Has Philip Hammond really saved the High Street?
In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises. One of these was measures to improve the lack-lustre retail sector in our city centre areas.
There is no doubt that the major online retailers, Amazon and the like, have caused a major shift in the way we shop.
Faster broadband and the use of computers and mobile devices has become more commonplace. The drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet will likely continue.
This is fine if you have established a thriving internet retail business but not so good if you have committed to the use of expensive retail premises in city centre locations.
At present, online retailers have a massive competitive advantage over their High Street competitors.
They don’t have to pay:
- Business rates or rent for shop front property or
- Salaries to retail sales staff
It could be argued that the mega online retailers, who can also afford to exploit the use of tax havens to shelter their trading profits do not pay comparable tax on their trading profits.
So did Philip Hammond save these failing, High Street retail outlets when he delivered his budget speech on the 29th October?
Well, he made a start…
He offered a one-third reduction in business rates for retailers with shop premises with a rateable value below £51,000 (although it should be noted that this reduction is for a limited period, two years from April 2019).
He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas.
This will support the cost of:-
- Improving traffic flows to shopping areas
- The renovation of empty retail premises to provide residential accommodation
- The repurposing of older or historical property
City centre shops depend on foot-fall.
If shoppers don’t pass by, then they will never become customers. The above investment should at least encourage an increase in foot-fall.
Mr Hammond has also kicked off the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users.
A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these businesses from customers in the UK.
Has Philip Hammond saved the High Street then?
The above changes will have some impact but whether this will slow or stop the movement away from window shopping to browsing the internet, remains to be seen.
Personally I’m not convinced that it’s possible to turn the tide.
For those people for whom shopping was always an unpleasant necessary chore, the time and effort saved by shopping online can be immense.
And to many, time is the most valuable commodity of all.
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