1. Analysis
December 3, 2019updated 02 Dec 2019 4:19pm

How the UK general election could affect the retail sector

On 12 December, the UK will hold a general election to vote in a new government. Retail Insight Network talks to the British Retail Consortium (BRC) and Keystone Law to find out how the policies of the three big parties - the Conservatives, Labour and the Liberal Democrats - could affect UK retail.

By Deborah Williams

Over the past ten years, the UK retail sector has suffered from the effects of the wavering economy and changing consumer shopping habits. As growing numbers of retailers close up shop and transfer to digital platforms, leaving many brick-and-mortar employees redundant, the retail industry will need strong backing from the new government to regain trust, momentum and growth.

The Conservative Party

Earlier this year, the BRC released a statement congratulating Boris Johnson upon his victory as UK Prime Minister-designate and leader of the Conservative Party, while urging him to support the reinvention of UK retail.

Following on from this and with the election looming, BRC chief executive Helen Dickinson said: “The BRC welcomes the Conservative commitment to review our broken business rates system, which holds back investment and accelerates job losses and store closures across the country. However, in the shorter term, additional fixes are necessary.

“The offer to cut business rates for SMEs, unfortunately, will not slow the decline in high streets that has seen many household names disappear in recent years. The Conservatives need to commit to supporting investment and growth in retailers, large and small, particularly as the majority of the UK’s three million retail workers are employed in businesses that will not benefit from the Conservatives’ proposed rates cuts.”

The Labour Party

Labour Party leader Jeremy Corbyn announced earlier this year the Party’s radical plan to revive the struggling UK high street, by enabling councils to reopen abandoned shops by giving them to start-ups, community projects and co-operative businesses.  The plan builds on Labour’s five-point plan to save British high streets, announced last year.

Dickinson said: “We were pleased to note the Labour Party’s manifesto commitment to a retail industrial strategy. From sustainability to business taxes to skills, it is vital that there is joined-up thinking across Government to ensure that retailers do not face an unstainable burden of cumulative costs.

“We were also encouraged by Labour’s focus on making the Apprenticeship Levy system fit for purpose by allowing greater flexibility in what Levy funds can be spent on. However, we would urge caution around Labour’s plans to divert 25% of Levy funds to apprenticeships in construction and manufacturing. Any additional apprenticeships should not be funded from retailers’ funding pots, reducing the monies available to reskill the retail workforce during the industry’s transformation.”

Liberal Democrats

Dickinson said of the Liberal Democrats’ policy: “We welcome recognition from the Liberal Democrats that the business rates system is broken and needs reforming, but it is unclear whether replacing it with a Land Value Tax is the solution. Retailers are currently going through dramatic transformation and any further public policy costs, such as extending DRS proposals or diverting Levy funds to the planned Social Mobility Fund is counterproductive in securing the future of the high street.”

What does the retail sector need?

Keystone Law commercial solicitor Tim Deacon said: “There’s no doubt that most high street retailers invested in brick-and-mortar would have a cut to business rates at, or near, the top of their wish list – even if this might only provide short term relief. An overhaul to the current system of setting rates would also be broadly welcomed by those on the high street.

“It seems unlikely that we will see any government-led strategy around rent reduction. So next on the list for many on the high street would be the introduction of a sales tax imposed on online retailers. This has broad support from those in the sector with a strong brick-and-mortar presence. But of course, this splits the sector with many established retailers having a sole or dominant online presence.”

Are the parties supporting the retail sector?

Deacon added: “There seems to be a feeling that the three main political parties not addressing retail in their manifestos indicates that they see that the solutions to the many problems in the sector must come from within. There is no doubt that high street retailers invested in brick-and-mortar need to find unique ways to increase footfall through enhancing the shopper experience, but solutions from within the sector will also undoubtedly see landlords having to take a significant portion of the pain with increasing trends towards downward renegotiation of rents.

“Whilst it seems unlikely that any of the main political parties will support policies that are focused solely on helping retailers, there may be hope from broader town centre regeneration strategy under any future government.”