On 15 June 2020, UK retailing will emerge from 12 weeks of enforced closure due to the Covid-19 lockdown. Many stores, however, will never reopen, while for those that do, the Covid-19 emergency has significantly exacerbated the deep and systemic problems facing high street retailing in the UK.
The British retail sector was already in a state of crisis before Covid-19 struck. 2019 was the worst year on record for the sector with unprecedented levels of store closures, job losses, and empty shops. The rate of vacant shops nationally is currently 1 in 10, but in many towns the figure is much higher, with around 20-30% of shops standing empty. Crisis and contraction in the retail sector poses a fundamental challenge to towns and cities all over the country because the prosperity and vitality of central areas has come to rely so heavily upon the local retail economy. The problems are particularly acute in smaller and less affluent towns, although the scale and severity of the retail crisis now means that high streets and shopping districts in many major cities are also under threat.
The so-called ‘death of the high street’ has focused political attention upon Britain’s town centres and prompted a new wave of policy responses aimed at ‘rescuing’ and ‘regenerating’ flagging high streets. The current problems are usually blamed on the rise of internet shopping, but in reality they reflect more serious weaknesses in the economic model which has guided the development of British town centres since the mid-twentieth century. As such, current debates about the decline of the high street raise fundamental questions about what a town centre is actually for, what makes a town centre ‘successful’, and what sort of social and economic functions we wish town centres to perform.
Understanding how and why retail came to dominate urban central areas is essential for any future policy response. At present, a raft of new policy initiatives are being proposed and implemented at considerable cost to the public purse. Yet many of these measures misdiagnose the nature of the town centre crisis; they risk addressing symptoms rather than causes and repeating mistakes made in the past. This policy paper sets out the recent history of town centres and retailing as a means of understanding how we got to where we are today. A better understanding of this history will help us not only to more accurately assess the nature of the present crisis, but also to understand how inherited regulatory structures and planning practices continue to inhibit or obstruct the effective revitalisation of our shared urban centres.
In the aftermath of the Second World War, a comprehensive public planning system was established in Britain. This system was operated for the most part by local authorities (councils), and as a result they acquired significant new powers with which to manage and steer the course of urban redevelopment. From the outset though, local authorities did not generally possess the powers or resources to undertake redevelopment themselves. Instead, as one American planning scholar observed at the time, the British system was based on ‘a melange of public and private energies’ in which urban redevelopment would be overseen by local authorities, but initiated and financed by private interests. This was especially the case in town centres which were viewed as an important domain of private enterprise and development.
The town centre was the most valuable district in any town or city in terms of business activity and land and property values. The business of shopping was key to these higher values, with prime sites on principal shopping streets of extraordinary value compared to other types of property. These conditions meant that the nascent post-war property industry was keenly focused upon central area shopping as the most lucrative form of redevelopment. Local authorities were similarly keen on redeveloping and expanding central shopping districts. Then, as now, for a town centre to have the best shops and the leading retail chains was seen as an important mark of status and prosperity. Prestigious central shopping districts were viewed by local authorities as a means to demonstrate the importance of their towns, to attract customers and spending from the surrounding region, and to secure future prosperity. In the Merseyside town of Birkenhead, just over the water from Liverpool, these municipal ambitions were already clearly evident in the town’s 1947 development plan:
The availability of the best class of shops for clothes, furniture, cars, etc., the provision of numerous well-planned restaurants and cafes, the accessibility of long distance travel services and the proximity of adequate car parks, will, it is thought, ensure that the people of Wirral [the surrounding region], many of whom are now attracted to Liverpool, will in future choose Birkenhead.
Local authorities were also concerned with local finances. The system of local taxation in Britain rests upon property values (‘the rates’), and local authorities thus had a strong interest in promoting the growth of land and property values. This made the remarkable site values associated with prestigious shopping sites hugely attractive. There were also significant imbalances in the way the burden of local taxation was distributed. Residential and industrial property was heavily protected, while retail property bore by far the heaviest load. The chairman of Lewis’s department stores complained publicly in 1956 about the ‘the wholly disproportionate share of the rating burden’ which retailers had to bear, and this fiscal imbalance remains a major source of complaint for retailers today. For local councils the implications of this fiscal unevenness were clear, and were stated in a town planners’ training manual of 1950:
From a rating point of view, shops are the best proposition for local authorities, and therefore the authorities in towns which are shopping centres for the surrounding district…tend to be extremely prosperous in the local financial sense of the word.
After 1945, the interests of the two main actors in town centre management – the local authorities and the property developers – coalesced strongly around the promotion of expensive retail development. Towns and cities all over the country embarked on programmes of central area redevelopment which were based upon expelling alternative, less valuable forms of social and economic activity in order to redevelop and expand central shopping areas. A 1954 planning study surveyed the development plans of 33 principal urban centres and found that many proposed a ‘tremendous expansion’ of their central shopping areas. Some local authorities aimed to double the amount of retail floor space in the town centre compared with 1939. These remarkable expansions of retailing were often flimsily justified by councils in social or economic terms, bearing little relation to projected population increases or regional wage levels for example.
The system of political and economic incentives described above created a tendency towards the oversupply of shops in town centres. This was exacerbated by local authorities’ liberal use of their compulsory purchase powers to acquire key sites and deliver them to property developers for new retail development. Such practices meant that it was ultimately local authorities – rather than the prevailing market conditions in the retail sector – which determined whether or not major new shopping developments took place. This process was most pronounced during the 1960s and 1970s, when a general enthusiasm for ‘urban renewal’ and ‘modernisation’ saw local authorities all over the country ally themselves with commercial property developers to install shopping centres of unprecedented size and expense.
The case of Nottingham provides a particularly stark illustration of these dynamics. In the post-war decades, Nottingham was a relatively prosperous commercial and manufacturing centre in the English Midlands. The local authority (Nottingham Corporation) was eager to join the many towns and cities which were installing glamorous modern shopping facilities in their central areas, and to share in the prosperity and profits this would bring. Negotiations with two leading development companies began in the mid-1960s, and by the early 1970s two major shopping centres were under construction on the northern and the southern fringes of the existing shopping district. The northern site, based around the city’s decommissioned Victoria Station, became the enormous Victoria Centre which opened for business in 1973. A parallel project on the southern side of the city became the Broadmarsh Centre and opened in 1975.
Both developments were unprecedented in size, scale and cost for the city. Each installed a number of large flagship stores for major retailers such as John Lewis and Debenhams, along with hundreds of smaller units within fully enclosed and air-conditioned malls. Such facilities were extremely expensive and the rents demanded were vastly higher than those retailers had been accustomed to paying. Unusually in the case of the Broadmarsh Centre, Nottingham Corporation already owned most of the land in the area as a result of pre-war slum clearance programmes. The local authority was eager to put these landholdings to work in the most profitable manner. A contractual arrangement was negotiated with the development company whereby the Corporation delivered the land cheaply on a secure long-term lease but would take an equal share in the operating profits once the shopping centre was up and running. These incentives clearly influenced local authority thinking on the project, as numerous scoping studies which cast doubt upon the commercial viability of a second shopping centre were disregarded.
The outcome for Nottingham was a serious oversupply of the most expensive forms of retail property which was not justified by the state of the national economy or by regional levels of demand. This picture was replicated all over the country as the new shopping centres of the 1960s and 1970s failed to attract the expected levels of custom and operators struggled to let scores of shop units in the luxurious new malls. In Nottingham the city was left particularly vulnerable to any downtown in the high-end retail market, and the decisions taken in this era continue to trouble the city centre up to the present day. In 2012, before the current crisis in town centre retailing really struck home, Nottingham had the highest store vacancy rate in the country, at over 30%. The Broadmarsh Centre is now being extensively redeveloped in an £89m scheme. The Centre will be rebuilt with a much-reduced provision for shopping, and emphasis instead upon commercial leisure and restaurants and a new library for the city.
In addition to producing an oversupply of shop property, the post-war planning system also produced damaging levels of competition between towns and cities. This process was particularly marked in densely populated regions such as southern Lancashire. As one of the heartlands of the industrial revolution, the region contained both the principal city of Manchester and numerous mid-size manufacturing towns. In the post-war decades, local authorities were well aware of the threat posed by the decline of the local industries and looked to retail development as a means of reinventing their towns and rejuvenating their economies.
Almost all the major towns in the region undertook an expensive overhaul of their central shopping areas in the 1960s or 1970s, including Accrington, Blackburn, Bolton, Bury, Middleton, Nelson, Rochdale, Salford, Stockport, Stretford, and Walkden. Rather than catering for ever-expanding consumer appetites, it quickly became clear that these towns were engaged in fierce competition to attract shoppers. They were also forced to compete with the regional commercial centre of Manchester, which was itself pursuing retail development on an unprecedented scale by building what was then the largest shopping mall in the country (this was the Manchester Arndale).
This phenomenon of ‘over-shopping’ was rapidly identified as a major problem and a key cause of high numbers of empty shops in redeveloped centres. The leading planner Max Lock complained in the early 1960s about ‘slap-happy over-provision of shopping floor space [which] can only sanction the robbing of Peter’s established trade to pay the apparently insatiable Paul’. Around the same time, the Guardian warned: ‘As more and more towns in a small area…redevelop their centres and build expensive shopping districts…it is likely that one town’s catchment area of shoppers may begin to overlap with that of another’. Central government agreed with this diagnosis. National studies carried out by the Ministry of Housing and Local Government found that redevelopment in many town centres had increased total retail floor space by ‘as much as 50%, and in one case 200%’.
A major aggravating factor in this regional oversupply of shops and inter-authority competition was the lack of any adequate system of regional planning. Town planning professionals had been arguing for regional planning to manage urban and economic development since the interwar period, but their calls went largely unheeded by government. The operation of the planning system was delegated to local authorities who, in the absence of effective inter-authority coordination, simply competed with each other to secure the biggest slice of the most profitable forms of development. The legacy of this neglect of planning at the regional level continues to be felt today.
These historical case studies demonstrate that many of the challenges facing the high street today have a much longer lineage. They are rooted in the transformation of the form, function and financial base of town centres which has taken place since the mid-twentieth century. These planning and redevelopment practices produced central areas dominated by shopping both in terms of physical space and commercial structure. Central area land and property values have been excessively inflated by forms of commercial redevelopment which have focused on maximising rents and investor returns. The effect of such trends on the structure of the retail trade itself has been dramatic, with whole swathes of small-scale, often locally owned, retailing destroyed or priced out of the town centre, to be replaced by larger and more profitable retail chains.
In addition, a wide range of alternative patterns of use have been crowded out of the town centre. Prior to the 1940s, central areas generally sustained an eclectic mix of social and economic functions, including residential properties, small-scale commercial and industrial enterprises and various non-commercial, social and associational activities centred around clubs or churches. Most of this activity was dependent upon relatively low rents and could not be sustained amidst the drive to redevelop and raise property values. The loss of this diversity left the vitality and ‘life’ of central areas heavily dependent upon shopping. Commentators began to talk of ‘death by development’ in town centres which stood eerily empty outside trading hours.
The dominance of this economic model for town centres has been unhelpful in other ways. The benefits of retailing for local economic regeneration are questionable. Jobs in the sector are generally low-skilled, low-paid, and often insecure, while managerial innovations and new technologies are used to minimise the numbers employed. Retailing rests upon absorbing regional disposable incomes rather than generating new wealth in the locale. This was particularly the case once redevelopment had replaced the many locally owned retail businesses with nationally organised chains. Beyond its capacity to generate higher property values and business rates, there is little to recommend retailing as a means of local economic regeneration.
The ongoing contraction of high street retailing has been widely recognised as a serious threat to the vitality of towns which demands a policy response. Local authorities, particularly those in less affluent towns, have been wrestling with these problems for some time, as has the retail industry and central government. Over the past decade, the Ministry of Housing, Communities & Local Government has commissioned a succession of reviews and reports, leading to the appointment of a ‘Minister for High Streets’, a 2018 ‘Plan for the High Street’, and, most recently, to the ‘Future High Streets Fund’, recently expanded from £675 million to £1 billion by the current Prime Minister Boris Johnson. This Fund aims ‘to renew and reshape town centres and high streets in a way that drives growth, improves experience and ensures future sustainability’. At present, the Fund is supporting 100 British towns to pursue locally formulated plans for high street renewal. In response to the Covid-19 emergency, the Minister of Housing, Communities and Local Government allocated a further £50 million of government funding for high streets, and the Chancellor of the Exchequer instituted a one-year business rate holiday for all retailers.
It is worth reconsidering the thinking behind some of these measures in light of the historical evidence. Retailers’ principal demand is for an adjustment of the local tax system, which continues to fall disproportionately upon them via the businesses rates payable. Online retailers, by contrast, sidestep this relatively heavy tax on shop property. In the past the government has sought to address this by extending the system of exemptions and discounts for small and independent retailers. This will not, however, benefit the most vocal complainants, which are the larger retail chains whose commercial difficulties and periodic collapses have been the source of much media attention. Permanently relieving these larger retailers from the current burden of business rates would require a more fundamental reorganisation of property taxes and local government financing. This would undoubtedly be complex and controversial, and probably require homeowners (whose properties continue to be heavily shielded from the burden of local taxation) to pay a greater share. The high street retail sector is also calling for new taxes to be levied upon online retailing.
Beyond these questions of local finance and property taxation, retailers are in effect calling for other forms of public subsidy. There is an expectation, largely shared by both local and central government, that public funds should be used to enhance the appearance and attractions of central areas as sites for shopping and commercial leisure. Such measures usually include beautifying the public realm, subsidising events and promotions designed to attract custom to the town, and accessibility and infrastructure improvements such as parking and transport provisions. From a historical perspective, the justification for such measures is questionable. It risks pouring a lot of public money into propping up an ailing town centre model established some 70 years ago in the midst of its ongoing collapse. Such approaches fail to acknowledge that most town centres have long been oversupplied with shopping space and that levels of consumer spending are ultimately finite.
Many of those involved in the current policy debates have come to recognise the problem of oversupply and, as a result, there are now serious discussions around alternatives to shopping in the town centre. Yet these alternatives come with their own set of problems. The high values associated with residential property, particularly high-end city centre apartments, make this an attractive proposition for both developers and local authorities. Yet, just as with earlier attempts to promote high-end retailing, this strategy largely relies upon town centres already being prosperous and attractive places. As a strategy for revitalising struggling towns in less affluent regions, it is unlikely to be successful.
In the absence of private sector interest, some local authorities are taking matters into their own hands by buying up central area properties and pursuing their own programmes of commercial or residential redevelopment. Since 2016, local authorities have spent £775 million purchasing sites in shopping centres and this figure is set to reach £1 billion by the end of 2020. Such activity comes with substantial financial risks for local authorities, as they are borrowing money to buy properties (at current market value) that the private sector is currently disinvesting from. Often the sites being acquired are the very post-war shopping centres which were delivered through public-private partnerships in the 1960s and 1970s. Although local authority purchasing gives councils a greater degree of control, it binds them to the profit-maximising imperatives of commercial property development, meaning that local authorities will be obliged to pursue only those forms of development which promise an adequate return on their investment. Just as in the post-war decades, these more profitable forms of development may well prove to be inappropriate for towns in the longer term and offer only limited benefits to local populations. And in the continued absence of effective regional coordination, such redevelopment activity is likely to perpetuate the post-war pattern of damaging inter-authority competition for the most commercially attractive forms of development.
The decline of the high street has prompted a renewed appreciation of the important social functions which central areas perform. Local authorities, regeneration professionals and central government are increasingly talking about town centres as important sites for social interaction, civic activity and associational life. This is a welcome indication of a more serious rethinking of what a town centre is actually for beyond the commercial domain of shopping. In many respects, this vision harks back to the era before the shopping-centred model was installed so comprehensively in the second half of the twentieth century. There have been a number of tentative moves in this direction, including the opening up of vacant property to community groups or the promotion of various forms of temporary, often low-value commercial activity in central areas. These include ‘pop-up’ shops and cafes, and other forms of temporary use, facilitated by a marked rise in new short-term leasing arrangements.
There is, however, a fundamental obstacle which remains. The mid-twentieth century experience shows that diverse, often unprofitable, patterns of social use in town centres rely upon the availability of cheap premises. They are thus generally precluded by the high central area property values which the sustained period of public-private developmentalism since the Second World War has bequeathed us. Modern planning systems do possess an obvious mechanism for cutting this Gordian knot, which is compulsory purchase at below current market value. Empowering local authorities to acquire sites in this manner would substantially reduce their costs and risks in purchasing central area property. It would allow them to make premises available for lower value uses for which there is demonstrable demand (and also often legitimate public interest arguments around welfare and social cohesion), rather than obliging them to pursue more lucrative modes of redevelopment for which local demand is often questionable.
Compensation for compulsory purchase in Britain has been fixed at market value since the 1959 Town & Country Planning Act. Amending this principle would undoubtedly arouse strong opposition from property-holding interests. Nevertheless, local authorities in Britain were able to purchase at below market value in the period between 1944 and 1959, while France, Germany and the Netherlands continue to operate systems for compulsory acquisition in which the balance between public needs and private property rights leans more heavily in favour of the state. One could argue that much of the wealth-generating capacity which landlords currently enjoy from their properties has been created via public policies since the Second World War. When the planning system was installed in Britain in the mid-twentieth century this principle of ‘betterment’—of property values being enhanced by local planning and improvements—was hotly debated, with many experts arguing that the state should claim a much greater share of this value.
In the decades after 1945, public planning authorities and private property developers worked together to overhaul town centres in pursuit of high-value retailing and ever-increasing land values. The upshot of these endeavours was to make town centres prohibitively expensive for all but the most profitable commercial enterprises and to expel broad swathes of business activity, civic life and social infrastructure from the town centre altogether. Examining these post-war patterns of redevelopment casts new light upon the nature of the problems facing town centres today. It also provides some instructive lessons for policy-makers contemplating new waves of redevelopment and regeneration activity.
Britain’s competitive and marketized system of planning and town centre management prioritised those forms of redevelopment which were the most commercially appealing for developers and investors and the most fiscally appealing for local authorities. This system of development control and incentives produced a damaging oversupply of expensive retail property in the nation’s town centres. A lack of effective planning and coordination at regional level exacerbated these problems, as towns engaged in wasteful competition with each other to attract the most lucrative forms of development. The legacies of this sustained period of publicly sponsored retail development remain deeply problematic for urban central areas up to the present day.
The current town centre crisis is unlikely to be resolved by ‘business as usual’ in Britain’s planning and land use regime. The use of yet more public funds to prop up town centre retailing is difficult to justify and, in any case, is unlikely to be effective in the longer term. Nor is the public-private, competitive pursuit of further rounds of commercial urban redevelopment likely to yield positive results, particularly when it involves local authorities purchasing sites at inflated values and shouldering much of the financial risk of redevelopment. A sustainable solution to the town centre crisis is likely to require some rather more challenging policy choices. We need to question whether our overpriced and underused town centres are fit for purpose as they currently stand and, if not, where reforms can be made to the planning powers of local authorities and the structure of local taxation in order to breathe new life into dying high streets. The Covid-19 emergency has only made these existential challenges to the life of our town centres all the more urgent.
Martin Daunton (2002), Just Taxes: The Politics of Taxation in Britain, 1914-1979. Cambridge: Cambridge University Press.
High Streets Expert Panel (2018) The High Street Report [on behalf of Ministry of Housing, Communities and Local Government].
House of Commons Library Briefing Paper SN06186 (2018), Retail Sector in the UK.
Institute of Place Management (2018), High Street 2030: Achieving Change.
Allan McConnell (1997), ‘The Recurring Crisis of Local Taxation in Post-war Britain’, Contemporary British History 11:3 (1997), 39-62.
Ministry of Housing, Communities and Local Government (2018), Future High Streets Fund: Call for Proposals.
Centre for Retail Research, independent industry research body
British Retail Consortium, UK retail trade association
Centre for Cities, independent research organisation
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