Tom Richmond: A ‘Tesco tax’ won’t cure high street ills

TO many shoppers, the prospect of a so-called ‘Tesco tax’ on the major supermarkets and other large stores is as enticing as the too-good-to-be-true prices that have seen the big grocery chains transform the financial dynamics of the high street at the cost of those much-cherished independent firms who have shut up shop for the final time.

Why shouldn’t a levy be imposed on emblematic firms like Tesco which still managed to record a profit of £3.3bn in the past year in spite of losing trade to increasingly influential discount retailers like Aldi and Lidl?

It’s a powerful argument that has prompted a coalition of 20 local authorities to call for a one-off raid on the profits of retail giants to raise £400m to fund the regeneration of declining high streets that are having the life sucked out of them.

Don’t be surprised if the measure is included on Labour’s pre-election shopping list. It is the kind of populist policy that appeals to Labour leader Ed Miliband and his deputy Harriet Harman already has the betting industry in her sights. She wants bookmakers to help fund community sport.

Yet, to me, the solution is a reform of those narrow-minded planning policies pursued by town halls across the country – including those who want to impose a ‘windfall tax’ that is comparable to the levy that Tony Blair and New Labour imposed on the privatised utilities in 1997 to finance the ‘New Deal’ for the young unemployed.

It is the councils – aided and abetted by successive governments – that encouraged the massive expansion of the supermarket sector by approving a succession of new stores, both in town centres or on the outskirts of major centres of population, without thinking through the consequences. And, because of the precedent that this created, it has become very difficult to refuse new applications.

Take the out-of-town retail park which is close to my home. The fashion chain Next submitted plans several months ago to expand its existing store after an adjacent unit became available.

I did not formally object – empty shop promises can become an eyesore and magnet for vandals and so on – and the site in question has been set aside in the local plan for non-food retail purposes.

Fine. Yet, when I suggested to the local authority that it ask Next to make a contribution to the council to pay for traffic and road safety improvements in the vicinity, I was told that this was not possible on planning grounds.

To me, this goes to the root of the problem. Given that the fashion chain wouldn’t be advocating the plan unless it was a viable business venture, I was slightly surprised – and disappointed – by the council’s indifference.

If this passiveness is due to a lack of clarity within law, then this should be reviewed – there is no reason why local authorities should not be able to seek a financial contribution to road improvements, or assistance with the provision of community facilities, in return for planning permission.

For once, I also find myself agreeing with the Keighley-born Eric Pickles, the Communities and Local Government Secretary, who says a ‘Tesco tax’ will simply lead to higher prices on the supermarket shelves. He’s probably right, though I suspect the major stores will look to tighten the financial squeeze on their suppliers like those hard-pressed Yorkshire farmers and dairy producers who are receiving such a raw deal at present.

I’m also acutely aware of the likely legal arguments if supermarkets are singled out. Should the levy be exclusive to the ‘big four’ – Tesco, Asda, Morrisons and Sainsbury’s? What about the discount retailers? Non-food shops like fashion retailers and DIY stores? Or the late-night convenience stores that the major supermarkets are opening and which are further compromising independent What about internet giants like Amazon, who have been adept at circumventing the spirit of Britain’s tax rules?

To me, the answer is simple. Given that councils can now keep the business rates paid by newly-opened enterprises, why can’t this principle be extended to supermarkets and shops above a certain size? If this happened, it would provide town halls with much-needed income to help reduce – or scrap – parking charges in some areas, or money that can be used to convert empty premises into community hubs that can be used by farmers’ markets, activity groups or charities.

If the Government is committed to ‘localism’, and the work of retail guru Mary Portas, it will not hesitate to act – or it will be high noon for the high street.