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Councils must resurrect the high street if they are to save themselves

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LGC’s essential daily briefing

The number of empty shops on Worcester’s High Street has risen by a quarter over the past year, according to a new report to go before the city council next Monday. The council’s report concludes that an extra 15 shop units in the city centre have become vacant over the past year - rising to 77 in total.

What makes this story all the more shocking, however, is that Worcester has been shortlisted for this year’s Great British High Street of the Year award and its Local Enterprise Partnership claims that the city is a booming place to do business.

But the so-called death of the high street is as much a national affliction as it is a cliche. A recent report from online courier company Parcelhero concluded that around half of the UK’s shops currently trading will close by 2030, with many of those shops and jobs disappearing online.

The Federation of Small Businesses places some of the blame on rising business rates. The federation’s chair Mike Cherry said rate rises are “threatening high streets all over the country”.

“This is a regressive tax that hits firms before they’ve made their first penny in turnover, let alone profit,” he said.

Yet to what extent the business rates themselves are causing shops to close remains open to speculation.

The Centre for Retail Studies estimates that business rates cost high street shops around 2.3% of their turnover compared to 0.6% for online retailers. The CRS also concludes that the really big hits to profit margins come from a combination of “weak consumer demand, high cost increases, online competition and intense price competition”.

As the retail sector makes up a total of 25% of all business rates which are now being increasingly retained by councils as a major source of income in lieu of central government grant, this is all very important for councils.

However, despite high streets appearing to be in distress, no rescue package is looming on the horizon.

Chancellor Philip Hammond has signalled that the Treasury is looking at a reform to the way digital companies are being taxed - but he has also signalled that he will not prioritise business rate reform in a letter to the Treasury committee.

“It is right that we make further progress on this issue [digital tax reform] before considering the implications for the wider tax system, including business taxes, so that all businesses make a fair contribution to the public finances,” he said in a letter that was leaked to the Daily Mail earlier in the summer.

Yet there is, whisper it softly, another world beyond local government finance.

Shuttered shops are no good for the feel of a place and councillors are being been warned to ensure that their places remain “relevant and economically viable” at a time of immense economic upheaval, even if that means thinking beyond traditional shop units.

Bill Grimsey, a UK businessman with extensive high street experience and co-author of the Grimsey Review 2, warned in a recent report that “bricks and mortar retailing can no longer be the anchor for thriving high streets and town centres.”

The first Grimsey Review, published in 2013, concluded that the high street has “irrevocably changed”, adding that there is “no point clinging on to a sentimental vision of the past”.

One answer put forward by Mr Grimsey is for local authorities to look more towards “community hubs” with libraries and public spaces “placed at the heart of each community”.

People care about their places and councils are their custodians.

Clinging on to the economic model of the past due to a lack of ideas about how places should be shaped in the future is not an option. With business rates now a vital source of local government income, councils must look to new models if both they, and their places, are to survive.

By Robert Cusack, reporter

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