Are we killing the High Street with kindness? Review of rate relief for charity shops in west Suffolk
- Credit: Archant
Concerns highlighted by traders in west Suffolk about the system which gives charity shops 80% business rate relief could help force a change in Government policy, it has emerged.
Businesses in Sudbury have been worried about the number of traditional retail chains quitting the town because of high rents and rates – while increasing numbers of charity shops open in their place.
Now South Suffolk MP James Cartlidge has raised the issue in Parliament and written to the Treasury highlighting the town’s “proliferation” of charity shops – and urged ministers to review the system.
He has questioned whether the rates system is causing an imbalance between traditional retail and charity shops.
Figures received in response revealed that allowing charity shops between 80 and 100% rate relief has cost the Treasury £500million in potential revenue during the past five years.
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Because of Mr Cartlidge’s intervention, Treasury minister David Gauke has now pledged to consider the impact of charitable rate relief on the high street and retail sector as part of the Government’s rates review, which is due to be completed by the end of the year.
Charity bosses in Sudbury maintain that it is less damaging for the high street if they occupy shops with reduced rates rather than leaving units empty.
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But Mr Cartlidge described the data received in response to his questions as “worrying”.
He said: “Charity shops receive a very generous rate relief of 80%, sometimes 100%, on the basis of being ‘not for profit’ when in reality many ‘for profit’ shops are not making any money due to the onerous cost of standard business rates.
“My parliamentary question has found that the cost of rate relief for charity shops has risen by 50% in five years, costing an additional half a billion pounds.
“This at a time of scarce public finances and huge pressure on traditional retailers.
“The issue has never been whether charities should have a right to open shops which we all accept; it’s whether they should be able to do so with so generous a relief that might then distort the high street leading to a proliferation of such stores, loss of revenue to the Treasury and even more pressure on traditional outlets.”
In response to the MP’s concerns about the situation in Sudbury, Mr Gauke said charities were currently eligible for 80% mandatory relief from business rates “in recognition of the important role they play in society”.
But he said the Government recognised that high streets were changing and was committed to helping communities adapt.
He added: “The business rates review is currently under way and I have asked my officials to ensure that your views on business rates are considered as part of that process.”
Sudbury recently lost its Oxfam shop during the huge fire in Friars Street, but that has now been rehoused in temporary premises in Gainsborough Street.
Mr Cartlidge said he had “nothing but the greatest respect” for charities and their right to raise funds for what are in all cases very worthy causes.
Hannah Beaven, acting area manager of the YMCA which was the most recent charity to open a store in Sudbury, maintains that charity shops attract footfall to a town and occupy buildings that would in some cases lie empty.
She said: “When a large unit like the one we took over on Market Hill on a temporary lease becomes vacant it would create quite a big gap on the high street.
“From our point of view, we are lucky enough to be able to test the water in a prime location before we commit to a town.
“It’s good for the landlords too because we pay rent, heat the building, decorate and keep it in use until a paying tenant comes along.
“We also pay rates and even at a reduced rate, this is preferable to having an empty building with no revenue at all.”
Sudbury Town Team is a member of the national Association of Town and City Management and has contributed to a document that has been sent to Westminster as part of the Government’s current rates review.
In it they have asked for charity retail tax relief to be retained but “reformed to prevent large scale clustering” and direct competition with ratepayers.
Chris Storey, pictured, chairman of Sudbury Chamber of Commerce, has also carried out a study in the town to ascertain the extent of the problem.
Last night, he said he was pleased that South Suffolk MP James Cartlidge had brought the issue of charity shop rate relief to the attention of government ministers.
He added: “It is right that this is reviewed and that the Government has a clear and unambiguous policy about how this can be applied across the country.
“We want support for charities but it has to be a balanced approach that allows charity shops to thrive but also enables town centres to provide for independent businesses on an appropriate basis.
“The footprint on the high street must be kept so that charity shops are an important element of it, but only an element, and that they don’t overtake small businesses and drive them out causing increased competition because of unfair allowances for rates.
“I am glad James Cartlidge has brought attention to the situation in Sudbury at government level.
“We have to make sure that this issue is an important element of the overall business rates review that is currently going on at national level. We can only hope that this leads to a fairer system and a more balanced situation.”
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