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Policy Exchange: Botched high street policies costing households £1,000

Remove retail powers from failing councils and allow competition to improve shopping experience, urges think tank.

Policies intended to revive Britain’s ailing high streets are raising the cost of living for hard working families by at least £1,000 a year.

Town Centre First, a policy introduced in the mid-1990s, was intended to support the high street by limiting out-of-town shopping centres. It has, however, decreased competition between retailers and damaged the social fabric of many communities, especially outside the South East. Between 2000 and 2009, 15,000 smaller town centre-stores closed despite the policy.

Discriminating against out-of-town outlets has also pushed up prices. This is particularly damaging for low income households. Academic studies show Town Centre First causes productivity losses of between 25% and 45% due to restrictions on the size of a store, its configuration and its location. A 25% loss in productivity in just food and clothes alone cuts the average household income by at least 3%, or around £1,000 a year. The real cost across all goods and services will be even higher.

The report also cites the rise of the internet as the key factor in the decline of many high streets. The share of people shopping online has quadrupled in just six years and continues to grow rapidly. Analysing existing data on the performance of high streets, the report notes that retail destinations need to be attractive, well run social hubs in order to retain customers. A trip to the shops is increasingly a social experience with a poll for the report showing that 68% of people visit out-of-town centres with other people, but a majority of high street trips are solitary.

The report proposes replacing Town Centre First with an Access First policy. This would focus on giving low income households access to social and retail hubs, but not restricting where these retail centres should be built.

The paper recommends:

  1. Well run councils or high streets with attractive features should be left to their own devices as they already cater for local demand.
  2. Councils which preside over poorly run high streets but which have the potential to flourish should have their powers removed and transferred to management companies consisting of people with retail experience. These companies would effectively replicate the way large out-of-town (Meadowhall) or in-town (Westfield) outlets are run, taking over key decisions on issues such as parking, wi-fi facilities, change of use and the location of ATMs and public toilets.
  3. High streets that are small, badly located and have little to no chance of competing with the internet and other retail destinations should be transformed into housing or office space.

Alex Morton, author of the report, “Politicians can show they support hard working people struggling with rising living costs by abandoning policies that push up the cost of the weekly shop. It is understandable politicians sometimes feel the pull of nostalgia but a focus on trying to revive the high street by limiting out-of-town outlets isn’t the answer. The results of this are boarded up high streets and higher prices.

“Some high streets are run by good local councils and are doing well. Others are not. High streets are struggling either due to poor council management, or simply because the high street is unable to meet the needs of 21st century shoppers. Poor performing councils should lose their powers over the high street. For those high streets unable to compete with other retail outlets, boarded up shops should be converted into housing and office space.”

Click here to download the report.

For further information contact Nick Faith on 07960 996 233.

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