In the wake of both the Government’s town centre rejuvenation plan and the Mary Portas initiative, I believe we have a bigger opportunity to build on the interest and momentum created by both these plans to use them to address some wider and related issues.
The current plans are very specific to town centres and I fully agree with the intent; however, I believe it could be enhanced to also address 2 additional points – the need to offer people not just the minimum wage, but a more representative ‘Living wage’ to help them out of any potential Benefits trap and in turn it would also reduce the overall Benefits Bill in the long term. There is also an opportunity to use an expanded scheme to help ‘rehabilitate’ the banks in the eyes of the community and to get them lending to help more small independent new businesses.
My plan starts with the Government creating a much more focussed initiative to help create 1000s of local ‘artisan’ businesses. I realise that the Mary Portas scheme also includes a similar approach, but I believe that that plan can go further as follows:
In their business plan, all new businesses seeking to set-up shop specifically in town centres, should include ‘Living wages’ as part of the planned staff wage bill. The additional wage costs would in part be offset by a reduction in their loan and general banking costs as outlined below. The Government would also benefit in that these lower paid workers, may not require additional top-up benefits in the form of working tax credits, and in fact are possibly also likely to be paying taxes back into the system. It may sound convoluted, but it’s in the Governments interests to incentivise both the start-ups and banks to support this approach.
Additionally, such businesses that create local employment and where possible, use local resources should also be highly encouraged.
Loans at cost
When considering such business plans, the Banks (especially the ones we own), should be strongly encouraged to offer loans at cost, rather than using the monies supplied to them under QE to create increased capital buffers, just to protect themselves even further. They should also offer these loans with low-cost banking facilities for a minimum fixed period of 3 years – the period that most new businesses are at the highest risk of failure. The Government cannot directly intervene to force such behaviour on the banks, but if the banks have benefitted from QE and have not used some of those monies to be loaned back into their local business communities, it would be possible for the Government to require the banks to publish (albeit privately to the Banking Regulator) a list of these preferential small business start-up loans and under what general terms they were issued (the range of interest charged, for example). The Government can ‘keep a record’ of those banks that cooperate, and those who do not. In fact from a marketing perspective, the more socially minded banks are likely to view their participation in such a scheme as being a marketing opportunity.
Town centre commercial landlords and new tenants should both be offered specific rejuvenation tax incentives to reduce the rents on vacant properties (e.g. vacant for 2 years or more) for a similar 3 year start-up period, thus encouraging small/independent business back into the area. George Osborne has already agreed to review the empty rates legislation and it could be conceivable that an exemption from business rates could be extended during the start-up phase of a new tenancy, if that tenant is one of the qualifying new businesses that were part of a town centre regeneration process.
I know this sounds both simple and simplistic, but the plan also shows that we need to be creative in a cross-departmental approach, in that one vertically aligned initiative may provide some success, but to be truly successful, we are going to have to look for solutions in a more holistic way.
If the above makes sense and can be made to work – who loses? Nobody, in fact everyone wins. And there is an additional bonus too. In an age where food miles are regarded as environmentally unsound whilst adding to our food bills and the exporting of jobs out of the country to other low-wage economies is now seen as undermining our core community; rejuvenating the town centre this way, offers a very significant range of benefits.
* Geof Todd is the MD of TODD Creative Services (www.toddcs.com), an independent Ideas and Creative Consultancy, who believes that the UK needs to think and act in a smarter way to reassert itself as a major world entity. He is a life-long supporter of the Liberal Democrats