Ed might want to revise his position on "Tesco-isation of the high street"

Big stores go bust, smaller ones follow.

Shortly after he was elected labour leader Ed Milliband criticised the "Tesco-isation" of British high streets, calling for specific policy changes. Asked on the Daily Politics show if if Labour would prevent more supermarkets on the high street, he said: "I think that is an issue, yes and it is something that we're looking at … It's about local people. It is about planning."

Back then, he was adding his voice to a generally held view, that big chains stifle competition on the high street and kill off independent stores. But figures to be released next week by the Local Data company suggest a rather different picture. It's the big stores themselves that are in trouble, and they're taking the small ones down with them. According to the FT today:

The scale of closures among the big chains is having a knock on effect on independent retailers, many of whom rely on chains to anchor high streets, and act as a magnet to shoppers.

There was a net decrease in large chain stores by 1.4 per cent in the first half of the year, down from a net decrease of 0.25 per cent last year, as more big stores closed than opened. This is a sharp change even from 2009, where despite the banking crisis the number of big stores on the high street was still growing by 1.2 per cent.

The independent stores are following suit: while still on the rise, there has been a significant slowdown from last year. A net increase of 2.4 per cent has become a net increase of 0.8 per cent. And according to Matthew Hopkinson, director of the Local Data Company, it is town centres that are bearing the brunt.

It will be interesting to see if Miliband revises his position in view of this news.

 

Ed Milliband. Photograph: Getty Images
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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.