‘The government is destroying independent fashion boutiques like mine. I won't vote Labour again'

Telegraph

01-04-2025

Opening the door to Dragana Perisic's eponymous boutique on Redchurch Street in Shoreditch feels like stepping into a former – and many would say better – version of London.
The space is small and dimly lit, with just six rails of beautifully tailored, handmade clothes. Perisic herself sits at the till, immaculately stylish with one streak of blue in her brown bob, having hand-sewn all the skirts, dresses and jackets in the studio space at the back of her store.
Compare this to the faceless corporations that crowd much of central London, filled with clothes made in China, Vietnam or Turkey that have been designed by people in Los Angeles or Hong Kong (or sometimes even by AI) and pumped out to identikit shops in major cities around the world.
And yet it is Perisic's store that is closing down after 19 years, crippled by business rates – the relief for which drops from 75 per cent to 40 per cent on April 1. For Perisic, this translates to an increase in charges from £9,000 a year to £18,000, and along with astronomical rents and rising national insurance for employers, it spells the end of her much-loved boutique.
She is not alone. The Centre for Retail Research (CRR) has predicted that store closures will rise to around 17,350 in 2025, from 13,479 in 2024, as business rates strangle smaller retailers. The CRR warns that the majority of the shops shutting down this year will be independents or those with fewer than five stores, and that on average business rates will increase from £3,589 to £8,613.
For people in the fashion community – many of whom voted Labour in the last election – this feels like a betrayal.
'I first opened here in 2006,' says Perisic, 'back when there were so many independent designers like me in this area. And I weathered so much: the financial crisis, Covid, Brexit. But what I was not expecting was for this government to destroy independent businesses like mine. I have never voted Conservative in my life, but what they have done is worse than the Tories, and I won't vote Labour again.'
Another Soho-based store owner – who sells contemporary clothing and jewellery for men and women – is also on the brink of closing down because of the damaging cocktail of higher business rates and national insurance contributions starting this week. He believes it is now almost impossible to be successful in the capital as an independent brand.
'If you're anywhere in central London you need to make a million quid a year just to break even,' he says. 'To rent a halfway decent space in Soho and pay the business rates alone will cost you nearly half a million pounds, which means you need to sell a hell of a lot of clothes just to keep your head above water.'
In homogenised Britain, where chain restaurants, identical coffee shops and fast-fashion brands dominate every high street, this should be a problem the government wants to solve.
Not only do small stores boost the value of properties nearby (according to a study by Strutt and Parker, independent shops and restaurants are rated, alongside parks, as one of the most desirable local attractions), they also bring in tourists.
'About 60 percent of my customers are here on holiday,' says Perisic, who tells me that clients from expensive American cities like New York and San Francisco regularly complain to her about the lack of designer-owned stores in their cities. Now, London is going the same way.
'Britain makes it almost impossible for small fashion businesses to exist,' says Patrick Grant, an author and journalist and former owner of Savile Row store Norton & Sons, who was forced to shut down his ready-to-wear business E. Tautz & Sons in 2021 because running costs were simply too high.
'These days, only huge companies can afford the astronomical rents and business rates, and as a result London has the exact same clothes on offer as every other city. It's so dull, which is sad because we have an enormous amount of creativity here.'
Grant talks about spending a weekend in Bordeaux recently (in France, independent businesses have a reduced corporation rate). 'I couldn't believe how interesting the shops were,' he says. 'There were almost no global brands and thousands of small places selling charming clothes tailored to the local market – it was really fantastic.'
For Grant, these impending closures will lead to a dearth of tourists picking London as a fashion destination. 'Choices like [increasing business rates] stifle creativity and economic activity,' he says. 'We're already struggling to encourage people to come here and shop but if there's nothing interesting to buy then why would they bother?'
'The government has to revise its entire business model,' he continues. 'In an era where online shopping already dominates, a business rate tax is not fit for purpose as it punishes brick and mortar instead of encouraging it.' And, yes, from next April the government intends to drop business rates for companies valued at less than £500,000 and increase them for everyone else – but given the price of renting a space in central London even independent designers with very low margins are likely to fall into the second category.
Debra McCann is one of them. She is the founder and owner of The Mercantile, an independent store selling quirky, stylish clothes sourced from brands in Britain and around Europe. It is on the edge of Spitalfields Market and on a sunny weekday morning, this treasure trove of affordable, interesting fashion attracts groups of tourists as well as local office workers popping in to browse the rails with a coffee. It feels like a breath of fresh air compared to the foreign-owned chain stores that take up so much local real estate.
'The high street is already very homogenous in most towns and cities,' she says. 'And these new government policies are only going to increase its blandness.'
The Mercantile has been in the same spot for more than 15 years and while footfall is at a record high, the sheer rate of taxation means she has never been more worried. 'This last national insurance rise was a real disappointment coming from a Labour government,' she says, 'I voted for them and I feel like Rachel Reeves has just shot us one last blow.'
McCann sources clothes from around Europe and has seen first hand the power that good government policies can have. She cites both Denmark and Spain as countries where independent designers have been given tax reliefs – and as a result creativity has flourished.
'We get no help at all in this country, just higher and higher taxes,' she says. 'My biggest costs are rent and staffing. I can't do anything about the rent and I also can't let go of staff because theft rates have skyrocketed in the last two years, so I need people with eyes on the customers all the time.' Hence also needing to stay near Spitalfields, which has a security team on hand.
Like everyone I speak to for this piece, McCann is in despair about these new policies. 'At this point, I feel like I'm firefighting all the time,' she says.
Perisic, at least, can take some time off when her store closes its doors for the last time at the end of the month. She simply doesn't have the capital to invest in the marketing needed to launch an online-only store, so instead she is going travelling. As for the space she has made her own for nearly two decades: a cupcake chain is reportedly taking it over.
And in the future, life abroad sounds increasingly appealing.
'For now, Athens sounds like a good place to start looking,' she says, 'I don't think this government cares about creativity – it's too busy trying to make Amazon happy.'