The Mail on Sunday

I can’t be King Canute and try to turn back the online tide – high streets HAVE to change

Minister’s stark warning for struggling retailers...

- By Neil Craven

TREASURY Minister Mel Stride may be among the closest t hings Britain’s retailers have to a saviour. But even his assessment of their predicamen­t – amid the worst trading in living memory – will seem brutal.

The rise of the internet is catapultin­g the woes of town centres up the Government’s agenda.

So it was little surprise to see a plethora of new measures in last month’s Budget – tax relief on smaller shops, a £675 million fund to help town councils cope with the shift and most eye-catching of all, a tax on digital firms that looks almost certain to hit Amazon and eBay as well as Facebook and Google. But there will still be pain. ‘The idea that we can preserve the high street set in aspic is just not realistic,’ says Stride, a former businessma­n who has worked with the likes of Marks & Spencer at his exhibition­s firm. Reversing the process of high street decline would be like ‘Canute’ trying to ‘stop the tide coming in’. ‘High streets are going to have to adjust,’ he says.

If that sounds harsh, it’s probably only fair to note that there is now an awareness in Government that the problem exists.

Getting Government Ministers to talk in material terms about the implosion of high streets was, for many years, virtually impossible – never mind senior Treasury officials. But the tone has changed dramatical­ly and there is now a clear vision – as extolled by Stride, 18 months into his role as Financial Secretary to the Treasury and righthand man to the Chancellor.

‘ There’s pressure across the board – whether you’re a big or small high street business. We can’t do all that we’d love to do but we can do as much as we feasibly can while still meeting our fiscal objectives, still funding the health service and so on.’

‘Look, there’s always going to be an interest in having something that lies at the heart of the community. Where people eat, drink and go out, argue, celebrate and create and do all of the things that humans do. If you can get an offer that works in terms of people living there, working there, visiting, then you’ve got something you can build on,’ he says.

He says shops in some towns may need to be converted into houses, the process itself bringing more people back into towns rather than having ‘simply retail’. ‘It’s about transition­ing but then taking the pressure off businesses as much as we can in the meantime.’

Some retailers will find that transition painful – and many others, let’s be honest, impossible.

But he says the £675 million fund for local authoritie­s to dip into is a ‘ reasonable amount’ and helps overcome ‘ the planning side of things that are best decided at the local level’.

The Treasury says a £13 billion aid package to help retailers has been made available through tax cuts and other funds over five years to 2021.

Stride, sat on one of the two leather sofas that take up the lion’s share of his spacious Whitehall office, confesses that even senior Ministers managed to hit the high streets for a bit of last-minute Christmas shopping. John Lewis, Waterstone­s and clothing chain French Connection were on his hit list, although the 57year-old declines to reveal what he bought his wife – ‘that’s between me and her!’

His exhibition­s business, which he last ran directly in the 1990s and set up after a lucky break cold-calling blue-chip company chairmen, still employs 50 staff. But you might even have forgiven him if he’d said he didn’t have the time.

‘I don’t think its a great secret that there’s a lot going on at the moment. These are fairly turbulent times. I feel confident that we’ll come through it but it’s going to be bumpy,’ he says – this time referring to Government efforts to leave the European Union on March 29.

From his own perspectiv­e, the fog of Brexit has been ‘taking all the bandwidth’ away from reporting some of the Treasury’s efforts to rework the tax system. He explains

These are fairly turbulent times. I am confident we will come through it, but it will be bumpy

reducing corporatio­n tax and cutting business rates for many are just two of those. Following a landmark Budget clearly designed to bring the Government’s tax policy into the modern age, Stride will oversee the new Digital Services Tax. It should be said many retailers – from Waterstone­s to Tesco – wanted a comprehens­ive tax on digital sales.

But Stride, who acknowledg­es around 17 per cent of products are now sold online, says: ‘Do I think we should be going out there and slapping a tax on all sales of online products? No, I think it would be disproport­ionate. If you start applying a tax right across the board, then it will have an impact on inflation, on living standards, so it’s a question of proportion­ality.

‘We think the right thing to do is to go for those businesses that most people, when they go down to the local pub and they talk about unfairness in the tax system, they will raise the kind of companies that you would throw at me and say, “Do you know what, they never pay enough tax.” ’ The aforementi­oned Google and Facebook will be in the scope of the 2 per cent levy, likely to raise £1.5 billion.

But clauses in the consultati­on document clearly indicate that eBay and Amazon’s ‘marketplac­es’ – third- party sellers using both platforms to sell to shoppers – will be included, bringing billions of online sales into the tax system.

Stride says such firms are not ‘avoidi ng tax typically’ but rather the internatio­nal tax system is ‘ not fit for purpose’. The EU and the OECD are working on similar proposal s – but too slowly, the Treasury says. Its digital tax will be introduced in April 2020 if nothing is resolved multilater­ally.

Some of those online giants are more receptive to new legislatio­n than others, he says. So are they now falling over themselves to pay more tax?

‘I think it’s a mixture actually. What I do know is that the kind of businesses that would be in scope for these measures do not enjoy the kind of public opprobrium that comes their way because they are considered not to be paying their fair amount of tax.

‘I think for a number of those companies, if something sensible can be worked out and it works and it takes away that problem of the public not thinking they’re paying the appropriat­e amount, that will be something they would welcome.

‘What they will want is certainty. What they don’t want is for this thing to be discussed forever and a day. They want to know where they stand.

‘So in a sense we are bringing this to a head from a UK perspectiv­e and we’re saying to other countries “Look, if we can’t all get round the table and sort it out between us, then we are going to do something ourselves.” ’

Do I think we should slap a tax on all online sales? No...that would be disproport­ionate

 ??  ?? ‘SAVIOUR’: Financial Secretary to the Treasury Mel Stride
‘SAVIOUR’: Financial Secretary to the Treasury Mel Stride
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