Stirlingretail

A Levy, Some Rates and the Grimsey Report

I quite enjoy the flight to Singapore (which is where I was much of last week) as it gives me time to read and catch up on a few things; once I’ve landed things get more hectic with wall to wall teaching and meetings (though the retail MBA and other students are always interesting). But sometimes on the flight your mind wanders, and that’s when I realised that Bill Grimsey is an anagram of B Girl Smiley, which is neither apt nor a good description of Mary Portas in front of the Select Committee.

Given my previous comments about the Portas Report and in passing the TV shows, I never thought I’d be writing that I felt some sympathy for the orange one, but watching that performance I did. Hauled in front of a Select Committee to be held to account for the failings of the Government to do much after her report; it’s a bit much really. But then I came back to reality as her evidence had to be clarified and so on.

At least Bill will be saved the same fate, as the Government didn’t commission him; though whether that makes us feel better when they ignore him we’ll see. Perhaps the Government should simply have a Challenge or X Fund, then whichever of Portas or Grimsey sells more books or has more viewers gets any money that is on offer.

And money was the real publicity coup of the Grimsey Report; a levy on major national retailers and leisure operators to pay for town centres. Well, it caught the eye and the media attention, but one is left wondering. Why only these sectors given everything we’ve decentralised from town centres? What does “national” mean in this context? And why on sales? We know the answer to the last question; making it on sales allows the figure (tax rate) to look small. But as Neil Saunders (@NeilRetail is the single most useful retail thing on Twitter) pointed out, when you translate it to profit it looks a lot worse (assuming that for some of these retailers there is any profit – would we have taxed Comet and driven a nail into that coffin?) As @NeilRetail noted, it would mean a c20% cut for those wreckers of the high street, the shop floor store partners of JLP, given their pay and bonus structure (much admired of course). That’ll teach them.

But, beyond the technicalities and issues (and all schemes have advantages and disadvantages) there is a very serious point to be made. Town centres are big business despite their current state and many (not all) are in trouble. The levy was to create a fund of c£800m – and that is probably insufficient. We need to think what really putting town centres into useful life would look like and would cost, as £60m here or there (a la Scotland) will not do the job, and £800m looks awfully like £60m pro-rated to the UK. But then we spend an awful lot of money on and in town centres already; it’s just that we don’t seem to get much bang for our buck.

Bill Grimsey is right to make us confront these issues, even if some of his remedies seem less probable than publicity at this point. This debate needs to be in the fore-front as we grapple with structural change and long run behaviour change. He is also right to sharpen the focus on rates, but is the right question being asked? Is revaluation enough? Even if there are longer term aims? The whole system is broken (as John Orchard noted in our last blog); but the problem is that the Government is intravenously hooked on the money generated. Would a freeze or even revaluation be seen as the end of the journey by Government and not the necessary start?

So what gives? If rates are revalued and retailers pay less, who pays more? We can’t dump all the costs on public schools, could we? If retailers pay the same overall, how much has been really gained? If the take is less overall, then how will local authorities be able to maintain statutory services, let alone help their high streets and town centres? And if values tumble in town centres then who will rescue the banks (again), property companies and various pension funds (yes there will be some balance from rising valuations in some places, but it will be turbulent one presumes). Rates need realistic rethinking in their entriety within the “national” revenue generating mechanisms as a whole, and not simply revaluation, or a pause in the increase or a switch from RPI to CPI or whatever is in vogue at the time.

The Grimsey Report joins the Portas Report and the Fraser Review, and work in Wales and elsewhere, and is an important contribution in stoking the debate. We’ll be reflecting here more on them all again, and certainly more formally and completely in our next quarterly column for Town & Country Planning. For now it will be interesting to see what (official and unofficial) responses they continue to garner.

Disclaimer:  Leigh Sparks is not eligble for the X-fund as he does not have a book on town centres to sell nor is he ever likely to be asked to star in a TV series (about Margate or anywhere else for that matter).