High street debt quadruples to £1bn over lockdown

Independent shops face a wave of closures after reaching “unsustainable levels” of debt, a former Iceland boss has claimed.

In a report on the high street, Bill Grimsey said that local retailers have watched their collective debt rise from £250 million to £1.03 billion since lockdown began.

“There is going to be a significant number of business failures and a large part of that debt will default,” he warned.

Grimsey took aim at the government for leaving smaller businesses to fend for themselves.

READ MORE: High street may never recover from Covid, ministers warn

“There are some sectors of the economy that governments will move heaven and earth to protect,” he argued.

“Those that don’t carry the same totemic importance to the nation’s economy are left to fight on their own.”

Although he avoided naming these sectors, there is widespread resentment for the support given to larger retailers.

Major supermarkets have collectively received billions in taxpayer funds despite seeing record sales.

While the Big 4 have returned their rates relief, the Co-op refused to follow suit and awarded a £1.4 million bonus to chief executive Steve Murrells.

Grimsey called for a “comprehensive forgiveness scheme” for shops defaulting on government loans, to prevent “the uncontrolled collapse of independent businesses”.

He also recommended replacing business rates with a 2 per cent sales tax, shifting a greater burden to online retailers.

British Independent Retailers Association chief executive Andrew Goodacre said Grimsey’s report highlighted a “real threat” to the high street.

“We would like to see the Chancellor address the problem of the debt and remove business rates for these businesses so that there is more cash in the business to address the debt,” he continued. 

“This could be funded by the £2 billion plus rates rebates returned by large essential retailers last year.”

Last week, Boris Johnson revealed that councils would be given powers to seize vacant shops in a bid to regenerate town centres.

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