The right to retail: proposal for taxes on out-of-town shops to support local small retailers and reverse high street decline

The new report, The Right to Retail, argues that the Government must give communities the power to rebalance the retail economy away from the ‘Big Four’ supermarkets, which control nearly 80 per cent of the UK’s £150 billion pound grocery market.

The radical plans contained within a 55 page report on the future of small shops are being unveiled by the influential centre-right think tank ResPublica. The report urges Ministers to give sweeping new powers to town halls to protect local shops.

Controversially the report proposes new tax raising powers on large out-of-town shops with the money being used to slash business rates on small retailers.

The Right to Retail – Can localism save Britain’s small retailers, by Adam Schoenborn, Senior Research Fellow at ResPublica, argues that the Government must do more to rebalance the retail economy away from the ‘Big Four’ supermarkets, which control nearly 80 per cent of the UK’s £150 billion pound grocery market.

And it sets out a raft of policy ideas which are designed to encourage new models of retail including mutuals, level the playing field between large and small retailers, rebalance the retail sector away from the ‘Big Four’ and reverse the decline of the high street.

'Britain every year is less and less a nation of shopkeepers – assets and ownership are concentrating, finance has become the preserve of the City of London and high streets have converged as though by centralised design,' says the report.

'The UK’s 8151 supermarket outlets today account for 97 per cent of total grocery sales, and 76 per cent of groceries are sold by just the four biggest retailers.

'When we talk about rebalancing the economy, what we are really talking about is shifting back the locus of ownership and economic control to communities. The goal and evidence of a genuinely new economic settlement, of any political stripe, must be the end of this declining trend in popular ownership. The challenge of the next settlement – in the retail industry as in the economy at large – will be embedding the small and the local owner into our economy, without compromising competitiveness or consumer benefits.'

Phillip Blond, Director of ResPublica added: 'The number of traditional grocery stores has been declining over many years. In 1950 there were around 90,000 butchers and greengrocers. By 2000 this figure had plummeted to fewer than 20,000. The number of bakeries has fared only slightly better declining from around 25,000 to 8,000 over the same period.

'The rise of these vast supermarkets, with the infrastructure needed to sustain them, a bias in the planning system and their enormous purchasing power has crowded out competition. These developments have made it impossible for small retailers to grow. We now have a situation where it is unimaginable that a small family owned shop could grow into a retailing powerhouse like Tesco, or Sainsbury.'

The report welcomes the political developments in Scotland and Northern Ireland where levies on large retailers are actively being debated. It says 'these could offer a model for micro-redistribution at a local level.'

But, while it urges the Coalition to look closely at these proposals, it insists that any money raised in tax on the big stores should be used to cut the tax burden on smaller shops. It also argues that there should be a clear distinction between out of town stores and in town shops.

'As the Government considers mechanisms for a new system for Business Rates and Government Grant, it should consider allowing significantly more flexibility in the local distribution of business rates. By designating a business as a significant community asset through the mechanisms established in the Localism Bill, the community would enable their Local Authority to issue a standard level of business rate relief to the business.'

The report concludes that the dominance of the sector by just four retailers is not a sign of a properly functioning market and without the radical changes outlined in the report entrepreneurs and communities will find entry to the market all but impossible.

Key recommendations from the report include:

1. Allow Communities to designate retail mix in Neighbourhood Plans
2. A Community Right to Appeal
3. Treat shops as local assets
4. Business rate reduction for designated retailers
5. A Community Right to Buy
6. A Community Right to Try
7. Embed small and medium owners in Local Enterprise Partnerships
8. A Community Interest Clause
9. An annual national report on “buying power” and “price flexing”
10. Encourage mutual retail models
11. Encourage community-run retailers

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