It may seem strange that I am writing a piece about the actions of local councils, however it is something that for many years I have felt really strongly about when it comes to how they support businesses located in the High Street.
There are currently plans to allow councils to keep 100% of all the business rates that they collect in the future. As a result many are setting up Town Centre Partnerships or Business District initiatives, all with the objective of promoting the local business area, however is this all too little, too late? I personally suspect so and I would like to explain in this blog post the reasons for this thinking.
There appears to have been for many years now an objective from many councils to drive out cars from town centres. This has led to some nice shopping areas being created, however they are now actually less and less populated with shoppers. It sort of makes the whole expenditure on these schemes a little bit pointless, as why spend on something that looks nice, when you have no one to admire it? According to research on average over 10% of shops lie empty in the UK at the current time.
Why is all this happening? Simply because councils have decided on a policy of making access more difficult to potential customers who drive. This has typically taken the form of closing off access to certain roads, reducing parking provision and increasing the charges of the parking provision that is provided. You can only assume that the logic behind all of this was to raise more money for councils to spend on their own projects?
This logic is just so short termed and now it looks like this is proving to be the case. The figures may have added up when the High Street was in boom and customers were flocking to the businesses in these locations, however the increase in choice from Out of Town shopping centres firstly and more later Online shopping means that times have very much been changing. Councils can not say that this has not been something that hasn’t been coming. Many businesses and critics pointed out that the development of Out of Town shopping centres, with ample free parking would “kill off” the High Street, yet despite this councils have allowed these to be developed and at the same time increased car parking charges in town centres for years.
The time has now come for something drastic to be done if we are to see any revival in the High Street. In my opinion if councils are to support businesses then they need to scrap parking charges and allow potential customers to park in the Town Centres. This will increase the footfall in the High Street and thus should see more businesses opening in these areas and paying business rates. Successful business, means everyone benefits.
It would be useful to add in some numbers to demonstrate the point that I am trying to make.
If a council charges £2 to park all day in a town centre and has all 1000 spaces used then this will produce a revenue of £2000. This simulates the level of demand when the High Street was originally in its “boom” phase and councils could use it as a cash cow.
However, now let us fast forward to 2017 where the council is charging £5 to park all day. However only 200 of those spaces are being utilised, which produces a revenue of £1000. The council of course does not see the wider picture and will just increase parking charges to increase revenue.
Of course the picture is so much wider. In this example businesses are seeing a massive decline in footfall. This will impact on trade and ultimately profitability. As this falls, they start to evaluate if it is actually viable to be operating within the Town Centres. Many will come to the view that it isn’t, thus closing their doors and reducing the incentive and choice for potential customers to find a reason to visit the Town Centre.
Hence this will actually see business rate revenues fall, which is actually a negative for local councils, especially when this is combined with falling parking returns.
So what needs to be done? I believe something drastic which will be a combination of scraping parking charges for short term stays (eg: up to 3 hours) which should be an incentive to get potential customers back into these areas. This in turn should increase the potential for businesses in these areas to succeed, thus increasing demand for premises in this area. It is very much a vicious circle with one factor having such a large knock on effect.
If councils were to take this short term “pain” from the loss of some potential revenue from car parking charges, then I predict that in the longer term this should more than be cancelled out by the increase in revenues from business rates. It is ironic that many out of town developments are now starting to see their sales figures decline, as a result of online shopping, This proves that if the High Street is to recover then it needs to do something drastic to firstly get potential customers returning.
Local councils have a responsibility to all their stakeholders to ensure that the community is a thriving area of economic activity.