Meeting of the Parliament

Meeting date: Tuesday, February 28, 2023

Official Report 1040KB pdf

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Retail and Town Centres

The next item of business is a debate on motion S6M-07942, in the name of Claire Baker, on behalf of the Economy and Fair Work Committee, on retail and town centres in Scotland.

14:25  

I am delighted to open this afternoon’s debate on behalf of the Economy and Fair Work Committee, which will focus on our inquiry into retail and town centres. I think that this is the first Economy and Fair Work Committee debate in the chamber in the new session.

We all know that Scotland’s towns matter to our constituents, but recent decades have witnessed the decline of many of Scotland’s town centres. The collapse of many retail chains has left a hole in many high streets.

The committee shares the frustration of communities that the damage to high streets is done quickly, but any solutions and rescues are slow to achieve. We are still seeing the closure of retail stores. Most recently, the Scottish clothing chain M&Co announced that it was closing all its stores, including 46 in Scotland. Other examples, such as New Look and Marks and Spencer, have recently announced the rationalisation of their stores. They are not alone in that approach.

Many reasons for what is happening are well documented. Shopping habits have changed, the cost of doing business has increased, and perhaps businesses have not kept pace with changing needs. However, the problem is still left of empty units on high streets that are no longer keeping pace with the faster changes in our economy and society, and that still raises the question of the degree to which social and economic policy has driven some of those changes to the detriment of town centres.

The retail exodus from our town centres has been caused in part by the ease of access to, and lower business costs for, out-of-town shopping parks but also by our changing shopping habits, particularly in recent years. Those changes accelerated during the pandemic as online shopping increased. At the same time, the pandemic created a renewed discovery and appreciation of local places, our towns and their potential. People looked to shop locally again and to build back their communities. The bleak picture that we see also presents opportunities.

The committee sought to focus on the future of our towns and the actions that are needed to ensure that the vision of connected, relevant and vibrant towns is achieved. I am sure that we all share that vision. Scotland’s towns are diverse, with their own stories. We heard clearly that, although central policy is important, the ambition for each town has to be responsive to local priorities and that, to facilitate that, there has to be not just capital funding but resource funding that supports community projects over the longer term to achieve their vision.

Throughout the committee’s inquiry, we heard about the wide range of issues related to our towns and what makes them attractive places to live in and visit. Those issues included transport, amenities, the role and contribution of culture, planning and the availability of appropriate and affordable housing to enable town centre living.

Two years ago, the report of the town centre action plan review group, which was led by Professor Leigh Sparks, was published. It made three headline recommendations: include towns and town centres in national planning framework 4 and create and implement town plans; review the current tax, funding and development systems; and expand and align funding for demonstration projects in towns and town centres with multiyear revenue and capital funding.

In April last year, the Scottish Government and the Convention of Scottish Local Authorities responded jointly by publishing a revised town centre action plan for Scotland. Shortly after, the Scottish Government published its strategy for the retail sector, and a retail industry leadership group was established with responsibility for finalising a delivery plan. At the end of last year, the Scottish Government finalised its national planning framework 4.

The committee welcomes all of those strategies and plans, but it wants to ensure that the ambition in those documents is realised and momentum is maintained through tangible actions, and that there is clear coherence between the different strategies. More than ever, the town centre action plan must be more effective than the 2013 plan in addressing some of the significant challenges.

For example, since 2014, there has been the town centre first principle, which is intended to counter the capital flight from many town centres to out-of-town developments on greenfield sites. The committee was told that that exodus had led to increased societal disparities. Although there was not a statutory planning duty or requirement, the aim was to ensure that reasons for locating new developments not in town centres were transparent and backed by evidence.

NPF4 stopped short of putting the town centre first principle on a statutory footing. However, our report set out the strong evidence from expert witnesses, including Professor Sparks, that the principle, as embedded, had not achieved its aims. Out-of-town developments continued to be preferred due to the greater availability of cheaper land and lower barriers compared with adapting existing town centre stock. In the absence of having made much difference since its adoption in 2014, the committee concluded that that principle needs to be strengthened, otherwise the vision for Scotland’s towns might not be realised.

Committee members had differing views on whether a moratorium on out-of-town developments was the solution, and I recognise that the minister’s response to the committee set out the challenges in making the approach consistent with the planning system. However, we all agreed that NPF4 must be sufficiently robust to ensure that proposed new developments demonstrate that town centre sites have been pursued and thoroughly evaluated, that development will have no adverse impact on town centres, and that it will not compete with town centre provision. We will keep a close eye on the effectiveness of that approach.

I thank all those who contributed to the inquiry. It is important for us to hear the voices of businesses, including small and medium-sized and social enterprises. We did not consider town centres and retail solely through an economic lens. Contributions from Culture Counts, Age Scotland and Sight Scotland among others were important in considering the purpose and future resilience of town centres.

I am grateful to the member for giving way on that point, and I congratulate the committee on its work. The member is talking about the fact that our town centres rely on cultural, economic, housing and a number of other significant factors that give each town its identity and character. Does the committee agree that the balance of success for our high streets and town centres lies in all those things coming together rather than in one specific area, which will not answer the overarching problem?

Martin Whitfield raises important points. The committee does recognise that a collection of efforts makes for successful town centres, and they have to cater to the individual identity of each town centre; one size does not fit all.

We considered the impact of online shopping, which is often seen as part of the problem, but we heard that, in some cases, it can be part of the solution. The independent retail sector demonstrated agility during the pandemic and pivoted to online, developing into omnichannel businesses whose online sales supported their high street presence. There is strong demand among Scotland’s smaller retailers for more and better support to build their online presence. The committee wants to see a broader range of opportunities made available to upskill, strengthen and future-proof our retail workforce.

We know that the Scottish Government has committed funds to help businesses to improve their digital skills, capacity and capability, and that it has committed to supporting improved broadband capacity and mobile connectivity in towns and town centres to improve local digital platforms, but that all needs to happen at pace.

Did the committee hear representation from rural retailers about their concerns about broadband?

We did. We visited Fraserburgh and Inverurie, and the issue was raised in those places.

Retail is not served by Scottish Enterprise, although we heard about support for town centres given by regional enterprise agencies, and we raised the question of what support other regions can access. Arguably they are all facing the same place-based difficulties, but I digress. The point is about help for the workforce to adjust to what are expected to be continuing and evolving long-term changes to business models and shopping habits. It is also important for there to be a gendered approach to such a transition within the workforce.

The committee also called for the development of a strategically driven action plan to support the take-up of training and capacity building to support Scotland's e-commerce activity, particularly the development of omnichannel retail. The committee heard that Scotland is falling behind hubs such as Manchester, and in the skills needed to support the industry. The Scottish Government’s response states that around £38 million of the £100 million commitment has been spent but it was not clear to us how it has been spent and by whom. It would be helpful to have further detail from the minister on that.

The issue of skills, the development of Scotland’s workforce and future-proofing is becoming something of a thread running through all the different strands of the Economy and Fair Work Committee. We have a serious skills shortage in Scotland. It is hampering our economic recovery and progress, and leaving us at a disadvantage compared to competitors. I acknowledge the on-going independent review of Scotland’s skills delivery but the committee is looking for specific action around e-commerce skills to be taken now.

I recognise that the Government can point to a working group or a strategy or a delivery plan to address many of the committee’s points but we have seen no shortage of those in recent years and progress has still been slow. We need to see a step change and a more radical approach taken if we are to revitalise town centres.

The vibrant town centres that we all want to see again rely on much more than retail. During our inquiry, we were welcomed on four visits. Our first visit was to Dumfries, where members were able to see first hand what is being achieved through the Midsteeple Quarter development. Midsteeple Quarter is a community benefit society in Dumfries that is developing empty high street properties to provide space for local businesses and to bring homes to the high street, giving the community a stake in their future.

In Hamilton, we met members of the successful Hamilton our Town business improvement district and heard about the positive steps being taken to bring back people to the town centre, including ideas to bridge the gap between its day-time and night-time economies.

During our visit to Fraserburgh and Inverurie, we could contrast whether a BID made a difference in terms of developing a well-established, widely shared vision for the future and what effectively supported communities on their journey.

In Burntisland, members met local business owners and discussed successful diversification into online presence prompted by the pandemic. Although one had accessed the DigitalBoost development grant, the other was not aware of its availability.

However, at every visit, and throughout our evidence taking for the inquiry, the issue of business rates came up. The committee’s report recognised that the reforms that are under way to business rates are not yet fully implemented. However, it was clear from the business community’s evidence and the Scottish Government’s town centre action plan review group that our non-domestic rates system is perceived as inequitable and unfair.

The NDR system acts as a disincentive when trying to attract businesses of any type back to town centres. For businesses that are already located in town centres, the NDR system acts as a disincentive to invest in already occupied property, as any investment leads to an increase in NDR.

The committee consistently heard that the system works against investment and growth in town centre retail and that it should be rebalanced to support town centre development. I recognise that that idea is not popular with all stakeholders, but if we value town centres and want to support a varied retail sector at the heart of them, we need to ensure that they are attractive places to trade.

There is a need to address the cost imbalance between out-of-town development and town centre regeneration, and to lower the barriers for town centre development, if the vision for regeneration of Scotland’s towns, particularly the aspiration to bring back good-quality town centre living, is to be realised.

Other members will probably raise the issue of VAT. I would like to hear more from the minister on whether it is recognised that there must be a rebalancing and, if so, how he is proposing to achieve that.

There is much more that will be covered in the debate, including absentee owners and the need for transparency of beneficial ownership; the extent and limitations of planning powers; and the possible introduction of an online sales tax. However, the committee’s overriding request is that we value our town centres for what they mean to communities and that we deliver policy that supports their ambitions.

On behalf of the Economy and Fair Work committee, I move,

That the Parliament notes the conclusions and recommendations contained in the Economy and Fair Work Committee’s 12th Report, 2022 (Session 6), Inquiry into Retail and Town Centres in Scotland (SP Paper 268).

I call Tom Arthur, You have up to 11 minutes, minister.

14:37  

I thank the committee for producing its very helpful and considered report, and I join committee members in thanking those who gave evidence and helped to facilitate its visits.

The committee’s report highlights many examples of progress, both in our town centres and in our approach to retail policy, as well as in how those interact, and it complements our work to deliver the town centre action plan and the retail strategy. I agree with the committee that a strategic approach to towns and retail that is focused on sustained long-term actions is required to maximise the contribution that they can and must play in achieving the vision that is set out in our new national strategy for economic transformation. Transforming our towns and the retail economy is an exciting opportunity to work collaboratively towards the shared purpose of a sustainable wellbeing economy that supports and connects people and places.

On town centres, we work collaboratively with communities, local government, the third sector and the private sector to deliver our shared vision. We have strong partnerships with local government, including through the newly established town centre action plan forum, which I co-chair with COSLA. A cross-sectoral approach helps to co-ordinate work in my portfolio, across Government and beyond, and I am encouraged to see that our place-based and community investment programmes are making a difference.

Disappointingly, that work is now being made more difficult by the United Kingdom’s approach to levelling up, which is not aligned with our policy framework. Notwithstanding that, we can and must celebrate the real and sustained progress that we have achieved and continue to double down on that, through new policy frameworks including NPF4, the national strategy for economic transformation, climate action towns and community wealth building.

“Getting the Right Change—A Retail Strategy for Scotland” sets out our vision for a strong, prosperous, vibrant and future-proofed retail sector. It makes it clear that retail matters as a contributor to economic prosperity in Scotland, as part of our everyday experience and as a foundation stone of our economy. Retail is the largest private sector employer in Scotland. It currently employs more than 260,000 people in Scotland, which is an increase of 8.3 per cent on the previous year. Shops and retailers support local communities, attract people into our towns and cities, utilise local supply chains, offer fulfilling employment and support other sectors.

Delivery of the retail strategy is now well under way, and the newly established retail industry leadership group, which I co-chair with Andrew Murphy from John Lewis, is in place to ensure that we take the right strategic approach.

I made a brief reference to the need to take a gendered approach to the issue. The committee heard evidence from Close the Gap, in particular, that the jobs that will reduce in number are the ones that are traditionally held by females and that the jobs that will increase in number are the ones that are traditionally held by males. Will the leadership group look at that issue in order to recognise where we need to focus our skills development work?

I am happy to confirm to Claire Baker that that is the case. We will do that in relation to skills and through the fair work agreement that the retail industry leadership group is seeking to develop. Addressing that issue is very important and is consistent with our broader economic objectives.

Our policy landscape provides key enablers of work on town centres and retail. I will touch on a few. NPF4, which was formally adopted earlier this month, provides a fresh start for planning and places our journey to net zero and neighbourhood renewal at its core. For town centres and retail, that means prioritising the regeneration of town centres and the reuse of vacant and derelict land while discouraging some types of development, including out-of-town retail.

Our reform of permitted development rights gives a clear signal—to be welcoming to investors and to the people who live in, support and enjoy our towns—and it empowers planners to be bold and courageous in pursuing opportunities for thriving communities.

Could the minister elaborate on the Scottish Government’s decision not to put the town centre first principle in NPF4? Could he also address the issue relating to change of use? Sometimes, it is very easy to change commercial premises into residential premises, which can detract from the critical mass on a high street.

I am grateful to Mr Johnson for his intervention. As we set out in NPF4, we have sought to provide a policy that is consistent with how the planning system operates. I always urge people, when reading any planning document, including NPF4, to read the document in the round. NPF4 includes 33 separate policies. It is, of course, ultimately for individual decision makers on planning matters to determine whether an application for a development accords with the development plan and whether there are material considerations to factor in.

With regard to change of use, we explored in our consultation the issue of using PD rights to allow commercial premises to be converted into residential premises. However, we were cautious about pursuing that approach—indeed, we will not be taking it forward—because, fundamentally, my view and that of the Government is that it is important that such plans for residential properties still go through the planning system so that we provide safety and assurance. Indeed, some other jurisdictions have explored using PD rights in relation to changing premises from commercial to residential use, but the outcomes have not been consistent with our aspirations.

I also want to touch on community wealth building. Through the community wealth building legislation, our aim is to create a fairer and more prosperous society, to enable more people to benefit directly from the wealth that is generated by local communities and to transform what our economy is for and how it operates. Community wealth building will enable communities to take more control of their local economies and to develop those using their assets, in line with their needs and interests.

It is important to acknowledge that this is a difficult time for many retail businesses. The cost crisis and record high inflation, on top of the Covid crisis, have brought real pressure. The squeeze has also been felt in households, so it is understandable why some shops are struggling.

Larger retailers are more able to respond. Some discount stores are reporting record sales as customers search out savings, and supermarkets are price matching their goods. However, reducing or matching prices is not always an option, and I read with concern about established firms such as Paperchase and M&Co—those staples of the high streets, which Claire Baker highlighted—closing. As someone with an M&Co in my constituency, I am aware of the impact that that will have.

Although it is neither the role of, nor within the gift of, Government to shore up those businesses, no matter how painful that may feel to those who are affected, we have a role in helping those affected and in helping the retail sector to evolve to meet changing consumer demand.

Our aspiration for Scotland, as set out in our economic prospectus—with a fiscal policy that supports improved economic competitiveness and resilience, underpinned by the principle of fiscal sustainability—will enable the creation of an economy that works better for everyone who does business in Scotland, including retailers the length and breadth of the country.

Taxation, which has been touched on, affects town centres and retail as it affects us all. I am pleased that the committee recognised the reforms that are under way on business rates, but I acknowledge the committee’s continued wider concerns. I would welcome the committee’s and Parliament’s support to address those wider issues, such as on VAT, and the wider issue of devolution of VAT.

Will the minister take an intervention?

I am afraid that I have taken two already, and I need to make some progress. I will try to pick up any points that the member makes in my closing remarks.

The retail landscape is ever changing, and competition from online retail has an impact. Although online retail sales have fallen every month since April 2021 from a high of 35 per cent in 2020, they remain 17 per cent higher than in 2019. That is 17 per cent more money spent online that otherwise would have been spent in shops.

Our retail business base is made up of 96 per cent micro or small businesses. Those small and often independent shops play a vital role in shaping the character and attractiveness of high streets and offer a different customer experience from that of the large retailers. However, they also have fewer resources available and need support to build an online presence.

The Government’s new national strategy for economic transformation recognises that digital will increasingly impact on the way that we live our lives. Digital investment and skills are also vital for a diverse array of town centre uses, as is noted in our town centre action plan. We are looking at the best way forward for digital support, building on earlier programmes, and we are working with the business support partnership to collaborate to deliver a single joined-up national service for businesses support.

As has been touched on, an independent review of the skills delivery landscape is under way and will recommend an approach to drive forward our ambitions for a skilled workforce, as is set out in the national strategy for economic transformation. The retail industry leadership group will consider the recommendations of the review and the opportunities that they afford the retail sector. I would be happy to provide an update to the committee on that in due course.

I will close with a couple of examples of successes on the ground that support town centres and retail. I was hugely impressed by the strategic approach to investment in Galashiels, where the great tapestry visitor centre forms a focal point, and by the Midsteeple Quarter project in Dumfries, where the Scottish Government’s regeneration capital grant fund is helping to deliver wider plans to repurpose the town centre as a fully refurbished contemporary living, working, socialising, learning and enterprising quarter. Both of those projects align strongly with my ambitions to support community wealth building and create places where the community can shape its own future, interventions and investments to support local businesses and take decisions for the benefit of all.

Supporting our towns and the retail sector across Scotland is a key priority for the Scottish Government. I welcome the committee’s input and I look forward to hearing the views of members from across Parliament.

I advise members that we have a little time in hand should interventions be taken.

14:48  

As a member of the Economy and Fair Work Committee, and as my party’s spokesman on business, I am delighted to speak in this debate on what is an increasingly important subject. I add my thanks to those of Claire Baker to all those who gave evidence to the committee, to those who advised and supported our considerations, to those who welcomed us into their communities and, of course, to our committee clerks, for all their efforts in organising panels and visits and producing our final report.

Scotland’s high streets are changing in the face of growing challenges. For decades, out-of-town shopping centres were the main competition but, in recent years, there has been an explosion of online shopping, which can often offer next-day or even same-day deliveries, and often more cheaply than shops on our high streets.

Our town centres have always evolved, with familiar names giving way to new favourites, but recent years have seen the retreat of some traditional stalwarts, such as banks and post offices. Although, previously, there were always others to replace them, that is often not the case now, with an increasing number of premises being left empty.

To let signs and shuttered buildings are becoming ever more conspicuous on our high streets, as properties remain empty, many of which are simply too big and not easy to repurpose. Even great shopping streets such as Sauchiehall Street in Glasgow are not safe—it has the highest city centre vacancy rate in Scotland, at 36 per cent, which is well above the UK average of 14 per cent.

As the report recognises, the decline in our high streets is not new—it has been happening for decades. However, it has gained momentum since the pandemic, when businesses were forced to close completely and online shopping became the only option for many families. Public behaviour has changed and how we all shop has changed.

Now, as our high streets are still in recovery mode, we have been hit by the cost of living crisis, during which business costs have risen, while customers have been left with less money in their pockets. Support for our high streets, from consumers and from Government, has never been more important, but that means that we must have a new vision for our high streets—one that recognises changing habits and that the high streets of tomorrow will be very different from those of today.

During our inquiry, we heard from a variety of sources on the issues that our town centres face. I will not have time to cover them all in depth and detail, but I know that some of my colleagues will. We heard of the impact of long-vacant properties—buildings that could become increasingly derelict and dangerous, but which can be difficult to establish ownership of. Even when ownership can be established, financial pressures on local authorities often mean that they are reluctant to use the powers that they have, particularly if that risks shifting the burden of remedial action on to themselves.

A common theme that ran through the evidence sessions was how we can provide more good-quality mixed-tenure accommodation in town centres. In high streets across the country, there are unused properties that could be repurposed. In our 2021 manifesto, the Scottish Conservatives said that we would encourage the development of more brownfield sites to bring life to cities and towns; that we would support communities’ first right to buy when local businesses face the prospect of closing their doors; and that we would relax planning laws to allow for the redevelopment of long-term unoccupied business properties into good-quality housing.

The issue is not just about physical footfall. During a previous inquiry, the committee took evidence on the slow uptake by Scottish businesses of an online presence. This latest report highlights that there is a lack of support available to help businesses to diversify online and found that there is strong demand among smaller retailers for more and better support to build an online presence. The committee wanted to know how the Scottish Government will address a situation in which Scottish businesses are much less likely to trade online than those in the rest of the UK. However, a reliable online presence requires fast, reliable broadband, which is something that too many communities across Scotland, and in my Highlands and Islands region in particular, still lack.

We also heard that, for smaller communities, including some in my region, getting dedicated support to drive forward improvement areas or other local co-ordination was difficult. Too often, it relied on local volunteers who were business owners themselves. The town centre action plan review group identified that, suggesting that a lack of revenue, time and expertise can restrict the potential of community or volunteer-led projects and that

“Those that succeed often do so despite the situation and system, rather than because of it.”

I know that my colleague Douglas Lumsden will talk in more detail about business rates and other tax issues, but the area is clearly one in which the Scottish Government could and should be doing more. The business community’s evidence and that from the Scottish Government’s town centre action plan review group was, as Claire Baker highlighted, that the non-domestic rates system is perceived as inequitable and unfair. The report highlighted the disadvantage at which Scottish business rate policy puts the retail sector, as well as how the current non-domestic rates system acts as a disincentive to attracting businesses back into town centres and encouraging those that are already in town centres to invest in their property, as that could lead to an increase in their NDR.

The Scottish Government has further disadvantaged Scottish businesses by refusing to grant the same 75 per cent business rates relief in Scotland as is available to businesses in England, despite the availability of Barnett consequentials from the UK Government that would have funded that. That conscious decision by the Scottish ministers has left Scottish businesses paying more than they would in England.

Rather than working to reduce the logistical and cost burdens on our high street businesses, the Scottish Government is actually increasing them, through short-term lets licensing, the tourism tax, the workplace parking levy and, of course, its latest and potentially most damaging plan: the almost universally derided deposit return scheme. Despite concerns from the retail sector—in fact, from virtually every sector—the Government is pushing ahead with that.

However, even the Scottish National Party leadership hopefuls have now raised issues with the scheme, and have called for it to be suspended or dropped. Humza Yousaf wants there to be a year’s grace period for small firms; Kate Forbes—the minister’s boss—has said that the scheme will cause “economic carnage” if it goes ahead as planned; and Ash Regan, with whom I am not normally prone to agree, has said:

“Businesses in Scotland are really struggling right now and this is absolutely not the right time to be piling more things on to them, something ... which could cause some of them to go out of business”.

She is right. She was also right when she said that business reaction to the scheme

“should have been ringing alarm bells in government before now”.

Why was it not doing so? It is an utter shambles.

Presiding Officer, there are many other very important areas that I could have covered today, such as how the cultural sector can play an increasing role in supporting our high streets, how good access to our town centres is vital, and how both better public transport and support for those with mobility issues are key.

However, our report was clear: our town centres have their own unique identities, and no one blueprint would work in every high street across Scotland. As the report says, it is a question of empowering communities by supporting and encouraging local decision making, to allow local people and local businesses—those who know their areas best and who have the passion for their communities—to drive forward successful projects.

What is clear is that the Government should support businesses, not put extra burdens on them. Ministers should remove barriers to regeneration and investment, not introduce new ones. If we want our high streets to survive and to thrive in the future—as I do not doubt that every member who is in the chamber today wants—it will need more than warm words. It will need real and sustained action.

14:57  

I am pleased that the Economy and Fair Work Committee agreed to carry out an inquiry into the future of our town centres. Members will not be surprised to know that I am especially pleased that the committee agreed to visit my home town of Dumfries as part of that inquiry. Dumfries is where I was born, where I have always lived and where I bring up my family, and it has been heartbreaking to see the decline in the town centre over the years.

The town centre really matters to me and to all my fellow Doonhamers, just as it was clear, throughout the committee’s inquiry, that town centres really matter to residents in communities right across Scotland. That is because their value is more than the sum of their parts. They are convenient places in which to access services, shops, jobs, entertainment and places to live.

However, they are more than that. They are part of the very fabric of our communities: our history, our culture and our sense of place. They are about who we are as a community. That means that the focus, the investment and the protection that they receive should go beyond the strict economic value that is placed on them.

In 50 years, no one will look back at a historical photo of an out-of-town development, and no one will ever reminisce about which supermarket was in a development before the current one, whereas we look back on the shops, theatres, cinemas and homes that once brought us together but are so often now lost to our high streets. If we do not take urgent action soon, there will be even less to bring us together, never mind look back on.

That does not mean that our town centres do not need to change. They are already changing. However, we need to do far more to support them in that change. We need to support retail, in particular, and especially those independent—

Does Colin Smyth agree that, sadly, some of the decisions of the distant past have led, in part, to the situation that we currently face with our town centres?

I agree entirely with what Stuart McMillan has said. I will come to that point in a moment.

Professor Leigh Sparks made the very good observation that we need to stop damaging our town centres in the way that we have certainly done in the past. That means providing more support for the independent shops in our town centres, which have a real stake in our high streets.

Retail will be crucial. It has changed. It has reduced in our town centres. However, the Scottish Retail Consortium reminded us that retail still employs 233,000 people in Scotland and contributes £5.8 billion to the economy. That highlights just how integral retail is to—in its words—

“the fabric of our communities and our society”.

The pandemic has accelerated changes in retail and, in particular, the shift to online shopping. However, Professor Leigh Sparks, whose evidence to the committee and work in this area have been invaluable, was correct when he said:

“The pandemic accelerated and exacerbated some trends, but those trends themselves are long standing.”

On the point that Stuart McMillan made, Professor Sparks continued:

“They will not be reversed without concerted effort over a number of years, and that effort needs to start with all of us agreeing to stop doing harm to our town centres.”—[Official Report, Economy and Fair Work Committee, 30 March 2022; c 3.]

If we want to better protect our town centres, the time for tinkering at the edges is over. That is why I supported the calls that were made to our inquiry for a moratorium on out-of-town developments where there is space and opportunity to develop in a nearby town centre setting. We simply should not allow out-of-town warehouses that offer the same products that can be—or, in some cases, already are—available on nearby high streets.

If there is not to be a moratorium, we need to see, at the very least, a meaningful town centre first approach. That did not happen when the Government adopted the town centre first principle without any real statutory meaning in 2014. Sadly, NPF4 fails to properly underpin a genuine town centre first approach.

We will not get the change that we need if we do not address the current fiscal imbalance between our high streets and the advantages that exist for out-of-town developments and online shopping. The cost of doing business in our town centres was raised with the committee more than any other issue during our inquiry. It is not a new issue. The Government-established town centre action plan review group’s 2021 report stated that the non-domestic rates

“system is widely perceived to be operationally broken and unfair”,

yet not enough has been done to level the playing field between a high street shop and a supermarket in an out-of-town development and between bricks-and-mortar businesses and those that trade exclusively online.

During our inquiry, some members of the committee visited Burntisland, where they met local businesses to discuss the role of e-commerce as part of a high street business. However, in Dunfermline, just a few miles away from Burntisland, there is a massive Amazon warehouse that covers more than 950,000 square feet—the size of 14 football pitches. That warehouse is not classed as retail, which means that Amazon pays millions of pounds less in tax than it would if that was shops on the high street. Why should small and medium-sized businesses pay exorbitant business rates while giant online corporations such as Amazon get away with paying far less per square metre? We need to end that injustice with an Amazon tax on big and exclusively online traders, and use the income to cut the bills for bricks-and-mortar shops on our high streets and in our town centres.

The town centre first approach should extend beyond retail to housing. Support for new housing should be more generous when it uses space in our town centres, to recognise the extra cost of developing brownfield sites and renovating existing buildings. It should mean tougher powers to tackle absent landlords who leave buildings in a state of disrepair, and it should mean action from the UK Government to end the ridiculous anomaly of charging a higher VAT rate on the redevelopment of existing housing stock than on new builds.

The Government can support a genuine town centre first approach when it comes to how it allocates funding for infrastructure projects such as new theatres and leisure facilities. When local authorities and others bring forward plans, it should be made clear by the Government that applications for funding projects that play a genuine part in regenerating our town centres will get Government support.

Unless we give people more reasons to come into our town centres—whether to shop, to live or for leisure—town centres will continue to decline.

Earlier, I mentioned the committee’s visit to Dumfries. Every town is unique, with its own challenges and, therefore, its own unique solutions. In many ways, however, Dumfries is a microcosm of town centres across Scotland. It has been hit by the impact of out-of-town developments, online shopping and easy access to cities, and the consequence has been more and more empty shops. However, our visit gave members a glimmer of hope, due to the way in which the community is fighting back.

Just as our visit to Hamilton provided the opportunity to meet members of Hamilton Our Town Business Improvement District and hear about their excellent community-led work in supporting town centre businesses, the visit that members made to Dumfries gave them the opportunity to meet people from Midsteeple Quarter, which is a community benefit company that is directly tackling the problem of absent landlords by becoming the landlord itself. Shop by shop, it is taking back the high street and investing in neglected properties to deliver the uses that the town has identified that it needs—affordable retail space, community space and, crucially, new housing in our high street.

That journey was hampered and made slower by the lack of revenue support as that work became established. That is why the committee urged the Government to consider the need for seed funding for community-led projects that really listen to communities and drive regeneration forward.

I add my thanks to everyone who gave evidence to the committee for the work that they do every day to support the town centres that they care passionately about. They need more support from Government.

The Government’s response to the committee’s report was largely a case of business as usual and a list of work that was already happening. I recognise that many welcome initiatives have been developed in recent years, but if committee members had been happy with that existing work, we would not have carried out our inquiry in the first place. We want and need to see more action on the cost of doing business on our high streets; on delivering a level playing field with businesses that operate exclusively online; on saying no to damaging out-of-town developments; and on taking a more strategic approach to investment in housing, leisure and retail that will genuinely put our town centres first.

As I said at the beginning, the time for tinkering is now over.

We move to the open debate.

15:05  

As a graduate in economic history, I have always been struck by the fact that England is described by historians as a country of large towns and many villages, whereas Scotland is characterised by smaller towns and villages. The idea of small-town Scotland had negative connotations in the past, but I think that, in this millennium, with the Covid pandemic making us consciously and physically rethink our geographic boundaries and loyalties, our towns can and should be reinvented for modern work, play, rest, shopping and life.

My Linlithgow constituency has six towns and a number of villages, each quite distinct. Therein lies the solution, as Professor Leigh Sparks clearly set out in his evidence to our committee. The ancient royal burgh and market town of Linlithgow has the innovative combined Linlithgow Community Development Trust and BID, which gave evidence to the committee. My constituency has the archetypal long main streets of the former mining towns of Armadale, Whitburn, Broxburn and Uphall, as well as the burgeoning new town developing from the former shale-mining village of Winchburgh. We have Bathgate, whose community council has been retelling the story of the town through plaques. Bathgate was home to Scotland’s first ever business improvement district and its Choose Bathgate initiative has helped build resilience in town centre shop occupation and complementary digital sales, bucking trends elsewhere and resisting the pull of neighbouring, larger Livingston.

We are clear that towns centres are not just high streets. Although the committee looked at retail, it became very clear that returning high streets to offering living accommodation as a way of replacing the lost footfall of hybrid workers was a big agenda, with cost prohibitions that must be surmounted.

Much is happening in this area: the minister’s opening speech set out a plethora of funding, policy and initiatives. Those include the Scottish Government’s town centre vision; the report “A New Future for Scotland’s Town Centres”; the new retail industry leadership group; BIDs; NPF4; permitted development rights and new class uses; town centre regeneration funding; derelict and vacant land funding; place-based and community empowerment funding; and the place and town centre first principles. We were told by Phil Prentice of Scotland’s Towns Partnership that so much resource and attention had never before been invested in town centre work. We must capitalise on that and drive town centre work forward with energy and conviction.

The best town action plans are based on the character of a town and its needs, story and community, but those plans need support to cultivate and nurture them and, as Colin Smyth said, the lack of community development personnel can hold things back. The community empowerment funding element of that is important and, although capital funding is welcome, it often lacks supporting revenue. The committee heard that the private sector is often offered more leeway with risk than community-led initiatives, and we question that.

The much-recognised Dumfries Midsteeple Quarter community-led regeneration project originated in a community art project by the Stove cultural organisation. Our report stresses that role. The fabric of many of our high streets has been improved by heritage funding capital grants from Historic Environment Scotland. Cultural projects funded by Creative Scotland have breathed new life into those towns. For example, the use of cultural funding to refurbish cinemas has brought life to many town centres.

However, many towns are blighted by vacant properties and derelict land, such as the Victoria hall space and the old bus depot office at the Cross in Linlithgow, and our councils need more powers to take such spaces over.

We must also pursue the recommendation on transparency of ownership and the registering of responsibility. The minister notes in his reply that the UK Government has launched a similar scheme that will require any overseas entity that buys or sells land and property across the UK to be registered, but will that be available to local authority enforcement departments? Will it address the barriers that limit councils’ ability to use their existing enforcement powers?

When we visited the main street of Dumfries, I was shocked that, although one flat had someone living there, almost all the other properties had their second floors lying empty, when conversion to flats would bring regular footfall and vibrancy. NPF4 and local flexibility on new classes of use can help to attract new businesses, but we will need to provide incentives for town centre living works.

I am very disappointed by the minister’s response that the very successful digital boost grant funding is not to be implemented in favour of digital productivity labs. We know that digital boost has driven economic growth and activity and, therefore, public revenue return, so there is surely a case for having both. We need to incentivise businesses to locate in town centres, which means either making it cheaper for them to do that or making it more expensive for them to locate outside. We were provocative in our recommendations, but we are yet to see whether NPF4, without statutory prohibition, has done enough or whether it will fall shy of preventing out-of-town development.

I know that the minister will pay attention to all those points. He was very impressive in committee and I know that he is committed to this and is a very able minister, but I hope that he acknowledges the concerns and criticisms that the committee has raised.

We must face the future for town centres with realism but also with optimism. With an ageing population, we need accessible town centres with local hubs and bespoke bus services. A hub-and-spoke mechanism can help to provide that, and 20-minute neighbourhoods demand it. We also need to think about people with disabilities and design those neighbourhoods accordingly.

Our towns connect us to each other. We realised that more than ever in 2020, when that connection was lost with lockdown. We must champion our towns, keep them open for business and living and ensure that they thrive and are fit for future decades.

15:12  

I join colleagues in thanking the Economy and Fair Work Committee for its excellent and informative report.

As someone who left school and started working for House of Fraser stores quite some time ago, I worked in the chaotic and wonderful world of buying trends, sales periods, merchandising, displays, promotional push and understanding pay packet time management. I will give a classic example of that. How many people do members know who get frustrated about Christmas displays in shops in October? Customers have two months’ salary to spend before the big day and retailers need to start advertising displays to capitalise on it. If they start too early, in September, they will confuse the Halloween period. If they wait too long, they will miss the split between buying gifts and the Christmas day shop. No one wants to focus on Christmas day before the schools have taken their mid-term holidays, but retail needs to have people thinking about Christmas for their end-of-October pay.

Traditional retail does not work in the here and now. Summer clothing lines are ordered in winter and displayed in stores a good two months before people think that they need them. Plans for the year’s Christmas displays are worked on as soon as shoppers go out to the January sales. Before we can help the retail sector, we have to understand the issues that it faces, the time factors in business planning and where support is needed.

Our high streets are in steady decline and help is required now. Town centres are dissolving before our very eyes and, unfortunately, the SNP’s plans to make radical improvements are lacking and have been found wanting. I have raised the matter in the chamber many times since I became an MSP—the last time was only a few weeks ago—in an attempt to find out how the multitude of plans will make a difference in reality and what we can expect to see happening as a result of them that will save our town centres.

The committee was absolutely right to raise that subject in its recommendations, where it calls for policy cohesion, given the myriad of strategies, which were eloquently listed by Fiona Hyslop. The last answer that I received in the chamber was that we should wait and give it time. Time would be the panacea—it would cure all and it was needed for the various plans to come into effect. Unfortunately, it is time that our high streets are rapidly running out of, which is worrying. As was referred to in the conclusions and recommendations of the committee’s report, retail is extremely important to Scotland’s economy.

The sector is experiencing a significant period of change. However, that is not all bad news for the retail sector. In particular, the independent retail sector is thriving in certain places. I will draw on the example of Cupar, in the region that I represent, where the mix of retail, business, residential and community is so natural that people have felt welcome and encouraged to stay local, shop local and spend local. As a result, the number of empty business units in that thriving Fife town has more than halved since 2019. That is fantastic news and should be a blueprint for other towns across Scotland.

However, when we read the overarching themes of the Scottish Government’s sector, people, place and just transition policy, we can see that the policy intention is designed to deliver the aforementioned magical blend, but, as with so many policies that it puts forward, this SNP Government is just not listening to what the sector is asking for.

The Scottish Retail Consortium regularly publishes reports highlighting the concerns of Scottish retail. The following points are all in its own words, as I could not put them better myself. It tells us that the

“Scottish store vacancies ... rate was 15.7% in the most recent quarter (Q4 of 2022)”.

Most importantly, the rate has remained at the same level for three quarters now. With regard to Scottish retail sales, the consortium says that

“consumer demand remains fragile and the outlook uncertain”,

and it is asking for consistency on

“policy making, town plans, and ... the Scottish Retail Strategy”.

The consortium also says:

“Scotland’s town centres have a great deal to offer, however the loss of commuters and business travellers over the past three years has been sorely felt. Retailers are playing their part in trying to tempt shoppers back to our town and city centres through a blend of price, promotions and service ... There also needs to be a concerted effort to reduce the cost of operating in our town and city centres, with the 2021 review of the town centres action plan”—

Will the member take an intervention?

Yes.

On fuel prices, I fully accept that some supermarkets have petrol stations and there are price differentials from location to location. However, the fact that some petrol stations—I am thinking of Tesco and Morrisons in my constituency—are charging up to 10p per litre more than petrol stations in Linwood and Renfrew will hinder attempts to increase footfall not just in supermarkets but in wider town centres.

I can give you the time back, Roz McCall.

I am quickly looking back over my speech, because I did not mention fuel. I thank the member for his question. He makes a valid point, but it is not the point that I was trying to make, which is about promotions, price and service.

The Scottish Retail Consortium states that we need

“a concerted effort to reduce the cost of operating in our town and city centres, with the 2021 review of the town centres action plan saying explicitly that ‘town centres have become too expensive’ to operate in and that this ‘restricts’ economic activity”.

It goes on to say:

“We applaud the Scottish Government’s decision to freeze the business rate for 2023-24. However, the freeze shouldn’t be the limit of parliament’s ambition on rates.”

If we truly want the offer on our high streets to work, we have to take on board what is being said by the people on the front lines. We can provide the rates relief for all those sectors if the will is there. The UK Government provided £220 million for the rates relief scheme. The scheme would have cost only £204 million, so not only would it have been paid for, the implementation costs would also have been covered.

When towns such Cupar are bucking the trend, there is hope. The answers are there, if only we would listen.

15:19  

I remind members that I am the chair of the cross-party group on independent convenience stores.

The committee report has a focus on town centres, as well over half the population of Scotland live in our towns. Town centres should be the beating heart of our communities the length and breadth of Scotland, but our high streets have been changing in recent decades. Many chain stores, from Burtons to Woolworths, have been closing, leaving large vacant buildings that are difficult to let and soon become a blight on our town centres.

That trend was accelerated by the pandemic, when more people began shopping online. In December 2019, just before the pandemic hit, the online share of retail sales was 19 per cent. It rapidly rose to 38 per cent in January 2021 when shops closed during lockdowns and people avoided unnecessary social interaction.

In order to turn that around and put our town centres back at the heart of our communities, we need to tackle the large number of empty commercial properties by bringing them back into use, although not necessarily as retail units. The footprint of our main shopping areas has shrunk; where possible, buildings on the periphery could be converted into much-needed homes. That could also be the case with the empty storeys above shop units, which would bring people back to live at the centre of towns.

We need to increase footfall. Committee witnesses provided examples in which large empty retail units had been converted into gyms, health centres, council offices and college space, all of which had helped to bring people back into the centre of towns and supported retailers and hospitality businesses.

If we want to see town centres thrive again, we need to encourage the growth of independent retailers, support the creation of incubator units for start-up businesses and encourage social enterprises. In order for that to happen, landlords have to realise that long leases of 10 or 20 years are no longer acceptable to everyone because, in the current economic climate, no one wants to take on that risk. In the Westside Plaza in the Wester Hailes area of my constituency, the landlord has let one empty unit to the community wellbeing space, home to the community wellbeing collective. The collective is a group of 30 people who live in and are connected to Wester Hailes and who aim to enhance health and wellbeing, develop local action and create community cohesion in order to tackle the effects of poverty, social isolation and poor mental health.

One way of assisting all new tenants, and landlords of empty commercial properties would be for the UK Government to amend the VAT legislation. Depending on the nature of building work, and the purpose and VAT status of the client, VAT can be charged at 20 per cent or 5 per cent or can even be zero rated. That confusion can create a disincentive for anyone to invest in old buildings that are lying empty or abandoned and could be brought back into use.

In recent years, prior to the pandemic, the proportion of independent retailers across cities and towns was increasing, while the proportion of chain stores was decreasing. Post-pandemic, that trend is continuing. However, independents now have to compete with online retailers, which, in many cases, have lower overheads. In order to protect our town centres, we have to encourage bricks-and-mortar retailers to trade online in order that they can add additional sales from outwith their area, which would enable them to support their businesses to remain on the high street. Currently, 35 per cent of Scottish businesses have an online presence, but only 20 per cent of businesses believe that they have the skills that they need to trade on the internet.

The Scottish Government’s digital boost development grant was significantly oversubscribed, which highlights the support that businesses need to develop their digital skills. The pilot digital productivity labs need to be rolled out across Scotland as soon as possible to provide tailored support programmes to the retail sector. Evidence from Business Gateway indicates that Scottish businesses are still reluctant, and are not necessarily picking up the opportunities, which means that their digital maturity is not yet as evolved or developed as we might want it to be. Other witnesses highlighted that, although Scotland has 8 per cent of the UK population, less than 2 per cent of e-commerce jobs are located north of the border. Small businesses need that support now.

There is no doubt that retailing has faced many challenges in recent years, from the financial crash of 2008, to Brexit, to the pandemic. Brexit has resulted in staff shortages and a lack of goods from the European Union—or goods obtained at a higher price—but it is not all bad news. The good news for our town centres is that this Christmas, shoppers returned to the high street, because there were no restrictions on opening hours, as there had been in previous years. Online sales fell by 30 per cent from their peak, to a 27 per cent market share, partially due to postal strikes making deliveries uncertain.

For the five weeks to 31 December 2022, total retail sales in Scotland increased by 11.3 per cent when compared with December 2021. Even adjusting for inflation, those figures, sitting at 3.9 per cent, remain a positive. We need to take this opportunity to support our town centres to, once again, be at the heart of our communities.

15:25  

I thank members of the committee and all those people who contributed to what is an important and, indeed, timely report.

As we have heard, our town centres should be the beating heart of our communities. However, as the report notes, for too long they “have been in decline” due to a lack of investment, but also to a change in habits, with people becoming more inclined to go to shopping centres and retail parks and to shop from the comfort of their home online. It is not realistic to suggest that we would be able to reverse those trends entirely; indeed, it is not realistic to believe that change is not required because people will, in time, return to town centres.

We need town centres that are adaptable, vibrant, diverse and modern. We need town centres that meet the needs of individuals and families in 2023; that are consistently underpinned by community and togetherness; and that are supported by a determination, as the report mentions, to rebalance

“the cost of doing business in town centres”

compared with

“out of town”.

I cannot contribute to the debate without mentioning a vital relationship that is highlighted in the report, which is the important role of local government in improving our town centres. Across Scotland, we have a vision for what our town centres ought to, and could, look like to meet the needs of a modern Scottish population. However, for those dreams and visions to become a reality, they need funding—local government and local councils need funding.

It is therefore beyond belief that, year after year and budget after budget, the SNP cuts the budgets of those who provide the local services on which so many rely.

I have been doing some work around derelict buildings, and I am listening to the debate because the matter is important to me. Does Carol Mochan agree that

“local authorities have several discretionary statutory powers available to tackle derelict ... buildings”,

which the report outlines? Amenity notices, defective building notices and dangerous buildings notices—those are powers that local authorities have.

I can give you the time back, Ms Mochan.

Thank you. I acknowledge the member’s point, but the point that I am trying to make is that it is about the wider role of local government in supporting its communities. There is an acceptance that the current Administration does not value the role of local government as much as we would all like it to. We must do better on that front.

I wish to pay tribute to East Ayrshire Labour councillors, who were able to secure key concessions in this year’s budget for the people of East Ayrshire. They secured increased investment in tackling antisocial behaviour in order to make our town centres safer; they ensured that resources would be given to tidying our streets and removing vandalism in order to make our town centres cleaner; and they worked to keep key amenities, such as public toilets, open, in order to make our town centres more accessible.

The Labour councillors put forward those key amendments because they are areas in which our communities and constituents wish to see better work done, which would help to improve our local communities and town centres. I pay tribute to Labour councillors because it is Labour in local government that is trying to find ways to deliver for our communities, despite the challenges that are laid before it in relation to local government funding.

It is important that I, like my colleague Colin Smyth, speak a bit about town centre housing. We have to make town centre living an attractive prospect. I look to Labour-run North Lanarkshire, where buildings such as unused churches are now being renovated by councils and housing associations to create state-of-the-art modern and accessible homes. The council is using the powers that it has to the best of its ability. Crucially, those homes are being built in close proximity to retail, health services and transport hubs. They are being provided at an affordable rate as council housing, but some key components of the previous use are being kept to ensure that there remains familiarity for local people.

In order to meet our vision for town centres, we have to speak proudly not only about council house living but about town centre council house living, supplemented by key amenities and resources that will bring life back to towns across our country.

We must have a user-centred approach, but we must also look to do all that we can to ensure that that approach acts to the benefit of small businesses, the low-paid worker and the local community. The observations made in the report in that regard are of significant concern, particularly in that many local businesses just do not know where to look for support. We must focus all our efforts on ensuring that there is a diverse range of options available to town centre users, but we must also reaffirm the benefits for small businesses in the future.

I note the importance of the report and thank the committee for bringing the debate to the chamber. We have a long way to go to realise the vision of our town plans. However, in getting there, we must ensure that people, residents and small businesses are at the centre, and that all are supported by strong funding for local councils to deliver on those key areas of work.

15:31  

I thank the clerks, the convener and the deputy convener for guiding our long and complex inquiry. I am pleased to speak in the debate as a member of the Economy and Fair Work Committee but I am also influenced by my other work, including my work as a member of the Finance and Public Administration Committee.

I will outline a few personal thoughts on why town centres and their regeneration are important. I guarantee that I will take less than the prescribed six minutes, Presiding Officer.

As an important yet often forgotten part of Scotland’s economy, town centres have an important role to play not only in local communities but in relation to sustainable economic growth. We sometimes forget that, among other things, they are powerful hubs of business activity, not least SME activity, which has a critical role to play in our national economy. If town centres contract, it is not only a tragedy for many communities but almost certainly has a negative impact on sustainable growth as well as a multitude of other areas such as culture and sense of place. Claire Baker, the committee convener, has already noted the range of areas that are affected.

Does the member agree that sometimes when we discuss town centres and how to use empty retail units, we treat the commercial, residential and voluntary work purposes as almost equivalent, without recognising the critical importance of the commercial hub that town centres represent? Does she agree that we need to focus on commercial use?

I strongly agree. Perhaps that is where allowing for flexibility in the planning system, as outlined by my colleague Fiona Hyslop, becomes increasingly important. Town centres must be community hubs that allow for a variety of activity.

Even now, economic activity in town centres is more broadly based than many people realise. I can go to town centres in my constituency and find retail shops—of course—but I can also find professional services such as accountants, pubs, entertainment venues, community playgroups, cultural centres, coffee shops, and many other types of SME. Sometimes, however, the challenge is that those different activities interact with different support funding opportunities, different regulatory controls and so on, which means that a town centre can find itself amidst a complex web of policy and funding support streams. That is part of the challenge in moving things on.

An added dimension to that complexity is that the situation is not the same everywhere. The committee has pointed out the different remits and sometimes very different delivery focus of the three enterprise agencies that together span Scotland. It worries me that there is a gap in the place-based support that is available for towns and communities that are not covered by either Highlands and Islands Enterprise or South of Scotland Enterprise. I know that the Scottish Government has been asked by the committee to respond to that concern; I, for one, hope that it will do so before long. It cannot be justifiable that, in effect, some towns and communities have less ease of access to support funds than other towns and communities have.

Another issue that has been known about for years is the need to address the cost imbalance between out-of-town development and town centre regeneration. That has come up in the debate. We have to find creative ways to lower the barriers to town centre development. In my judgment, we will simply not be able to realise our aspirations to regenerate Scotland’s towns if we do not tackle the issue head-on and give it due importance in policy development.

The committee has further commented, including during the debate, on how current VAT rules add to the imbalance. They add to distortions in local economies and create disincentives—we have heard examples of that. The Scottish Government is asked to set out what discussions it has had to date with the UK Government on VAT, but I would go further. If it is possible to devise tax incentives to support free ports, which are much more controversial business places, then perhaps we can think more creatively about relieving some of the tax burdens on town centres. I venture to point out that if, say, a reduction in overall tax burden had the result of encouraging many more small start-up businesses in our town centres, the cost to the Exchequer would be minimal—or even better.

Although I have focused on economic and business issues, I end by joining my colleagues in recognising the quality-of-life benefits to be had from thriving town centres. They are of us and from us, and we will continue to be within them. They can bring real social and environmental improvements to town-centre communities, and that should be nurtured and treasured. After all, is it not the purpose of politicians to provide such improvements for the people we serve? I am sure that we all aim to do that.

I advise members that we have a bit of time in hand, so do not feel constrained in your comments.

15:37  

I begin by thanking all the organisations, community groups, individuals and businesses who gave up their time to share their experiences and expertise with the Economy and Fair Work Committee during the inquiry. I also put on record my thanks to the committee clerks and Scottish Parliament information centre researchers for all their support during the inquiry and the production of the report, and of course, I thank my committee colleagues for their thoughtful work on this important topic.

We have heard, and will likely hear more, consensus expressed this afternoon, which mirrors the consensus that has been widely shared in the evidence and conversations of the Economy and Fair Work Committee. To a large extent, we share a clear vision of what we want for Scotland’s towns and their centres. They are unique and cherished places where humans and non-human nature can flourish and thrive.

We want town centres where people of all ages—those born nearby and those who have come from further or far away—share a vibrant and supportive community of care, support and discovery and live in comfortable, warm, safe and dry homes that are appropriately and sustainably built, converted or modernised. We want town centres where people can reach the places to which they need to go by active travel or public transport easily, accessibly and affordably.

We want town centres with local businesses where people can easily buy or access the goods and services that they need for their day-to-day lives and for those projects and special purchases that, at their best, can be a pleasure to choose, enjoy or give away. We want customers to know that what they buy in their town is of good quality and responsibly sourced, and that they are not being forced to pay significantly higher prices than they would pay elsewhere.

We want town centres where customers know that they are contributing towards good and fair livelihoods, and sustainable businesses where employees, partners and co-owners can work free of insecurity and precarity, with decent pay and fair work for people of all genders and ages. We want businesses that are good enough, in every sense, to attract customers from far as well as near.

We want town centres that have all the important places that people need if they are to gather together—schools and nurseries, libraries and community centres, surgeries and advice centres, venues, cafes and pubs—and all the special places that people can enjoy together or alone, such as gardens, parks, beaches, riverside walks and green spaces that heal and restore mind and body.

We want town centres that recognise and celebrate their stories and the histories, cultures and memories that make them unique, while knowing that those histories are far from over.

We share many common perceptions and insights about the barriers to achieving that vision. We recognise resource limitations—especially financial ones—and the difficulties that can arise from imbalances between capital and resource funding. We acknowledge with deep regret policies and practices of exclusion, which have too often served to reward the already privileged and push the marginalised yet further outside circles of care and consideration. We see in particular that patterns of out-of-town development have often assumed that residents have access to private cars, which has led to ways of life that are environmentally unsustainable and socially unjust. We have noted failures of participation and of opportunity, and we have heard disappointing experiences of discouragement and cynicism.

However, we have also heard and shared many encouraging and positive ideas about how to overcome those barriers and achieve the futures that our towns need and deserve. We have heard something about best practice in Scotland, including from towns in my North East Scotland region, and across the world. We know that Scotland’s towns need genuine and robust support and frameworks within which achieving such best practice is not only possible but attractive, exciting and easier than achieving the bad alternatives.

Those frameworks of support have to work for all our towns and acknowledge underlying patterns of exclusion and marginalisation. They have to recognise not only underinvestment but forms of investment that have been unhelpful or limited in their benefits. They have to name and redress the long legacies of industrial change without transformation and broken promises that left communities isolated and abandoned.

We know from examples such as Inverurie and Huntly that Scottish towns, not least—I might even say especially—in the north-east, can be imaginative, sustainable, original and groundbreaking in their shared vision for the future and their shared participation in making that future happen. We also know that other north-eastern towns, such as Peterhead and Fraserburgh, whose residents are no less imaginative, generous, community focused or forward looking, have been left behind by decades of austerity and neglect. It is now our urgent role to take up that shamefully abandoned responsibility and to make the just transition not only a reality but a priority.

Finally, we need to look with clarity and honesty at the scale of the task ahead: the task of helping Scotland’s towns to become truly resilient places of community, culture and mutual support in the climate-changed years ahead. We need to be bolder in challenging vested interests, dislodging the inertia of the status quo, enabling genuine participation in decision making, amplifying unheard voices, and prioritising wellbeing and real sustainability. Both present and future generations deserve no less.

I look forward to working with colleagues across the Parliament on that task to make our vision for our towns and their centres to be unique and cherished places, where humans and non-human nature can flourish and thrive, a reality. Making that vision a reality is our task.

15:43  

I thank the Economy and Fair Work Committee for its work in its inquiry into retail and town centres in Scotland and the subsequent published report, and I welcome the opportunity to contribute to this debate.

I declare an interest as convener of the cross-party group on towns and town centres. This evening, I will host a reception to celebrate improvement districts in Scotland. If any of my colleagues would like to attend that reception, they will be more than welcome.

Let us rewind back to 25 years ago. When I first moved back to Scotland, I initially stayed with my grandparents, who lived in an ex-mining village three miles outside Ayr. Every couple of days, my gran would get on the bus to go into Ayr to get her messages. In those days, Ayr was absolutely buzzing. The length and breadth of the high street was jam packed with retail choice. Blockbuster, John Menzies and C&A were there. Remember all of them? Everybody looks back on those days with treasured memories and nostalgia, and there is a demand to get the towns back to the way they were. However, the cold hard truth is that our towns will never be the same as they once were.

Over the past 25 years, we have seen a steady decline in our town centres—not only in Ayr but throughout Scotland—as they have faced the challenges of changing and evolving retail patterns.

We have seen retail industrial estates open up outwith town centres, the main supermarkets have based themselves on the outskirts of towns, and of course, online shopping has increased. All that has accelerated further and been exacerbated in the past few years by Covid-19, Brexit and the current cost crisis.

For many, it is still hard to accept that our town centres will never be the way they were many years ago, but there is a common understanding that they are vital to the collective wellbeing of our communities, economy and environment. We now have the opportunity to completely rethink how we do things and move forward with ambition and optimism to rebuild our town centres to be vibrant, creative, enterprising and accessible. I welcome the Scottish Government’s approach to delivering a town centre vision that is centred on collaboration and partnership working to build on local assets.

As we know, local authorities have the responsibility for delivering local economic development and local regeneration. The Scottish Government’s town centre action plan can succeed only if it is supported by effective partnership working. I will focus on that point initially as I think it is extremely important.

Town centres will not be transformed overnight. There needs to be an ambitious vision and long-term plan to drive progress, which all parties must be involved in, regardless of whether they form the administration or are in opposition. I was elected as a councillor in 2017. A lot of energy, time and investment was dedicated to planning to transform Ayr town centre. When the Ayr town centre regeneration group was set up, councillors of all parties were invited to contribute to Ayr’s long-term plan. Sadly, councillors from the opposition parties did not attend any meetings in order to contribute, but they opposed the administration’s plans vocally in the local press.

The council decided to purchase an empty department store to transform it into a much-needed new local leisure centre. Once the council committed to that investment, we saw the private sector gain the confidence to invest in Ayr and a private company bought a neighbouring empty shopping centre to turn it into a new cinema complex to coincide with the opening of the leisure centre. That conversion of a huge chunk of empty retail space into leisure space would have been transformational for Ayr town centre. Unfortunately, as is too often the case, the parties that were in opposition opposed any plans for that development, and the current administration of South Ayrshire Council has cancelled the leisure centre project, so private investment has pulled out. At present, there is no long-term plan to transform Ayr town centre and another consultation has been launched, although the work was already done back in 2018. If we are ever going to see progress in our town centres, we need a cross-party and cross-administration approach. We need to go beyond politics for the sake of politics and put our constituents and support for town centre regeneration at the forefront.

On a more positive note, although some of our towns are struggling, we also have some examples of towns that are flourishing, and what better example to look at than Prestwick, which I am very proud to represent in the Parliament? After extraordinarily hard work and commitment from the community, Prestwick high street was crowned as the best in Scotland for 2019. If someone drives through Prestwick, which I invite all members to do, they will find that there is plenty to keep them occupied. It has more restaurants and cafés than can be counted, it is full of small independent shops, and it has a nightlife that attracts many from afar. Despite the challenges of the past few years, business is still booming in Prestwick and there is stiff competition to take up any vacant retail space that emerges. Prestwick has succeeded where others have failed because it has taken an individualised approach that serves the needs of the community.

I strongly believe that Scotland should be an entrepreneurial superpower where people with bright ideas and ambitions are encouraged to open businesses and contribute to the economy, just like so many in my constituency do. We must support them and push them forward.

Will the member take an intervention?

I am sorry, but I have only 15 seconds left.

I can give you the time back, Ms Brown.

Okay.

I am interested in the examples that Siobhian Brown is giving because the committee visited different towns. Although we sometimes found that we could point to the successful ones having good local businesses and so on, there were also factors such as that they were cheaper places to do business, they had easier parking, the community was a bit more mixed and there was a bit more money in it. That was true of the towns that we saw, so I wonder whether Prestwick has any of those advantages and whether neighbouring areas might need a bit more support to achieve the success that Prestwick has had.

Ayr town centre is unique. Some 30 to 40 years ago, people resided in flats above the shops, but it moved away from that set-up in time. Prestwick is different—the same is true of Troon—in that there are a lot of residential and non-residential dwellings in the town centre. That makes it busier, which is the difference between Ayr as the county town and Prestwick and Troon.

It is important to look to the past, as it allows us to learn lessons from mistakes made and, of course, indulge in nostalgia. However, if we are to succeed, we must look ahead with a fresh perspective, new ideas and endless ambition. That is how our town centres will thrive once again.

15:50  

It has been a really interesting debate so far, and I have enjoyed listening to the contributions, particularly the previous one from Siobhian Brown. I am always interested in hearing from her. She mentioned a couple of towns in her patch: Ayr and Prestwick. I had the pleasure of visiting both towns recently. First, I went to Ayr, then to Prestwick. I actually drove through Prestwick town centre. It was the first time that I had been there. I was on my way to the airport, which I have been to a few times, but I had never been through the town centre before.

I remember commenting to a colleague that it is a lovely place, with much variety, and I said that I would have to come back. The picture that Siobhian Brown paints is exactly right. I fully intend to go back, park up and shop. That is the way that I like to see a town centre.

The point is that town centres come in all shapes and sizes. I represent a region where there are lots of towns, and I will mention a few of them. I will start with the town where I live: East Kilbride. We have what is billed as Scotland’s largest undercover shopping mall. It has been struggling for a number of years and it went into administration recently. Yesterday, I spoke to the administrators of that huge shopping centre. I think the message is that it is not all doom and gloom. A plan is being worked on. We could look at reconfiguration, with a bit more of a leisure mix, as opposed to mostly retail. Maybe we can get more housing. The centre has not been put up for sale yet, and I do not think that there is any particular rush in that regard.

If we turn to Hamilton, which the committee visited, the picture is different. It has a covered mall, but most of the town centre is not covered—it is out of doors, a little bit like how it is in Prestwick. Hamilton has a relatively successful BID project, which the committee came across. I should mention that I was not on the committee at the point of its visit; I joined at the tail end of the inquiry.

If we go across to North Lanarkshire, we have Cumbernauld, which is another new town. Unfortunately, it is the two-time winner of the plook on the plinth award, which it won through the—thankfully—now defunct carbuncle awards.

I rise in defence of Cumbernauld. That award is defunct because it caused great offence to people who lived there. It is a good thing that it is defunct—we should be celebrating all the fantastic things that towns do. I think the member said that he would be optimistic, so why is he dwelling on the past, particularly a negative past?

I am being optimistic, because there is a plan for Cumbernauld. It has attracted £9.2 million from the levelling up fund. I am sorry that Tom Arthur was so negative about the levelling up fund, because that money will help to regenerate Cumbernauld town centre. Like Fiona Hyslop, I am delighted that those awards do not exist anymore, because they were entirely negative. She is absolutely right that people did not like having that badge applied to their town.

However, there is hope for Cumbernauld thanks to all stakeholders, including both Governments and the council, working together. Unlike Carol Mochan, I could not care less what the political persuasion of the council is; I do not think that anyone cares about that. In Scotland, councils of all shapes, sizes and colours are doing their best for their town centres, so for her to stand up and say that only Labour can deliver good town centres is, frankly, ludicrous. There is hope for Cumbernauld.

In Motherwell—I see Clare Adamson at the back of the chamber—work is going on to improve the town centre, and work is being done at the station, so I think that we will end up with a nicer offering in that town.

I want to make the point that town centres come in all shapes and sizes. If we want to attract people into our town centres, we need to get people to live in them, as other members have mentioned, and to offer things such as free parking. We also need to look at the rates system.

I will end on the point that Age Scotland makes about people having access to town centres. That is where public transport comes in. We need to provide a really good public transport offering in all our town centres, because, too often, it is too difficult to get in and out of them. If we want customers and footfall, we need a decent public transport system.

15:57  

I thank colleagues for a very positive debate on our town centres and how to get them thriving again.

Like Siobhian Brown, I hark back to the days of a thriving Ayr town centre, as I come from Ayr originally. When I was small, I went to town with my mum every Saturday. We had a good look round the shops. Sometimes, it was a bit boring for me if my mother was on clothes shopping mode, but I really enjoyed going to Woolies for a look at the toys and maybe a pick-’n’-mix for the bus home. I doubt whether many children and adults have that experience these days.

Throughout most of the previous century, we had a planning system and Governments that supported retail in town centres and clearance of housing. The value of prime sites on principal shopping streets soared to extraordinary levels, and then American-style malls came in. Those were reliant on massive anchor stores, which are now failing due to the rise of online retailers and the support for out-of-town shopping centres. We have spoken a lot about that already. However, those retail parks performed much better than the high street did during the pandemic.

We will never recreate the town centres of my childhood, but we can create vibrant town centres, which are central to the ambition for 20-minute neighbourhoods across Scotland.

The committee’s report asks how the Government might incentivise social landlords to build in town centres. From my professional experience, I know that affordable housing should be central to the regeneration of town centres, so I am pleased that the Scottish Government is already investing £3.2 billion in affordable housing over the five years of this parliamentary session.

Our colleague Graham Simpson mentioned Motherwell town centre. I also have Wishaw town centre in my constituency and, tomorrow, I will be cutting the ribbon on Trust Housing Association’s development there. The development is on what had been a gap site for almost 25 years, right in the middle of Wishaw town centre. It will provide new homes adjacent to local businesses and reinvigorate the whole town centre. Does the member welcome that development in my area?

I can give you the time back for that, Ms Tweed.

Thank you, Presiding Officer.

Yes, I think that the development that Clare Adamson mentioned is absolutely amazing. I will come on to speak about similar developments in my constituency and other places.

The £3.2 billion that I referred to is an increase of more than £541 million on the previous five-year allocation, which is an uplift of more than 20 per cent. Social landlords will need additional funding for brownfield sites where there are poor site conditions or contamination. Those landlords will also need to be encouraged that the Government will prioritise projects that seek to regenerate town centres. Providing housing in town centres has multiple benefits. As well as providing much-needed housing, it means that residents do not need to have a private car and that derelict buildings can be repurposed or demolished. Crucially, such developments bring people into town, which supports businesses and encourages other businesses to move in.

It was good to hear Colin Smyth’s comments on Dumfries, and that Dumfries was included in the case studies as part of the report of the inquiry into town centres and retail. I worked for 15 years as a development director for a social landlord in Dumfries, and I took the view that the affordable housing grant would be better spent in town centres. I am probably responsible for at least 60 of the new houses that are noted in the report, and for bringing student accommodation into the town to serve the expanding Crichton campus.

From that experience, I can say that brownfield town centre sites are not easy to develop. Such sites carry much greater risk than greenfield locations and, no matter how much feasibility work is done, things go wrong and there are unforeseen costs. The social landlord is then responsible for those additional costs. If the Government really wants to incentivise landlords, it needs to provide a safety net for when things go wrong and provide support and potentially further funding, even when the development is already on site.

We also need to be prepared to address planning issues. Moat Brae, which is now the national centre for children’s literature, is also mentioned in the report. The social landlord that I worked for at the time purchased Moat Brae because it was derelict and an eyesore, and the landlord was keen to build 20 desperately needed flats. The intention at the time was to maintain the facade and provide flats behind it, with a visitor centre commemorating J M Barrie, who had links to Moat Brae. However, a community trust opposed the development and eventually the association transferred the property to that group.

The Moat Brae restoration by the community trust took 10 years to build, at a cost of £8.5 million, which was made up of public donations and various grants from the heritage lottery fund, Creative Scotland and so on. The housing association’s plans would probably have cost about £1.5 million of public money and taken about a year to complete.

The point of that story is that putting housing into historic town centre buildings, particularly where demolition is involved, is not always popular.

Ms Tweed, could you start winding up your remarks, please?

Okay—thank you. I will just skip to the end. I actually thought that I had more time.

Putting social housing on greenfield sites when town centres are struggling makes little sense. Let us ensure that there is a real focus on the allocation of housing budget to regenerate our town centres and support social landlords to achieve that.

16:04  

I am pleased to speak in the committee debate on the conclusions and recommendations within the “Inquiry into Retail and Town Centres in Scotland” report.

Scotland’s town centres have been under on-going pressure in recent decades with the rise of out-of-town shopping, online shopping and then the pandemic having a major impact. My first point would be that there needs to be some kind of levelling up between out-of-town development versus developments in town centres. That point was picked up by the committee in recommendation 25, which says:

“The Committee agrees that the overarching principle must be rebalancing the cost of doing business in town centres versus out of town sites.”

The same can be said for shoppers, who face parking charges and access issues when choosing to shop in town centres versus free parking and convenience at the out-of-town parks. Many businesses in town centres such as Dunfermline and Kirkcaldy raise the issue of parking charges and point out that it is just cheaper and easier to go out of town. Therefore, that surely needs to be addressed.

Then, there are the higher costs to businesses based in town centres. Recommendation 30 of the report says that more need to be done to address business rates in town centres and Claire Baker touched on that. In recommendation 31, the committee states:

“The current NDR system acts as a disincentive when trying to attract businesses back to our town centres.”

Therefore, there are clear messages in the report, but we have yet another report and then I fear that there will be another report, but what actions will be taken? The committee is making some really good points, but they need to be picked up on.

The committee adds that it

“consistently heard that the current system”

of non-domestic rates

“works against investment and growth in town centre retail and that the NDR system should be rebalanced to support town centre developments.”

Our business rates system must support growth and innovation, encourage good business and no longer penalise our high streets. Government must take that on board.

I also note that the committee picks up on the fact that not all town centres have business improvement districts. Indeed, in Dunfermline, it was businesses who voted to reject continuing with their BID company, which is proving now to be a big loss to the city. Therefore, I support what the committee says at recommendation 36:

“The Scottish Government is asked to set out how support will be provided to towns and communities where there is no BID and without any local community resource.”

Indeed, I would make the case that, where town centre funds are established, the out-of-town stores should be required to contribute. I know from the Dunfermline experience that that was an issue for the smaller businesses that had contributed and then voted not to continue with the BID. They felt that there was an imbalance between what they were being asked to pay in contributions compared with all those out-of-town centres, some of which are just 100 or 200 yards from the town centre.

I would also say that there is a need for a better structure and process for co-ordinating partnership working at town centre level. Local authorities, in my view, have a critical role to play but the decision making needs to come at the local level. All town centres should have development plans that are designed locally, costed and driven by all partners.

I thank Alex Rowley for taking part in the debate. He is not a committee member but he has obviously read the report thoroughly. Does he support the committee’s suggestion that it would be helpful to have a central resource that communities could pull on? That might be for legal advice, or for other support and advice if they were looking for community options, but it would be something that was delivered centrally that they could pull down on.

Yes, absolutely. Government needs to look at its role when it comes to support. As the former leader of Fife Council, I sometimes worry that the council has far too much of an attitude of “We’ll tell you what you need” rather than “How can we support you?” There needs to be a rebalancing in the role of the councils. They need to support and to put resources in but not to dictate what the decisions will be at the end of the day.

The committee makes the point that culture and heritage have an important role in town centre regeneration and sustainability. I agree, but I suggest that there must be a fairer distribution of such funds from national organisations, beyond the large cities and into smaller cities and large towns across Mid Scotland and Fife—and, indeed, across Scotland. There is certainly a view among many organisations that, if they are not in one of the large cities, a lot of the national organisations simply ignore the pleas, and that the pot is not getting split as equally as it should.

I welcome the committee’s highlighting at recommendation 14 of

“the value of, and increased demand for, online and e-commerce activities”.

One example of good practice is Cupar in Fife, in my region. Just last week, it was reported that Cupar has cut the number of empty business units by more than half—a success that is hailed as “ground-breaking” and as possibly the best in the UK. Vacancy rates dropped from 18.2 per cent in 2019 to just 7.6 per cent last year.

Colleagues may have seen Cupar being featured on the BBC’s “My Kind of Town” programme because it is home to Scotland’s only digital improvement district, CuparNow, whose various platforms show the town’s active community and vibrant businesses.

Such a success story is welcome and should be looked at in more detail by Government to find out whether more such forward-thinking approaches can be developed to allow local-level tailored approaches to local economic development.

My experience of town centres is that a lot of businesses, social enterprises and culture and arts venues are committed to working for improvement but, often, feel frustrated at the lack of support and the stumbling blocks that are put in their way by public authorities.

Mr Rowley, will you bring your remarks to a close, please?

To finish up, my message is that we must empower local stakeholders and communities, and build in partnership for the future.

Kaukab Stewart will be the last speaker in the open debate. You have up to six minutes, Ms Stewart.

16:12  

I thank the Economy and Fair Work Committee for its very detailed report.

We are all too aware that Scotland’s town centres have faced increasingly challenging circumstances, year on year, with a seemingly relentless onslaught of obstacles that have undermined the success of high street retail businesses large and small. Changed work patterns and shopping habits that were not necessarily created by the pandemic but that have certainly been accelerated by it; recruitment issues that have been exacerbated by the on-going fallout from Brexit; and the economic challenges that are posed by increased energy costs, transport costs and other inflationary pressures—all those things are combining to make life for retailers an on-going and uphill struggle.

I commend, in particular, small and medium-sized business owners the length and breadth of Scotland, including those in my Glasgow Kelvin constituency, for their commitment to customers and their perseverance in the face of the challenging conditions that they find themselves operating in. Their delivery of high-quality goods and services and their proven adaptability and resilience do them huge credit.

I welcome the report and the Scottish Government’s commitment to addressing the challenges that are faced by retail in our towns and communities. I highlight the retail strategy delivery plan that is being prepared under the leadership of the Minister for Public Finance, Planning and Community Wealth. I hope that the plan will be prepared and enacted with a sense of urgency.

Key aspects that will significantly determine the scale of the plan’s success are identified in the committee’s report. They include a requirement for cross-portfolio policy cohesion—ensuring that resources and initiatives dovetail to maximise their positive impact.

The upskilling and future proofing of our retail workforce, particularly in the areas of creating and growing an online presence, form another important strand of the plan and of the support that is needed from Government to enable all retail businesses to benefit from the increasingly important multichannel model of selling.

The Scottish Government has committed £100 million to businesses to improve their digital skills, capacity and capability. It has committed to support the improvement of broadband capacity and mobile connectivity in towns and town centres in order to improve local digital platforms. Like the committee, I would welcome more detail on how and to whom that vital funding will be allocated.

I note the committee’s request that the Scottish Government consider what equalities expertise the group that is taking forward the retail strategy delivery plan demonstrates. It is important that the group be equipped to deliver effective strategies to remove barriers to advancement for women in retail, which, traditionally, has had gendered role structures, as well as to remove barriers for people of colour and those with disabilities.

It is worth considering how Glasgow is responding to the challenges that retail faces in its city centre—some of my colleagues have mentioned streets in my constituency with which I am very familiar—and how it is seeking to support businesses to adapt and be successful in these most difficult of times.

The economic impact of the pandemic on Glasgow city centre, as on all retail centres, was profound and is on-going. With its low residential population and reliance on a regional travel-to-work population, Glasgow city centre and the west end of the city have traditionally boasted a high number of retail businesses that are reliant on those specific drivers of footfall.

I commend the Glasgow city centre task force for the work that it is doing to tackle the economic challenges that the city faces. Since 2020, it has supported retail and has attempted to maximise footfall return to the city centre with marketing campaigns, event funding, maximisation of the use of outdoor space, the tackling of antisocial behaviour and targeted cleansing and environmental interventions. The task force brings together all the core city sectors, including retail, hospitality, the night-time economy, higher education and transport. It is an excellent example of cross-portfolio working.

Yesterday, I attended a meeting of the Glasgow city multi-agency group, which brings together a wide range of stakeholders, including retailers, Police Scotland, street pastors and MCR—motivation, commitment and resilient—Pathways. The multi-agency group works collaboratively to share strategies in a practical and solution-focused way to ensure a safe and inclusive retail experience.

The committee has done a thorough job of investigating the issues that retail businesses, town centres and communities face, and it has presented clear, practical options to support retail to survive and thrive in an increasingly fast-changing environment. I welcome the report and look forward to hearing what I hope will be a positive response to it from the minister.

16:18  

I begin with a declaration of interests, which, given that I come from the retail industry, is substantial. I am currently a director and the sole shareholder of a business with retail interests. Suffice it to say that I am extremely biased towards the retail industry and make no apology for that.

It has been a really good debate, looking at both town centres and the health of the retail industry more generally. It is an incredibly important issue.

Listening to Siobhian Brown and Evelyn Tweed, in particular, I was struck by the fact that people have a lot of nostalgic memories of retail. However, retail has always gone through change. More than 100 years ago, people railed against the rise of department stores and the loss of individual mercantile trade. After the second world war, people railed against retailers putting stock out so that customers did not have to ask a shop assistant to see it. Through the 1970s and 1980s, people railed against the rise of the big national retail chains—in fact, having lived in a retail family, I remember the tail end of that through the 1990s. In a sense, the current change is part of a longer-term progression.

Colin Smyth is absolutely right. What is at stake here is much more than places of business. Our town centres are at the heart of the identity of our places. That is why it is important to think carefully.

When the committee visited Dumfries, we were very struck by the empty spaces above shops. In the past, those spaces would have been used for stock and storage. Mr Johnson is familiar with the economics of retail. The idea of storing something just in case has been replaced by the concept of getting stock just in time. The turnaround of stock has completely changed and we have lots of vacant places above shops.

The way that we use our town centres is really important. I will come to that point.

Claire Baker did an excellent job of setting out the constituent elements that town centres need to be able to thrive. They need more than shop units; they need transport links, housing density and use. That is also why I am keen to support what Michelle Thomson said, because she touched on an important point about use. Towns are commercial centres. Tom Arthur is absolutely right: retail is a massive employer. Maintaining the critical mass for commercial activity is important because of the jobs that that supports.

That is why we need to take great care with change of use. I absolutely think that we should bring the space above stores into residential use, but, as I suggested in my intervention on the minister, we should take care to preserve retail space, because converting that into residential space can undermine footfall. As a former retailer, I can say that workplaces generate far more footfall for retail premises than residential dwellings do. If we can have both, that is great, but we should not view them as equal and commensurate. We must retain retail units and, in so doing, drive down rents to lower the barriers to people beginning retail businesses in our town centres. If we can come up with policies that do that, we will be on to a winner.

Does Daniel Johnson agree that this is about getting the balance right and not about just having lots of retail? We need to have people living in our town centres. Too many town centres have too few people living there. It is also important to have restaurants and places to eat out, as well as theatres if the space is available.

Mr Simpson is absolutely right. This is about the balance between the working, residential and visiting populations, but it is also about the balance between uses. People will not always be buying goods; they may be buying services. If I could caution people about one little thing, I would say that this is not necessarily about retail but is about consumer-facing businesses in our town centres. Sometimes, services are just as good at bringing vibrancy to our town centres. This is about finding that equilibrium. We must think about how planning policy, tax policy and local council policies play into that.

I highlight the points made by Siobhian Brown, Carol Mochan and Alex Rowley. Local authorities have an absolutely pivotal role to play. I totally agree with Alex Rowley: our local authorities must work in partnership with our town centres to help them to thrive.

There has been a great deal of discussion about online retail, which is critical. We must do everything that we can to support businesses to move online, because no retail business can survive by being purely physical—that is a fact. If you are not trading online, you are trading into decline. It is as simple as that.

However, the skills that are needed are not purely digital. The hardest parts of putting a business online are photography and writing copy; the digital bit is actually quite easy. We must ensure that it is easy to obtain those skills, and I gently point out to the Scottish Government that scrapping part-time college courses in subjects such as photography may have hindered that. Most important, in that transition, we need to ensure that those rounded skills, which are not necessarily technology skills, are accessible to people who are very busy running businesses.

We have to talk about non-domestic rates, because, when we talk to retailers, that is the first subject that they raise. I say to the Scottish Government that, if we were looking at non-domestic rates as a new levy, I do not think that they would meet its principles for taxation: proportionality, efficiency and certainty. They are not a tax that is any of those things. They have unintended consequences that have not been accounted for. One reason why the Government likes non-domestic rates is that they always bring in the same amount of money, but that is because they do not reflect the health and state of retail.

We have to rebalance so that retail is not paying twice as much as its overall contribution to the economy. We need to repurpose elements, which is why we should be looking at treating places such as Amazon’s premises as retail premises and not warehouse premises. If it was paying its fair contribution of non-domestic rates, it would be paying not £3 million, but £60 million.

Finally, we probably need to replace non-domestic rates, because, until we replace them with a better levy that actually reflects business health and encourages investment rather than hindering it, we will continue to have a problem.

I remind members that those who have spoken in a debate are expected to be present for the start of the closing speeches. I note that one member was late back and one member has still not come back. That is a discourtesy not just to the chair but to all other members who participated in the debate. Perhaps we will hear from those members in due course.

I call Mr Lumsden to wind up on behalf of the Scottish Conservatives.

16:26  

The retail sector and town centres the length and breadth of Scotland are facing enormous and often unnecessary pressures at present. I welcome the opportunity to take part in the debate and I thank all the organisations who sent in briefings ahead of it.

This Government and those before it that were led by the SNP have presided over a period of decline in Scotland’s retail sector. The change in shopping behaviours was predicted and accelerated by the pandemic, but that should not mean that we accept defeat and just manage the decline. We should have had plans in place a decade ago to change how we use our town centres by having more people living and working in them. However, time and again, we have seen that there is no plan from the Government to re-energise or reinvigorate our town centres, no plan to boost economic growth in the heart of our communities, no plan to bring jobs and opportunity to those areas, and no plan to help small businesses to flourish.

The SNP and the Greens have never been friends of Scotland’s small businesses. What we have is an anti-business Government that seeks to restrain businesses with unwanted and unnecessary bureaucratic shackles.

The Economy and Fair Work Committee has heard repeatedly about the importance of the small business bonus scheme, which the SNP Government brought in. It did not exist before that, and it is saving hundreds of thousands of businesses from paying any business rates whatsoever. That is very pro-business.

It is just unfortunate that the small business bonus scheme was cut in the budget that has not long been passed.

Nowhere are the bureaucratic shackles more evident than in the shambolic disaster that is the deposit return scheme. Businesses of all sizes across Scotland have been calling for the scheme to be reconsidered for months, but the Government seems to be determined to plough on. Granted, it has been suggested that small businesses might be given some sort of exemption, but the when, what, and how remain, which is muddying the waters and creating more uncertainty for businesses.

Proof, once again, of the Government’s disdain for small business was its decision to vote through reforms to the small business bonus scheme in the recent budget, thereby reducing the threshold for 100 per cent relief and ripping away a lifeline from many small businesses in Scotland.

We also have business rates, the regime for which—as the committee’s report identifies—places a huge disadvantage on Scottish businesses and remains a disincentive to investment. The committee’s report notes that evidence that was produced by the Government showed that the current non-domestic rates regime is “inequitable and unfair”. That will be no surprise to anyone who has spoken with business owners in our town and city centres.

That is why it is so disappointing that the SNP refused to accept the Scottish Conservatives’ proposal for a 75 per cent business rates relief. As a result of Barnett consequentials, the Government could have provided Scottish retail, hospitality and leisure businesses with support that would have been equivalent to that which is enjoyed elsewhere in the United Kingdom. Sadly, this Government chose to continue to hammer businesses in our town centres with jacked-up rates.

There has been one change recently to non-domestic rates; that is, devolution of empty property rates relief to local authorities. That devolution means that the burden of providing the relief falls on our hard-pressed local councils. My fear is that the relief might be withdrawn altogether because councils simply cannot afford to keep it going.

In Aberdeen, we are seeing perfectly good office accommodation being pulled down in order to avoid rates liability, which seems crazy but is, at least, an option for some owners. However, the owner of a listed building does not have that option, and an empty listed building could be liable for non-domestic rates depending on the position that the council takes, which will differ between Ellon and Edinburgh. That could have two outcomes. The first is that the owners could be more flexible with their terms so that the building would be occupied. That is what we all want. However, when I speak to commercial property experts, they tell me that they do not feel that rent is the issue; rather, lack of demand is the problem.

The second option is that owners could simply walk away, thereby adding to the decline of our town centres, as listed buildings become too high a risk for people to invest in. I guess that time will tell, because I do not suppose that any modelling of the potential impact has been done by the Government.

We have heard contributions from other members. It was good to hear about Roz McCall’s real-life experience of working in retail. She reminded us that many retailers will be working now on their plans for Christmas trade—there are only 299 shopping days until Christmas. Roz McCall mentioned House Of Fraser. Aberdeen used to have a House of Fraser store, just like it used to have Debenhams, BHS and John Lewis stores. All of them have gone from Aberdeen’s high street and they will not be replaced. We need new thinking and new ideas.

Claire Baker mentioned in her speech the demise of some of those big names. In Aberdeen, the old BHS building will have a new use—I hope—since Aberdeen’s success in securing £20 million of levelling up funds.

Claire Baker also said that Scotland has been falling behind the rest of the UK on digital skills. That is a worrying trend that must be addressed urgently. We heard about that in the Finance and Public Administration Committee.

Jamie Halcro Johnston talked about e-commerce business support, as did Daniel Johnson. Jamie Halcro Johnston made some great points about the skills that people need in order to be able to start trading electronically.

There has been some good news. We heard, for example. that Dumfries is fighting back, and Roz McCall mentioned Cupar and the success there, which we hope can be replicated across the country.

Fiona Hyslop spoke about business improvement districts. From experience, I know that they play a vital role and that they lever in additional funding through the levies that they raise. She also spoke about the importance of the role that the cultural sector can play in improving our town centres.

Graham Simpson spoke about East Kilbride and suggested that the answer might be to move use of buildings’ to housing and leisure. I say that a mix of things is required; I would add culture and hospitality to that. He also spoke about the £9.2 million of levelling up funding and the need for all levels of government to work together.

I share Evelyn Tweed’s memories of Woolies. I remember being dragged round the shops by my mum: we went to C&A first, then I got pick and mix from Woolies as my reward.

Elsewhere, other policy failures of this Government are having severe impacts on our town centres. Despite promising in its 2016 manifesto to

“deliver 100 per cent superfast broadband coverage for Scotland by the end of the next Parliament”,

the SNP has presided over serious delays to the R100 scheme—so serious that we will not see it being delivered until 2028. That has a real impact on our rural shops and retail sector.

The devolved Government has failed to produce a plan that will bring prosperity to our town centres, and seems instead to want to manage the decline, so let me give it some areas to look at. We could take steps to make our town centres more competitive by supporting Scotland’s local councils to exempt high streets and town centres from paying business rates, which would release businesses of all shapes and sizes from restrictive and unfair taxation.

We could take action to bring people back on to our high streets by proving local authorities with full funding to scrap parking changes in publicly owned car parks, which would encourage people to support their high streets. As Alex Rowley said, it is often easier to go out of town. We could stop the war on motorists by making it easier for people to get into their town and city centres.

The Scottish Conservatives would take on the horde of “To let” signs that are holding our high streets hostage, by supporting the community-first right to buy. We would reform planning laws to allow for redevelopment of brownfield sites, which would help to energise our towns and cities, encourage new green spaces and revitalise our town centres and return excitement and opportunity to them. As Roz McCall said, time is running out.

Above all, we would pass on Barnett consequentials and deliver 75 per cent rates relief so that Scottish businesses could operate on a level playing field with those across our United Kingdom.

16:35  

I reiterate my thanks to the committee, and to the clerks and parliamentary officials, and all those who have contributed to production of the report. I am conscious that the timing of the report, at its inception, aligned with publication of the retail strategy in the Scottish Government’s response to the town centre action plan and with parliamentary scrutiny of the draft NPF4. That speaks to the topicality of the matter, and to the sustained and profound interest in the future of our town centres that has been demonstrated today.

I will respond to as many of the individual points that have been raised as I can. I am very grateful to colleagues for their mostly measured, thoughtful and considered contributions. I acknowledge that the issue presents a profound and strategic challenge that does not lend itself to being solved by magic bullets or to easy solutions.

More than one colleague referred to Professor Leigh Sparks. If I recall correctly, he made remarks to the effect that we have spent 50 years doing things to harm our town centres and it will take 50 years to fix them. I do not think that any of us wants to take 50 years to address the problems with our town centres.

It is important to acknowledge Daniel Johnson’s point, which was that the retail sector has always been in flux and is dynamic in responding to societal change, and Fiona Hyslop’s point about the need for town centres that are representative of and fit for the 21st century.

It is also important to recognise that addressing the problems cannot happen overnight. It requires sustained effort across Administrations, parliament sessions, all layers of government, including local and national—the UK Government has a role to play by providing overall macroeconomic stability—and our communities. That also has to be done in partnership with the private and third sectors.

To some extent, our town centres are the complexion of our economic system. Many of the challenges that we highlight with regard to town centres are reflections of deeper issues in the operation of our economy. They reflect the fundamental economic policy decisions that have been taken over many years. Let us, for example, consider the opening up of land for out-of-town retail and the increase in car-dependent residential developments at the edge of our settlements. Those things have removed people from our town centres, which has reduced the population density that is essential to providing town centre businesses with consumers.

Globalisation and the internationalisation of finance have brought tremendous opportunities and significant investment to Scotland, but they have also led to many of our high street and town centre properties being owned by interests that have no particular local connection to an area. We have all—including the committee—acknowledged the challenges that that brings. That is why, among the many workstreams that have been outlined, community wealth building will be so important. Community wealth building will be a byproduct—a consequence—of rewiring how our local economies operate. Along with all the other broader strategies, we will start to see it make a material difference in terms of the aesthetic of our town centres and in the range of shops and services that are available.

A number of specific issues have been raised. Let me touch on a perennial issue in discussions about our town centres and high streets—non-domestic rates. If I recall correctly, the legislation that underpins non-domestic rates has been in place since 1854. We recently undertook work to implement the reforms of the Barclay report. I acknowledge that, in these trying times, business is asking for stability. We sought, in the recently passed budget, to meet the number 1 ask from businesses, which was to introduce a freeze in the poundage.

As I have said previously in the chamber and in exchanges with Mr Johnson, I recognise that one of the central challenges with non-domestic rates is the reality that rateable value does not always align with the economic performance of an individual business. The question is, in that case—I put it to colleagues in all sincerity, because it is a conversation that I will be happy to have—is this: if there is a desire to move to a different system, what should that system look like? Should it be revenue-neutral, bearing in mind that non-domestic rates are forecast to raise some £3 billion for public expenditure this year? What do we mean by “rebalancing”? Those questions are significant, but that is a conversation in which I am happy to engage.

The minister is right to pose that challenge. The reflection is about more than just individual businesses; it is about the fact that retail, which is 10 per cent of the economy, provides some 20 per cent of non-domestic rates. One of the things that the Government will need to accept, as we all will, is that the static nature of non-domestic rates is probably a sign that it is not a functional levy. Does the minister agree with that insight?

Mr Johnson has made an important point, but the specific issue arises from the fundamental operation of non-domestic rates as a property tax.

Irrespective of the system that we use, does the minister accept that there have been real concerns expressed by the retail sector about the Scottish Government’s not following England and Wales in introducing an enhanced rates relief for smaller shops, which it could have done?

Graham Simpson will acknowledge that budgets are ultimately about choices and the weighing up of a range of priorities. There is always an opportunity cost. As part of our budget, we have fully committed all the consequentials that we have received. The point that the Government raises with Opposition members at each and every budget is that if members desire increased funding in one budget line, it is incumbent on them to identify where the corresponding decrease would be in another budget line. The reality is that we provide an enhanced social contract in Scotland, which is not available in other parts of the UK and from which employees and people who live in our towns and town centres benefit.

I reiterate my invitation and my willingness to engage with members on the question of non-domestic rates.

I am grateful that the minister is always keen to engage.

The report is trying to say that, financially, things seem to be skewed against businesses in town centres and towards out-of-town businesses, which has had a massive devastating impact on town centres. Does the minister accept that?

Alex Rowley has raised an issue that was raised in the review of the town centre action plan. However, the question is about what members are proposing. Is it that we should try, through further relief and modifications, to modify how non-domestic rates land, or is it that we should recognise that, as a tax on heritable land and property, non-domestic rates is ultimately a feature of how the system operates and is therefore, in and of itself, something that requires fundamental reform? That is a very deep question and we will not land on an answer immediately.

In dealing with a system of taxation that is now 170 years old, it is right and proper—notwithstanding the need to address the immediate concerns of business and the people whom we represent who face the cost of living crisis—that we ask ourselves whether the system of non-domestic rates is appropriate as we approach the middle decades of this century. It is also right that we ask whether it is aligned with our ambitions in respect of town centres and the just transition to net zero. That is a conversation that we should be more open to having collectively in Parliament as the session progresses. I hope that we can consensually arrive at a position ahead of the next election. As I have said, my door is always open to those who want to have that conversation.

I am conscious that time is running out. A number of points were made about what the Government can do. The Government has an important role, which is why we provide significant capital investment through our place-based investment programme and our vacant and derelict land investment programme. Members touched on the latter, which can play an important role not just in remediating land and financing projects directly, but in creating stability and confidence in unlocking private sector investment.

Fundamentally, all that work has to cohere. In my tenure, I have sought to ensure that our retail strategy, our town centre action plan—which was jointly published with COSLA—and national planning framework 4 align with each other. The most profound way in which we can influence change for our town centres in the long run, beyond the immediate interventions that we make here and now, is to rewire how our economies operate at local and regional levels. Community wealth building is key to delivering that.

I call Colin Beattie to wind up on behalf of the Economy and Fair Work Committee.

16:45  

As deputy convener of the Economy and Fair Work Committee, I am pleased to have the opportunity to close the debate on the committee’s important report on retail and town centres in Scotland. First, I would like to thank the committee clerks and the other Parliament staff who worked so hard to help to produce the report. I also thank those who gave their time to appear before the committee to give evidence or who submitted written evidence. I should not forget to thank the committee members, whose diligence and commitment ensured that the end result is a document of real value.

There was a substantial level of agreement in reaching conclusions and in identifying key issues, as well as, to an extent, in finding solutions. I say that because the successful regeneration of our town centres is a complex exercise that will involve many stakeholders.

On the whole, this afternoon’s debate has been positive. It is interesting that so many members highlighted the same concerns and spoke about the same desires in order to achieve results in particular areas.

First, I touch on the question of non-domestic rates that Alex Rowley, Colin Smyth, Michelle Thomson and the convener, Claire Baker, raised concerns about. There was considerable discussion in the committee about NDR and the cost imbalance between out-of-town development and town centre regeneration has been raised as an issue. Should NDR be reduced in town centres and increased in out-of-town developments to encourage town centre regeneration? The committee agreed that the overarching principle must be to rebalance the cost of doing business in town centres compared to out-of-town sites. A variety of options were considered and highlighted in the report but, in general, NDR is perceived as inequitable and unfair.

E-commerce—or, more precisely, the lack of it—was a substantial feature of the committee’s discussions. Jamie Halcro Johnston and Claire Baker highlighted that point. It came as a surprise to me and to the committee that Scottish businesses had only a 4 per cent share by volume of UK e-commerce. The need to upskill and extend Scottish capabilities in that regard was well explored. The need for training and support for small businesses in particular was identified.

The committee noted that the £100 million that the Scottish Government has allocated to improving digital skills, capacity and capability is significant, but the committee was interested to know how the Government intends to allocate those funds and expressed the view that they be directed to support businesses to develop omnichannel models.

Town centre accessibility featured quite highly. In today’s debate, Fiona Hyslop, Alex Rowley and Graham Simpson all mentioned various aspects of accessibility, such as transport, car parking and the ability to walk around the streets and access the shops, which is so important in regenerating our town centres.

The question of NPF4 was seen as a key driver in town centre development. Although members had different views on whether a moratorium on out-of-town development in NPF4 is part of the solution, all members agreed that NPF4 must ensure that in any development, town centre sites must be fully evaluated to ensure that there is no adverse impact on the town centre. The Scottish Government response reaffirmed its commitment to that principle. However, concerns remain as to how the principle can be further strengthened by the Scottish Government.

The question of absentee landowners and property owners, particularly of properties that are decaying, derelict or in need of repair was fully discussed by the committee, and the minister, Fiona Hyslop, Claire Baker, Colin Smyth, Gordon MacDonald and others have mentioned that issue as a particular concern. The committee took evidence that absentee landowners remain a problem in some towns and a hindrance to the development of out-of-town centres. In some cases, identifying the beneficial owner can be difficult, especially if they live overseas. The committee looked at compulsory purchase orders as a means to deal with such buildings, especially when they are derelict or dangerous.

The committee asked the Scottish Government to undertake wider research elsewhere to determine the position on beneficial ownership of commercial property and land. It is clear that more needs to be done on that barrier, but it was noted by the Scottish Government that the UK Government has launched a register for overseas entities buying or selling land and property across the UK. However, it is unclear at this time how that will be made available, for example, to local authorities in Scotland.

The committee had some sympathy for an online sales tax, which might level the playing field between town centre businesses and competitors who have no bricks and mortar, but it was not seen as an easy option. It would need to be carefully constructed to achieve its target. The UK Government is not proceeding with its proposed online sales tax, and the Scottish Government has undertaken to review the complexities involved. It should be noted that, given that business taxation is largely a reserved matter, any proposals would need to be negotiated with the UK Government.

The principle that every town should have a development plan was widely accepted, and although the Scottish Government explained that, through various mechanisms, that is the situation, it is somewhat unclear how those various strands come together with the focus that the committee believes town centre development plans need. The committee sees town centre development plans as key. Each town is a unique entity, so there is no one-size-fits-all approach, and it is tremendously important that each entity has its own development plan.

The committee noted that the three enterprise agencies—Scottish Enterprise, South of Scotland Enterprise and Highlands and Islands Enterprise—appear to have differing remits and focuses for delivery. There seems to be a gap in the delivery of place-based support outwith HIE and SOSE. The Scottish Government advised that that support is in place, but the feedback indicates that that is not widely recognised.

One key element that the committee identified was the need for sustainability, which has been touched on by Maggie Chapman and the minister. Funds can be made available to develop a particular project or for regeneration, but it is necessary that the project be sustainable in the long term in the community in which it has been developed. It would be unsatisfactory if long-term funding had to be provided to sustain the project if the community was unable to do so. That makes it even more important that local communities are part of such plans at an early stage to ensure that they meet local needs and that a viable business plan is in place.

The small business bonus plan has removed more than 100,000 small businesses from paying non-domestic rates—broadly, it has been a success. The Scottish Government notes that some reforms took place in the budget to improve the plan’s progressive aspects, but more data is needed to better evaluate its impact. Concerns about the burden on businesses resulted in data collection not being carried out to the extent required.

Several members made significant contributions. Colin Smyth made a very strong plug for Dumfries as a place to live in and enjoy. Alex Rowley appeared to argue that Cupar in Fife is in fact the centre of the universe.

I have split loyalties. I am a fan of all my West Lothian towns but, on the basis that three of the SNP speakers were brought up in Ayr, I think that Ayr, as well as Cupar, deserves special mention in the debate.

I could not possibly comment.

In conclusion, the retail sector is a vital element in driving the regeneration of our town centres, and the need to consult extensively with local communities remains key. One size does not fit all. Each town and its communities are different, and each need is different. I believe that that has been recognised and accepted across the board.

The committee looks forward to the finalised retail strategy delivery plan from the retail industry leadership group and to seeing the part that NPF4 will play in creating an environment in which our town centres will prosper.

I commend the report to Parliament.