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30 June 2020

What future does the government envisage for England’s city centres?

A new housing announcement points towards a future in which work is very different.

By Stephen Bush

The most interesting concrete announcement in Boris Johnson’s big speech today was about housing: specifically, the rapid conversion of former shops into housing units. One of the oddities in England’s planning system is that planning permission can be quite specific: this is one reason why your local high street may have sky-high domestic rents yet there is one retail unit that hosts a new venture every six months despite the fact the area has demonstrated time and time again that the local economy cannot support a fourth café or a second pub.

Policy tweaks like this have been unveiled before, but they haven’t worked, because in normal times they have only unlocked one or two extra dwellings in areas with housing shortages. Why? Because, for the most part, dying high streets are a symptom of wider local decline: in places where people want to live, the high street is changing, as brick and mortar stores are replaced by amenities like restaurants, cafes and bars, but it is only in places that tend to be losing working-age people that high streets are dying completely.

But this could well be about to change thanks to the novel coronavirus and the continuing requirements that people observe social distancing – including, and especially, that they work from home where possible.

To put it bluntly, I think it is a reasonable assumption that dozens of sandwich shops, chain restaurants, and pubs around office blocks are going to shut down over the coming months. Businesses may well seek to offload their office costs permanently, downsizing to smaller facilities designed around entertaining clients, face-to-face meetings and inductions rather than hosting their whole workforce.  

The nightmare scenario, both socially and economically, is that once-flourishing business districts become ghost towns. The optimistic scenario is that they instead become flourishing residential districts, with smaller high streets offering restaurants, cafes and pubs.

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What’s the big barrier? Well, it’s two-fold: the first is that if business districts are going to remain ghost towns for a prolonged period, unemployment will continue to rise and the economy will continue to perform badly. It’s less clear in that situation that people will take advantage of the opportunity to live in former commercial districts, or that new amenities will arise to serve their needs and create new jobs. The second is that businesses may be reluctant or unable to shed their commercial properties, because they have punitive break clauses, or because they believe they may be able to return to normal.

It’s plausible that you could have a situation in which a business has successfully moved towards remote working, but continuing to let its empty office is cheaper and easier to bear than the upfront cost of breaking the lease, thus blocking new housing developments and suppressing new economic activity.

And that’s the big unanswered question in British politics: to what extent do government policymakers think it is desirable, or achievable, for the world after the novel coronavirus to look like the one that came before? And to what to extent should they be facilitating either a return to the world before or a transition to something new?