MPs urge business rates reform to revive high street

The government should consider “wide reforms” to business rates and planning law to allow Britain’s town centres and high streets to flourish in future decades, a parliamentary committee has said.

The Housing, Communities and Local Government committee, headed by Labour MP Clive Betts, said that without reform formerly thriving shopping areas “are likely to become ghost towns and effectively close down altogether”.

Among the recommendations of its “High Streets and Town centres in 2030” report are further review of the “unfair” business rates system and other aspects of corporate taxation; an overhaul of planning law to make changes of use easier; and more local co-operation to speed up the evolution of high streets.

It also said that landlords should recognise that the retail property market has changed, and that the government should consult on whether to outlaw upward-only rent reviews.

Other suggested reforms included a levy on online retail sales, an increase in VAT and “green taxes” on deliveries and packaging. During the committee’s deliberations, Sports Direct chief executive Mike Ashley called for a 20 per cent tax on online sales, with the proceeds used to offer business rates relief.

Most retailers agree that business rates unfairly burden the operators of physical shops, but there is less consensus on how to reform them. Last week Mark Price, the former head of supermarket group Waitrose, wrote in the FT that taxing sales instead of property “would not help the likes of Next and John Lewis, which are investing heavily to build their online capability.”

The Treasury reviewed business rates in 2015 and concluded there was no case for substantive reform, but the Treasury select committee recently launched a separate inquiry on the subject.

Revo, an organisation that represents landlords, retailers and local authorities, said it was encouraged by the proposal to reform the Landlord & Tenant Act, describing it as “long overdue”.

“The legislation as it stands encourages an adversarial relationship between property owners and occupiers,” said chief executive Ed Cooke.

The committee said local authorities’ ability to respond to the decline of high-street shopping was often constrained by outdated planning rules. It urged the government to make compulsory purchase orders easier to obtain and said it should consider whether usage classes needed to be made more flexible.

It added that “town centre first” policies, adopted in the 1980s to protect urban centres from the effects of out-of-town development, should be updated to reflect non-retail uses for centrally located buildings.

However, it said the government should suspend any extension of permitted development rights — which permit conversion of retail and office buildings to residential use without planning permission — because of their potential to undermine strategic decision-making.


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