An uncertain future for Britain's charity shops

The humble charity shop will be hit by further financial burdens thanks to the government's new business rates scheme.

We’ve all got a local charity shop. Like the bank, the post-office or the news agents, they’ve become a staple of the British high street ever since the first one was set-up by Oxfam in 1947. It’s easy to take these unassuming shops for granted. Quietly, they chug-along in the background, minding their own business, recycling and re-selling unwanted possessions; but unlike other high street institutions, these small establishments are exceptionally important to our communities.

Last year alone, charity shops raised over £220m for their parent charities, which funded a variety of vital projects, from medical research to local community care work. Staffed by over 160,000 volunteers nationwide, who benefit from social-interaction and retail training, charity shops also prevent a huge amount of rubbish entering the waste stream through encouraging re-using and recycling. But as of this month, charity shops will have a tougher time remaining on our high streets, thanks to the government’s new business rates retention scheme.

Designed to create a direct link between business rates growth and the amount of money available for councils to spend on local services, the business rates retention scheme will allow local authorities to retain 50 per cent of all business rates revenue from their area – an increase of 25 per cent.  The scheme’s focus on economic growth is a concern for the National Council for Voluntary Organisations, who warns that it will “potentially stunt the growth of local community action”, as councils withhold discretionary rate relief payments.

At present, organisations occupying a building solely for charitable purposes are entitled to 80 per cent mandatory rate relief, funded by central government. Local authorities can then choose to grant the remaining 20 per cent rate relief at their discretion. But once underway, the new scheme will require councils to fund 75 per cent of all discretionary relief payments. For local authorities, already feeling the effects of budget cuts, it would be self-defeating for them to grant discretionary rate relief which they must fund substantially from their own resources, especially when they have the chance to earn more revenue from businesses paying rates.

Councils have already begun to grant less discretionary rate relief because of pressures on budgets, according to Wendy Mitchell, head of policy and public affairs at the Charity Retail Association: “Rate relief to charity shops is important, as any reduction in relief impacts the amount of money that goes to the parent charity. So it’s important that relief is given in recognition of the social and philanthropic benefits to services – local hospices for example.”

Not only does this new legislation create further financial burdens for a sector already feeling the effects of the recession, but the government’s lack of consideration for charities contradicts their ‘localism’ ethos. Outlining their desire for a rejuvenated high street last July, communities secretary Eric Pickles, and former minister for high streets Grant Shapps, asserted: “Shared and public spaces are vital ingredients. Creative thinking is needed so these spaces can become the focal point for the social interaction that is the epitome of the high street experience – an area that is enjoyed by all members of the local community.”

Charity shops are exactly the kind of spaces where community interaction takes place; where volunteers meet with members of the public and where social interaction and community-cohesion is encouraged. It is totally counter-intuitive, therefore, to create a scheme which makes it tougher for charity shops to survive on our high streets. Although, as Wendy Mitchell asserts, the charitable sector “understands that local authorities are under a lot of economic pressure”, it is nonetheless important for the government to recognise the importance of relief payments to charity shops; and in turn, the importance of charity shops in creating a community-focused high street.

A dramatic example of what may happen to charity shops is being played out in Wales: proposals from an independent business review want to reduce the amount of mandatory rate relief for charities from 80 to 50 per cent, and restrict the premises charity shops are able to occupy. The plans have been vehemently opposed by the Charity Retail Association, who submitted a petition of 22,600 signatures to the Welsh government in January. “Charity shops are being looped in with chicken shops and betting shops, and their wider context is being forgotten,” says Mitchell. “Our petition shows that most people do use them, they are popular, and we need to make sure that that voice is heard. These shops raise money for a huge range of worthwhile causes.” According to Mitchell, if the changes are accepted it will force charity shops to close, creating more empty shops on Wales’ already abandoned high streets.

Though no decision has yet been made regarding cuts to mandatory rate relief in Wales, it provides a stark vision of what could happen if attitudes towards charity shops remain unchanged. Incentivising councils to focus on economic growth rather than charities, the business rates retention scheme ultimately puts at risk the very organisations that contribute most towards the government’s idyll of a community-focused high street. And, more dangerously, should these small but mighty fundraising establishments be forced out of our town centres, it will be the more vulnerable members of our communities who will suffer most.

Oxfam worker looks for clothes that have been sold via their online store at the Oxfam online hub warehouse in Portishead, England. Photo: Matt Cardy/Getty Images

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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