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Covid-19: Financial Support for High Street Retailers

Volume 807: debated on Tuesday 27 October 2020


Asked by

To ask Her Majesty’s Government what additional financial support they plan to provide to high street retailers affected by the restrictions in place to address the COVID-19 pandemic.

My Lords, we have abolished business rates for high street retailers for 12 months as part of the Government’s support during the pandemic and have extended the moratorium on commercial landlords’ right to forfeiture for non-payment of rent. The Chancellor has announced the next phase in the Government’s plan to protect jobs and support businesses, including a new job support scheme and greater flexibility to help pay back loans.

I thank the Minister for his reply and, of course, I welcome the additional support the Chancellor announced last week and the business rates holiday, which has been a lifeline for so many businesses. However, that holiday is due to come to an end in April and without it, I fear more retailers will go under, resulting in yet more store closures and job losses. We have already lost 14,000 stores this year and 125,000 retail staff have lost their jobs. Will the Government extend the business rates holiday for a further year and think again about their recent decision to end the VAT retail export scheme, which CEBR estimates will result in at least another 27,000 people losing their jobs in the retail sector?

I know that my noble friend has great expertise in this sector. As set out in the call for evidence for the fundamental review of business rates, of which he will be aware, the Government anticipate setting out our preliminary conclusions from the review in the most pressing areas, including reliefs, in the autumn.

My Lords, does the Minister agree that Covid has exacerbated a problem that existed some time before the pandemic, that high street retailers face higher costs and taxes than internet suppliers and that this will continue long after the Government’s short-term measures cease? Does the Minister agree that we need a permanent solution unless we want to see our high streets permanently damaged?

I did not quite catch all of that question, but I understand what the noble Lord was saying about the difficulty the retail sector is experiencing. Of course, the pandemic has exacerbated what has been a long-term problem, so I agree with the noble Lord to that extent.

My Lords, given the remarkable achievements of the high street retail sector in adapting to very difficult circumstances this year, can my noble friend say what steps the Government and the retail sector are taking to ensure that shops are safe for customers to visit in the run-up to Christmas?

The Government have worked closely with retailers throughout the pandemic and we continue to do so. Retailers were instrumental in the development of the Covid-secure guidance and we have invested a great deal to ensure that their premises are Covid secure. I welcome the British Retail Consortium’s campaign to encourage consumers to “Shop early, start wrapping, enjoy Christmas”.

My Lords, I remind the House of my registered interests. Footfall in high streets is down by well over a third compared to a year ago and despite business rates retail reliefs, the collection of business rates overall this financial year is still forecast to be down by more than £1.5 billion. Do the Government have a plan to meet this deficit without penalising the high street?

As I set out earlier, we will be announcing a review of the business rates system shortly but we have a number of other elements in place, which I outlined in answering the first questioner, to support the high street during this difficult time.

My Lords, does my noble friend agree that the serious demise of the high street was evident long before Covid hit, through a combination of the success of out-of-town shopping centres and the trend for shopping online? We really should have been thinking about things of this nature many years ago. Does he also agree that it is vital that we rethink the role the high street must play post-Covid, especially in rural towns, where it has always been a major part of the social structure of those communities?

I agree with my noble friend that the retail sector has been undergoing a period of transition that well predates the pandemic. High streets play a crucial part in our rural communities, and through the £3.6 billion Towns Fund and the High Street Task Force we are providing support to local businesses and high streets.

My Lords, does the Minister agree that it is difficult to separate the original Question from questions about the longer term at a time, for example, when the current vulnerability coincides with changes to planning regulations? How much importance will be attached to the recent LSE report, Saving the high street: the community takeover, and does its message that close local authority involvement with community-driven projects is central to the future of our town centres have the Government’s support?

The noble Lord is quite right. We welcome the report prepared for Power to Change, which provides some valuable insights that will inform future policy interventions to support the recovery of the high street and town centres. This is a difficult, ongoing problem and we will want to work closely with both local authorities and retailers to solve it.

My Lords, will the Minister ask colleagues in the Welsh Assembly if the distinction between buying essential and inessential retail goods is a scientific one or an arbitrary political one? For retail in general, beyond financial support, a dangerous dose of puritan moralism will not help shops if it means that a care worker who has worked long shifts and might want to treat themselves to a dress is now treated as a criminal. The Minister said to shop early for Christmas—not in Wales, where I am from, because you are not allowed to shop at all, apparently.

The noble Baroness makes a powerful point, and I point out that we do not have these restrictions in England. I almost felt sorry for the Welsh Government yesterday in trying to navigate a way through this self-imposed error.

My Lords, with visits to the high street falling and the prospect of Christmas and new year being digital at best, why are the Government asking local authorities to pay back support originally designated for the high street fightback fund? Should not the focus be on reopening the fund to help businesses struggling under the new restrictions?

As the noble Lord will be aware, the retail, hospitality and leisure sectors have been helped considerably. We allocated £12.3 billion to local authorities in England to pay grants to businesses under the small business grants fund. This support will continue and we need to do all we can to help our high streets.

My Lords, will the Minister have a look at the fate of charity shops on the high street, which fill up a great deal of it? They provide a large part of the income of many charities and are having their services called on very heavily at the moment. Can we do something to help them particularly? They have lost a lot of money and we need their services.

The noble Lord makes a powerful point. We are providing an unprecedented package of support worth £750 million to allow charities and social enterprises to continue their vital work but, of course, we accept that we are not able to replace every pound that they have lost.

My Lords, I congratulate my noble friend on the business rates holiday and look forward to the forthcoming reform proposals. Following up the question from the noble Baroness, Lady Fox, are there discussions between his department, the DHSC and the Government in Wales regarding the sale of non-essential items and the risk to high street jobs that it poses when those who might otherwise have purchased such items on the high street are then driven to buy them online?

My noble friend makes a powerful point. As I said earlier, I thought the Welsh Government were placed in a really difficult situation yesterday. It shows the difficulty of trying to define what is an essential item and what is non-essential. As I said, I almost felt sorry for them.

My Lords, can the Government consider placing out-of-town retailers on a comparable basis to high-street retailers with regard to business rates? There has long been a perceived position of overtaxing high streets and undertaxing out-of-town businesses.

My noble friend makes an important point. Business rates are based on the rateable value of non-residential properties, and rateable value is a measure of the property’s annual open-market rental value, as assessed by the Valuation Office Agency. Clearly, with the move towards out-of-town shopping centres and online retailers, this is an area ripe for urgent review, and we are doing that.