Why is the government giving retailers such a hard time?

In the latest example of being on the wrong end of a regulatory decision, the Competition and Markets Authority (CMA) has said it will investigate the tie-up between Sainsbury’s and Argos.

There are a few things skewiff about this decision. First, the regulator has intervened almost five months after Sainsbury’s revealed it had approached Home Retail Group, the owner of Argos, about a deal.

Second, Sainsbury’s and Argos are in different parts of the retail market and the grocer has already made it clear that it plans to close around 200 Argos shops and instead open concessions within its own grocery stores.

Furthermore, although Sainsbury’s has performed robustly over the last decade, the two retailers are not exactly coming together from a position of strength.

Sainsbury’s will now be looking warily at the problems at Poundland, whose share price has fallen by almost half in the past year. Poundland’s takeover of 99p Stores was also called in by the CMA.

The regulator decided to take no action, but the delay to the deal meant that when Poundland eventually took control of 99p Stores, it found the business in a worse state than it expected. The chain has struggled ever since.

Heart of the problem for high street retailers

As the CMA investigates bricks-and-mortar retailers trying to react to changing consumer habits, Amazon and other online retailers are expanding unchecked. This is at the heart of the problem for high-street retailers - their structural disadvantages against online rivals are being exacerbated by the government and regulators.

The retail industry employs one in six British workers, accounts for a tenth of the economy and has 270,000 shops across the country. Yet rather than protect this unique sector, the present government appears to be taking advantage of it.

Unlike multinational companies, which can locate their tax base anywhere in the world, shops and their workers have nowhere to hide, which makes them easy to tax. As a result, while the government boasts about cutting corporation tax, retailers now find themselves being squeezed by business rates, the apprenticeship levy and the national living wage.

This combination will cost retailers around £14bn over the next five years. Tesco boss Dave Lewis has warned retailers face a “potentially lethal cocktail”, while the British Retail Consortium has predicted that 900,000 jobs are at risk.

The squeeze on high-street retailers is being played out in the public eye right now with the demise of BHS, but the unique circumstances and characters involved in the department store chain’s collapse mask the structural changes in retail that pushed BHS to the brink.

Tata Steel versus BHS response

Although a high-profile investigation has been launched by MPs on the work and pensions committee and the business, innovation and skills committee, the reaction of the government to the collapse of BHS has been telling.

There are roughly the same number of jobs - 11,000 - involved in the collapse of BHS and Tata Steel.

Yet while the government is offering hundreds of millions of pounds to potential buyers of Tata Steel, the only action that has been taken towards BHS has been warm words of support for workers in the week that administrators were called in.

If BHS is liquidated, local communities will lose one of their biggest shops and clothing manufacturers one of their biggest customers.

Courtaulds, a key BHS supplier that makes Pretty Polly tights, has already called in administrators.

Retailers have for too long shied away from asking the government to reconsider policies that are making life more difficult for them.

However, it is time to accept that our high streets are not just being reshaped by changing shopping habits, but by government legislation.

Graham Ruddick is senior business reporter at The Guardian