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
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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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