Retailers and trade unions have called on the government to pass urgent legislation to boost the high street after new data reveals that shops, pubs and restaurants are closing at a dramatic rate.
Analysis by PwC and the Local Data Company (LDC) reveals that around 16 chain stores closed their doors every week in the first half of 2019.
This was faster than the rate in 2018 and the 1,234 stores that closed in the first six months of 2019 was significantly up on the numbers in 2017, when just 222 chain stores closed.
The 2019 figure is also the highest recorded number of closures since LDC started keeping records in 2010.
This shop closure record, which doesn’t include independent stores, indicates a deep crisis on the nation’s high streets which has cost tens of thousands of jobs.
Several major retail chains have entered Administration in the last few years and others, including Arcadia, Monsoon, New Look and Carpetright, have reached Creditor Voluntary Agreements (CVAs) with those that they owe money.
A CVA is a type of insolvency agreement which allows insolvent companies to repay creditors over a fixed period while they continue trading. For retailers, one key advantage of a CVA is that it allows them to negotiate with landlords to reduce their rent and close unprofitable sites.
Some high profile retailers including Tesco, M&S, Harrods and Sainsburys have called for a review of business rates and other taxes to stave off the high street decline.
More than 50 major high street businesses who signed a letter to chancellor Sajid Javid last month complained that retailers account for just 5% of the British economy, but pay 10% of all business taxes and about 25% of business rates.
Shopworkers union Usdaw has also called for action on business rates as well as a minimum wage of £10 per hour to help protect retail workers.
The government has promised £1bn for 100 towns under the high street rescue fund. It has also announced some business rates relief for small retailers, but retailers insist that a complete overhaul of property taxes is necessary to level the playing field between high street shops and online retailers.
“High streets are undergoing a fundamental change in response to changing shopping habits, new technologies and rising costs of doing business, so it is vital that government supports the industry to make the necessary investment to adapt,” said Dr Liliana Danila, economist at the British Retail Consortium.
“The business rate system holds back investment, reduces productivity and increases regional disparities … The government must address the much-needed reforms to this broken tax system before more jobs are lost and stores are closed.”
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency, said: “Retail chains are struggling with low consumer confidence, rising costs including business rates and an increase to the minimum wage and uncertainty due to Brexit.
“We would expect to see more retail chains and independents seeking insolvency solutions in the remainder of 2019 and onwards into 2020.”
For more information on CVAs and other company insolvency solutions, speak to a member of the team today. Call: 0800 611 8888.