This article was written by Steven Morris, for The Guardian on Wednesday 25th January 2012 06.00 UTC

“I wish I could say it’s bad, but frankly it’s worse than that: it’s dire and has been for some time,” says Eddie Talbot, owner of the JET model shop in Caerphilly. “I’ve been going for 20 years and it’s never been this bad. I don’t know where it’s going to end and I don’t think the government is doing enough to help.”

Talbot’s neighbours tell the same sad story. They are being hit with, as they see it, astronomical business rates and plunging consumer confidence. Some are planning to leave the south Wales town, famed for its stunning castle, the cheese and as the birthplace of comedian Tommy Cooper. Others say they are just waiting for the end to come.

A report published on Wednesday by the Welsh assembly’s enterprise committee, and being launched in Caerphilly, concludes that throughout the country high streets are struggling to survive.

It calls on the Welsh government to do more to boost town centres by reforming planning laws, helping independent traders take on out-of-town malls and finding a way to reduce business rates. It says more flexible opening times should be encouraged so that shoppers stay in town centres into the evening and suggests converting empty shops into homes.

Town centres throughout the UK are suffering but the report, which follows hard on the heels of the collapse of the Welsh high street giant Peacocks into administration, concludes that the problems are particularly acute in Wales.

According to the report, produced after a wide-ranging inquiry, the proportion of vacant premises in Wales stands at 11.5%, above the UK average of 11.1%. The report says the decline is partly due to the economic downturn but also because of “long-term structural issues”.

Among these are “weaknesses in planning law” – the inquiry heard planners had little option but to give permission to out-of-town stores and centres. Councils said they could not afford to challenge supermarkets wanting to build new stores away from centres because of “punitive legal costs”.

The report also says office space has moved to out-of-town locations, taking with it workers who used to shop and dine in town centres.

Nick Ramsay, the committee chair, said vibrant town centres were crucial to the wellbeing of Wales but the inquiry had found deep problems. “Our inquiry showed that throughout Wales there are examples of weak and vulnerable high streets, blighted by empty premises and poor shopping environments.

“Key to tackling these issues is strong, effective leadership at ministerial level, which must then be complemented locally in towns and communities across Wales,” said Ramsay, a Conservative assembly member.

The inquiry found that many shop owners complained they were struggling with soaring business rates. Shopkeepers in one small market town the committee visited said rates had risen by more than 200% in recent years. The report suggests that an independent panel should consider changes in legislation to help struggling store owners.

Around the corner from the JET model shop, at Whaddon’s jeweller’s and gift shop, sisters Jan, Ann and Lynda Whaddon say they suspect the local authority does not care about this part of the town. In recent years money has been invested down the hill in a new shopping centre, Castle Court, opposite the castle. The national chains have set up shop there but the top of the town feels neglected.

“Nobody comes up here any more,” says Lynda Whaddon. “The rates are huge – more expensive than parts of Cardiff – and in return we get no help. The council and the government needs to do more.”

The Whaddons have a string of shops they would like to rent out, but they remain empty for the moment. “We still have to pay full rates for them. We’re losing £20,000 a year on empty shops,” says Lynda.

Terry Burton, the landlord of the Irish Tymes pub, complains that just before Christmas the whole street was dug up. “It was like the Marie Celeste up here,” he says. “Some shopkeepers saw their trade cut by 95%. They don’t spend money on this part of town. All the council wants is your money but they don’t think how they can help you.”

Back at JET Models, Talbot places a plane kit – a Hawker Typhoon – back on its shelf. The price of his kits have increased hugely in recent years because the price of the raw material, the plastic, has shot up. “Twelve months ago that would have cost £3.99,” he says. Now it is priced at £6.99. “Yet just before Christmas I went to an out-of-town place and they were selling kits discounted by 50%. It’s cheaper for me to buy them from there than from my supplier.

“As a small retailer you can’t cope with that. These are painful times for all of us small retailers. I hope the government isn’t just going to talk but is actually going to do something.”

guardian.co.uk © Guardian News and Media Limited 2010