling and create pleasant open spaces resilient to hotter summers and wetter weather. That simply cannot be done with current resources. Government must invest in and empower local authorities to play the leadership role on behalf of our towns centres that we know can be so effective.

I want to return to the issue of business rates. A fundamental problem for our town centres is that business rates do not reflect the value that people place on their local high street. They penalise town centre retailers in more expensive property, to the benefit of internet-based businesses operating out of low-value warehouses. It is the job of the taxation system to redistribute resources according to the public goods that communities value. Town centres are one such public good. The value of the relationship that an isolated elderly person has with their local shopkeeper does not appear on any balance sheet. Our taxation system must take account of that value and redistribute resources to serve our town centres.

It is for the Government to provide the policy and taxation regime that can support our town centres, whether by creating an obligation for banks to provide branch-based services in every community in the country, redistributing businesses rates to support our town centres or investing in our local authorities to equip and enable them to play a leadership role. The Government are not doing enough; they must show more leadership.

It is a pleasure to serve under your chairmanship, Mr Stringer, I believe for the first time. As a distinguished former leader of a city council, you will understand the importance of the high street not only to our towns and cities but to people across the country. I apologise to the hon. Member for Sheffield South East (Mr Betts), the Chair of the Select Committee, for being slightly late for the debate; I was engaged as the secretary of the 1922 committee, administering the ballot for the leadership of the Conservative and Unionist party.

I have a long memory of the high street; when I was a young lad, the shops were open probably five days a week: on Saturday all day, closed on Wednesday lunchtime and often closed on Monday, too. It was the advent of another subject dear to my heart—large-scale immigration to this country—that enabled the Gujarati community and others to come here and see the benefit of cornering the market and opening for longer. That shows how retail outlets have to change with the times. It is no longer good enough to be open from 9 to 5.30 or 6; shops have to be open seven days a week to make money.

I think it is fair to remind the Minister that this report is cross-party and its recommendations are agreed and strongly endorsed by all members of the Select Committee, so they have a lot of strength behind them. I want to touch on one or two things that are appropriate on this issue. First, to rejuvenate our high streets, I agree with the hon. Member for Dulwich and West Norwood (Helen Hayes) about allowing retail properties to be converted to rather unsuitable homes for people. They were originally intended to be retail units and were not built as homes, and often they are unsatisfactory.

However, there are large numbers of flats above high-street shops that were originally made as homes. A lot of those have been converted to become storage units, office space or for other purposes. To rejuvenate our high streets, we need to get people back to living in those properties. In times gone by, the shop owners would live above the premises and have a very short commute to work. These days, that is not the case. We need, and should encourage, a rejuvenation project to encourage those properties to be brought back into use for living accommodation.

The Chair of the Select Committee mentioned our visit to Darlington and Stockton. It was shock to us that Marks & Spencer—a key store in the middle of the high street—had closed down. We asked why, and were told that it could not make money. It had a 250-year lease on the property, and the property owner quite reasonably said, “Fine. You just keep paying us for 250 years.” No one would take on the lease because it was too expensive, so it blighted the whole high street. The Government need to look at ownership of properties, because without understanding who owns properties and what pressure can be brought on them to change the basis of rent or encourage them to let the properties at a reasonable rate, our high streets will be blighted forevermore.

I was also struck when I had a briefing from Tesco about business rates and their impact on its stores. Tesco, a very successful company across the UK, has concentrated not on the big retail stores but the smaller, Metro-type operations on our high streets. That is welcome because it brings retail back to people at a reasonable price, drives footfall and encourages the development of other comparable retail units on the high street. The slight problem is that its finances on turnover and business rates are remarkably tight. It makes only something like a 4% margin, so if retail sales fall, those stores will be in potential crisis. If they close, many other stores along that high street will close with them, because people will not go to them. There is a fact of life that we must look at: frankly, business rates for retail units are not fit for purpose and need fundamental reform.

The arguments about an online sales tax are reasonable, and I think there are concerns. The first question is whether we can collect the money. Business rates associated with a property are relatively easy to collect. However, an online sales tax should also be reasonably easy to collect. The next issue is where that money goes. If an online sales tax is introduced on warehousing or companies such as Amazon, will it be collected from a central point and then distributed? How will it be provided to local authorities, which will depend on business rates, or some form of business taxation, for their funding?

My answer is that we need an online sales tax, but it needs to be set at a reasonable rate—1%, 2% or whatever—and then distributed on the basis of the business rates income that otherwise would have accrued to a local authority. That is one way we could make this happen. Not reforming business rates is completely unacceptable, because the burden will become greater and greater. The other issue that affects retail units is that, as the Government response to our report shows, the Government have done a whole series of complicated things that, frankly, have distorted the market completely. They have distorted business rates and made them even less fit for purpose, which is why we need fundamental reform and review.

High streets up and down our country have gone through various problems, and many of them are looking a bit tired. They need to be refreshed and reconsidered. We need new ideas, new shops, new facilities and encouragement from local authorities to increase footfall to those premises. We must build up the partnership between local authorities and retailers. It is a symbiotic relationship: the reality is that if local authorities do not co-operate with retailers, they will lose business rates income, which will be even more important to them in the future. We look to my hon. Friend the Minister to come up with some wise words and stronger action—particularly on business rates, on which the Government’s response was rather disappointing. I hope we see further action from the Government in that area.

It is a pleasure to serve under your chairmanship, Mr Stringer. I, too, welcome the Select Committee’s report. I thought it was outstanding, particularly in the light of the challenges that my city experiences on a day-to-day basis, on which I have advocated action in this place. Those who are familiar with our debates on these issues will know that I have made many contributions, particularly about business rates—an issue that the hon. Member for Harrow East (Bob Blackman) articulated so well and that I will return to shortly.

York provides an incredible high street experience for people visiting our city, but we also need to make the city work for local residents, who increasingly do not visit the city centre. We should reflect more on the experience of residents and on how communities engage with these issues, because communities can really make a high street. Although our city has 7 million visitors a year, we must give the residents—those who are there day in, day out—the opportunity to have both a real shopping experience and a wider experience. That is why I welcome the report’s suggestion that we should look at not just a retail opportunity but a whole community opportunity.

Bishy Road in York was, frankly, a dying high street. The post office had moved out and the street was struggling. However, it has been rejuvenated, to the point of winning a Great British High Street award, because it built its whole centre on the wider community. Traders’ engagement with the community means that it is now the go-to place in our city for a retail experience; there are lots of different types of outlets on the street.

However, the picture across the city is not universal. York has many exciting places for people to engage in, which very much attract the external community—I am thinking of Jorvik and the museums in our city centre—but local residents really struggle to be able to afford to benefit from them. Like so many places, York has seen a real hollowing-out of shopping centres, particularly on Coney Street, where shops are struggling, not least because of the huge pressure on business rates.

Before I move on to business rates, let me mention the great opportunities for innovation across our city. The report did not particularly reflect on markets, but they are a great place for businesses to develop and grow. We should look at the role of markets on our high streets, and at how they interact with the wider retail experience. Spark:York, a new development built in shipping containers, has enabled many businesses to start up. It has a real vibe about it and it provides great opportunities. Those kinds of initiatives will help to bring some regeneration. For example, Spark gives good, ethical businesses the opportunity to start up and then move out to benefit from opportunities on the wider high street.

I take slight issue with what the report says about transportation into urban centres. It focuses on car parking. In an age when many of our urban centres are so polluted and congested, we need to ensure that there is really good public transport infrastructure to bring people in. York has one of the best park and ride facilities in the country. Opening up opportunities for living streets, for active travel and for park and ride on public transport is a way of regenerating our urban centres. Of course, if people walk and cycle rather than just going to their cars, there is more engagement; it has been shown that businesses benefit more if people use public transport and active travel. I hope that the Minister will take that on board.

We also need to ensure that there are real community spaces in the heart of our cities. I am thinking about libraries—people used to go to city centres to visit libraries, but they have disappeared—swimming pools and green spaces. We must ensure that people can access community hubs. Because of the lack of facilities and space, and the cost, community hubs are often pushed out to the periphery of the city. If there were go-to places at the heart of the city for residents to congregate and attend events, residents would be drawn into the city again. We need to square that circle to ensure that we have good community spaces in the heart of our city centres.

Business rates have been a particular problem in York. The analysis of what has happened was worked through with Make It York and the York Retail Forum. Across the country, 29% of the high street is owned by international businesses. We might, at one level, argue that that is inward investment, but at the same time it leads to a detached relationship between landlords and local centres. Investors who own property in the city centre often have wider interests, including maintaining their share price and increasing the value of their assets. When an investor charges high rent on a property, that hurts the shop owner, but there is a wider, more important benefit to the investor. Higher rent increases the property’s valuation, which pushes up business rates, so people are hit by higher rents and higher business rates.

The false economy, or bubble, that that creates is forcing many of the independents in York, and many other shops, off the high street. We have to address the relationship between property owners and the city or town centre. Social clauses should be built into contracts to force that relationship back to a sensible place. If a property owner does not make the right decisions for the wider area then, frankly, they should not own space on the high street.

We must also look at new developments. In York, we are on the cusp of the exciting York Central development, which has been through many iterations in planning. It was going to be a full retail piece built into the city centre. That is no longer the case, but the plan is still to have retail outlets as part of the 400,000 square metres site. However, if the planning goes ahead, which sees the development in isolation from the rest of the city, there could be a serious detrimental impact on the city itself.

When we look at developing new sites, we need to take into account the broader impact. Sadly, that is not the case for the York Central development, where no appraisal was undertaken to see what its impact could be on the wider city. The plan is on the Secretary of State’s desk. There has been a request for a call-in, which we hope will be honoured to allow the plans to be revisited, not least because of the plan’s housing and limited wider economic opportunities.

I welcome the Government’s future high streets fund, which is a good start. Like many, I believe that it needs to grow and be dedicated to sharing good practice. York has an interest in benefiting from the fund to ensure that our city works for residents as well as visitors in future. It is also important for those people up and down our country who are working hard to try to make their high street businesses work for everyone’s benefit.

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank the hon. Member for Sheffield South East (Mr Betts) for bringing forward the report and for the positive and meaningful contribution that the Committee has made to the overall debate. As several hon. Members have said, this issue affects every constituency, irrespective of where it is. I support many of the report’s recommendations and know that if more SNP colleagues were in their places, they would support them, too.

The Government have not accepted all the recommendations in full. I hope the Committee will keep pushing and encouraging them to deliver more, fund more and provide more, especially in leadership, which is critical to future success. The hon. Member for Hertford and Stortford (Mr Prisk) said that some of our town centres are not dead but may be in intensive care, and they really need that support and leadership if we are to make them viable, vibrant places for the future.

The hon. Member for Dulwich and West Norwood (Helen Hayes) homed in on business rates, which could be a big driver in how town centres are allowed to develop, as well as how we might start to deal with the closure of banks and post offices, which affect the general feel of our high streets. The Committee’s report talked about the impact of business rates on town centre businesses and looked at methods to reduce the burden.

I have a few examples from Scotland—as the Minister will appreciate, I usually do—where for the past 10 years we have run a highly successful business bonus scheme: a package of rates relief now worth £750 million to small businesses. Under the current scheme, small businesses can claim rate relief to the combined rateable value of their business premises up to £35,000 or the rateable value for individual premises if under £18,000. Therefore, many businesses do not pay rates at all, and even those with rates that sit between £15,000 and £18,000 can still qualify for a 25% rate relief. Such support saves businesses up to £7,350 each financial year. As margins in the retail sector are becoming so narrow and squeezed, that is sometimes the difference between shops staying in business and pulling down the shutters.

Under the Scottish Government, 90% of businesses will pay a lower poundage than they would anywhere else in the UK. That all equates to the most generous package of non-domestic business rates relief in the UK. Just as the Committee has suggested, small steps can make a huge difference to the vibrancy of our town centres.

In Scotland, we have also launched a £50 million town centre fund in partnership with the Convention of Scottish Local Authorities, to boost high streets and town centres. I note that the Committee recommendations on the UK Government’s future high streets fund underline the importance of strong local leadership. There is no better business intelligence available than that obtained from people working on the ground among businesspeople and retailers and the communities in which they operate. It is vital to tap into that knowledge to identify where best to allocate resources that will drive forward growth and help our town centres adapt to modern-day markets. That important point was raised by the hon. Member for Harrow East (Bob Blackman), who talked about the need for local town centres to adapt and change. He came here hotfoot from the 1922 committee; maybe that should now be called the 2022 committee, if he wants to adapt and change in the future.

Another area that has been important for Scotland has been the growth in regional economies. We have invested heavily in the city growth deals. As I am sure the Minister will recognise, we have not, disappointingly, seen those deals matched by UK Government Departments. The Scottish Government have already committed £388 million more to the growth deals than the UK Government. Although it may not be relevant to this particular report, I say to the Minister that we would like to take these opportunities to up-skill our people and develop our town centres as best we can, but we need to have that funding matched pound for pound by the Westminster Government.

The Committee’s report notes the challenging economic environment in which town centres and high streets are operating. Given those challenges, we cannot ignore the impact of Brexit, which I believe will only make things worse. The British Retail Consortium recently warned:

“A no-deal Brexit means the public will face higher prices and less choice on the shelves. British businesses desperately need certainty about the UK’s future trading relationship with the EU and will be severely disadvantaged by a no deal.”

I do not know whether there will be any change in that respect, given today’s Tory leadership election results; we live in hope. The consortium also pointed out that a no-deal outcome in October would disrupt retailers at one of the busiest times of the year, as they stock up for black Friday and Christmas. This week it noted a six-year low for retail footfall in May, due to political uncertainty around Brexit deterring shoppers.

Brexit uncertainty has also had a detrimental effect on workforce availability for many high street businesses, particularly in hospitality, where there is a high reliance on EU nationals for labour. In her response, can the Minister address what action is being taken to protect our town centres from the catastrophic consequences of a no-deal Brexit?

I take this opportunity to share some of the initiatives being pursued in my own constituency. I will link them to the Committee’s report as best I can. I pay tribute to Dunfermline Delivers for the outstanding work it has done over the last 10 years, as manager of the Dunfermline business improvement district. The work it does is truly remarkable. I am sure every hon. Member will have examples of how BIDs have been instrumental in improving town centres.

Like most town centres, Dunfermline suffered a serious decline in retail as online shopping became more important but, as the hon. Member for Bedford (Mohammad Yasin) suggested, we found it was time to fight back. He mentioned the 74 businesses that came together to try to improve things, and that it is exactly what happened in our town as well. We had the same empty shops and closure signs around our town centre. Luckily, we had been protected by some bigger retailers, including Marks & Spencer and Debenhams, which decided not to leave the town; we are thankful they made the good business decision to remain. In fact, town centre vacancy rates have actually dropped from 17% in 2014 to 14% in 2018. We would all like to see that trend in all the constituencies represented here today.

I believe that the drop in Dunfermline vacancy rates is in no small part thanks to the efforts of Dunfermline Delivers to maintain footfall in the town. It has been working hard to diversify what the town has to offer. For example, we have one of the biggest fireworks displays in Scotland, attracting 40,000 visitors every year, as well as a popular food and craft weekend.

My personal favourite is the Outwith festival, which is run by Dunfermline Delivers in conjunction with local organisations Avocado Sweet, Firestation Creative and Write Rammy. Now in its third year, the Outwith festival has enjoyed phenomenal success, with over 7,000 attendances across four days in 2018. The festival organises a range of entertainment from music to comedy to dance, and has a real family-friendly feel. Crucially, it brings people into the town centre, where they can take advantage of other retail, historical and cultural offers we can give. With a 98% satisfaction rate among festival goers last year, it is no surprise that the festival will return bigger and better this year. I am glad that the Committee endorses the fact that the issue is not just about retail—there needs to be a full mix of entertainment, a sense of place and places for people to go to enjoy the town centre, so it can allow itself to regenerate.

That is a real success story, as are other BIDs around the country. I encourage the Minister to consider how she can support town centre organisations to recreate that kind of success. I have given examples—I am sure others can as well—and we can learn from each other, to make sure we are all pulling in the same direction.

Dunfermline has also tried to succeed in attracting small, niche businesses to the town centre in recent years; the Happy Earth Place and Little Shop of Heroes are two examples. Last year I visited the Sew Studio, which had recently expanded into a second retail unit on the High Street, diversifying its sewing supplies shop to offer sewing and crafting classes. It is a real hub that helps the town centre feel more vibrant.

The Committee’s inquiry pertains to areas that are devolved matters, but I hope Members appreciate the value of comparing approaches in constituent parts of the UK, working towards what is a clearly a common problem. In our support for town centres, we really are all in this together. I have heard some great ideas that I will take back to my constituency. I wish the Committee well in pursuing its recommendations and look forward to hearing a positive way forward from the Minister.

It is a pleasure to serve under your chairship, Mr Stringer. I thank the Committee, its members and its staff for the excellent report. I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts) on securing this debate and on his opening remarks, which were wide-ranging, informative and comprehensive, as well as excellently delivered. I thank all the hon. Members here for a reasoned debate, delivered in a good atmosphere, considering shared concerns about the future of our high streets at this important time.

This week, Arcadia, one of the biggest retailers in the country, narrowly avoided a collapse, which would have put 18,000 jobs at risk. Even so, Arcadia workers still face 50 shop closures and 1,000 job losses; my hon. Friend the Member for Bedford (Mohammad Yasin) highlighted some of the impacts of that on his constituency. Arcadia will not be the last retail group to struggle. Too few retail magnates have not given sufficient thought to the long-term sustainability of their retail groups, leaving workers and consumers to pay the price. Mike Ashley is as successful in his self-proclaimed role of saviour of the high street as he was in selling Newcastle United. The Business, Energy and Industrial Strategy Committee has compared working conditions in Sports Direct to “a Victorian workhouse.” That is not the kind of high street we want to see.

As my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) highlighted, the identity of our town centres is wrapped up with the retail sector, which is the largest private sector employer in the UK, employing one in 10 of our workforce. When I walk down Northumberland Street or through Eldon Square in Newcastle and see the vibrant mix of consumers and traders, I am grateful that my city centre appears to be weathering a very difficult trading environment; but that cannot be said for all cities and especially not for our towns.

Indeed, as this report highlights, there are often differences within towns. My hon. Friend the Member for York Central (Rachael Maskell) spoke about some of the innovative practices that some businesses on her high street were using to attract more foot flow. In Newcastle, Grainger market, our Victorian gem, is putting on tea parties and gastronomic delights in order to do the same thing.

What this review tells us is that, if our town centres are to survive to 2030, they must be grounded in community. Local authorities have a responsibility for the economic and social wellbeing of the places and communities they serve, but the scale of the issue demands action from central Government to ensure that our local authorities have the necessary powers to do their job, as hon. Members on both sides have emphasised. That must be backed by proper funding—much, much more than the pitiful £1.2 million put into the regeneration pilot in 2017. Our high streets and town centres anchor our local economies and offer jobs, services and a sense of place, but that is declining year on year. Every retail location type—high streets, retail parks, shopping centres—saw the number of occupied units decline at a faster rate in 2018 than in 2017. The high street vacancy rate rose from 11.2% to 11.5%; in retail parks it jumped from 4.9% in 2017 to 7.1% in 2018. There are 50,000 empty shops in the UK. In shopping centres, 6% of empty space has been empty for two years. On the high street, that figure is 5%. There have also been more than 100,000 job losses in retail over the past three years alone.

Some people say it is inevitable that online shopping will kill the high street, but it is wrong to think that the rise in internet retail equals empty shops and job losses. The impact of technology on our society involves political choices, and in this case the impact is due to Government inaction. As we see in this report, many shoppers still enjoy shopping as an experience; the most successful high streets are those with a good mix of retail, leisure and services, which provide a vibrant community space, not just a collection of businesses.

Under this Government, we have seen chronic under-investment in infrastructure, particularly outside London and the south-east. For example, the north-east receives less than one third of London’s transport spending per capita. According to the Local Government Association, outside London we have lost 117 million miles of bus routes—nearly half of all council-subsidised services—since Tory austerity began in 2011.

Every month, 60 bank branches and 250 free cash machines close, with devastating effects on access to cash in rural areas, and despite repeated promises to safeguard our post offices, we face 2,500 potential closures over the next year. We welcome today’s announcement by UK Finance that the banking sector will work to support people’s free access to cash, but it is not enough. Will the Minister take note, follow Labour’s lead and ban automated teller machine charges?

This Government have not only failed to take action but repeatedly ignored their own warnings. Despite the recommendations of this report, they have chosen to extend permitted development rules, which, as we have heard from many hon. Members, can effectively depopulate town centres in the day, which has an impact on retail and restaurants and makes it harder to enforce high standards for new homes. Will the Minister take note and suspend any further extension of permitted development, as hon. Members have called for?

In their response to this report, the Government refuse to recognise that online retailers should be contributing more. The system is past its sell-by date, having been

“designed in 1990, when businesses made money in a very different way.”

Those are not my words, but those of the Conservative Mayor of the West Midlands, Andy Street, who understands that high street retailers are being crippled by an outdated business rates system and has called for online retailers to pay more tax—as indeed have hon. Members such as the hon. Member for Hertford and Stortford (Mr Prisk) today.

The Tories have failed our high streets, failed our retail sector, and failed our economy. They have no claim to be the party of business. As the hon. Member for Dunfermline and West Fife (Douglas Chapman) highlighted, a no-deal Brexit would be catastrophic for businesses, extending that failure and wrecking many of the businesses on our high streets and in the retail sector. I ask the Minister to rule out a no-deal Brexit—[Interruption.] I am sure it is within her pay grade to do that. Will she at least say that she will not support a Conservative candidate who supports a no-deal Brexit?

Labour’s industrial strategy will rebuild our economy for the many. Unlike this Government, we care about every part of the economy. As part of our “innovation nation” mission, we will raise productivity and job quality in sectors such as construction, agriculture and retail that have been wholly neglected by the Government’s industrial strategy. Labour would fund a new catapult centre to boost the take-up of innovation in the retail sector, creating higher wages and better jobs on high streets across the country.

Our high streets are reaching crisis point, which is why Labour has an emergency five-point plan to resurrect and rebuild our town centres. I will finish with that plan. First, we will ban ATM charges and stop post office and bank branch closures. Secondly, we will provide free bus travel for under-25s. Thirdly, we will roll out free public wi-fi in town centres, so that we have networked centres that encourage people to spend their time as well as their money. Fourthly, we will establish a register of landlords of empty shops in each local authority, making it easier to bring shops back into use. Finally, we will introduce an annual revaluation of business rates, ensure a fairer appeals system and review the business rates system to bring it into the 21st century.

Labour’s plan will revive and reinvigorate our high streets, which must urgently adapt. We will take the urgent action required; will the Government follow in our plan and commit real resources to ensuring that our town centres can survive and thrive?

Before I call the Minister, I will say two things. First, my notes said that the Minister was Kit Malthouse, but you are no less welcome for being unexpected, Minister. Secondly, can I ask you to leave a short space of time at the end of your speech for the Chair of the Committee to wind up?

Absolutely, Mr Stringer. I am Heather Wheeler, just in case anyone had not worked that out. The other Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the hon. Member for Rossendale and Darwen (Jake Berry), should have been responding, but sadly he is at a funeral today. It is therefore my pleasure to respond to the debate. Clearly, my 16-minute speech is going to go nowhere, as I am leaving time for the Committee’s Chair to reply. As always, Mr Stringer, it is a pleasure to serve under your chairmanship.

I thank all members of the Housing, Communities and Local Government Committee who are present for their cross-party report into high streets and town centres for working with the Government to support the sustainable transformation of our high streets. We are pleased that the report broadly recognises the Government’s measures to instigate structural change, and we agree with the diagnosis that local places are best placed to know what their local solutions are—with appropriate support from central Government. It is a helpful report and, as has been said, we have broadly accepted its recommendations. Although I cannot cover everything in the short time available, I hope that hon. Members present will see how the Government are pursuing a holistic package of measures to transform our high streets and town centres for the long term.

Last year was particularly challenging for UK retailers, bringing into question traditional success models for towns and high streets. Quick to respond, in July 2018 the Government commissioned an expert panel, bringing together a wealth of expertise from the retail, property and design sectors. Chaired by Sir John Timpson, it explored the question that brings us here today: how do we catalyse change and ensure that town centres across the country adapt and thrive for future generations?

Our package includes a £675 million future high streets fund to support local areas in England to invest in town centre infrastructure, to make a real difference to the underlying structure of the high street. This demonstrates our commitment to taking long-term action to help high streets and town centres evolve through investment to improve town centres. We thank the Committee for commending our work in this area and echo its sentiments. We are currently considering more than 300 expressions of interest, and we have placed significant weighting on local leadership, vision and strategic ambition when assessing the bids. The places progressing to the second stage of the fund and receiving revenue funding to support the development of their plans will be announced later this summer.

As the hon. Member for Sheffield South East (Mr Betts) said, business rates are a bone of contention. Since the 2016 Budget, we have introduced a range of business rates measures in England worth more than £13 billion over the next five years. This includes the announcement in the 2018 Budget to take a third off eligible retailers’ bills for two years from April 2019, which is worth an estimated £1 billion alone. We have also doubled small business rate relief from 50% to 100% for eligible businesses, resulting in more than 655,000 small businesses —one third of occupiers—paying no business rates at all.

Alongside that we have committed to a £435 million package to support ratepayers facing the steepest increases following the 2017 revaluation. Finally, we switched the annual indexation of business rates from the retail prices index to the consumer prices index, representing a cut in business rates every year for all ratepayers. That alone will save all businesses almost £6 billion over the next five years.

Will the Minister give way?

It will have to be very quick.

I will be brief. Will the Minister commit to going back and scoping out the possibility of a turnover tax?

The hon. Lady is obviously prescient. When the Government concluded the last fundamental review of business rates, we decided to keep business rates as a property tax, following stakeholder responses. Respondents agreed that business rates are easy to collect, difficult to avoid, relatively stable and clearly linked with local authority spending. Some respondents suggested alternative tax bases. However, Select Committee members and others may wish to know that there was no consensus on an alternative base, and that even those respondents who put forward alternatives were clear that they were not without issues. To finish on business rates, the Government are committed to listening to views and will keep all taxes under review.

Will the Minister give way?

I have not got time.

I will be extremely brief. This issue is killing businesses across the country now. I am afraid that saying the Government generally keep it under review, along with all other taxes, simply does not cut it for businesses in our town centres.

I have outlined how the Government are helping local businesses with many, many millions of pounds, and with £6 billion-worth of relief, so I think the hon. Lady is slightly over-egging it.

Another issue that has been highlighted is our undertaking a planning consultation on permitted development rights to help support change on the high street. Permitted development rights continue to play an important role in the planning system, supporting key Government agendas such as housing and high streets by providing more planning certainty while allowing for local consideration of key planning matters.

To put the hon. Member for Sheffield South East’s mind at rest on local plans and permitted development rights, where a local planning authority considers it necessary to protect a local amenity or the wellbeing of an area, it can consult the local community by removing a right by making an article 4 direction. Proposals for development can change, and a change of use would require a planning permission application.

Equally, on the point from the hon. Member for Dulwich and West Norwood (Helen Hayes) about poor quality homes being delivered through permitted development rights, permitted development rights have actually provided 46,000 really important homes that needed to be built. However, we are particularly keen to ensure that the quality of all new homes meets our ambitions, so in the spring statement we announced a review of permitted development rights for the conversion of buildings to residential properties, in respect of the quality and standard of homes.

Because the Government believe in the high street, we run the Great British High Street awards, with Visa, to celebrate the achievements of our communities and high streets. The awards are a great way of bringing together local players and focusing minds on high streets. In entering the awards, local authorities, businesses and communities work together and get local people talking about their high street, letting local leadership emerge. Last month, I was delighted to launch the 2019 competition in Crickhowell, the town that took the top prize in 2018. I am sure that Committee members will join me in wishing this year’s entrants the best of luck.

We encourage all those with an interest in high streets, particularly landlords and retailers, to consider how they can take the Committee’s recommendations on board in their own decision-making processes. We agree wholeheartedly with the Committee that the elements raised today form part of a bigger whole.

This is a package of interconnected measures to help local areas make their high streets and town centres fit for the future. The different elements will work together to have a real impact on high streets and town centres in adapting and evolving and in becoming vibrant hubs once again. I believe that the benefits of this will be felt more widely, helping to deliver local growth and real change in our communities. This growth will be shaped by the Government’s industrial strategy, which sets out the long- term plan to boost productivity by backing businesses to create good jobs and will increase the earning power of people throughout the UK with investment in skills, infrastructure and places. I once again congratulate the hon. Member for Sheffield South East on securing the debate, and I thank hon. Members for their speeches and questions and the Committee for its helpful recommendations.

My local high street in Swadlincote is thriving, my wonderful South Derbyshire District Council has no car parking charges in any of its council car parks, and we moved the market back down the high street, making it a vibrant place to be. I am sure that, as the hon. Member for Dunfermline and West Fife (Douglas Chapman) said, we all have marvellous examples that show how our high streets can get back to being the best places that they can be. The challenge of rebalancing the functions of our high streets and town centres is a real priority for us across the nation. Having adapted successfully before to new demands, we believe that places can and will do so again.

I thank all hon. Members for their contributions, and particularly members of the Select Committee, whom I also thank for agreeing this report unanimously. We did very well: it was 45 minutes before Brexit was mentioned and 70 minutes before Mike Ashley was mentioned.

We started off with failures of retail, whether British Home Stores, which is gone, or House of Fraser, which is restructuring, and we subsequently heard about Arcadia, Marks & Spencer and Debenhams closing stores and small businesses going out of business altogether. We looked at a situation that could get worse, with some high streets failing completely, but then we looked at the possibilities for the future. We recommend that all stake- holders get together, including local councils, Government, retailers and landlords. We can have a brighter future by changing the nature of the high street, with changing uses—coffee shops, leisure, open spaces, public services and residential—all being brought in, led by the local authorities with BIDs through their local planning processes, involving their local communities and businesses in a package.

We also said that there has to be a level playing field for retail, which will still be an important part of the high street. We held our inquiry after all the Government’s initiatives on business rates had been brought in, and no one who gave evidence said that they were sufficient. That is the reality. The Government simply have to go away and look again at the possibility of alternatives, such as an online sales tax. They should read the excellent report from Tesco that said how this could be done and how it could benefit the high street.

Question put and agreed to.

Resolved

That this House has considered the Eleventh Report of the Housing, Communities and Local Government Committee, High Streets and town centres in 2030, HC 1010, and the Government response, CP 84.