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Slashing business rates won't 'save' the British high street

Even drastic measures like Rochdale's 80% rate cut for new businesses can't stem the tide of change.

by Rachel Savage
Last Updated: 26 Mar 2015

Rochdale town council is set to approve a drastic new business rates cut to try to fill the yawning gaps on its high street today. But while the measures, and those like it, might bring some new businesses to town centres, the simple truth about Britain’s high street is that a lot of what’s gone just isn’t coming back.

New businesses filling empty shops will get their business rates bill slashed by 80% for their first year and 50% in the second. The tax is set centrally, but Rochdale Council has earmarked £100,000 to pay the Government on small businesses’ behalf.

The measure would cover 23 empty units in the Lancashire town’s centre, where the vacancy rate is 22.7%. Nationally, it was 13.3% in November, according to the Local Data Company.

For years now, bricks and mortar retailers have, unsurprisingly, pointed the finger of blame for Britain’s boarded up high street at business rates, which are based on a property’s rental value, arguing the 400-year-old system unfairly favours online retailers.

They have a point. Despite recent Government measures to provide some relief from the tax for small businesses, Luke Johnson, the serial entrepreneur behind chains such as Patisserie Valerie and Pizza Express, told MT earlier this year that it’s increasingly common for business rates to be more than a shop’s profits.

Essentially, the Government has been merely tinkering around the edges with a tax that netted it around £27bn last year - almost as much as fuel duty and council tax. George Osborne did announce a review into the system, but - surprise surprise - that won’t be done until early 2016, well after May’s election.

But even if more councils do cut rates in an attempt to lure retailers back, or there is finally wholesale reform, it’s very unlikely anything will completely reverse the changes taking place on Britain’s high streets.

Some of the shops vacated by defunct retailers like Woolworths, Blockbuster and Phones4u have been taken over by discount stores, pawnbrokers and betting shops - perfectly legitimate businesses, albeit ones not to the taste of the chattering classes. There’s also been a rise in businesses such as restaurants, cafes and gyms, which provide ‘experiences’ that you simply can’t get online.

At least in the near future, there will still be people who want to browse in shops rather than do all of their clothes, food and gift shopping on the internet. But the rise and rise of online shopping means that the future British high street is likely to keep on changing, even if rate cuts or reforms do mean fewer empty shops.

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