In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises. One of these was measures to improve the lack-lustre retail sector in our city centre areas.
There is no doubt that the major online retailers, Amazon and the like, have caused a major shift in the way we shop. As faster broadband has become more commonplace, and the use of computers a regular home fixture, then this drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet, will likely continue.
Which is fine if you have established a thriving internet retail business, but not so good if you have committed to the use of expensive retail premises in city centre locations.
At present, online retailers have a massive competitive advantage over their High Street competitors. They don’t have to pay:
- business rates or rent for shop front property or
- salaries to sales staff.
And in the case of the mega online retailers, who can afford to exploit the use of tax havens to shelter their trading profits, they do not pay comparable tax on their trading profits.
Did Philip Hammond save these failing, High Street retail outlets when he delivered his budget speech on the 29th October?
Well, he made a start…
He offered a one-third reduction in business rates for retailers with shop premises with a rateable value below £51,000. Although this reduction is for a limited period, two years from April 2019.
He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas. This will support the cost of:
- improving traffic flows to shopping areas,
- the renovation of empty retail premises to provide residential accommodation, and
- the repurposing of older or historical property.
City centre shops depend on foot-fall, if shoppers don’t pass by, then it’s unlikely they will become customers. In this respect, the above investment should encourage an increase in foot-fall.
Mr Hammond also committed to start the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users. A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these concerns to customers in the UK.
Did Philip Hammond save the High Street? The above changes will have some impact, but whether this will slow or stop the movement away from window shopping to browsing the internet, remains to be seen.