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Paper 9 - 24 September 1999 Meeting

ASSOCIATION OF HAMPSHIRE AND ISLE OF WIGHT LOCAL AUTHORITIES

24 September 1999

GOVERNMENT POLICY ON SHOPPING DEVELOPMENT

Report by the Head of Planning, Test Valley Borough Council

RECOMMENDATION

It is recommended:

That the Prime Minister, deputy Prime Minister and the Minister for Planning and the Regions be informed that the Association of Hampshire and Isle of Wight Local Authorities:

(a) wishes to maintain the vitality and viability of its town centres of Andover and Romsey and to protect the quality of the surrounding countryside;

(b) re-affirms its support for the underlying principles of PPG6 (Town Centre and Retail Development) and PPG13 (Transport);

(c) considers that these policies must endure and be applied consistently if they are to achieve, over time, their objective of directing new retail investment to town centres and preventing developments in locations that would harm them;

(d) urges them to resist pressure for relaxation of planning controls by supermarket companies or prospective purchasers and to adhere to PPG6 and PPG13.

1. BACKGROUND

1.1 The motion proposed at the meeting of Test Valley Borough Council on 30 June is attached (annex 1). It expresses concern that the government should not weaken its policies on shopping in the light of recent reported pressures from a major foreign retailer considering acquisition in this country.

1.2 Until the 1980s, both national and local planning policies generally supported the concentration of new retail investment in town centres. This policy was changed in the 1980s to allow more competition between retailers and to allow consumers to benefit from the convenience and economies of scale of large out of town shops. By the mid 1990s harm to town centres was becoming of concern to government, provoking a change in national policy, against which appeals at Charlton, Andover for Safeway and at Romsey for Tesco were dismissed.

1.3 The policy of supporting town centres has been continued by the present government. Recently however there have been a number of press reports raising doubts about the government's future adherence to the policy. These were prompted by:

* the fact that the Prime Minister met the chief Executive of Wal-Mart on 2 February 1999;

* Wal-Mart have a policy of operating very large out of town stores in the United States, selling a wide range of food and non-food goods;

* Wal-Mart's intention to acquire Asda, one of the 'big four' British supermarket operators.

1.4 There was a full debate in the House of Commons on 24 June, just prior to confirmation of the acquisition of Asda by Wal-Mart. The Minister for Planning and Regions, Richard Caborn, gave an assurance that government policy would still be applied, referring to his recent clarification of the policy in the light of court judgements and to the Prime Minister's continuing support for the policies. Copies of the Hansard debate are available in the Members room (Andover) and the Planning Services Reception (Romsey). It can also be viewed on the Internet, most easily accessed via a search engine (goverment/uk/commons/24 June /column 1340).

2. ISSUES

2.1 The main issue is whether there are any grounds to substantiate fears that the government will change away from its current shopping policies supporting town centres and conservation of the countryside. Doubts have arisen because:

* the Prime Minister met the Chief Executive of Wal-Mart earlier this year.

* the Department of Trade and Industry is alleged to believe that planning policies need to be relaxed to allow more competition following a report from its economic consultants (McKinseys).

* the Competition Commission is currently investigating accusations of monopolistic practices and over-charging by the big British supermarkets.

* criticisms have been made of the additional cost imposed on British retailers, compared with the US and parts of Europe, because of high prices of land (and diesel).

2.2 The position of the DETR is that it supports its current guidance. There appears therefore to be a potential divergence of opinion between the DETR and DTI. Furthermore, contradictory statements appear to have been made by the Chief Executive of Asda and Archie Norman, MP, the Chairman of Asda, on whether planning controls on supermarkets need to be relaxed.

3. DEBATE ON ISSUES

3.1 Policies such as PPG6 (Shopping) and PPG13 (Transport) operate mainly through steering private investment decisions. They only work if the investors perceive that policies will endure and be applied consistently. Any impression of political whimsy and investors will hold off for future exceptions or changes to policy. Uncertainty means that investors are deterred because either their investment would be more profitable if there were a change of policy yet to come, or if they invest now there is a risk that their investment will be threatened by the change of policy.

3.2 These principles apply particularly in the case of town centres versus out of town shopping. The former is often sub-optimal from the point of view of large retailers considering major investment, because of the complexities of the land acquisition, limited space, design requirements and accessibility by the car. Much easier is the clean slate approach of greenfield development, supported by the claim that it is what the majority of customers want anyway. The large retail investors will therefore only be persuaded to make the extra effort required to fit into existing centres if there is no prospect of obtaining permission out of town.

3.3 This context has been the determining influence in deciding the pattern of future shopping in Romsey, with not only an out of town store dismissed on appeal, but the attention of investors now focussed on a site in the centre. In Andover, although the earlier Charlton appeal was dismissed, there has not yet been the corresponding interest in expanding within the town centre for food retailing. However, in time, investment interest should materialise given the forecast increase in convenience (food) shopping expenditure. However, this outcome could be threatened if there were uncertainty over government policy nationally or locally in relation to allowing new or extended out of centre stores on appeal.

3.4 Nationally, existing commitments from the period up to the mid 1990s for major out of town developments are only now being exhausted. So, for the first time new investment decisions are being significantly affected by the policy of support for town centres, even though it has been in force for some years. To relax the policy now would therefore mean that the long-standing drift to out of town shopping investment would only have been ephemerally checked.

3.5 Steadfastness of policy in this area is therefore essential. The reported doubts are therefore pertinent and worrying if they have substance. Richard Caborn has attempted to allay these fears as follows:

".....developers will have to demonstrate that there is a need for their scheme; that they could not find a more central site; and that there would be no significant impact on existing centres. I want to reaffirm that that is still our policy and that we have no plans to change it. My Right Hon. Friend the Prime Minister has confirmed that.

Let me put the record straight about the rumours concerning my right hon. Friend the Prime Minister's meeting with Wal-Mart. My Right Hon. Friend has put it on record that he has given no assurances to Wal-Mart about relaxing planning policy. Indeed, planning issues were not discussed."

Hansard (Commons) 24 June 1999 Col 1352

"We are only now beginning to reap the benefit of the change in policy to which the hon. Gentleman referred, and in the meantime the boom [in out-of-town shopping] has had a devastating effect on many of our local centres. It has been a very damaging and wasteful process, effectively playing Russian roulette with the future of our towns and communities. It is a process that we cannot afford to repeat. We will not do so, which is why this debate is very timely indeed.

We are determined to take a tough line. We realise that we must capture new retail investment for our town and city centres. We must ensure that supermarkets are developed in existing centres, to help to make them attractive and competitive. That is particularly true of smaller towns and district centres where we need to have stores of the right size."

Hansard (Commons) 24 June 1999 Col 1354

3.6 The Planning Minister clearly has no intention of changing existing government policy but his views may not continue to prevail in government. It would therefore be appropriate to address the Borough Council's concerns to the Prime Minister and to John Prescott in his role as Deputy Prime Minister as much as in his role as Secretary of State for the Environment, Transport and the Regions.

3.7 Particular concerns have been expressed about Wal-Mart's possible pursuit of greenfield out of town sites particularly in the south of England where Asda is relatively under-represented. However, it is difficult to see that there is a great risk to the town centres which would arise directly from Wal-Mart/Asda expansion. Andover's self-contained catchment expenditure is probably too small for the scale of operations that Wal-Mart may have in mind; conversely if Andover were targeted then the degree of effect on the town centre is likely to be severe and demonstrable and therefore support a successful resistance of the proposals. In the south of the Borough there are already two Asda stores (Southampton City and Chandlers Ford) accessible to much of the Romsey shopping catchment population, so that it is likely that other parts of the south-east of England would have a much higher priority for new investment by Asda/Wal-Mart.

3.8 The Department of Trade and Industry's alleged belief that the introduction of Wal-Mart type operations will increase competition and drive prices down needs to be critically evaluated. Richard Caborn made the point in the debate on 24 June (column 1359) that there has been a large increase in out of town stores during the 1980s and the first part of the 1990s which was intended to achieve what the DTI are believed to think that Wal-Mart could now achieve. Yet after 10-15 years anti-competitive practices are being investigated.

3.9 One reason may be that often the major stores have no equivalent competition within a particular geographical area which, combined with national strategies for branding, advertising, pricing, special officers and loyalty bonuses, creates a virtual monopoly within the area. Hence the apparent large increase in out of town stores but still apparent lack of competition. The Borough Council's strategy for Romsey town centre is intended to rectify this by allowing for two roughly equivalent major stores to compete more effectively within the town centre. In Andover there is already competition between three major stores and policies being applied are attempting to favour expansion of the lesser used town centre store rather than expansion of the out of centre store. However, real local competition between such stores is impeded by the national marketing approach common to most large chain. It will be interesting to discover the Competition Commission's conclusions on these issues. Whatever the outcome it is difficult to conclude that allowing Wal-Mart type operations to establish in the UK will do anymore than substitute one type of monopoly for another, but over an even wider geographical area (creating greater conflict with sustainable transport objectives).

3.10 It is worth noting the Minister's emphasis on the need for Local Authorities to be proactive in pursuing policies to maintain the vitality and viability of their town centres.

"If we are to regenerate our town, district and local centres, we will have to adopt a positive, plan-led approach. Our policy advice urges local planning authorities to adopt a much more proactive approach to the task. For example, they should say where new retail development is needed, and where it will be encouraged, and identify sites and, if need be, help to assemble those sites. We need to capture new investment for town centres. That means taking a positive approach to planning for new food stores, to help to bring about our wider aim of an urban renaissance, and using them to anchor the regeneration of district and local centres."

Hansard (Commons) 24 June 1999 Col 1355

3.11 The Borough Council is effectively doing this in the case of the Alma Road site, Romsey, where the majority of the land happens to be in public ownership already. In Andover the need for expansion of both convenience and comparison shopping has been identified and sites will need to be considered in the review of the Borough Local Plan. The Minister's statement indicates that in order to implement those policies the Borough Council may need to become actively involved in land acquisition and other facilitation measures.

4. CORPORATE OBJECTIVES

4.1 The motion as put and the statement recommended for submission to government are both designed to give support to the Council's own corporate policies for maintaining and promoting all aspects of the vitality and viability of its town centres.

5. CONCLUSION

5.1 The Planning Minister, Richard Caborn, has been unequivocal in his support for town centres in his recent statements in the House. Support should be given to this view but needs to be directed to the government as a whole.

5.2 The recommended statement to government has made some minor amendments to the proposed motion but retains the substance.

Last update: 12/10/2000
Author: Nick Goulder, Policy Manager

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