Timmy elsewhere

At the ASI.

Because people are using the High Street less (you know, internet shopping) there’s some idiots out there who think taxes should be raised in order to subsidise the High Street.

Sigh.

26 comments on “Timmy elsewhere

  1. All of these arguments were heard in the American Supreme Court in the Leegin vs PSKS case. This legalised Resale Price Maintenance in the USA in instances where it could not be proved to be anti-competitive. RPM would restore the High Street to something like its original purpose .The expert on the subject is Helen Mercer of Univ of Greenwich whose LSE research paper on the effects of the Abolition of RPM in the UK is available online.

  2. It’s time to address both the housing shortage and lack of High St custom. Allow the conversion of the charity shops, popups and bargain bins to be converted into housing. I am sure the remaining traders will be delighted by the turnaround in their businesses.

  3. Isn’t an alternative that the rents on high street retail drop by 11% to 12%?

    OK, rent isn’t the retailer’s only cost, but it’s a biggie.

    Progress an’ all that, but it really seems it won’t be long until most people are content to spend their days in a pod, hooked up to some kind of life support with a VR headset plugged into their smartphone.

    Technology will thus solve the housing crisis.

  4. DBC, hurtling back to the 1950s at warp speed, as ever. Are you also in favour of trolley buses & rationing?

  5. BiG, wouldn’t the total property cost (rent + rates) have to drop by 12% (or whatever)?

    Since I can’t see rates reducing any time soon, that means the drop in rent would have to be much greater.

  6. There are two important issues with the conversion of commercial to residential.

    Firstly, there’s a huge gulf in taxation between residential and commercial premises. A ground floor flat might attract £1,000 a year in council tax, whereas a small high-street shop of the same size will pay around £5,000 in business rates (both figures vary widely depending on the location, but the latter is almost always much greater). Note that both council tax and business rates are payable by the tenant/occupier, but the incidence of the tax falls on the landlord/owner. For a landlord, this means the flat will let for more money than the shop. Hence we actually see fewer commerces than we would if there was a single tax rate on property. We end up with less competition on the high street, and higher prices to boot.

    Secondly, converting a large office block or warehouse into flats means shifting from one owner to hundreds of owners (and hundreds of voters). This is a one-way operation. It’s nigh impossible to convert back from flats to offices: far too many individuals involved, far too many heart-wrenching stories about little old ladies who have been neighbours in the same council towers ever since they disembarked from the Windrush. A single seller can refuse to budge, holding an erstwhile (re)developer to ransom. What’s needed is a form of compulsory purchase, similar to corporate takeovers (i.e. if you can persuade 90% to sell, the other 10% are forced to sell too). But no, an Englishman’s home is his castle.

    Neither of these is a pressing concern: the country copes despite these issues. But it’s becoming a problem in central London: there are a lot of offices being converted to flats in the City, which under a more even property tax would remain as offices. Once converted, they’ll never go back to being offices.

  7. Get rid of business rate thieving–councils
    Get rid of parking rip-offs–councils
    Get rid of councils

    Then we will see what competition between shops and the Net really produces. Obv the Net has some effect but at the moment it is the thieving state doing in high streets.

  8. Mr Ecks,

    “Then we will see what competition between shops and the Net really produces.”

    Even with those factors, the difference between running online and bricks and mortar retail is huge. I can set up an online shop serving the UK 24/7 from £20/month. OK, I then need to fulfil orders, which might take me an hour each day. I’m running a national shop for a month with less than the number of hours than 1 person in 1 bricks and mortar shop for a week.

  9. Andrew M>

    “there are a lot of offices being converted to flats in the City, which under a more even property tax would remain as offices. Once converted, they’ll never go back to being offices.”

    I’m glad to say that you’re wrong, less glad to point out that you’re almost laughably wrong given that the London trend has been in the opposite direction for quite a while. St J’s P, Westminster and so-on, have been converting back from offices to housing over the last decade.

  10. As President Reagan once said: “If it moves, tax it. If it continues to move, regulate it. If it stop moving, subsidize it.” Looks like we’re at the third stage of government involvement with business.

  11. Dave, you’ve mis-parsed what I wrote. I said that offices are being converted to flats in central London; and you’ve said the same thing.

  12. “Once converted, they’ll never go back to being offices”

    I wouldn’t say “never”. Lots of commercial buildings started life as houses and were converted. Plenty of big old Victorian or even Georgian terraces were turned into offices or even shops as part of the flight from city centres to the suburbs. It can happen again.

  13. Quite: Mayfair was built as houses. Post WWII a lot got converted to offices. They’re being converted back to mansions now. Another cycle in 50 years time maybe?

  14. Ok, “never” was an exaggeration. But there’s still a very uneven playing field in taxation between residential and commercial. The outcome is too many flats in city centres, while businesses get pushed out to suburban office parks. That’s basically the opposite of what a city should be, not to mention incredibly inefficient for transport.

  15. Tim Almond – the difference isn’t that huge on the smaller end of the scale.
    Our business sells across multiple sites on the internet, a friend has a shop – we will probably sell as much in a day as she does. For similar times spent dealing with the products.
    Both can have quiet times or busy times – just we are open 24/7 and come Christmas we have to take stock off in order to cope with workload. Shop just needs people to queue if necessary.

  16. @Andrew M

    The decline of the high street would suggest not enough demand for businesses. Where are there ‘too many’ city centre flats? Nationwide, there are far more empty shops and offices than homes.

    Too many shops, not enough homes. Easy to solve unless you have a ridiculous and largely unnecessary planning system.

  17. The high streets where I live (Ealing) are booming. Cafes, restaurants, hair dressers, etc. All the stuff that you can’t get online. Plus there’s been a resurgence in specialty stores: butcher, baker, cheese/beer shop.

    I’d guess a lot of this has to do with the amount of disposable income in the community rather than a simple shift from meat-space to online shopping.

  18. @Mr Ecks: “Get rid of business rate thieving–councils”

    Correct me if I’m wrong, but aren’t business rates set by central government rather than the councils?

    Personally I’m much happier with local government, thieving though they no doubt are. I appreciate clean, maintained streets and parks. I don’t much care for foreign wars, IT boondoggles and… actually is there anything else that Westminster actually does?

  19. Point 1 paying for the person in bricks n mortar to hang about is what makes real shops so kerching expensive.
    No 2 the biggest hidden subsidy is empty property above high street businesses, if a business chooses not to use a property above their premises it should not be zero cost option, fill all tnese flats up & there may be a resurgence in town life.

  20. If you charge insane rents and tax on something, and charge much less for using the same thing in a different way, then strangely option 2 becomes popular.

    The high street has been a cash cow for the councils/government and landlords. Infinite free money. Between them they are killing the golden goose.

    The arrival of the internet has meant that you don’t have to have a physical presence on a high street. Note that quite a number of small businesses selling on the internet rent a commercial space in a business park, install a shop counter and tell people where they are, as part of the process of expanding.

    Part of the problem is the insane price of property – used to build a chain of debt that means in some parts of London, the Landlord is demanding £40,000 a year for a shop a few meters square.

    Ealing (mentioned above) is doing well, simply because the cost of running a high street property is substantially less than the amount of money you can make run a business. That profit thing.

  21. Glendorran – so is the internet business.
    Quiet times are quiet times no matter if online or offline.
    Both companies have wages to pay, bills to pay, stock to pay for.

  22. bnis
    1950’s ?The Leegin judgement allowing Resale Price Maintenance in USA came in 2007.Why don’t you do some homework ?
    If you were to do the minimum, i.e .look up Leegin on Wikipedia ,you would read : “In Leegin ,the court resolved the tension by overruling Dr Miles. Citing Bork, Ronald Coase and others , the court held that manufacturer- imposed resale prices can lead retailers to compete efficiently for customer sales in ways other than cutting the resale price” So 1) RPM allows “retailers to compete efficiently” 2) Ronald Coase said so, something Tim Worstall fails to mention while extolling Coase’s work at all opportunities.

  23. Martin Davies,

    “Quiet times are quiet times no matter if online or offline.”

    But you don’t have quiet times in the same way because you’re not waiting around for orders; the server. I know 2 people that run online shops (I set up their payment gateways) and they do it part time. Get home from work, collect the orders, fulfil them, make dinner. If you get even a bit of scale in your business, you hire as many fulfilment people as you need so they’re getting the orders out and not standing around. Might be that the orders are piling up over lunchtime, but by 4pm, the pile has been caught up.

    I did some retail in my youth, working in a record shop and I reckon that outside Saturday, we were busy less than half the time. You’d get some people in just as you opened, loads at lunchtime and a fair number after 5, but between 9:30 and 12 and 2 and 5, you’d see almost no-one. You’d go and try and spot any cassettes in the wrong place just to kill the boredom.

    The only reason that internet isn’t bigger is that it doesn’t suit a lot of goods: things people need to touch and try, things they need advice on, things they need immediately.

  24. Tim, I sell online full time.
    Times when there are no sales mean no income for the business. Can do plenty of stuff to try and improve sales, stock control, even spend money buying more stock. But without the sales there is no income generation.
    The part timer coming home to find a few orders waiting has quiet periods too .They are busy dealing with the orders then quiet again until more orders come in.
    Great when you can employ just enough staff to deal with orders. However if there’s even a small variation in order numbers is there then too many staff or too few? If orders are delayed – perhaps coming through late evening rather than when staff are around earlier do the staff still have enough packing to do?
    We can vary in a day within the same week by over 60 orders, where Tuesday is quiet one week can be Wednesday is a couple of weeks later.
    Talking at business events with other internet sellers we tend to have similar problems. Buyers buy when they want not when we want them to.

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