A billion here. A couple of billion there. Our new prime minister certainly knows how to spend money and has no reservations about spraying the economy with government cash. The latest recipient of his generosity is a fund to rescue the high street. The idea is a worthy one. The government has set aside £1bn that different towns can bid for a share of. The grants will be used to upgrade infrastructure, improve transport and pay for fresh planning applications. The idea is that, with some sprucing up, some better marketing, and a few more buses, we will all start spending our Saturday afternoon nipping between Boots and WH Smith on the high street before stopping at a local organic caf for a latte and muffin.
The high street is in terminal decline
There is no question that something needs to be done. The traditional high street is in terminal decline. According to figures from PwC, a net 2,481 stores disappeared from the country's top 500 high streets in 2018, a 40% rise on the total in 2017. That is accelerating, with even chains such as Marks & Spencer closing stores. And that is against a backdrop of a relatively strong economy, with record levels of employment and rising retail sales. When recession arrives, there is going to be a bloodbath.
And the crisis has spread from retailers. The banks can no longer make any money from branches. The restaurant and caf chains have reached saturation point and have started to close. The estate agents may soon go the way of the travel industry as property sales move online. Even the bookies are in trouble, with the clampdown on betting machines. It is hard to think of a single traditional high-street business that is not in trouble. If we don't do something about that, town centres will go into a spiral of decline, with boarded up shops creating an abandoned, drab environment that is even less vibrant for firms that remain.
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Over the last decade, the retail and leisure industry has changed out of all recognition. The online giants have muscled in, wiping out whole industries and taking such a huge chunk of mainstream retail sales that what is left over for the high street is barely enough to cover costs. Local authorities have made that worse by pushing up rates and making it more and more expensive to park. Government has added to its woes by steadily increasing the minimum wage, a move that primarily hits shops and restaurants, the two mainstays of most town centres.
Four ways to reinvent town centres
The trouble is, even the PM's £1bn is not going to be nearly enough to remedy this. Yet the UK is still a crowded, busy country, with shortages of space. What we need to do is lift restrictions so that the high street can be reinvented. Here are four ideas.
First, and most importantly, we need to make it easy for shops to be redesignated as housing or offices. That power needs to be taken away from local councils, and anyone who owns a retail property should have a legal right to convert it into flats or shared working space for the fast-rising number of self-employed people. With more people living or working in converted shops and banks, the high street would be livelier and restaurants and bars busier. Next, put a legal cap on business rates, so that chains are not taxed out of business. It is absurd that small armies of bureaucrats are taxing shops into bankruptcy with exorbitant rates and then offering those same shops subsidies to stay afloat. Thirdly, borrow an idea from Donald Trump and designate any failing high street an "enterprise zone" and make any business that opens up in one free of corporation tax. It has worked in the US, drawing investment into depressed parts of even prosperous cities, and it can work here as well. Finally, how about lifting all parking restrictions for electric vehicles in any of the towns receiving extra funding?
It is easy to blame the internet for the demise of the town centre. But in truth, state intervention is one of the things that has killed it off. To rescue it, the government needs to get out of the way, not intervene all over again because that is simply going to delay the process of finding a real solution.
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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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