HIGH STREET BALANCING ACT

John Boydell - Friday, 1 December 2023

As always, I’m not on anybody’s “side” politically, just trying to champion common sense.

The British Retail Consortium has been having its say, along the lines of high tax and government-imposed red tape risking higher inflation and, indeed, the futures of some of its members. The Government has responded, in the usual way, with a bland press release: “The OBR have confirmed that our policies will reduce inflation next year while boosting growth and rewarding people for their hard work.” As an aside, you’ll have noticed the press-release deflection quite a lot in relation to difficult-to-answer specifics, usually along the lines of ‘The Government has put ￡X into addressing the matter of Y’. Anyway, does the BRC have a point or is it just general whinging on behalf of its members?

The high street is super-visible to citizens (and so, voters). They can see vacant shops, “Closing Down” sales, rising prices and rows of upturned crates for foodstuffs that used to be staples but for which supply is now sporadic. It contributes to the “nothing works” perception that is growing and so should not be treated with any complacency by politicians. In particular the trade body’s concerns were around business rates and Brexit-related red tape. Business rates relief was extended for some smaller retailers in the Autumn Statement, which they will welcome, but will rise for larger retailers. As with so many other clamours for “reform” [social care, NHS, transport etc.] business rates runs up against the reality that the money is needed and it has to come from somewhere. So, reform gets kicked down the road. It is, of course a business cost and businesses must make a profit or they will fail. Profit can be protected by charging more, and it is inevitable that costs like rises in business rates will translate into higher prices and so, inflation. There was also a substantial [near enough 10%] rise in the national living wage to ￡11.44 per hour. One cannot argue that such a figure is excessive; it’s not but it will translate into a significant extra cost for retail businesses (many of whose workers are on such a wage) that, once again, will be passed on in higher prices.

In addition, there’s the (at least in political circles) non-topic of Brexit and the red tape it’s brought in its wake. The BRC has had the affrontery to actually use the B-word, instead of the coded language that’s become fashionable when the topic has to be addressed. What the problem is on that, I don’t understand: Brexit was always going to bring in significant red tape for business and barriers to trade, and that has happened. Stop the dancing around (and worse, the denial) and just deal with the reality. Now, what the BRC has in mind is that the extra bureaucracy and barriers are due to get even worse, for the UK has not been implementing all the rules but will have to do so. In summary, we’ve been waving all kinds of things through, instead of carrying out checks that should be taking place. Why are we allowing that? Well, for two reasons: a) we haven’t put in place the infrastructure to deal with the extra red tape; and b) it is delaying additional political embarrassment. The Government, having denied that there would be consequences (and, indeed, with some voices promising improvements), the sight of lorry queues, increased upturned-crates in supermarket aisles, no-longer-available items and higher prices is not a good look, politically. Unlike a stealth tax, it’s all so visible, so policy has been, as is so often the case with “difficult” stuff, to kick the can down the road. But we’re running our of road and the rules will have to be implemented soon. The BRC is simply pointing that out that additional overheads for business will follow and, effectively, if you create barriers, there’ll be costs. ?

Is this all just good kickabout debate (accompanied by the general whinging of a trade body) or does it matter at the end of the day? Actually, it matters economically, socially and politically. The high street, even to younger generations, is part of the fabric of society: it needs to succeed and in many localities it’s looking rather sad. It needs to make a profit and that means income exceeding costs. The imposition of unreasonable costs will either lead to inflation or to business failures, if the extra burden cannot be passed on in higher prices. Can retailers not just absorb some of this pain? A few, maybe, but the recent history and outlook is not their side. ONS statistics paint a gloomy picture, with retail sales in the United Kingdom falling by 0.3% month-on-month in October 2023, following a 1.1% decrease in September. On a yearly basis, retail sales fell by 2.7%, following 19 consecutive months of decline. Not just whinging, methinks, but a genuine candidate for my prescribed approach of: facts; reality; analysis and common sense in policymaking. The problem is it bumps up against another reality in the Government’s need to fund public spending. I had an early instructive message in this many years ago, when I was involved in high-street related discussions with a local authority about the effect of the introduction of parking charges. We presented a researched, thoughtful body of evidence as to the adverse effect on retailers and the heart of the town, arguing as well that surely the interests of the citizens being represented were best supported by having a vibrant, thriving centre able to pay its way. Our case was received with somewhat downbeat courtesy, accompanied by tepid tea in flimsy paper cups that threatened to implode. We’d been hopeful of meaningful engagement, lively debate on the merits even, to arrive at a mutually agreed way forward. That’s, unfortunately, not how things panned out. The response was the delivery of a clearly pre-decided position, amounting to ‘Thanks for all that, but we need the money’. I suspect the Treasury’s bland press release left the BRC with the same feeling.