Walk down the UK’s most famous shopping street and you will see bright, inviting emporiums of Americana, stacked high with sweets and rainbow-coloured vape pens. Dotted between them you’ll see identikit souvenir stores selling keyrings and miniature models of double-decker buses. Oxford Street has at least 30 of these candy stores on the last count, with some even in prime locations.
Everyone understands that retail had a really tough time during the pandemic, which saw big names leaving high streets across the country. Even so, shoppers and tourists are perplexed. Why are there so many? Why do they often appear to be empty? Why are sweets being sold at eye-watering prices?
The answer to the first question is the long-term decline of the high street due to online shopping, compounded by the short-term shock of lockdowns during the pandemic. The increased number of empty units has created a headache for freeholders or long leaseholders of these buildings, who become liable to pay business rates on the empty stores. To avoid this, a number have let their sites to an intermediary company (or series of companies) or managing agent, who in turn let to other companies who run souvenir or sweet shops.
Anyone moving into an empty shop becomes liable for business rates instead of the freeholder or long leaseholder. The problem is establishing who the occupier actually is. When council officers visit US candy shops, they frequently meet staff who claim not to know who the owner is and point to a shell company licence certificate on the wall. The council has the job of trying to unpick a trail of false occupation names or shell companies that dissolve before we can take court action for business rates owed. When we do find the occupier, we encounter shell operations where assets may have already disappeared.
While some of the stores are legitimate, others are under investigation by Westminster city council for tax evasion and selling counterfeit goods. We are currently investigating unpaid business rates of £7.9m from 30 shops. That is the taxpayers’ money – yours – being siphoned off. Westminster is the largest collector of business rates in the country (£2.4bn per year) with the vast majority of the money redistributed across the country to other local authorities. Therefore this lost income affects all UK taxpayers, not just those in Westminster.
The ordinary customer often also gets ripped off, too. Unpriced goods ring up a hefty charge at the till. Children can find themselves forking out £13 for a bag of pick’n’mix. Some of these shops are also outlets for suspected fake and unsafe goods. In the last six months, Westminster city council officers have recovered around £575,000 worth of these items from candy and souvenir shops on Oxford Street.
To give you an example: we recently recovered more than £100,000 of suspected fake or unsafe items after raiding three shops on Oxford Street. From one store alone we recovered more than 2,000 suspected fake Willy Wonka bars. If that doesn’t sound like big business, consider the mark-up. The chocolate inside these bars is sometimes genuine – a supermarket’s own-brand – rebadged in fake Willy Wonka packaging. The original cost of the chocolate is around 40p; the fake bar is sold at £9 to £10. In other cases, as the Food Standards Agency warns, the chocolate may be hazardous. The haul is also suspected to include 3,000 vapes carrying excessive levels of nicotine; around 1,400 fake designer label phone covers; 78 fake designer hoodies and a number of bogus Apple AirPods; the list goes on.
Our trading standards officers make life difficult for these rogue traders with their enforcement activity, but they can’t tackle the problem alone. We are pressuring the landowners of the buildings where these stores operate to reflect on whether a short-term ploy to deflect business rates serves the long-term future of Oxford Street. We know there are many landowners who want to work with us; however, so far there are some who are in denial about the problem, or who seem set on obfuscating in the face of reasonable requests from the council.
One significant measure the council is taking to stop the inexorable rise of the candy store is offering discounts to startup businesses who will take void spaces on. The West End pop-up scheme helps landlords secure a reduction of 70% in business rates where startup businesses are allowed to use an empty shop. Since May 2001, we have supported 38 up-and-coming brands – ranging from a company that turned old kimonos into lampshades, to a lingerie business, to a company that produced recycled clothing.
We are working with central government and enforcement partners to take action. But we also need new measures in the forthcoming Economic Crime Act – like a change in Companies House legislation – to make it easier to navigate the labyrinthine world of shell company structures. Government agencies need the power and resources to investigate – and if necessary, take action – when similar firms are repeatedly created and closed by the same people. The end result must be to ensure that taxpayers’ money isn’t wasted, and that means understanding who is responsible in order to hold them to account.
It is difficult to avoid the conclusion that many of these shops may simply be vehicles for a tax evasion racket exploiting UK laws. I know other UK cities are being similarly affected, and it feels like the moment to take collective action.
Ultimately, if consumers want to go into US sweet shops and buy expensive goods, I can’t stop them. But what I will strive to do is stop customers and taxpayers getting conned.
Councillor Adam Hug is leader of Westminster city council
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