Where will Jeremy Hunt’s Budget leave Britain’s battered high street?

Retailer Joules has run out of energy and called in administrators. Time to dial up Queen’s “Another One Bites the Dust” on Spotify? That might sound brutal, but there’s more than enough cruelty to go round as the government continues its softening-up exercise while Jeremy Hunt prepares to reveal the price we’re going to be charged for the Tory party’s mistakes.

Joules’s fall into administration is a familiar story. Profit warnings with revenues falling short of City expectations; the unveiling of a recovery plan amid a scramble to secure fresh investment that doesn’t materialise; a phone call to the corporate recovery people.

Corporate recovery is rare in being a good business to be in right now. All this comes less than a week after Next swooped in to pick up the made.com brand but precious little else from the wreckage left by the collapse of the online furniture retailer, which fancied itself a British Ikea and once boasted a valuation of around £800m.

So, who’s next? Retail sales in October suffered a 6.9 per cent year-on-year slump, putting them below pre-Covid levels, where they are likely to remain as the consumer squeeze imposed by the cost of living crisis continues.

The combination of sharply rising costs and sharply falling consumer incomes was described by Marks & Spencer as a “gathering storm” as it announced a fall in first-half profits last week. It probably won’t be the last such announcement. M&S doesn’t look like a business preparing to join the grisly parade of failures, but the future is murky.

It was against this backdrop that its chief executive Stewart Machin was heard protesting loudly at the “daylight robbery” of business rates. The property-based levy is of far greater concern to companies with substantial bricks-and-mortar estates than is the increase in corporation tax that Hunt reimposed after the disastrous Kwarteng/Truss mini-Budget of which he is attempting to pick up the pieces.

Machin has a point. High-street retailers look at April 2023 as a cliff-edge. Business rates are linked to property values – not profits, as with corporation tax. And they are regularly uprated based on those values, but also on inflation. So even though property values are in many cases falling, the bill will still rise, leading to Machin’s description of the levy as “daylight robbery”.

In some cases, business rates are the biggest cost for bricks-and-mortar retailers, with energy coming a close second. Given these costs aren’t linked to the ability to pay, some can’t do that now, let alone after the forthcoming increase.

Unusually, the CBI isn’t calling for lower business taxes in the run-up to Hunt’s statement. Calling for lower business taxes is one of the operating principles of the groups that make up the business lobby.

CBI director general Tony Danker, however, said he accepted that the chancellor “will have to make tough fiscal choices on spending and tax to achieve market stability and control inflation”.

His main “asks” were for “pro-growth measures”. Note that this doesn’t involve the bonfire of EU law that Tory MPs with precious little business experience (falsely) imagine will be a panacea for all that ails UK plc. No, Danker’s idea of pro-growth measures includes planning reform, a more liberal immigration policy to tackle labour shortages, and measures to stimulate investment, which could very easily seize up if Hunt gets this wrong.

His organisation’s “main and modest” fiscal ask is to “smooth the upcoming cliff-edge in business rates”. Given the potential threat it poses, that isn’t too much to ask.

The central conceit of Trussonomics was that lower taxes stimulate growth, despite the fact that plenty of European countries boast both higher taxes and higher growth rates than tortoise Britain, whose growth has been held back not by its tax rates but rather by the poor decisions made by an ideologically obsessed and immature group of politicians.

However, it is also true that setting taxes too high can be both an impediment to growth and counterproductive as a means of balancing the books. Business rates are in that category. A depressingly large number of high streets up and down the country already resemble the “ghost town” The Specials sang about in their classic No 1 hit. All that’s lacking is the tumbleweed.

This doesn’t only apply to what Labour described, in one of the more effective party political broadcasts it has produced in recent years, as Britain’s “forgotten towns”. It extends even to Oxford Street, which used to be among the most prestigious of prestige locations, where retail businesses used to place their flagship stores. It has now become the venue for tatty souvenir shops and candy stores, some of which are under investigation by Westminster City Council.

The rise in online shopping, with warehouses and distribution centres operating from places where property is cheap and business rates are low, was always going to have a negative impact. But the problems of the high street go beyond competition. Successive chancellors have largely failed to pay heed to this. Will Hunt? The omens are not particularly good.

True, Britain’s economic malaise, greatly exacerbated by the appalling and avoidable mistakes made by Tory governments, is also seeing off online retailers, of which made.com is one. There is a good chance it will be joined by others before we’re done.

But the high street is where the greatest pain is being felt. Its struggles have long been a discussion point. Various initiatives have been trailed and trialled to no great effect. In the absence of more concerted action, will there be anything left on the other side of the long, dark economic tunnel Britain has entered?