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High streets and town centres: Is the heart already broken?

Yesterday afternoon we heard the Autumn Budget, delivered by Philip Hammond. The Chancellor stated that high streets are at the heart of communities and “under more pressure than ever” as Britain shifts more to on-line shopping, telling us that high streets “need to adapt”.

The rate of transformation of many high streets over the last five years has been staggering. In another 10 years they may well be utterly unrecognisable. We consider the extent to which the Budget proposals will make a difference and whether these plans are perhaps too little, too late in light of fundamental shifts in shopping habits and customer behaviour.

New fund to help deliver innovative visions

The first of three key measures announced is the proposed £675m Future High Streets Fund.

The fund will serve two purposes:

  • supporting local areas in preparing strategies for their high streets, including a new High Streets Taskforce "to provide expertise and hands-on support for local areas"; and
  • co-funding projects to improve access and circulation in centres; for investment to support new housing and workspace and communities; the regeneration of heritage high streets; and supporting investment in land assembly (including "densification and workspace in place of under-used retail units").

Whilst £675m sounds a lot, infrastructure of any type is expensive. Furthermore, the pressures facing high streets are a national issue. Whilst not all authorities will forward proposals for a slice of the fund, the budget averages £2.1m per local authority.

The effectiveness of the taskforce will depend hugely on who is involved, and we see engaging the expertise of the private sector as essential. We welcome the opportunity for funding to support flagship transformations through innovative projects in centres, although the number of centres which will truly benefit is potentially very small.

Hammond claims the fund will “support footfall in town centres”. Creation of more housing and new workspaces in town centres as sustainable, accessible places has to be a key strand in reviving our centres. Recognition of the role and importance of increasing densities, particularly through residential development and new workspace, is laudable and absolutely the right approach. However, this must not entirely displace the active ground floor uses which give centres their vitality. After all, these uses are the reasons to visit centres and they provide the services which communities require.

Regulatory reform – but no details

The second of the key measures mentioned was reform of the Use Classes Order (UCO) and compulsory purchase “to facilitate the transformation of the high street”.

The current consultation suggests extending permitted development rights to allow some ‘A’ class uses to change to office use, and for hot food takeaways to be redeveloped for residential purposes. An extension to temporary changes is also proposed, allowing temporary conversion of premises to town centre community uses, such as libraries and health centres. Whilst UCO changes will likely allow a more rapid shift of retail units between use classes, with the intention of capturing the latest customer demands, there are already five different ‘A’ Use Classes. We have been here before, with flexibility to move between classes for smaller sized units introduced in 2013, and remain unconvinced that these changes will help arrest the decline of the high street.

The worry is that new permitted development rights would see us losing A1 retail and other footfall-generating uses. As with office-to-residential prior approval, a blanket approach outside plan-making that allows greater flexibility is not necessarily a positive for the long term. Surviving retail businesses must not be easily wiped out on the ground floor by fast-track planning processes enabling conversion to residential.

A reduction in business rates

The third element of the measures announced with more immediate benefits will be support for small businesses in our high streets. They will benefit from two changes:

  • Business rates cut by 33% for businesses that have a rateable value of £51,000 or less, reportedly reducing business rates by up to £8,000 for up to 90% of independent shops, restaurants, pubs and cafés.
  • This will be followed by a longer term review of business rates that will see rates reduce from 2021 in line with rateable values.   

Often it is the small businesses which give high streets and town centres their uniqueness and appeal, so it is expected this will be seen as a very welcome gesture. Retailers face a climate where growing on-line spending is driving price competition; rising labour costs and other overheads are impacting profits; and a weak pound and price inflation are making sourcing from overseas more expensive. Therefore, it remains to be seen whether rate reductions will be enough to calm this ‘perfect storm’.

Bigger retailers will find little to help them in the Budget – and they need help too. Losing them from our town centres has a huge ripple effect on other businesses. Many department stores have had the toughest period in their history, but not all are failing. Selfridges has been investing heavily in digital technology and just posted record results. Making physical space engage better with consumers, to work in collaboration with online offerings, is essential.

Good day or bad day for town centres?

We will monitor the effectiveness of the three key measures discussed above with interest.

The policy paper asserts a need to “evolve and adapt”, but we think more urgent and radical action is required. Waiting for taskforce advice and action may take too long. Local authorities engaging the larger landowners and funds which own large parts of many centres should be a priority. Landowners need confidence that the political and policy vision for centres is moving away from preservation of now surplus A1 retail space and towards embracing investment in living, working, leisure and new collective experiences. We also expect to see councils leading as landowners in their own right.

Although not reflected in the Budget speech, the Future High Streets Fund policy paper talks about the “reshaping of high streets and town centres”. The role of heritage is recognised, alongside creating "experiences" and providing convenience. Whilst this nod to place-making is encouraging it is a concern that the importance of design quality is not referenced in the Budget or as an objective for the fund.

The most important take-away (please excuse the pun) is that high streets featured heavily in the Budget. It is firmly on the political agenda and rising. Although the Budget proposals may not go far enough, they are a push in the right direction to help keep the heart of our town centres and high streets beating.

30 October 2018

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