With more grim headlines appearing each day about the future of the UK high street. Jonathan Wallace, Senior Director at Lichfields, discusses the impact of Covid-19 and what can be done to re-energise our town centres.
Here at Lichfields, we have a specialist retail group within the organisation that regularly gets together to discuss challenges, opportunities and to further develop ideas on how we can improve our town centres. Most recently these discussions have of course centred around the impact of Covid-19.
Of course, the issues faced by the UK high street haven’t materialised overnight – they have been emerging for a number of years, not least as a consequence of the growth in online retailing – and many commentators have been talking about a ‘crisis on the high street’ for some time. However, Covid-19 will act as a catalyst, speeding up the process of change and making the existing issues even deeper and more urgent to address.
While my background is in planning, a number of the issues being faced on the high street are quite unrelated to the planning process. Business rates have been attracting many headlines in recent times, and rightly so given that the current system unfairly penalises high street occupiers, having been set up in an earlier era when the retail sector was thriving – and the competition faced by town centres was much more limited.The unfairness of the current position has been highlighted by the British Retail Consortium who, in submissions to Government, have recently highlighted that the retail sector accounts for 5% of the economy but pays 25% of all business rates.
The Government has previously committed to a rates revaluation – recently deferred until next year – but surely that is tinkering with a broken system? The real answer is surely to take the more radical approach of creating a new system based upon a sales tax to be paid by all retail businesses – through which online businesses pay their fair share, and businesses with a presence on the high street are no longer penalised for doing so. Indeed I would go further, and incentivise occupation of town centre property by providing a rebate to businesses who meet the needs of a local community by providing a town centre outlet.
Another issue unrelated to planning is the need for reform in lease structures. Much high street property is subject to lease agreements which were designed in an earlier era – when there was little alternative for retailers to occupy town centre space – with many agreements being subject to ‘upward-only’ rent review every five years. The inflexibility of such agreements, and the rise in rents over a period when retailers margins have been falling, has been a huge part of the developing crisis – and with the country still in ‘lockdown’, and the re-opening of high street shops some way away, this issue is unlikely to go away.
While these commercial matters are important, there will, of course, be a key role for planning in ensuring that our town centres are brought back to life. Over the last twenty or thirty years, many town centres have been subject to restrictive policies which sought to ensure the primacy of A1 retail in central areas. However, while this has not been a realistic approach for some time, many local authorities have been slow to recognise this and introduce more open policies which recognise the need for greater diversity and the potential for other uses to enhance town centre vitality and viability.
Moving forward, a more flexible approach will be essential if town centre space is to be re-occupied. Debenhams recently announced that they will not be re-occupying some of their stores at the end of ‘lockdown’ and with other national multiple chains likely to follow suit, it seems inevitable that there will be large voids on the high street which will need to be filled – in all likelihood by non-A1 uses, given that high street retail demand is low and unlikely to return anytime soon.
Against this background, there are an increasing number of voices within the planning sector arguing that to assist the process of change in town centres, there needs to be wholesale reform of the Use Classes Order (https://lichfields.uk/media/2913/guide-to-use-classes-order-in-england.pdf), with some even arguing that there is a need for Use Classes A1, A2, A3, A4, and A5 to be merged into a single use class, effectively removing the need to apply the need for changes of use between the different types of high street use. This would be radical of course – and could result in unintended and undesirable consequences, not least the potential loss of even more A1 uses from our town centres. However, some form of major reform is going to be needed – starting with a new planning policy for town centres through a revised National Planning Policy Framework (NPPF).
I would argue that the scale of change needed in our town centres requires much more than updated planning policy. In my view, and perhaps with the exception of the largest and strongest regional centres, there is going to be a need to re-shape most town centres around the country in order to ensure they can meet the needs of the future. To achieve this, a new generation of Town Centre Area Action Plans will be needed – potentially similar to the Area Action Plans allowed under existing legislation (albeit rarely prepared in practice) but prepared over shortened timeframes (perhaps 15-18 months from start to finish). While new legislation would be required to introduce new style Town Centre AAPs, this need not cause significant delay if a Government priority.
The mere preparation of the AAPs would effectively drive all parties with interests in town centres – landowners, landlords, investors, operators and local authorities – to reassess their position in the context of the new reality of town centre economies, and to engage in identifying solutions. The AAP preparation process would not be without it’s challenges – starting with resources, as few local authorities currently have the capacity to embark on the preparation of additional development plans without impacting on other planning functions – but subject to resourcing, AAPs have the potential to be a ‘game changer’ for our town centres.
Given the scale and pace of change, it would easy to be pessimistic about the future of town centres. However, despite the challenges ahead, I remain optimistic that town centres do have a future.
It is only really over the last 40 or 50 years that town centres became dominated by Class A1 retail uses. Prior to that, centres, while successful and in many ways central to our way of life, were characterised by a much broader mix of commercial and community uses. While the uses demanded by consumers of the 21st century will no doubt be quite different – let’s face it, we’re more likely to find nail bars and tanning salons than fishmongers and hardware shops – there is no reason why town centres shouldn’t successfully return to a similarly broad function in the years ahead – though we may need to give them a little help along the way.
Jonathan Wallace and Lichfields are members of Developing Consensus. To support the industry during this uncertain time, Lichfields has developed a live tracker in partnership with the Planning Advisory Service (PAS) to record how Councils are operating during the pandemic. Access the tracker and learn more about the organisation, click here: https://lichfields.uk/business-as-un-usual/