Following the storm of protest over parking charges, York council leader Steve Galloway is writing a series of four articles to explain the background to the changes. In his second article, he addresses the state of the city centre economy.

I HAVE explained the difficult financial position that the council found itself in last year. How was the city centre economy faring?

Provisional economic impact data for 2003 for visitors to York shows that:

Retail spend by visitors overall increased from £95.7m to £96.2m from 2002 to 2003

Visitor numbers overall were down by one per cent to 4.025m and visitor spend was down by £2m (0.7 per cent) to £290.9mn, but these were still the second highest annual figures since 1993.

In the long-term, visitor expenditure in York has gone up by 41.9 per cent in the ten years, 1993 to 2003.

But the York visitor economy had suffered in 2002 with 9/11 terrorist attacks dramatically reducing the number of high-spending visitors from North America. In 2003-04, only 30 per cent of York's overseas visitors were from North America, compared with 45 per cent of them in 2002-03.

Five years ago, 38 per cent of visitors listed shopping as the "main reason" for visiting York. The 2003-04 figure was seven per cent. Furthermore, the loss of high-spending (mainly USA) visitors is likely to impact more on small, specialist shops with higher value goods.

Faced with these challenges, the new council took immediate steps through its York Pride campaign to improve standards. The York Pride/Safe City campaign put a focus on developing a clean and friendly city. The major gainer initially was the city centre. The York Business Pride initiative was rooted there, although later it has expanded to cover a wider area.

The gains included improved cleansing standards, gum removal from footpaths, quicker removal of graffiti and action to deal with beggars. The behaviour standards of a small number of visitors to the city centre in the evening remained a matter of concern. Sadly, alcohol-related crime still does deter some people from visiting some streets.

The UK is still seeing a strong retail performance nationally. The seasonally adjusted total sales volume in May was 7.4 per cent higher than in May 2003, the highest annual growth since April 2002. This was driven mainly by non-food retailers, in particular clothing and footwear stores, for which sales grew 12.7 per cent over the year.

The monthly figures support this, as the total sales volume, seasonally adjusted, increased by 0.8 per cent between April and May 2004. This follows a 0.3 per cent increase between March and April and a 0.8 per cent increase between February and March.

However, within these headline figures there is clearly increasing pressure on margins - more likely to impinge on smaller retailers (confirmed by interviews in York). Richard Hyman, the chairman of Verdict, the retail consultancy group, has observed the high street becoming a much harder place for retailers as prices stagnate.

"In recent years ..... operating costs have risen steadily, exerting downward pressure on profit margins," he says.

Interviews took place with nearly 50 local retailers and organisations between January and April. In terms of overall retail performance, there was no suggestion that the retail sector was in crisis.

Data from the First Stop York Visitor Survey was used to gauge how York's shopping "experience" has changed over time. The question was asked: "Do you think the experience of shopping in York city centre has improved, stayed the same, or got worse over the time you have been coming to York?"

The response from those visitors surveyed (that had visited York before) was interesting - 22 per cent said that shopping in York had improved

44 per cent said it had stayed the same

two per cent said it had got worse. The remaining 32 per cent declined to comment.

Only a third of those who responded therefore felt that the retail offer had improved - possibly a reflection of the level of investment that has taken place recently.

Only 12 per cent mentioned high parking charges as a dislike about the city centre, with positive comments being 30 per cent "historic buildings", 25 per cent "character/atmosphere", 20 per cent "everything", 18 per cent pedestrian streets and 17 per cent "choice of shops". Three times more respondents wanted "no change" to the city centre than those requesting lower parking charges.

Retailers responded by confirming that they were looking for a flagship store, a food outlet and the promotion of small specialist shops to improve the retail offer.

Meanwhile, much investment in the city centre had stagnated while central government made a decision on the Coppergate II shopping centre planning application. Although opinions were divided on the scale and layout of the proposals, many retailers and residents recognised that the inclusion of another major "magnet name" store in the city centre would improve choice and therefore "footfall". York would become a more attractive shopping destination.

Overall, the numbers of residents and visitors to the city centre has been increasing again (following a setback during 2002 and the terrorism alerts).

Fewer visitors are driving into the city centre (down 20 per cent in two years) but this has been compensated by a 14 per cent increase in bus use and a huge expansion of park and ride numbers. Over two million now use this facility each year.

More recent trends can be identified, covering the periods when parking charges were raised (since March 1):

lHotel room occupancy; 64.1 per cent (2003), 64.7 per cent (2004).

lVisitor attractions monitor; up 8.6 per cent on 2002, down one per cent on 2003.

Little evidence, then, of a downturn in visitor numbers in these three months.

According to agents, 80 to 100 retailers are showing interest in opening stores in York, so parts of central York remain an attractive location for retailers - but the potential to improve further exists.

The city centre does face a significant issue. There is little prospect in the near future of accommodating a new "magnet" store, North American visitors may return but any change is likely to be slow and an attempt to "extend" the evening economy last year (Good Evening York) produced only a limited response. Evening park and ride services - now extending until 9pm - are not well used.

Talks started a couple of months ago about business taking a more prominent role in managing the city centre. Yorkshire Forward's support for the designation of the area as a business development district has just been obtained and funding included in this, and future years, investment plan.

Constructive discussions are taking place all the time with business about marketing the city's unique attractions. Organisations like the Chambers of Trade and Commerce, the Hospitality Association, the Federation of Small Businesses and First Stop York actively welcome the involvement of businesses of all shapes and sizes. These representative organisations enjoy a direct line of communication to senior councillors in York.

So how then can we reconcile the council's need to balance its books against a background of inadequate Government grant levels and the City's aspiration to make central York even more attractive to visitors? I will look more directly at transport issues in my third article.

Updated: 14:39 Wednesday, July 14, 2004