Andrew Goodacre and Allen Simpson gave evidence.

We will now hear evidence from Andrew Goodacre, chief executive officer of the British Independent Retailers Association, and Allen Simpson, deputy chief executive of UKHospitality. For this panel we have until 3.10 pm.

Thank you for coming. I am very interested in the provisions around local growth plans and particularly how they affect your sectors. In the area I represent, Sittingbourne and Sheppey, there has been a feeling that we have been lacking, from the existing local authorities at both tiers, a real focus on growth locally. For instance, on the Isle of Sheppey, they are pulling together a local growth group and a local growth board. That is really important for the sense of place for areas that feel that they have already been overlooked. I am concerned that, in a big devolved settlement, that may still be a problem. I am also curious how that affects areas like the retail and hospitality sectors. Again, they may not be seen as major strategic-level elements of a growth plan, but actually they are fundamental, particularly for local communities. What are your takes on that?Q

Andrew Goodacre:

Looking at it from a wider view, we are largely supportive of devolution and what is in the white paper. If I put the retail lens on it, though, especially independent retail, which are the businesses that we represent, they will always ask, “What is in it for us?” There is a fear among those businesses that if you look at the national growth strategy, neither retail nor hospitality really feature in there as one of the eight key areas for investment and growth. I have not seen all the local growth plans. I have looked at the north-east and the west midlands one—that is where we are based—and largely those growth plans are aligned to the national growth areas. I understand that: the mayors, the areas and the regions want to create jobs that are skilled and well paid, and that grow the local economy by focusing on industries of growth.

You could argue that retail, and high street retail especially, has seen itself decline over the years as customer behaviour has changed, so I understand where the direction is, but there has to be a fear. If I was a shop owner now looking out, I would be saying, “Okay, I hear where you’re going to spend money. How does that work for me? How does that make a difference for me in my high street in Coleshill in the west midlands, near where I live?”—or in Solihull, or anywhere else in the UK that they might be?

If you look at the north-east plan, I do not see high streets mentioned once—I have only scan read it; someone may be able to point me in the right direction—and in the west midlands plan, I see priority high streets mentioned. Priority high streets are where they are planning to invest and create jobs, so they recognise the need to invest in high streets in the areas where they are creating jobs. I am not sure where that leaves the others. If you look at it purely from a retail point of view, there has to be a fear that the focus on high-tech, highly skilled jobs and on creating in the local economy will create pockets of success, but it will also create pockets of neglect as well, if we are not careful.

Allen Simpson:

I agree with that. The element of a local growth plan that I think is really positive is the word “growth”. Quite often, when we ask local communities what they want, we are talking to them about whether they do or do not want housing, but encouraging local communities to think about what sort of growth they want is really valuable.

I think you are right about the tendency that exists. Often, if you ask local political leaders what sort of growth they want, they will start talking about wanting to be a fintech hub. In an old life, when I was at a devolved organisation that used London mayoral money to drive economic development, I quite often used to get asked by people around the country how they could create a fintech hub in Devon, Dorset or wherever. I used to say, “You’re probably not going to. You’re likely not going to succeed, but there are industries that you can develop.” That might have been agritech, agricultural tourism or food supply chains, depending on where they were in the country.

Your point about encouraging local communities to think about the role of hospitality and retail in driving quite visible growth is really powerful. There is something about the distribution of the value of growth that we would encourage local communities to consider. I happen to know your patch quite well—I am from Maidstone, so it is a world I know. If you look at the areas around the Kent coast, for example, which have done well over the last few years, the characteristic of the growth strategy has been to use hospitality, leisure and experience as a way of driving other forms of growth. Take Folkestone, for example, and the work around the Harbour Arm there, or Margate, or 20 years ago, Whitstable. With growth strategies that, first, ask how you make a place liveable and attractive, you find that you crowd in other forms of growth, which may be within the eight industrial sectors.

I am very in favour of local growth plans, because they help to encourage local communities to ask what sort of growth they want and to be pro it. To a hammer, everything looks like a nail, and if you ask people what sort of growth they want, you get an answer about what growth they want. If you ask people what other sorts of development they want, often you get an anti-development answer.

What examples can the panel provide of effective relationships between retailers, hospitality businesses and local government? Can you also let us know whether those relationships work better at a local level, or can they be managed and led regionally?Q

Andrew Goodacre:

I am really lucky in the role that I do. I get to visit places around the country. I have become involved with initiatives. Recently, there was an initiative from Visa, which sponsored the “Let’s Celebrate Towns” awards. I was judge for one section of the awards, which was about high streets that had been regenerated. Local areas had to put themselves forward, and we considered elements of the regeneration—partly digital, and partly how they have integrated transformation into their world and understood their target market. I have visited three of those places since in the last two months.

In fact, last month, I was in a place called Oakengates in Shropshire, near Telford. I visited Enniskillen in Northern Ireland, and I visited New Malden, a suburb in south London. Those are three different areas—three different socioeconomic places with different background foundations. What they all have in common is local pride, local involvement and local people making decisions. Not all of them are councillors or politicians, or sit on a local authority. New Malden was about a focus group looking at ways they could improve their status, being between Wimbledon and Richmond—often the forgotten part. They have created a fantastic cultural experience, because they have a large Korean population that is integrated very well into it.

If you go to Oakengates, it has a very simple local high street. It has a huge retail park near it, but it works well. The local council and local people work well with the local authority, and they receive funding. It has free car parking as a policy—no wonder there is a 94% occupancy rate on the high street against an average of 86%. Enniskillen has a business improvement district, which is funded by rate payers, although it is slightly different in Northern Ireland. Again, local people are proud of their high street. When I walked up and down, I saw only one empty unit.

It is about local people with pride in their area who really understand what they are trying to achieve. Each one has a different mission. New Malden wants to become a food centre and a tourist attraction in that respect. Enniskillen wants to build on the fact that it is the only island town in Northern Ireland and is worth visiting; it has so many fantastic local features. Oakengates wants to be a local place for local people, and not forgotten about despite the huge retail park next to it.

I see plenty examples of local people, if they are given a chance and the right involvement and engagement, being able to make the right decisions for their areas, because they really understand what they need. Sometimes they need help and guidance, and it is not always perfect. I am sure that if I really thought about it, I could think of some bad examples, but just recently I have had the privilege of seeing three where it works.

Allen Simpson:

Great examples. I mentioned Folkestone as an example of somewhere that has regenerated incredibly strongly. That is, to some degree, non-replicable because one thing that has driven Folkestone’s success is a wealthy local man who has ploughed a lot of his personal wealth into regenerating his community—largely, from what I can see, for social purposes. Bootle is an interesting case study of a specific national Government grant being used locally to drive high street regeneration, with the intention of bringing in other sorts of business behind it. That has been quite successful. There is another example up in Aberdeen around the dock area, where a mixture of local businesses and—I think I am right in saying—council grants have reduced the cost of access.

A universal trend seems to be peppercorn renting, to the extent that an ex-industrial, brownfield site will be brought online. This was true in Peckham when the cocktail bar, Frank’s, opened above the Peckhamplex. I was young at the time, so it was 15 or 20 years ago. Low rents have two benefits. First, they allow businesses to take a risk on opening in an area where it is unclear whether there is live spend available to them. Secondly, those opportunities are open to local people. That is an important point, because the wealth generated tends to be returned to the community in quite a powerful way. I come back to the point that if you can get that right—and there are lots of examples of where it has been less successful—you get other sorts of economic activity crowding in. If it goes well, you have to manage questions of gentrification and how you keep the character of the local area, but that is a second-order concern for a lot of areas.

Can I just ask you to keep your answers fairly short? We have two very important questioners coming up. I call the Minister.

Q Thank you, Ms Vaz. You have both campaigned to remove upward-only rent review clauses. Could you give us a sense of the negative impact that those clauses have had on your members, and, if we remove them, the impact that will have on both your members and the wider economy?

Before you answer, can I ask you to direct your answers to the Speaker or the Chair, rather than to each other?

Andrew Goodacre:

Running a high street business, whether it be retail or whatever else, is expensive, and the costs are going up all the time. When you talk to those business owners, they will tell you that the three biggest chunks are labour, business rates and rent. If your rent is only ever going to go up because the lease stipulates it and there is no negotiation around that, irrespective of what the economic climate might be or what has happened in the local area to perhaps take footfall away to a different part of town, your business is left with ever-increasing costs and no power to change it. That just does not seem right.

If there is pain because of a change in the area, the landlord, the property owner, has to feel some of that as well. At the moment it is only ever faced by the commercial tenant who has a difficult decision to make: either they go with the higher rent in the hope that they can compensate for it or they leave the business. They should not be faced with that choice, in fairness. These are hardworking businesses. People have probably been running those businesses for many years. There needs to be a more sensible, mature conversation taking place between landlords and commercial tenants. I think it does happen; I think there are good examples of it. But if we leave it to best practice, if we leave it to the industry and good actors dominating, we will be waiting another 20 years and sat here moaning about upward-only rents, so we do need to remove it.

Allen Simpson:

Two quick points on rent reviews. The first thing is that upward-only rent reviews also drive up business rates because of the link between rateable values and rents. So the Government’s intention to reduce business rates expenses for businesses relies on addressing upward-only rent reviews. They do bake in inflation in the way that you say. There is an A/B test here, which is that the pubs code, of course, banned them some years ago. That has increased the amount of time that the average pub tenant stays on site. It has not led, that I can see, to any other negative outcomes, so there is evidence that it does actually increase tenancy rates.

Q To follow up on the point that you made around local growth, which is a big driver of everything that we are doing, what things should we think about in the context of local government and powers and resources in order to deal with the huge challenge that we have around reviving our high streets?

Andrew Goodacre:

We touched on good examples, and we should look to learn from them. On local engagement, you need local leadership, but they need help sometimes. That help could be internally from the next level of authority up, or it could be from an external body. One body that I thought was beneficial to high street regeneration at a local authority level was the high streets taskforce that was set up as part of the Institute of Place Management for Manchester Metropolitan University. It has now ended as a body, although in name it carries on because stakeholders—we were one of those stakeholders—would meet on a quarterly basis to discuss opportunities, challenges, good news and bad news on high streets and high street regeneration. We would share those ideas and share them back with the high streets taskforce, and they would help that local decision making.

Quite often what you find is that people know what they want to do. They just do not quite always know how to do it. A think-tank independently managed and run could help them with that “how” and the implementation of their ideas. If you do not bring it back as it was, something similar would really help that local decision making, because sometimes the pride is there, the passion is there; they just do not always have the nous to make it work in the way they hoped for.

With regard to high streets, I see it from a retail point of view, but I recognise the fact that high streets are increasingly dominated by experiential elements—cultural, leisure, more hospitality driven—and I have no issue with that. It does mean that we need better change of use of some of the retail sites that become empty. I know planning is part of this whole issue, so speeding up the planning process is important.

Ideally, I would like to bring homes back into high streets where the possibility exists. There are some large, empty buildings. I live quite near Stratford-upon-Avon and I still go past a VHS store that closed in 2016. It is still empty. I find it remarkable that a landlord can let a big place like that stay empty for so long. We have not looked at the opportunity of what more we could do with that, or what we could do differently with that. If we can bring homes and people back into high streets as places where people want to live, preferably with affordable properties for younger people, I think you would start to create local economies that would drive some of those high streets as well.

Allen Simpson:

The question is what level you devolve at. Clearly, we are all nimbys. Nimby is an irregular verb—you are a nimby; I am concerned about my local environment. There are circumstances in which we need to find ways of treating high streets like strategic infrastructure. There will be asymmetric benefits and costs if you live close to a high street or, as people used to, above shops—that is less common than it was—versus being in the surrounding community. Sometimes local politicians do need help. We have seen an approach to that in London that the Committee will have views on.

I am very much in favour of hospitality zones, which have specific licensing approaches, where there is some form of recognition that you get to a “yes” more quickly. There is a specific question around Andrew’s point about bringing people back into former high street or commercial areas, in the City of London or elsewhere, around agents of change. I am very in favour of placing a burden on developers to fit the development around hospitality, rather than buying a flat next door to a pub and then being annoyed that there is a beer garden, for which I have zero sympathy.

Q At what level, or by what mechanism, do you think the views of local businesses, particularly smaller businesses, should be captured and used to influence the decision making of the new authorities that will come into being? I was very conscious listening to your descriptions that you very ably depicted some issues that those businesses might face. How do you make sure that the mayors, and the decision makers feeding into those mayors understand what the impact of those decisions will be, and take those views into account?

Andrew Goodacre:

That is a good question. What works well at the moment is the business improvement district model. Where it falls down slightly again depends on the people involved. A good BID represents the voice of local businesses, which are paying through business rates, because the levy is on the business rate, as we know. What I saw in Enniskillen at that time was a BID that really listened to its stakeholders, shared ideas with them and took back the feedback. One of the things introduced there was an Enniskillen gift card that could be used in any shop in that area—ideal for the tourist market that it is trying to appeal to.

We should establish BIDs; the problem with them is that they can be very indifferent, in terms of their make-up and the quality of them. Again, the funding often becomes a point of contention because you are adding to business rates, which is already a massive point of contention for most business owners. In a way, I would like to see BIDs funded in different ways, through the devolution white paper. Their performance would therefore be a bit more targeted. Part of their performance metrics should be the ability for them to show that they have engaged, understood and taken forward what local business people want, in my case, within their high street.

Allen Simpson:

An observation: if you are looking to drive growth, by definition you are looking to bring in businesses that are not there or do not exist, so to some extent your problem is how you consult businesses that do not currently exist. To some degree, it is less about having consultation with specific businesses and more about having an approach that is pro the foundation of businesses in a given area. Clearly, there will be examples where licensing rules could be better consulted on so that existing businesses can expand, but I wonder whether it is less about consultation and more about taking a proactive approach to growth.

Both the industries that you represent rely on tourism. One of the things that has come up in discussions that I have had about local government reorganisation is the branding of an area. I just wondered about your thoughts—you have touched on bids and hospitality zones. By way of an example, my area of Ribble Valley is known for food and drink and for weddings. Ribble Valley borough council will disappear in local government reorganisation. One of the biggest fears about that seems to be about the branding of it. We have looked at things such as the English riviera in Torquay, and how they have created a bid to brand that. What are your thoughts on that? Do we have enough mechanisms to protect those brands within the UK, which may disappear as borough council areas, but your industries will still need?Q

Andrew Goodacre:

I think it would be a shame if we lost some of those brands that people have worked hard to create. I think the visitor economy is so important. The most successful independent retailers are in those visitor economies, because people often visit looking for something different that you do not see in a chain store of a large retailer. Creating that identity is something that I hear all the time from successful places. They feel as if they are part of an identity—they have something around them that says, “Yes, we can buy into this.” The riviera example is a good one. It would be a shame if that local effort—that local sense—was lost. I think Falmouth is another good example. Falmouth has created its own essence of Cornwall within that place. You should not lose that. They are so important. It seems counterintuitive that a push for devolution to create more power at a local level means that you would lose local identities. That would be counterintuitive, so we need to make sure that does not happen. Actually, those should be reinforced with better funding.

Allen Simpson:

I ran Visit London for five years, so I worked on this a lot. My observation is that the money is not there. Unless you are London, Edinburgh or, to a certain degree, Manchester, which has a very high-quality marketing agency of its own, the money just is not there to do it. Visit Kent has just gone bust. The ability to market a region—sometimes, we devolve the responsibility but not the money with it, and I think that is an example. Equally, not everywhere can be branded. I am not going to pick on anywhere in particular or have one of my regular digs at Essex, but where there is a solid local brand, at the moment, we do not have sensible ways of doing that—just mechanisms to do it. Visit Britain works quite hard internationally to disperse people’s awareness of the UK outside of Edinburgh, York, Lincoln and London, but towards a domestic market, which I think is largely what you are talking about, the exam question is, “What is the pot of money handed down to local communities to do it?” because it is incredibly expensive doing marketing.

If there are no further questions from Members, on behalf of the Committee, I thank both our witnesses for their evidence. We will now move on to the next panel.