Coronavirus: What is the Government doing to support high street retailers?

The effect of the coronavirus pandemic on high street trade is the subject of an upcoming oral question in the House of Lords on 2 July 2020. Baroness Ritchie of Downpatrick (Non-affiliated) is due to ask the Government “what assessment they have made of the impact on high street retailers of the Covid-19 pandemic”.

As health is a devolved matter this article focuses on the situation in England.

Coronavirus: Impact on the high street

On 20 March 2020, in response to the coronavirus outbreak, the Prime Minister announced the compulsory closure of all cafes, pubs and restaurants. On 23 March 2020, the Prime Minister extended the closures to include all non-essential shops. The restrictions remained in place until 15 June 2020, at which point some non-essential shops were allowed to reopen, provided they enforced social distancing measures. On 23 June 2020, the Prime Minister announced that pubs, restaurants, cinemas and other venues in the hospitality sector could re-open from 4 July 2020.

The impact of the lockdown on high street trade has been significant. In May 2020, the BBC reported that footfall on high streets in April had fallen by its “fastest rate ever”, decreasing by more than 80%. Figures from the Office for National Statistics (ONS), published in June 2020, showed a similar trend, with retail sales declining by historically unprecedented rates in March and April 2020. The graph below, reproduced from ONS data, shows the trend in the volume of retail sales between May 2016 and May 2020. The ONS said that although retail sales “partly rebounded” in May 2020, they were still down compared to the pre-coronavirus period in February 2020.

Growth in the volume of retail sales, Great Britain, 2016–2020 (Index: May 2016=100)

(Source: Office for National Statistics, ‘Retail sales, Great Britain: May 2020’, 19 June 2020)

Separate analysis by the Centre for Towns has concluded that coastal and ex-industrial towns are likely to be the regions most adversely affected by the pandemic. The British Retail Consortium has warned that, even with the lockdown easing, footfall on high streets could continue to be negatively affected “for some time to come”.

Coronavirus: Government policy to support businesses

The Government has introduced a range of policies to support businesses affected by coronavirus. They include:

  • The coronavirus job retention scheme, in which the Government pays 80% of “furloughed” workers’ wages, up to a cap of £2,500 per month. The Government has announced that the scheme will be extended until October 2020, with businesses paying a larger share of their employees’ wages and national insurance contributions from August 2020 onwards.
  • The coronavirus business interruption loan scheme offers bank loans of up to £5m to support small and medium-sized businesses. The Government covers the costs of interest on the loans for the first six months. The scheme was extended to larger businesses from 20 April 2020. A simplified scheme, bounce back loans, launched on 4 May 2020.
  • Tax deferments for VAT and self-assessment tax returns.
  • Statutory sick pay costs for businesses with fewer than 250 employees met by the Government for up to 14 days per employee.
  • Business rates relief for all businesses in the retail, hospitality, or leisure sector in England.
  • Cash grants worth:
    • £25,000 to the smallest businesses in the retail, hospitality, or leisure sector
    • £10,000 for all business in receipt of small business rates relief and rural rates relief.

Support for high street retailers

Prior to the coronavirus pandemic, there had been debate about the vitality of UK high streets. In February 2019, a House of Commons committee inquiry on the prospects for high streets over the next decade concluded that without “urgent action” some town centres risked “disappearing altogether”.

In October 2019, the Government was asked in a parliamentary question what support it was giving to the high street retail sector. The Government said that it had:

  • established the Retail Sector council, to “bring Government and industry together to help the sector address key sector issues and define its future strategy”;
  • announced a £3.6 billion towns fund “to re-energise local economies”, which included a £1 billion future high streets fund; and
  • established a High Streets task force, “giving high streets and town centres expert advice to adapt and thrive”.

The Government has also announced the reopening high streets safely fund, which provides £50 million from the EU’s European regional development fund to local authorities in England to “support the safe reopening of high streets and other commercial areas” affected by coronavirus.

However, the Labour Party has argued that the Government should go further in its support for high streets impacted by the pandemic. The party has called on the Government to introduce sector-specific support for the retail and hospitality sectors, which it argued could “face collapse” due to a “wave of closures and redundancies”.

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Further information on the Government’s policies, and on demands for the Government to introduce a commercial rent relief scheme, can be found in the following House of Lords Library briefings:

Image by Gary Butterfield on Unsplash.