Stuart Farr explores the factors – such as 400-year-old laws – which are contributing to the demise of the high street.
The proposition that the High Street is disappearing isn’t really all that new. For some years now, many of us will have witnessed the high streets’ decline and seen the empty shop fronts, “To Let” signs and white-washed windows standing alongside seemingly more and more charity shops, nail bars, hairdressers and discount stores. Not that I have anything against those sorts of businesses I should add. It’s just the lack of diversity which seems to be emerging.
So many businesses have gone. Local bakeries, greengrocers, butchers, cobblers, pet shops and family owned businesses (selling TV’s, carpet, furniture etc). While the concept of purchasing locally isn’t completely buried, the word “locally” seems to have been re-defined and now includes the concept of not having to leave the comfort of one’s sofa.
Some towns have been fortunate enough to rejuvenate their high streets into something more adventurous and diverse. “Pop up” shops, galleries, gift shops, delicatessens and similar artisan style businesses have encountered a degree of success. They have made certain town centres more vibrant and, dare I say it, even more “European”. For them the high street has become more of an experience, an opportunity to window shop and potter around local market stalls as well as being a place to purchase treats. They have ceased to be the venue where the weekly wage is spent on weekly staples (who gets paid in cash on a weekly basis now anyway?). That’s now seemingly the remit of the out-of-town supermarket.
Well, that’s progress I suppose, and let’s face it, the power of online selling nowadays is so formidable that bricks and mortar business will inevitably struggle to be competitive. In order to gain custom, they have to offer something different.
That said, you may have noticed that I didn’t specifically include “gun shops” in the above list. We have, of course, sadly seen a fair few of them relocate, downsize or completely disappear over the years. However, there are still a fair few which have remained and in my view they stand out like shining examples of a bygone era in the high streets and side streets where they remain.
Gun shops face a conundrum when compared with other retailers – which, I suggest, is one reason why they have been forced to adopt a high degree of resilience. Gun shops are still subject to all the same forces of competition as everyone else. However, whereas retailers in other sectors can decide to shut up shop, surrender the lease and sell foreign-made widgets via an online sales service run from a tin shack on a grotty industrial estate somewhere in the back of beyond – the gun shop feels pressured to stay put where it is. Why?
Gun shops are regulated in a different way. They cannot simply move all essential parts of their sales processes to an online system. Gun sales ultimately require a face to face transaction. Knife sales are following suit. Guns and ammunition sales require purchasers to produce an original and valid certificate. What is more, all these items require a high degree of (approved) security which is expensive to install, is often bespoke to the premises and so cannot be easily moved elsewhere. By definition, a gun shop wouldn’t be a gun shop if all it sells is shooting accessories would it?
The point is, of course, that the gun trade is subject to different regulation and therefore has different priorities when compared with other forms of retail. Bricks and mortar is often the very fabric of the gun trade business. By the same token, however, those bricks are themselves the root of the increased costs base which the business within must carry.
What has not helped in recent times, I strongly suspect, is the ongoing impact of business rates. Business rates are a tax on the occupation of non- domestic property. Its roots lie in the property tax which was used to fund local services following the introduction of the Poor Law 1572 – even the Pudding Lane bakery that started the Great Fire of London paid this. This gives you a flavour of just how long they have been generally unpopular.
They are collected by the local authority and, to my mind, are largely impenetrable when it comes to most businesses trying to work out whether the rate it has been told to pay is correct or not.
So, how does it work? In basic terms, the rateable value of the property is multiplied by a figure which is called the Uniform Business rate (more often referred to as the “multiplier”). The multiplier is a constant and applied uniformly. It is reviewed annually in April and is index linked to inflation (the Retail Price Index not the Consumer price Index which is more commonly used in other contexts).
Its tempting to think that the rateable value of the property is the element which is most adjustable or negotiable. My response to that is to say; “well, yes and no”. On its face, the rateable value is merely an estimate of the annual rent that would be paid for the property at a particular date. As such, a professional valuer would consider the physical nature of the property (size, location etc), the market price for similar local properties and so forth.
That said, as one might expect, the rules on calculating rateable value in this context contain a number of valuation assumptions which can operate to restrict the value attributed. So, for example, the valuation will assume that a year-to-year lease of the premises is being agreed. It assumes the tenant will pay for all repairs and insurance and that the property is in a reasonable state of repair. The property is also assumed to be vacant and available to rent.
The relevant rating lists which are produced generally run for five years. Changes can be made to the rating lists during this time and so if it is worth reviewing your business rates periodically to ascertain whether any changes can be used to your advantage. Proposals to change the rating list are not appeals as such but can be made on various grounds. Notwithstanding the assumptions applied, challenging the basic rateable value tends to be the most common. Others include alterations to the property or proposing a reduction due to a particular event – such as changes to a street affecting traffic.
There are various companies and agencies which offer services based on achieving reductions for business customers. If you are thinking of going for a reduction it would be wise to do your research first because it can prove to be a double-edged sword. The cost can often outweigh the immediate benefit. The speed of the process, it has to be said, is variable at best. Recent hikes in business rates are, however, giving rise to more reports that businesses are suffering and so looking into this issue might at least help some of you to keep above the high street breadline.