Tax cuts and parking reviews will not save the high street

In order to support the High Street, government needs to drop its obsessive focus on it.

Paul Swinney is a senior economist at the Centre for Cities

Last week was a big week for the High Street. The chancellor announced a business rates discount on retail premises. And Eric Pickles revealed that there will be a review into parking charges in town and city centres. But while these moves have been universally cheered by the retail sector, they’ll do nothing to arrest the decline of the High Street.

The real issue facing struggling city centre retailers is that in many of our medium and small sized cities an increasing number of jobs are locating in out of town locations. Preston is a good example. The city was one of the UK’s top performing cities for private sector job creation in the decade before the downturn. But all of this performance was driven by its out of town employment sites – its city centre actually lost private sector jobs over this time.

The result is that an ever increasing number of people commute to the suburbs of Preston to do the 9 till 5. To put it another way, a growing number of people physically cannot get to the High Street during trading hours of five out of seven trading days. The shift in the geography of jobs has reduced the size of the market that Preston’s city centre retailers can sell to. And its High Street has struggled as a result.

This is the real problem that faces many of our High Streets, as we showed in our recent Beyond the High Street report.

And yet government policy ignores this, instead focussing on much more marginal issues such as business rate discounts and parking charges. A tax cut is going to make little difference to a Preston retailer who hasn’t got enough people walking past the shop front. And while it may give them a little bit of breathing space, it will do precisely nothing to tackle the real long term drivers of the decline.

These pop policies give the appearance that action is being taken to arrest the decline of some High Streets. What isn’t recognised is that another policy is directly undermining them. Enterprise zones give businesses tax breaks to locate in specific areas. The vast majority of these zones (with Bristol and Birmingham being notable exceptions), have been designated in out of town locations.

This encourages job creation outside of city centres, which at worst shrinks the market for retailers and restaurateurs. This confused policy thinking is nothing new – the enterprise zones of the 1980s and 1990s and the publicly subsidised business parks of the 1990s and 2000s did exactly the same thing.

If the government is serious about supporting the High Street, then it needs to drop its focus on the High Street and deal with the real issue – the decline of many of our city centre economies. Struggling retail in Preston is a symptom of a poorly performing city centre, not the cause, in the same way that Manchester’s vibrant High Street is reflective of its strong city centre economy.

To do this the government should use part of its underspend on infrastructure to create a city centre growth fund. Cities would bid in to this fund and use it to remove inappropriate office stock, support new office creation, improve transport connections and address skills issues that hold city centre businesses back. This should be complimented at the local level with a removal of planning restrictions to make change of use of properties easier to do.

Retail is only a secondary activity in city centres, benefiting from the primary purposes of employment, leisure and residence. Focusing too narrowly on retail and not on the broader issue of helping city centres attract and retain a wide range of jobs hurts the very shops and High Streets policy makers are trying to save.

And so paradoxically, in order to support the High Street, government needs to drop its obsessive focus on it.

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