Sixth Report - Supporting our high streets after COVID-19

We commend the Government for acting decisively and quickly to implement a wide-ranging package that supported high street businesses during the covid-19 pandemic. We additionally commend the Government for taking steps to avoid a cliff- edge of support, both by extending schemes beyond the lifting of restrictions, and by winding down gradually schemes such as the business rates holiday and coronavirus job retention scheme. While recognising the speed at which decisions needed to be taken, it is a matter of regret that there seemed to be a lack of co-ordination across Government. We also praise local authorities, Business Improvement Districts, the High Streets Task Force, and others, for their work on the ground to protect high streets and the public’s health.

The Government’s commitment in its hospitality strategy to learning lessons from the pandemic for the hospitality sector is a welcome start, but it should do so for high streets and town centres in the round. Learning lessons will not only help central and local government be better prepared to support the high street through any future health crises, but may also highlight opportunities for policy development to support high streets beyond the pandemic, such as the Government has done by extending pavement licenses.

We recommend that the Government conduct a full lessons learned review that specifically examines the impact of the handling of the pandemic at central and local government level on the short- and long-term health of high streets and town centres. The Government may wish to consider high streets in its independent inquiry into the Government’s handling of the pandemic, but given the pressing challenges facing the high street it should conduct a separate review immediately. The review should consider the various schemes on an individual basis as well as differential impacts by sector and by geography. It should consider the value for money of schemes that supported the high street, including how taxpayer money lost to fraud and error could have been prevented. The review should also consider how well high street businesses have been supported to implement covid-19 public health measures, such as the Test and Trace system, social distancing, and guidance on wearing face coverings. As well as considering lessons learned, the review should consider opportunities arising from the covid-19 pandemic for future policy development to support high streets and help them evolve in a post-pandemic world.

While we consider that an immediate lessons learned review is needed, we recognise that the pandemic is not over. The Government should continue to monitor the impact of the full range of covid-19 business support that affects the high street with a view to being prepared to adjust such support in case of a serious new variant or variants. (Paragraph 27) Building back better high streets

It remains the case that resilient, thriving high streets and town centres of the future will be planned in the round in collaboration with local authorities, the business 68 Supporting our high streets after COVID-19 community (including Business Improvement Districts), property owners and the local community. Strategies for high streets and town centres should combine a mix of uses including housing, offices (including shared workspaces), retail, hospitality, leisure, arts and culture, healthcare, physical activity, green space, seating, and child’s play. These plans should be based on experiences and not just transactions, and be tailored to the needs and character of the individual area. Principles that local planners of high streets and town centres should explore include: creating experiences that cannot be found online; generating social value and not just economic growth; and supporting residents to move around because they want to, rather than because they have to. The Government should consider how these principles can be embedded within individual strategies for high streets and town centres across the country.

In line with our predecessor Committee’s recommendations and our report on the planning system in England, Local Plans and strategies for high streets and town centres must be updated regularly in order to keep pace with changing trends. This will also help to identify how vacant units arising from the pandemic can be put to best use. A plan that is more than five years old will do little to support a high street for the future. The Government should also publish annually a list of which areas have strategies for their high streets and town centres and when they were last updated.

We welcome the £65 million for the planning regime announced in the Spending Review towards a new digital system, though more detail is needed on what this new system will entail. Additionally, this announcement falls significantly short of our previous calls for £500 million over four years for local planning authorities. We call on the Government to provide additional funding for local authorities to build place partnerships and place leadership. The Government could consider additionally allowing bids for government funds available for high streets to include budgeting for place leadership and placemaking resource alongside capital investment. We also reiterate our call for the Government’s resource and skills strategy for the planning system to be published in advance of primary legislation. This strategy should include a focus on planning high streets and place partnerships.

As our predecessor Committee recommended, retailers must adapt to changing consumer habits in order to thrive. Retailers should especially consider how to embrace online as part of their business model, not only as a channel through which to sell products, but also as a means of engaging with customers. The Government should consider how it can support smaller retailers to become multichannel through targeted investment.

We recommend that place partnerships and, where possible, businesses, should continually review whether store opening hours are meeting people’s needs and generating maximum custom as consumers settle into life after the pandemic. We recommend that places that cannot invest in footfall counting technology make use of the High Streets Task Force manual footfall counting programme to help assess opening hours.

The future of the high street will depend in part on where people work. It is therefore disappointing that the Government’s impact assessment of its consultation on Supporting our high streets after COVID-19 69 making flexible working the default does not consider high streets and town centres. The Government should assess the impact of making flexible working the default on high streets and town centres.

With hybrid working likely to become more common, co-working spaces may offer an opportunity to attract footfall to smaller high streets and town centres. The Government should consider how co-working office spaces can be taxed fairly so as to stimulate high street business without harming local authority income or BID levies.

We are disappointed that the Build Back Better High Streets Strategy does not mention markets and does not introduce any new initiatives for heritage. The Government should consider what further steps it can take to support markets and local heritage to build back better high streets.

The Government’s commitment in its Build Back Better High Streets strategy to work with stakeholders on how property owners and community groups can be better engaged with Business Improvement Districts is welcome, albeit vague. This work should include consideration of how Business Improvement Districts can be supported to be their most effective, such as exploring whether renewal terms should be extended. The Government should commit to a review of whether additional models could be legislated for alongside Business Improvement Districts, such as Community Improvement Districts, Property Owner BIDs, and Place Improvement Districts. The Government should collect and publish examples of local initiatives that could serve as models.

We welcome the Government’s intentions to reform the Compulsory Purchase Order process, which is overdue. The Government must publish further detail on proposed reforms to the Compulsory Purchase Order process without delay, along with timescales for reform. It should set out how it intends to streamline and simplify the process, as well as how it intends to ensure that local authorities have the necessary expertise. (Paragraph 71) Government support for high streets

The Government’s current approach to funding town centre regeneration—in line with its approach to allocating funding to local government generally—is too complex, short-term, and fragmented. Ultimately this funding approach may hamper rather than facilitate the Government’s ambitions to build back better high streets, which require funding for long-term, comprehensive strategies for town centres in the round. The Government must move away from its current funding approach of multiple disparate grants for relatively small sums of money for which local authorities must compete, instead combining fewer grants of larger sums of money with a sustainable long-term funding settlement for local government and greater devolution of funding and powers. It should seriously consider not making the UK Shared Prosperity Fund a competitive fund.

The Government should keep to its commitment that the UK Shared Prosperity Fund will at least match receipts from EU structural funds. It should ensure that areas that would have been classed as objective 1 areas had the UK remained in the EU do not 70 Supporting our high streets after COVID-19 lose out on additional funds. As we recommended in our report on the progress of devolution in England, the Government should increase the total amount of funding for the UK Shared Prosperity Fund to ensure that English regions that would have been eligible for greater sums of structural funding had the UK stayed in the EU, and if the Government had strictly followed the EU’s former allocation of funds, do not lose out as a result of the Government’s guarantee to retain the existing amounts of funding for other parts of the UK.

We urge the Government to publish measurable outcomes frameworks for each of the Towns Fund, Levelling Up Fund, Community Ownership Fund, UK Community Renewal Fund, and UK Shared Prosperity Fund. These frameworks should set out how the funds achieve the goal of levelling up high streets and town centres, taking into account areas that have not received funding. The frameworks should measure impacts on people and ensure that they do not simply count outputs such as the number of buildings that have been repurposed. The frameworks should have social value as well as economic growth embedded within them.

It is important for the Government not just to evaluate the success of the individual funds, but also to have a clear framework for how the different funds will work together to achieve high street and town centre regeneration at the scale that is required in all the places the need it. The Government should set out an overarching evaluation framework for its Build Back Better High Streets Strategy, including how funds available for high street regeneration contribute to successful delivery of outcomes.

For each competitive fund available for high streets, the Government should publish the full list of local authorities whose bids were unsuccessful in each round. For future rounds of bidding for these funds, the Government should consider requiring local authorities to state how much it cost them to put the bid together—whether using their own resources or capacity funding provided by the Government—and publish these amounts, to provide greater transparency about value for money. The Government should undertake a cost-benefit analysis of the bidding process to identify which local authorities do not have the resources to draft bids. This analysis should show the geographical applications and success of bids.

The Government should clarify whether any further funds will be available from the Towns Fund for competitive bidding, as was originally intended, or whether the Government’s position is now that authorities who wish to compete for funding for Town Deals should do so by applying to the Levelling Up Fund.

The Government should explain why such a high proportion of applications to the Community Ownership Fund were disqualified. For future rounds, the Government should ensure that the eligibility requirements are clear and well understood. The Government should also set out its justification for requiring communities applying to the fund to be able to provide half of the capital funding for their proposals, and should consider removing this requirement for future rounds of the fund.

It is clear that the High Streets Task Force is highly prized and should be commended for its excellent work in its first two years of existence, in particularly difficult circumstances. While the focus of the High Streets Task Force necessarily had to Supporting our high streets after COVID-19 71 change with the covid-19 outbreak, we are concerned that budgetary constraints limit the Task Force in achieving its full potential and delivering the recommendations our predecessor Committee had for it. We are particularly concerned that the High Streets Task Force is being held up as the solution to a gap in skills and capacity for place leadership at a national level, when it is warning that it lacks the resource to do so. The Government should review the size and remit of the High Streets Task Force as soon as possible, with a view to increasing its budget. (Paragraph 103) Changes to use classes and permitted development rights

We are concerned by the Government’s confirmation that change of use from office to retail no longer requires a sequential test to protect main town centre uses, and we welcome the Secretary of State’s recent commitment to us to look again at this issue. We reiterate our recommendation from our report on Permitted Development Rights that the Government should consider amending the use class regime to prevent out-of-town commercial and business premises from being converted to retail without having first gone through the sequential test.

We also reiterate our recommendation that the Government amend the prior approval process for the class MA right so that councils, in deciding whether to approve development, can consider the impact of a loss of ground-floor commercial, business and service use on the sustainability of a town centre or high street. Additionally, the Government should monitor the impact of the new use classes on high streets and town centres and report its findings to this Committee.

Housing has a valuable role to play in mixed-use high streets, but we are not convinced that extending permitted development rights from Use Class E to residential is the right way to address either the housing shortage or the regeneration of high streets and town centres. We are concerned that the Government’s current approach may introduce so much flexibility as to create an imbalance between housing and other high street uses. We are not persuaded that the Government has sufficient evidence to justify extending permitted development rights in this way, without any pilots. As part of the review of permitted development rights which we recommended in our recent report on the same subject, the Government should include an evaluation of their impact on high streets and town centres, including Article 4 directions. (Paragraph 117) Business rates and taxation

We welcome many of the Government’s reforms to business rates, in particular the more frequent revaluations and the 12-month holiday from increases arising from investing in improvements. But we are concerned that they do not amount to long-term or fundamental reforms that will make a significant difference to high street businesses. The Government should set out its plan for when the 50% discount for retail, hospitality and leisure businesses comes to an end after a year, such as a permanent reduction in the multiplier. The plan needs to be for long-term reform of business rates that reduces the need for a complicated system of reliefs, and does not reduce income for local authorities. (Paragraph 127) 72 Supporting our high streets after COVID-19

We welcome the fact that the Government intends to compensate local authorities for its temporary business rates measures, though more detail on how it intends to do so is needed. The Government should set out how it intends to compensate local authorities for its temporary business rates measures.

We welcome the consultation on transitional relief, and recognise that more frequent revaluations will go some way to helping businesses pay the correct level of business rates for their properties’ rateable values. The Government’s consultation should consider how businesses in a downward property market can reach a stage where they are paying the correct rate more quickly than is currently the case.

We support the principle of an online sales tax and welcome the consultation. We particularly welcome that revenue from an online sales tax would be used to reduce business rates for retailers. The Government should provide clear timescales for the consultation. Since the future of retail is multichannel due to changing consumer habits, it is particularly important that an online sales tax does not penalise retailers that have both an online and bricks-and-mortar presence. We look forward to further detail on the scope of the consultation, which we recommend must consider: • the impact on multichannel retailers; • the scope of the tax, including which sectors it will be levied on (such as groceries and holidays) and whether it will apply to Click and Collect; • how revenue will offset business rates for retailers in a meaningful way and on a permanent basis; • how the tax may sit alongside work by the OECD to develop a consensus solution to the tax challenges of digitalisation; and • the impact on local authority income.

Building on its fundamental review of business rates, the Government should conduct a full review of taxes on high street businesses to ensure that they are fair, fit for purpose in a digital era, and generate economic, environmental, and social value. The review should include an analysis by sector and include possible targeted interventions. (Paragraph 132) Landlords and tenants

We welcome the steps taken by the Government to address the issue of covid-19 related commercial rent arrears. Alongside the legislation that the Government has introduced, explicit guidance will be required to define exactly what is meant by ringfencing arrears and the periods to which ringfencing applies. As well as differences by sector, this guidance must take into account local restrictions.

We are concerned that the Government’s Build Back Better High Streets strategy does not mention Company Voluntary Arrangements. We recommend that the Government consults stakeholders to determine whether a review of Company Voluntary Arrangements is needed. (Paragraph 138) Supporting our high streets after COVID-19 73

We welcome the Government’s decision to review the Landlord and Tenant Act 1954, Part II, as recommended by our predecessor Committee. The Government should consider, whether separately or as part of the review, how to make commercial property ownership more transparent and property owners more easily contactable, such as through a national register of landlords. (Paragraph 141) Skills and transport

We are concerned that the Government lacks a joined-up approach for generating jobs on the high street and ensuring that those working on the high street have the opportunity to develop appropriate skills. The Government should set out its targets for high street employment and how they relate to its plans for skills and jobs. We also reiterate our recommendation from our report on devolution in England that the devolution of the adult education budget should be included in the devolution framework. This will help areas target their adult education initiatives towards skills gaps in their town centres.

While we recognise that some provision of parking to access high streets and town centres is necessary for accessibility reasons, strategies for high streets should seek to minimise car use and increase public transport and active travel. The Government should commission a review of the relationship between local authority income and parking fees, with a view to reducing local authority reliance on income from parking. It should also set out a timeframe for introducing the new data standard. Separately, consideration should be given to requiring all new car parks to include secure cycle parking.

We welcome significant government funding for public transport, though we urge the Government to clarify how much of its £3 billion for buses is for covid-19 recovery and how much is for investing in improvements. The Government should embed the accessibility of high streets by public transport—by people of all characteristics and from all backgrounds—in transport policy by: • including accessibility of high streets in the criteria for funding for local transport networks; • including within new guidance on Local Transport Plans a requirement that high streets are adequately served by public transport and that these transport links are affordable and inclusive; and a requirement that Local Transport Plans are integrated with Local Plans; • requiring funding for Bus Service Improvement Plans to be contingent on providing adequate, affordable and inclusive access to high streets; and • including advice on ensuring that high streets are adequately accessible by bus within guidance, promised in the National Bus Strategy, on the provision of economic and socially necessary bus services. • We also reiterate our recommendation from our report on devolution that the Government should consider the case for extending powers for Transport for London-style oversight of local buses to all transport authorities. (Paragraph 154) 74 Supporting our high streets after COVID-19

We welcome government funding for active travel and reiterate our recommendation from our report on local government and the path to net zero that the Government should put funding for active travel on a consistent footing as opposed to a competitive basis. The Government should publish how additional funding for active travel will be allocated fairly and should ringfence funds for active travel projects that support the health of the high street.

To maximise the number of people accessing high streets by foot, bicycle, or public transport, the Government should ensure that the revised Manual for Streets includes clear guidance on how to make walking, cycling, and public transport accessible to people of all characteristics and backgrounds. The Government should also develop guidance to help local areas set their own targets for increasing walking and cycling, and this guidance should include advice on maximising the benefits for high streets and town centres.

Local authorities should monitor the social, environmental, and economic impacts of any changes to walking, cycling, and public transport infrastructure on high streets.

It is disappointing that consideration of freight solutions for the high street is missing from the Government’s Build Back Better High Streets strategy. Consideration of freight solutions should include how the use of more environmentally friendly freight solutions may be incentivised, such as ‘last-mile’ logistics by bicycle and greater rollout of electric vehicle charging points, as well as any legislation that may be required to limit emissions from freight vehicles. It should also consider how to balance the timing of deliveries with minimising congestion and minimising noise to residents at unsociable hours. (Paragraph 158) Supporting our high streets after COVID-19 75