Hammond announces £675m High Street fund
Written by Hannah McGrath
Philip Hammond has announced a £675 million Future High Streets Fund as part of a raft of Budget measures aimed at bolstering Britain’s struggling High Streets.
Setting out his Budget plans yesterday afternoon, the chancellor confirmed that business rates would be cut by a third for all retailers in England with a rateable value of £51,000 or less until 2021, when the next formal rates evaluation takes place.
This would save small retailers £900 million in business rates, he said.
This move is intended to create an equivalent annual saving of up to £8,000 for up to 90 per cent of all independent shops, pubs, restaurants and cafés.
A retailer with an annual bill of £16,203 in 2019-20 (based on a rateable value of £33,000) will save £5,401 a year.
The £675 million Future High Streets fund will be channeled to councils to help them draw up plans to support High Street retailers and provide the transport links and infrastructure they need to transform their businesses.
The chancellor told MPs in the House of Commons that the UK High Street was “under pressure as never before as Britain adopts online shopping with greater alacrity than ever before”.
He warned that retailers would “need to adapt” in order to keep up with the growth of e-commerce.
The government will also consult on relaxing planning laws to make it simpler to convert empty retail units into homes and office spaces, he announced. There will also be a trial register of empty shops to help councils and the government monitor properties that could be put to better use.
Hammond also used the Budget speech to announce plans for a UK digital services tax, targeting two per cent of the revenues on established tech giants, which the government expects to raise £400 million a year when it is introduced in April 2020.
Seeking to allay fears that the tax could target UK tech startups, the chancellor said that a narrowly defined group of major digital platforms, with at least £500 million in revenue, would be subject to the levy.
The measure would not be a sales tax on goods or services bought online, which he said could be unfairly passed on to consumers, but would affect the revenues companies make from sales to online consumers in the UK.
“We need to consult on the detail to make sure we get it right and the UK continues to be the best place in the world to start and scale up a digital business,” he said.
Reaction to the package of measures from industry and consumers has been mixed.
Jeremy Gilman, senior vice president of strategy at digital commerce consultancy DMI, said that retailers should view combined action to boost traditional High Street retailers whilst cracking down on online giants as a "gift."
“The combination of a £1.5 billion investment in the high street and a two percent tax on large digital firms, in my opinion, is one of the most aggressive efforts to ‘level the playing field’ between online and offline retail in recent times," he explained.
"UK retailers should be viewing these actions as somewhat of a gift. Not only is the Government paying to redevelop the high street in a mould of modern live-work-play experience centres, but it is also adding a new tax to some of the high street’s biggest threats in retail; Google, Amazon, Facebook."
However, Carolyn Fairbairn, director-general of the Confederation of British Industry, struck a note of caution.
“Smaller businesses will be relieved by the support on business rates at a time where the current system is crippling many high streets.
"But larger retailers and manufacturers - and the millions they employ across the UK - will continue to suffer needlessly until there is a full, in-depth review."
Helen Dickinson, chief executive of the British Retail Consortium, also highlighted the fact that millions of struggling businesses would not be eligible for the business rates relief.
“The government has missed a much-needed opportunity to help the retail industry," she stated. "While we welcome measures to assist smaller retailers, the majority of the UK's 3.1 million retail workers are employed in businesses that will not benefit from today’s business rates announcement."
She added that retailers were currently in the midst of a “perfect storm” of factors with technology changing how people shop, rising public policy costs and softening demand.
“Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high.”