Councils demand 'two strikes' powers to close London shops

Local authorities in London are seeking new powers to shut down businesses that repeatedly flout regulations, according to a new report. The Centre for British Progress has recommended a 'two strikes and out' approach, allowing councils to close shops after two breaches within a single year. This would provide a more direct route to tackle persistent offenders involved in money laundering, selling illicit goods, or other criminal activities.

The current system requires councils to pursue businesses for individual breaches, a process that can be lengthy and costly without a clear path to permanently closing persistent offenders. The report highlights that closure orders, typically lasting three to six months, have not been widely used by local authorities due to the legal expenditure involved. This often leaves national law enforcement bodies overwhelmed by the scale of the problem.

Financial Impact of Lawbreaking Businesses

The financial toll of such businesses is significant. One shop unit located at 7 Coventry Street in Westminster experienced seven different companies occupying the premises between 2017 and 2024. All of these companies failed to pay business rates, resulting in a loss of over £3 million for the council. Nationally, an estimated £1 billion is laundered through British high streets each year. Phoenixing, a practice where individuals repeatedly set up and dissolve companies to evade creditors, caused an estimated £836 million in losses to the Exchequer in the 2022-23 financial year.

The report also cited a case in North London where a business continued to operate despite multiple breaches, including unlawful pavement occupation, unsuitable waste disposal, and operating without registered directors. Despite ongoing issues and reports of anti-social behaviour, including vandalism, the local council lacked the immediate legal power to close the premises.

Government Measures and Future Actions

In response to concerns about organised crime and rogue businesses, the Prime Minister announced in August that the maximum length of Closure Orders would be doubled from six to 12 months. This measure aims to give police and local authorities more time to investigate premises linked to organised crime and prevent businesses, such as illegal vape shops or barber shops, from reopening before investigations are concluded.

Labour MP Joe Powell, representing Kensington and Bayswater, stated that high streets should be community hubs, not havens for criminality. He supported stronger action against phoenixing and businesses linked to illegal activity, noting that his constituents desire thriving high streets free from rogue businesses. The Centre for British Progress also proposed an Irish-style system for company directors, requiring them to demonstrate good conduct or provide a capital buffer before serving again within five years.