Committee Reports > List of Committees > Joint > 2000 > Committee on Enterprise and Small Business > Report - Development in Relation to UK Supermarket Trading Practices & Retail Planning

APPENDIX III

Appendix 3

Environment, Transport and Regional Affairs Committee

Transport Sub-Committee

ENVIRONMENTAL IMPACT OF SUPERMARKET COMPETITION

LIST OF WITNESSES

WEDNESDAY 27 OCTOBER 1999

GOVERNMENT MEMORANDUM TO THE ENVIROMENT, TRANSPORT AND REGIONAL AFFAIRS COMMITTEE’S INQUIRY INTO THE ENVIRONMENTAL EFFECTS OF SUPERMARKET COMPETITION

1. The Government’s planning policy guidance on the location of new supermarkets is set out in PPG6: Town Centres and Retail Developments, published in June 1996: One of the first actions of this Government when it came into office was to respond to the Environment Committee’s report on its inquiry on shopping centres. The Government affirmed its commitment to the firm and consistent application of this policy. Since then the Government has clarified how the policy applies to leisure developments, to extensions and how the issue of “need” should addressed for out-of-centre developments.

2. Most recently, in reply to an Opposition Day Debate on Food and Superstores on 24 June 1999 (Hansard, Columns 1350-1356), the Government made clear that it has no proposals to change its policy on the planning of supermarkets.

The Government’s Policy on Planning for Supermarkets

3. The Government’s planning policy guidance encourages the development of appropriately-sized new supermarkets in existing centres. The main objectives that the Government is seeking to achieve by focussing new supermarkets in existing centres are:

•to promote an urban renaissance by sustaining and enhancing the vitality and viability of existing centres;

•to promote social inclusion by ensuring easy access to a range of everyday shopping opportunities; and

•to promote a more sustainable pattern of development by encouraging local centres which are accessible by a choice of means of transport and reduce dependence on the car.

4. The Government therefore advises local planning authorities to plan positively for new retail development, identifying which centres should receive additional retail investment and, where possible, identifying sites and even helping with site assembly. Retailers seeking to develop new stores are advised that they should seek sites in the centre and, failing that, on the edge of the centre, and only then look for other sites well served by public transport. In seeking sites they are advised to be flexible about the size, format and design of the store and the amount of car parking to try to fit into a central site. Before choosing an out-of-centre site, the onus is on the developer to demonstrate that that there is a “need” for the additional floorspace and that they could not find a more central site.

Impact of Supermarkets

5. The Government’s policy is to give positive encouragement to supermarkets to locate in centres and to encourage competition between retailers in these centres.

Where, however, an out-of-centre store is proposed, the developer may be required to undertake:

•a retail impact assessment to help assess the likely impact of such a store on the vitality and viability of existing centres, including the effect on the strategies for revitalising existing centres and the impact on potential investment; and

•an assessment of their accessibility by a choice of means of transport and their impact on overall car use.

6. The Government’s policy relies primarily on the positive benefits of focussing investment in existing centres, but is concerned about the adverse impact out-of-centre stores can have on existing centres. It has therefore undertaken research and published a report on “The Impact of Large Foodstores on Market Towns and District Centres” (TSO, September, 1998). This has concluded that out-of-centre stores can have considerable impact on existing centres: even where they encouraged people to shop locally whereas previously they shopped further away, the town centre did not benefit, nor was there any overall reduction in car use. These findings support the policy for seeking to fit new stores into existing centres wherever possible.

Competition

7. The Government favours competition between retailers, but in a manner which enhances rather than damages the health of existing centres, whether city, town, district or local centres. The size of store should be appropriate to the size of the centre and its catchment: local centres with small catchments will require small supermarkets, whilst larger centres with larger catchments will justify larger stores. Given the Government’s overriding objectives - urban renaissance, social inclusion and sustainable development - proposals for very large superstores are unlikely to fit into such centres and, therefore, with the Government’s planning policy.

8. The Competition Commission is currently undertaking an inquiry into the supply of groceries from multiple stores. As part of that inquiry the issue of planning policy for supermarkets will be considered to see if this is barrier to entry to new competitors in high-volume grocery retailing in Britain. Until the Commission has taken evidence and reported - which is likely to be next spring - it would not be appropriate to comment.

9. The current policy applies equally to all retailers. There is no proposal to change this approach to favour any particular retailer or group of retailers. Planning policy must be operated in an even-handed manner.

[Mr. Taylor]

However, Asda has.

It is pretty obvious that The Guardian has it exactly right when it says that there is a struggle with those who believe that the primary issue is lower prices, which can be achieved only by the development of more and bigger supermarkets in tighter competition. That is a perfectly legitimate view, but it is not the view of DETR Ministers or the majority of right hon. and hon. Members. There are other ways to tackle the issue without raping the countryside and our town centres.

Mr. Gray: In an intervention, the hon. Member for Harrogate and Knaresborough (Mr. Willis) said that there was no out-of-town supermarket in Harrogate. I am sorry that he is no longer in his place. He has made his intervention, issued his press release and shoved off some place else. Liberal Democrat-controlled Harrogate council gave planning permission to Morrisons and Sainsbury to build supermarkets on green-field sites.

Mr. Beith: Where?

Mr. Gray: Just outside Harrogate. Does the hon. Gentleman believe that Liberal Democrat-controlled Harrogate will give permission for Wal-Mart—

Mr. Deputy Speaker: Order. The hon. Gentleman’s intervention is too long.

Mr. Taylor: My colleagues tell me that the hon. Gentleman is inaccurate, but I am not in a position to answer for my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis). The hon. Gentleman can pursue him on another occasion.

I do not know whether those on the Conservative Front Bench support our concerns. I know that the right hon. Member for Suffolk, Coastal, a former Secretary of State for the Environment, strongly supports them and went on the television to say so. We shall find out soon whether there is division among the Conservatives.

I want to quote one last time from the newspapers. The Sunday Telegraph said:

“Given Wal-Mart’s relentless attention to detail there is no doubt that it has already drawn up a blueprint for Asda. one that it is reluctant to share with outsiders.”

Wal-Mart has refused to comment. The report continued:

“It is almost certain to be based on the vision of transforming Asda into Britain’s dominant retail business within the next few years, through a mixture of aggressive store openings and prices low enough to put rivals out of business.”

We know that Asda is pursuing that strategy and that Wal-Mart’s acquisition makes commercial sense only if it is allowed to do that. We need to know whether the Government are going to stand up to that strategy.

The Government must clarify their policy. On 17 June, the Department of the Environment, Transport and the Regions issued a response to the report in The Guardian. It said:

“This is wrong. The Government has no intention of changing the policy on retail development which is directed to promoting the viability of our town and city centres.”

That is reassuring, but the press release goes on to refer only to the sequential approach, and so does not clarify whether it will allow large, out-of-town retail development. The approach says only that the first choice is for in-town development, but, if there are no in-town or edge-of-town sites, the need should be examined. All the evidence is that the debate in the Government about whether the need for greater competition should allow out-of-town developments in the circumstances that I have described or whether they should hold the line is still lively and, at best, undecided.

The McKinsey report recommended a change to give competition priority over the environment. We know that Asda is pursuing those developments. We know that Wal-Mart’s acquisition makes sense only on that basis. If the Government want to reassure us, they should stop refusing to say anything on the record about what happened at that meeting. They need to be clearer about what happens after the sequential approach is exhausted and what they believe about need, competition and the development of new and much larger superstores around our towns, cities and smaller country towns. That is the issue. I hope that the House will agree with us, but nothing in the takeover and the Government’s response so far holds out any reassurance.

4.52 pm

The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): I beg to move. To leave out from “House” to the end of the Question. and to add instead thereof:

welcomes the Government’s planning policy on town centres and retail development, which promotes the development of food retailing in existing centres; endoreses its attempts to maintain vital, viable competitive town, district and neighbourhood centres, which provide a broad range of retail services accessible to the whole population regardless of whether they have access to a car. welcomes the benefits which supermarkets have brought to consumers: notes the concerns over the level of supermarket profits and approves the investigation of grocery retailing being carried out by the Competition Commission; welcomes the recently agreed re-shaping of the CAP and the establishment of the second pillar of the CAP—as integrated rural development policy; and welcomes the Government’s commitment to rural communities, its efforts to increase collaborative marketing among farmers and encourage diversification, and its support for regional, speciality and traditional food producers.

We do not often congratulate an Opposition party on tabling a motion opposing the Government, but I welcome the debate because it gives us an opportunity to set out our position on out-of-town shopping and supermarkets. It is good of the Liberal Democrats to use half their Supply day to give me that opportunity. The hon. Member for Truro and St. Austell (Mr. Taylor) gave us one of the best examples that I have heard of a speech based on joined-up press releases and press cuttings. There was not a great deal of new substance to it. I shall try to clarify what has happened over the past 10 days and at some of the recent meetings.

I must make my apologies to the House, because unfortunately—or fortunately—I have a speaking engagement elsewhere and I shall not be here for the vote, if there is one. I shall deal with the Government’s planning policy for supermarkets and my hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food will deal with the food issues that the hon. Member for Truro and St. Austell has raised.

I welcome the opportunity to make the Government’s position clear. Soon after we came to office, we published our response to the report of the Environment Committee on shopping centres. We made it clear that we were firmly committed to the objectives of the planning policy guidance note on town centres and retail development— PPG6.

Everyone knows that PPG6 seeks to sustain and enhance the vitality and viability of existing city, town and district centres to make them the focus for retail investment. so as to provide everyone with easy access to a wide range of facilities and services by a choice of means of transport. I remind hon. Members that nearly a third of households still do not have a car. Such investment is essential to the regeneration and enhancement of the attractiveness of our towns and cities.

What does that mean? We want local planning authorities to establish the need—a point raised by the hon. Member for Truro and St. Austell—for new retail facilities in their plans, and we want them to apply the sequential approach to identifying sites where this can be accommodated. That should be in existing centres. Developers who propose schemes that do not conform to that will have to demonstrate clearly that there is a need for the scheme.

I refer the hon. Member for Truro and St. Austell to a written answer on 11 February. when I cleared up the whole question of need—a point on which the hon. Gentleman dwelt and on which, I think, he accuses the Government of being inconsistent. What does “need” mean? In that written answer, I said that, first, would-be developers must demonstrate that need does not mean simply an assertion by the developer that there is a market demand. It means that the local planning authority must consider the wider needs of the community as well as the market demand for a plan before it accepts the development plan. If the local authority is satisfied that a need exists, it must also be satisfied that the sequential test has been applied in selecting the site. Even then— [Interruption.] The hon. Member for Truro and St. Austell said that he wants answers to his questions, so I hope he will do me the courtesy of listening while I give him those answers.

Even then the local authority must also consider whether there will be an adverse impact on the existing centre before it allows the proposal to go forward. That was a clear definition of the word “need”.

Mr. Matthew Taylor: The Minister’s comments are helpful. As I said. I believe that the Minister and his team at the Department share my concerns on this. However, can the Minister clarify whether, if it is believed that there will be and adverse impact either on the community or the town centre, that in itself could always be taken as grounds by councillors for refusing permission?

Mr. Caborn: We actually have devolved government and the planning authority is the local authority. Because of certain cases before the courts, we have tried to clarify the word “need”. It will be for the local planning authority to make the decisions. If people believe that local authorities have acted outside their rights and responsibilities, there are many mechanisms by which they can be challenged. But we cannot and will not be as prescriptive as to say that everything can be determined from the centre. On the contrary, we believe that devolving government to local authorities is important.

It is difficult in a narrow debate such as this to talk about the wider impact of the planning regime. I think that the hon. Gentleman will accept that since we came to power we have looked at modernising land use and transport planning. We have now instituted for the first time at the regional level an examination in public, in an attempt to change planning regimes from being reactive to proactive. The first hearing in public took place in the eastern region. I believe that it has been successful. SERPLAN, the south-east regional planning conference, is going through that process now, and all the regions will go through it this year and the early part of next.

So the context is one of the right to make decisions strategically at the regional level, translating that into the local or unitary development plan, and the planning authority, in turn, translating that. That gives local authorities every opportunity to plan in the most positive way for their communities.

Mr. Taylor: There is nothing in that with which we would disagree. However, the Minister knows that what Ministers say in this House helps to influence what happens, particularly in inspectors’ inquiries when they try to interpret the Government’s intentions. In the past, councillors have often looked to refuse permission for out-of-town or edge-of-town retail superstores on the basis that they would harm the existing community. However, councillors have not been successful. because while that condition may be taken into account, it is not sufficient in itself.

Is the Minister saying that the policy now is that if there will be a detrimental impact on an existing town centre, that should be taken as sufficient in itself by an inspector, should it go to appeal, to uphold the refusal by the local, council?

Mr. Caborn: I will repeat what I said on 11 February, and I advise the hon. Gentleman to read my response of that date. Following the court case we believed that the word “need” needed to be clarified, and we did that. If the local authority is satisfied that the need exists, it must be satisfied also that the sequential test has been applied in selecting a site. Even then, it must consider whether there will be an adverse impact on existing centres by allowing the proposal.

All we can do is to give that type of guidance. When we do that, it can be cited in courts and at the various planning inquiries. Coupling that with what we are trying to do to bring more certainty to the planning system through other actions will mean that local planning authorities will be able to carry through their plans for their communities.

As I was saying, 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.

[Mr. Caborn]

I am pleased to say that our policy has widespread support in this House, from the general public and within the industry. However, there are some exceptions. For example, Asda’s chief executive is reported to have told the BBC’s “The Money Programme” that the only way forward is to loosen planning restrictions.

It is interesting to note that the Asda chairman, the hon. Member for Tunbridge Wells (Mr. Norman), told the House as recently as 3 February 1999 that

“it is important to recognise that the supermarket industry has, for the most part, welcomed the tightening of the planning restrictions. which is good for the industry and for the community.”— [Official Report. 3 February 1999: Vol. 324. c. 1030.]

I wonder whether the hon. Gentleman maintains that view when he has been so publicly associated with the takeover proposal by Wal-Mart.

I picked up a copy of an Asda press release when I came to the House. It says:

“Following today’s report in the Financial Times Asda wishes to clarify that following the proposed acquisition by Wal-Mart, it plans to continue to trade in the UK under the Asda banner.

We will continue to back British farmers, favour small British suppliers and crusade for value for British consumers.

It will remain Asda’s policy to adapt its store development plans to meet the intention and spirit of today’s planning regulations and to work closely with local communities to meet local environmental and transport needs.

As far as Asda is concerned, rumours to the effect that there has been any understanding, formal or informal, with the Government on relaxation of planning requirements are complete nonsense.”

Asda is all over the shop, with its chief executive saying one thing and its chairman saying another. However, we welcome that statement.

We are determined to maintain a firm and consistent application of the policy. That is more important than scoring a few points about press releases, and would be expected of us by all the stakeholders. Indeed, in the past two years we have clarified and tightened up the policy in PPG6, closing some loopholes; we have called in a large number of applications to ensure the consistent application of the policy; we have refused a high proportion of appeal and call-in cases, allowing only those in or on the edge of town centres; and we have successfully defended our policy in the courts.

I would charactense our policy stance on supermarkets as tough but fair. We have tried to keep the policy up to date; to ensure that it is applied firmly and consistently, without fear or favour; and to ensure a level playing field for all players in the industry. All the letters that we have received support our policy. Nobody from whom the Department has received representations wants us to relax it. Everyone wants to be reassured that we will maintain and uphold the policy, and I give the assurance that we will.

Mr. Brian Cotter (Weston-super-Mare): The Minister talked about a fair policy on supermarkets. What about business rates, which cost supermarkets only 5 per cent. of their turnover, whereas small shops pay anything from 12 to 15 per cent? That is not exactly fair.

Mr. Caborn: We are prepared to debate anything that the Opposition table in a motion, but I was not asked to respond on that subject today.

We inherited a situation in which the number of superstores had increased nearly tenfold since 1980. Very many of them were built outside existing centres and there were still out-of-town stores coming off the production line when we came to power. The legacy of the previous Government was a deluge of out-of-town stores. They left a trail of disaster and absolutely let the market rip. A combination of permissive planning policy and a property boom in the late 1980s meant that half the current out-of-town retail floor space was built in only five years, from 1986 to 1991. Another boom following the recession of the early 1990s brought another surge of out-of-town development. The situation was totally unmanageable.

Mr. Gray: Does the Minister agree that there was a significant change in policy at about the time when my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), for whom I worked as a special adviser in the Department of the Environment, entered that Department? From then on, there was a significant shift in the number of permissions given for out-of-town centres. Does he agree that some tribute should be paid to the previous Government?

Mr. Caborn: I have acknowledged on many occasions that the previous Government introduced PPG6, and we welcome that, but that does not alter the fact that they were responsible for the massive expansion of out-of-town shopping in such a short period, which has done so much damage to our town and city centres. 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 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.

Our independent research conducted by Hillier Parker, on the impact of large stores on market towns and district centres showed that locating stores outside such centres can be very damaging. It showed that large food stores outside towns or district centres have in some cases cut the market share of the principal food retailers in such centres by up to 50 per cent.

As the hon. Member for Truro and St. Austell will be only too aware, the opening of superstores on the edge of town in many areas in the south-west has had a devastating effect on the town centres. Penzance, Helston and Falmouth illustrate that all too well. Small towns in East Anglia and small centres in our large towns show similar results.

The research provides strong support for the tough line we are taking, and we need to capture that “inward investment” to revitalise our town centres. We cannot afford to allow new out-of-town schemes that undermine rather than reinforce the vitality and viability of existing centres.

If we are to regenerate our town, district and local centres, we will have to adopt a postive, 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.

There are some encouraging signs that the message is getting through. Some companies have developed new formats. such as the Tesco Metro and Sainsbury’s Local. The convenience store could be the format of the future for our local communities. Our retail policy is all part of our strategy for bringing about an urban renaissance.

Lord Rogers, who has headed the urban task force, will present his report and recommendations to the Government next week. We hope that his report will form the basis of the urban White Paper—and the rural White Paper—that we will publish later this year. Those White Papers will address the wider issues. The subject of our debate today will form part of that urban renaissance and should be seen in that context. If we are to make our towns and cities, and our local neighbourhoods, places where people choose to live, then we must make sure that we can offer them the quality of life that we all expect for ourselves.

Mr. Hilton Dawson (Lancaster and Wyre): Does my right hon. Friend agree that in purusing the worthy objective of an urban renaissance we should encourage distinctive urban centres, so that we do not end up with the uniformity of development that we have seen in the past? We should celebrate diversity and regional and local differences in our town centres.

Mr. Caborn: I could not agree more, and that is what we are trying to do. We are trying to change the whole concept of the planning regimes in this country and we want local authorities to be proactive, not reactive. Many initiatives are emerging in our city and town centres. I recently visited Manchester to open some flats that had been developed from an old broken-down warehouse. All those flats had been sold before the conversion had taken place. When designers and architects use their imagination. there is a market for the result, If professional people can be persuaded to stay in towns and cities, their disposable income starts to have an effect on the type of restaurants and shops in the area, and a virtuous circle develops.

We also want to develop the individual character of our towns and cities. We have some beautiful cities that can be said to be European, and there is no reason why we cannot develop some of those cities, as has been done in Barcelona. Shops and supermarkets are beginning to accept their responsibilities as part of the urban renaissance. That approach to planning and investment in the inner cities has brought out creative talent instead of letting the market rip, which produced the situation that we inherited. Even the Conservatives accepted that before they left office. and introduced PPG6, which we welcomed.

The new approach to regenerating smaller centres and building them up to meet a wide range of everyday needs is part of our approach to tackling social exclusion. We want to ensure that everyone has good access to shops, especially food shops. and that will often mean ensuring that appropriately sized supermarkets are opened in local centres.

Our objective is to promote competitive and vibrant town centres. We want retailers to compete on the same terms in the same market place: the town centre. The planning system provides a level playing field for all players, regardless of size or ownership. We are not trying to protect one firm against competition from another. Our policy is fair. clear and consistent with our overarching aim of revitalising our towns and cities. We intend to keep it that way.

5.15 pm

Mr. Nick Gibb (Bognor Regis and Littlehampton): This is an important debate. A number of concerns have arisen in recent years about the food retailing industry. The growth of large supermarkets in out-of-town locations has been a fact of life for 20 or 25 years, and has taken place in Europe and the United States as well as in the United Kingdom.

The reasons for that growth are many, but unclear. They include social changes: people lead increasingly busy and demanding lives, and want to do their shopping in one trip once a week at stores with easy parking. Other factors include increased pedestrianisation in many town centres, and the success of supermarkets in improving quality, choice and variety and in bringing down prices.

The motion tabled by the Liberal Democrats mentions

“the rapid expansion of our-of-town superstores under the Conservatives”.

Like the Minister’s speech, that is a facile and juvenile approach to a complex issue. It does no credit to the Liberal Democrats, or to the Minister. However, although it was one-sided and simplistic. the Minister’s speech was slightly less polemical than the motion and will contradict many speeches made by Liberal Democrats in constituencies around the country.

The growth of out-of-town supermarkets has had a damaging effect on smaller retailers and town centres, as I know only too well from what has happened in Bognor Regis and Littlehampton. Moreover, despite the gains in efficiency and economies of scale that supermarkets achieve, the prices that they charge are considerably higher than in similar enterprises in the United States. An effective campaign has been run by The Sunday Times to expose such price differentials.

There may be many reasons for those differentials, as no doubt the Competition Commission will report. Transport costs are higher in this country, especially after the Government’s huge hike in diesel prices. [Interruption.] In total, the Government have increased the escalator from 5 to 6 per cent. and there has been more than one increase in any given year. The result is that diesel prices are 21 per cent. higher than when the

PLANNING APPLICATIONS FOR SHOPPING AND LEISURE SCHEMES SHOULD BE ASSESSED ON THE BASIS OF NEED - CABORN

The Government policy on shopping and leisure developments was clarified today by Planning Minister, Richard Caborn when he said that planning authorities should take into account the need for the development, when deciding planning applications for such developments outside town centres.

Answering a Parliamentary Question from Alan Johnson MP, (Kingston upon Hull West Hessle), Mr Caborn said:

“Our policy on town centres, including retail and leisure development, is set out in Planning Policy Guidance Note 6: Town Centres and Retail Development (PPG6) This aims to sustain and enhance the vitality and viability of our existing town centres by focusing new investment, particularly for retail and leisure uses within city, town and district centres. This statement is intended to add to and clarify the guidance in PPG6 in the light of a number of issues raised in recent litigation which concern the interpretation of PPG6 and Government policy.

PPG6 advises local planning authorities to adopt a positive, planded approach to handling planning applications involving new retail and leisure developments. It advises them, in preparing planning strategies and policies, to consider the need for new retail and leisure development in the plan area over the lifetime of the plan. Having established that such need exists, local planning authorities should then adopt a sequential approach (as explained in PPG6) to identify suitable sites. If there is no need for further developments, there will be no requirement to identify additional sites.

In applying the sequential approach, the relevant centres in which to search for sites will depend on the nature and scale of the proposed development and catchment that the development seeks to serve. The scale of such proposals should also be appropriately related to the centre - whether town, district or local - the development seeks to serve.

The policy set out in PPG6, and the guidance above should be applied equally to proposals for extending existing edge-of-centre and out-of-centre development which creates additional floor space. Local planning authorities should consider the need for further retail or leisure facilities and then apply the sequential approach to identifying where any such development should take place. Where proposals for such extensions to existing developments are put forward, the Government will expect applicants to demonstrate the need for additional facilities, and that such additional facilities could not be accommodated on sites in more central locations, in accordance with the sequential approach. Need in this context, as in PPG6 generally, should be interpreted as already explained above. Local planning authorities should therefore treat extensions to existing retail and leisure facilities in edge-of-centre and out-of-centre locations as if they were new development”.

Note to Editors:

1.The Government’s policy on town centres is set out in planning policy guidance note 6 (PPG6): Town Centres and Retail Developments, which was issued in June 1996 and was firmly endorsed by the Government in July 1997. The Government’s objectives are:

-to sustain and enhance the vitality and viability of town centres;

-to focus development, especially retail development, in locations where the proximity of businesses facilitates competition from which all consumers are able to benefit and maximises the opportunity to use means of transport other than the car;

-to maintain an efficient, competitive and innovative retail sector; and

-to ensure the availability of a wide range of shops, employment, services and facilities to which people have easy access by a choice of means of transport.

2.Following recent court cases where the issue of how planning applications for out-of-centre shopping and leisure developments should be assessed, the Government has now clarified the issue. This statement clarifies the policy and should be taken into account by local planning authorities when faced with such applications.

Out-of-town Supermarkets

Dr. Tonge: To ask the Secretary of State for the Environment, Transport and the Regions if he proposes to make changes to the planning policy guidelines on out-of-town supermarkets. [19295]

Mr. Raynsford: The Government, in its response to the Fourth Report from the House of Commons Select Committee on the Environment on Shopping Centres (Cm 3729), has endorsed the planning policy guidance in PPG6: Town Centres and Retail Developments. The only further clarification that we wish to make is that proposals for extensions to existing out-of-centre supermarkets, and other developments covered by PPG6, should be subject to the same tests as other out-of-town developments.

Correspondence

Sir Brian Mawhinney: To ask the Secretary of State for the Environment, Transport and the Regions when the Chief Executive of the Highways Agency will give a substantive reply to the letter of 12 August from the right hon. Member for North-West Cambridgeshire. [19468]

Ms. Glenda Jackson: A substantive reply was sent on 3 December. The Chief Executive has apologised for the unacceptable delay in replying.

ASDA GROUP LTD

A paper prepared for the Environment, Transport and Regional Affairs Committee enquiry into the environmental impact of supermarket competition

11th October 1999

ASDA GROUP LTD

The environmental impact of supermarket competition

Asda’s Trading Strategy

1.Asda has its origins in the 1970’s as a value-based grocer. However, in the late 1980’s its then management attempted to raise prices close to the level of Tesco and Sainsbury. The strategy did not work and as a consequence Asda came near to collapse. Since then it has repositioned itself in the market with a new mission and strategy.

2.Asda’s mission is “To be Britain’s best value fresh food and clothing superstore by satisfying the weekly shopping needs of ordinary working people and their families who demand value”. The mission was introduced in 1992 when the current management team took over and marked the start of a turnaround centred upon a unique business model. The strategy to achieve Asda’s mission is best defined with reference to its formula for growth:

3.A critical strand of Asda’s formula for growth is its goal continually to deliver superior value to the customer. Pricing is the most visible expression of this value. Asda has already achieved low price leadership among the major grocers and is seeking to extend this even further. This price leadership is a major competitive driving force in the industry.

4.Asda has significantly lower prices than any of its major competitors. It is 10% lower than the industry average on the basis of the independent Taylor Nelson Sofres retailer price check and over 7% lower on the basis of a check of 1200 lines conducted on behalf of Asda by an independent agency. Recently, Asda has stated that it intends to widen the price gap with competitors to 10-15%

5.Asda’s everyday low pricing strategy has been reinforced by Rollback. Asda decided that the increasing number of promotions that were becoming commonplace in the industry were not the best way to provide value to regular customers as a result significantly reduced the number of its promotions, and launched Rollback. Rollback is essentially a permanent price reduction scheme and Asda has been steadily rolling back prices across all categories in the store. To date, it has rolled back around 2,500 prices and is set to continue the momentum by rolling back a total of 10,000 prices by the end of the year 2000.

6.The approach is proving successful. Recent figures from Taylor Nelson Sofres Superpanel show:

•Asda’s market share has risen to a record 13.6 per cent for the four weeks ending 22 August;

•Asda’s year-on-year growth has reached 9.5 per cent for the 12 weeks to August 22;

•customer numbers are up by eight per cent year-on-year to 8.1m households in the latest quarter.

7.Asda charges the same prices in all its stores. Asda believes that there is no justification for local price variations that are not explained by cost differences. This philosophy appears to contrast with that of some of Asda’s rivals. For example, one competitor appears to price flex a large range of products according to local market conditions; this is evidenced by a price check of 1,200 products in the week ending 24th September 1999 showing that 22% of individual product lines were priced differently in one of their stores in the North compared to one in the South.

Current Market Conditions

8.Asda’s position is that the supermarket retailing industry is competitive and that this demonstrably benefits consumers. The arrival of new competitors in the past has put pressure on existing operators, and has contributed to a competitive environment that has lead to the emergence of clear winners and losers. The benefits of this competitive market structure can be seem in the form of prices coming down at the same time that store facilities and services have been improving.

9.However, there is a significant proportion of the UK population primarily in London and the South East - which is not only under-provided with supermarkets but has limited or no access to low-priced supermarkets. This is despite those customers having at least the same propensities as customers in other regions to shop in such stores.

10.It is worth emphasising that the national grocers compete with each other for the same type of customer. The socio-demographic profile of the customers of the major retailers is quite similar. For example Asda’s customer’s profile is 15% ABs compared to 18% for the national average: Tesco is only marginally higher at 19% C1s, C2s, and DEs also shop at Tesco and Sainsbury in approximately the same numbers as at Asda.

Asda and the Current Planning Regime

11.Asda believes that the Government’s planning policy has two overall aims:

•to give good access to shopping for the majority of the population

•to minimise travel (especially by car) to shops.

12.These aims dovetail with Asda’s trading strategy and hence its wish that as many people as possible should shop in its stores and that this should be a convenient, enjoyable experience. Asda’s purpose is: “To meet the weekly shopping needs of ordinary working people and their families who demand value”.

13.The sometimes-held myth that Asda’s stores are all out-of-town can be exploded. In fact, out of a total of 229 stores only 11 are out-of-town and the majority are in towns, district centres or edge-of-centre locations.

14.A linked point is that 86% of the 56 stores Asda has built or re-built in the last six years are on brownfield sites. Of the remaining 14%, 10% were built on sites that already had permission and we Asda obtained consent from the planning authorities for 4%. In the same period, Asda has spent around £40 million on land decontamination and site improvements.

15.Asda disagrees with the assumption that the aims of the current policy can exclusively be delivered in town centres - and that, by implication, small stores are the only way forward. Asda is achieving its mission of becoming “Britain’s best value food and clothing superstore” within the existing planning regime - but in the large stores that are central to its success.

Relaxing the Planning Regime?

16.Asda is not arguing for or seeking a relaxation of planning policy. However, Asda believes that the Government should recognise the inherent conflict between the “sequential test” and the “need test”.

17.This conflict can be illustrated by looking at the example of Stevenage: the sequential test would suggest that a store within the designated centre should be allowed to go ahead - the need test, however, would indicate that Stevenage already has several out-of-town stores and planning permission should not be granted. On this basis, the result would be that the position of the existing out-of-town stores would be reinforced and that there would be no improvement in accessibility for consumers and no reduction in their travelling times.

18.Asda believes an effective way to address this conflict and these concerns could be to apply, for example, a local market share test to consider whether or not an operator already located in the area should be granted planning permission for another store.

19.Asda believes that two improvements can be made in how the current policy is applied:

•it would be helpful to have clarity on why the Department is calling in applications; if information could be given earlier specifically on what the concerns and issues are, it would be possible directly to address them; and

•shorter, predictable timescales when applications are called in would allow more efficient planning and allocation of resources. More importantly, it would mean that local authorities who have approved applications would reap the benefits of investment and job creation (typically, 350 - 400 jobs in a new store) sooner and that consumers would have access to better value shopping.

CB Hillier Parker

1.CB Hillier Parker is part of CB Richard Ellis, the largest global real estate advisor in the world. In the UK, CB Hillier Parker advises the public and private sectors on all aspects of retail agency, investment, planning development and research.

2.The firm’s Planning and Public Sector Group is closely involved in the planning and development of new foodstores. The firm has advised most of the major food retailers on a range of property and planning matters and regularly acts for a number of retail developers across the UK. CB Hillier Parker has also acted for more than 250 local planning authorities throughout England, Scotland and Wales, and advised on the effects of in excess of 50 new stores or store extensions in the last few years.

3.CB Hillier Parker was responsible for preparing the research into the Impact of Large Foodstores on Market Towns and District Centres on behalf of the DETR which was published in September 1998, and is currently engaged on a research project into the effects of the sequential approach on retail development, commissioned by the National Retail Planning Forum. The results of this research will be published early next year.

4.Dr Brian Raggett is a Senior Director of CB Hillier Parker, and is head of the firm’s Planning and Public Sector Group. He is also currently the President of the Royal Town Planning Institute. Chris Goddard is a Director of CB Hillier Parker, and is responsible for the firm’s retail planning consultancy advice. He was the principal author of the DETR Market Towns research.

5.The views expressed in this Memorandum are the personal views of the authors.

Scope of Evidence

6.This evidence focuses on the planning issues raised by supermarket development.

7.The evidence summarises the growth of large foodstores and the decline in local independent and co-operative grocers over the last 30 years, and identifies more recent trends, including the continued pressure to create larger stores through store extensions, and the introduction of smaller local ‘convenience’ foodstores by the major retailers.

8.The evidence reviews the general principles and specific policies for the planning of new foodstores contained in Planning Policy Guidance 6, and concludes that the central thrust of planning policy guidance is not to regulate competition between retailers or different retail formats, but to focus new development into the most appropriate locations.

9.Finally, the evidence summarises the effects of large foodstore development, and the role which such developments play within town and district centres, and considers whether there is any case to suggest that the current planning policy guidance framework for assessing proposals for new or extended foodstores should be reviewed.

Supermarket Growth

10.The growth of large foodstores and the main multiple operators are described in our research into the Impact of Large Foodstores on Market Towns and District Centres.

11.Research undertaken by Verdict quoted in our Market Towns research shows that the proportion of total grocery spending attracted by superstores (conventionally taken to be stores with in excess of 2,500sq m sales floorspace) increased from 29.9% in 1987 to 53.7% in 1996. Total grocery superstore turnover grew from £9,188m to £34,055m over this period (in current prices).

12.This growth went hand in hand with the development of new superstores over this period, incorporating a wider range and diversity of products (i.e. fresh meat and fish counters), catering particularly for those undertaking bulk food shopping by car.

13.Concurrent with the fall in market share of independent grocers and the growth of multiples, there has been a more general decline in the number of outlets. Research quoted in our Market Towns study indicates that the total number of grocers fell from 147,000 in 1961 to only 58,070 in 1980. The number of multiples, co-operatives and independents were all in decline long before the major period of food superstore development in the late 80’s and early 90’s.

14.In terms of absolute numbers, the independents have witnessed the most closures, falling from 116,000 in 1961 to only 20,900 in 1997. However, there has also been substantial rationalisation amongst the multiples and Co-ops of their older smaller stores. This is consistent with analysis undertaken by Goad, which shows that the number of convenience retailers as a proportion of total town centre units (as defined by the Good Plan) fell from 12.0% in 1990 to approximately 9% in 1997.

15.Although store numbers have fallen, the average size has increased significantly to accommodate a broader range of products. Our Market Towns study quotes research suggesting total grocery superstore floorspace increased from about 1.6 million sq m in 1987 to about 3.6 million sq m in 1996. Over this period, the proportion of all grocers outlets accounted for by superstores grew from 24% to nearly 40%.

16.Modern grocery superstores increasingly include a wide range of non-food products such as clothing, health and beauty, housewares and home entertainment. Many include services such as a pharmacy, opticians, post office, dry cleaners, photo processing and cash point banking facilities. Improvements to supply chains have reduced the area needed for storage, and this has been replaced by more sales space with a wider range of goods.

17.Since the introduction of the 1996 version of PPG6, the pace of new superstore development has slowed markedly. This in part reflects the current planning climate, which makes it more difficult to pursue proposals which do not accord fully with Government guidance. It also reflects some major retailers re-appraisal of their trading formats.

18.Retailers like Sainsbury and Tesco in particular are pursuing smaller store formats. Tesco developed its Metro format before the publication of PPG6. These typically locate in urban areas, for example Covent Garden, and cater for lunchtime and top-up trade, and an affluent, young urban catchment fuelling the demand for a different type of retail offer from the conventional family oriented superstore.

19.Outside the conurbations, the Tesco Compact format, typically comprising stores of 1,400 sq m sales space has been developed in smaller centres e.g. Hook, Princes Risborough. Sainsbury’s has also developed ‘Country’ and ‘local’ store concepts. After the success of pilot local stores, such as Fulham Palace Road in London, Sainsbury recently announced plans to open 200 new convenience stores of about 300 sq m each, in suburbs, small towns, and public transport interchanges.

20.Another illustration of the major retailers change of focus towards the ‘convenience’ end of the market is forecourt shopping. The major superstore operators have secured a significant share of petrol sales, traditionally sited alongside superstores. However, the development of forecourt food sales has moved on, to include the development of freestanding forecourt/convenience stores e.g. Tesco Express, and joint ventures e.g. Somerfield/Elf, replacing the traditional role of the ‘corner shop’.

21.While attention has focused on the dominant position of major food retailers like Tesco and Sainsbury, the last ten years has also seen the growth of discounters like Aldi, Lidl and Netto. These have injected significant price competition in the core convenience goods sector.

22.At the other end of the spectrum, Tesco has developed its ‘Extra’ format, typically comprising stores of circa 10,000 sq m, selling a wider range of goods including clothing, books/records. These stores are akin to the Sainsbury’s ‘Savacentre’ format, and the larger Asda stores which have traditionally sold a wider range of non-food goods e.g. the ‘George’ clothing range.

23.Notwithstanding the reduced pace of new superstore development over the last three years, most food retailers have continued with ambitious store expansion plans. Tesco, for example, is particularly active at the present time in pursuing extensions to existing superstores, which are promoted on the basis of the need to improve congested and over-crowded conditions in such stores, and/or in order to extend the range of goods sold, for example to include clothing or other comparison goods. Most of the other major food retailers are promoting similar extensions.

24.While the number of consents granted for new edge of centre or out of centre large food superstores has fallen, there is evidence that retailers in partnership with local planning authorities are continuing to secure such opportunities within town centres, or within existing or as part of proposed new district centres. However, despite the Government’s advice to encourage such development, practical difficulties and planning concerns relating to highways and design issues continue to present obstacles to new foodstore development, and proposals to extend existing town centre supermarkets.

25.Recognising the key role which large foodstores can play as an anchor in smaller centres, there seems to have been a small increase in the number of authorities that are using their compulsory purchase powers to assemble suitable sites for large foodstores as part of a regeneration strategy for their centres. A good example is Eccles.

The Policy Position

26.The first version of PPG6 (Major Retail Development) published in January 1988, afforded limited guidance as to the role or the preferred location for new foodstores. The generally ‘laissez faire’ policy approach at that time provided a clear presumption in favour of new development, unless it would be likely to cause harm to interests of acknowledged importance.

27.A more substantive version of PPG6 was published in 1993. This advised that the planning system should facilitate competition between different types of shopping by avoiding unnecessary regulation, and stressed the need to secure a suitable balance between town centre and out of centre retail provision.

28.The guidance acknowledged that retailing is constantly adapting to changing conditions, and highlighted the trend towards larger shops to increase efficiency and extend the range of goods available on one site, offering the potential to pass on benefits to the consumer in convenience, choice, value for money and comfort.

29.Acknowledging the difficulties of accommodating larger stores within centres, the guidance indicated that the role of large foodstores both in and outside town centres was well established and understood. This is borne out by looking at the scale of superstore development which took place prior to the publication of PPG6. By 1993, superstores accounted for just under half of total grocery sales, and represented 35% of total grocery floorspace.

30.The 1993 guidance restated the general principle that it is not the function of the planning system to preserve existing commercial interests or to inhibit competition between retailers or between methods of retailing. The guidance advised that retailing should generally be able to respond to consumer needs and demands and enjoy the benefits which may flow from competition provided by new retail developments, (with the proviso that such competition should not be such as to deny access to retail facilities for significant sectors of society).

31.As commercial competition as such is not a land use planning consideration, the guidance stated that the effects of new retail development on existing individual retailers would not normally be a relevant factor. Impact considerations were confined to effects on the vitality and viability of any nearby town centre as a whole. However, food supermarkets in smaller towns and district centres were acknowledged as playing a vital role in maintaining the quality and range of shopping, and the guidance advised local authorities to consider carefully the effects of new development on such stores.

32.The current version of PPG6 published in June 1996 maintains the Government’s objectives to secure an efficient, competitive and innovative retail sector, and ensure the availability of a wide range of shops and other facilities. The principal change of emphasis is the objective to focus new development on existing centres, by the introduction of the sequential approach, (foreshadowed in PPG13) and deleting the reference to securing an appropriate balance between town centre and out of centre development.

33.Within town centres, the current guidance gives clear continued support for the important role which large foodstores perform. It recognises that large foodstores and supermarkets often play a vital role as the anchor store in maintaining the quality and range of shopping in smaller towns and district centres, and are essential for less mobile members of the community. As the major retailers have developed more efficient distribution networks, they have been able to reduce the size of store needed to provide a full range of convenience goods, enabling more flexibility.

34.More qualified support is given to edge of centre stores. The guidance acknowledges these may be the best solution in many small centres, particularly in historic towns, provided the links between the store and the rest of the centre are strong.

35.Our market towns research highlighted the critical importance of linkages and effective integration. We have suggested that the current guidance should be clarified, to emphasise the need for effective integration between ‘edge of centre’ development, and to consider the impact of such proposals on the economy and environment of the town centre. We have also highlighted the need for more research into the functional linkages and relationships between town centres and edge of centre stores arising out of our current research into the sequential approach on behalf of the NRPF.

36.The guidance recognises the role of supermarkets in district centres. It refers to district shopping centres as ‘groups of shops, separate from the town centre, usually containing at least one food supermarket or superstore, and non-retail services such as banks, building societies and restaurants’. In practice, following the incorporation of additional services within large modern superstores in many cases, such stores can legitimately be argued to perform the role of a district centre in themselves. In commercial terms, of course, the potential to achieve competition between retailers within the centre is lost.

37.The guidance qualifies the role of supermarkets in district and local centres. Local authorities are advised to encourage ‘appropriately sized’ local supermarkets and seek to retain post offices and pharmacies. No indication is given as to what constitutes an ‘appropriate’ size. If the development can be physically integrated properly within the centre in question, in our view, there should not normally be grounds for concern about the impact on other retailers within the same centre, provided that there is no real risk that the food retailer will be able to establish a monopoly position.

38.The impact of new foodstores within town and district centres on neighbouring town, district or local centres may be a legitimate planning issue. However, there is little guidance on the circumstances where it is relevant to take account of the impact of new development in one town centre on any neighbouring centre(s). This comment applies equally to non-food retail development.

Policy Recommendations

39.We consider that current PPG6 correctly focuses on the location of new development, rather than regulation of the scale and form of development, (for example, to regulate the size of foodstores or to reduce competition with other town centre retailers). We do not consider it is desirable, or practicable, to use land use planning powers to regulate supermarket operators, or any other town centre retailers to restrict competition within existing centres.

40.We have highlighted, particularly in our Market Towns research, the need to ensure that where new edge of centre development is promoted, both the physical links and functional relationship between the new development and existing centre require careful consideration. A poorly located edge of centre store is unlikely to offer any benefits to the nearby town centre.

41.Where development is proposed outside existing centres, the guidance sets out a range of tests, including requirements as to accessibility, effects on travel and car use, and the environmental effect. Detailed consideration of these issues falls outside the scope of this evidence. However, our Market Towns research demonstrates the vast majority of shoppers using out of town superstores arrive by car, and that town centre stores generally attract more shoppers arriving on foot, or by public transport, and achieve a higher proportion of linked trips. This analysis clearly supports the continued preference for town centre development.

42.Three key tests are applied to proposals for new and extended foodstores:-

•Need - evidence of a need for the development is a requirement when seeking a Local Plan allocation, and, as clarified by the Minister on 11 February 1999, is also a requirement for the grant of planning permission for proposals outside existing centres which are not provided for in the Local Plan.

•Sequential approach - the onus rests with the applicant to consider central locations for the proposed development having regard to their suitability, viability and availability. Recent Ministerial clarifications confirm that this approach applies equally to store extensions.

•Impact - including cumulative impact i.e. the effect on existing town and district centres.

i)Need

43.We broadly welcome the Ministerial clarification that the need test should apply to applications as well as Local Plan allocations. This addresses an inconsistency in PPG6 as currently drafted.

44.The key issue is how need is defined. The Minister has to date declined to provide further guidance on what constitutes need, although he has indicated that commercial demand, or theoretical capacity, do not in themselves, constitute ‘need’.

45.In principle, we concur with the view that what constitutes need is best left to the local decision maker. However, we would welcome some clarification. We believe that qualitative shortcomings in the existing provision, limited choice, and evidence of significant ‘leakage’ of expenditure are all indicators of retail need.

46.There may be circumstances where the imposition of the need test can run counter to the Government’s desire to see competition in the supermarket sector; for example, where a single operator secures a dominant, in effect, monopoly position in a small town or District Centre. Provided an existing retailer meets the ‘need’ as defined, the guidance may have the effect of inhibiting competition - at least from any edge of centre or out of centre store.

47.The need test should help prevent the environmental consequences of wasteful competition; in its simplest form, developing two stores where only one is required. However, if the threat of competition is reduced, the guidance should make it clear that the responsibility rests on local authorities and retailers in established town centres to continue to invest and modernise.

ii)The Sequential Approach

48.We endorse the principles of the sequential approach, and the general onus on the developer to consider alternative sites. However, as PPG6 makes clear, we believe local planning authorities have a critical role to play in the identification and assembly of sites for new town centre supermarket development. In this respect, the current review of the use and effectiveness of these measures, and how the process can be streamlined is timely.

49.Of all the provisions of the June 1996 version of PPG6, the sequential approach has given rise to the greatest level of confusion and uncertainty. Our ongoing research on behalf of the NRPF points to clear inconsistencies in the interpretation of what constitutes ‘town centre’ and ‘edge of centre’. While the introduction of the sequential approach has had an impact on the way both local authorities, developers and retailers are considering proposals for foodstores, the early indications from our research for the NRPF are that the approach is being applied inconsistently.

50.For the most part, those promoting new food supermarket development appear to acknowledge that the onus rests on them to demonstrate that they have thoroughly assessed all potential town centre and edge of centre options. The confusion arises when deciding which sites should properly be considered as being ‘suitable, viable and available within a reasonable timescale’, taking the criteria set down in PPG6.

51.The question of suitability is normally taken by supermarket operators and developers to mean suitable for the size of store which they wish to develop. Local authorities, on the other hand, typically highlight a need for compromise and flexibility, and, quite reasonably, require the applicant to consider sites which may be suitable for a smaller development which may suit some, but not all, food retailers. In our view, the clarification of the ‘need test’ should go some way to resolving this issue, by first defining what type of development is needed.

52.The debate on the suitability issue broadly falls into two different interpretations of the guidance. The stance taken by developers and retailers is to adopt the ‘built form’ approach i.e. the size of unit required to meet the retailer’s own commercial and operational needs and aspirations. Local planning authorities generally favour the ‘range of goods’ interpretation, which considers the extent to which the proposed development can be broken down into its constituent parts e.g. food sales, clothing sales, etc.

53.The ‘built form’ approach enables retailers to set their requirements as the basis for the sequential approach. Given the dominant position of the major superstore operators, and their continuing strategy to extend their offer well beyond their traditional convenience goods function, if the built form interpretation of the sequential approach is accepted, it will be seen as offering superstore operators a significant competitive advantage in the sale of a wide range of non-food goods over and above traditional specialist town centre retailers. Our concern is that this interpretation will only encourage retailers to develop larger less flexible store formats in order to justify out of centre sites. It must therefore be questionable as to whether this would be consistent with Government policy to ‘put town centres first’.

54.The second aspect of the sequential approach which gives rise to significant uncertainty is the question of availability. We do not advocate the interpretation adopted by some that the suggested alternative site should be immediately available. However, nor do we consider it is appropriate to oppose new development on the basis of a more central alternative location unless there is some realistic prospect for that site coming forward for the proposed development within a reasonable period of time.

55.We would suggest that what constitutes a reasonable period of time depends on the urgency of the need as defined. However, if a local authority intends to rely on an alternative more central site as a basis for opposing new supermarket development, we consider that as a minimum, the authority should be able to demonstrate its in principle support for development on the site in question. It should also be able to indicate what support it is prepared to offer in the land assembly process, using its CPO powers if necessary.

56.The final aspect of the sequential approach which is causing significant uncertainty and controversy at present is the way in which it is applied to proposals to extend foodstores. The Minister has confirmed that the sequential approach applies to store extensions. Advocates of the ‘built form’ interpretation of the sequential approach argue that a store extension is indivisible from the existing store, and therefore the sequential approach cannot apply to such proposals.

57.We do not support this interpretation. In circumstances where a supermarket or superstore performs an important local or district centre function, and an extension is required in order to meet the specific needs of its catchment, there is unlikely to be any justification to consider alternative sites. However, in the case of proposals for significant extensions to stores, serving an extensive catchment overlapping with nearby centres, we consider the analysis of alternative sites will be justified. Many of the current proposals for store extensions are advanced on the basis of the overcrowding and overtrading in existing stores. Clearly, the development of a new competing foodstore, or extension of existing facilities within a nearby town centre offers an alternative solution to overcrowding in out of centre superstores, which is likely to be more consistent with the underlying objectives of PPG6.

58.In circumstances where superstore operators propose major store extensions in order to extend the range of goods sold, we consider the same underlying principle should apply. If the effect of such store extensions is to create retail floorspace which would not otherwise have been permitted, having regard to the related tests of need, the sequential approach, and impact, we do not consider that any distinction should be drawn in policy terms to store extensions.

ii)Impact

59.The relevance of the impact of out of centre superstore development on established town and district centres has always a been recognised in policy. Our market towns research was the first major research project to quantify the effects of such developments, and their consequences for the vitality and viability of nearby town centres. This suggested wide variations in the level of impact, and its consequences, in different centres.

60.We consider there is a need to improve further the consistency and objectivity of retail impact assessments, for example, by the more extensive use of up to date survey material. We would also welcome the introduction of compulsory, post-opening surveys, based on a consistent methodology, to measure objectively the impact of new stores, and to assist retailers, developers and local authorities to identify the likely consequences when planning new developments.

61.There remains a clear need for accurate, up to date information on floorspace and retail turnover; the data available at present is wholly inadequate in some cases. We welcome the efforts of the DETR to assemble reliable data on floorspace and turnover, although without a comprehensive Census of Distribution this task presents major practical problems.

62.Leaving aside these practical measures, we do not consider that there is any justification for reviewing the Government’s Planning Policy Guidance relating to the economic impact of large foodstores. This has been refined and developed over time, and is well understood.

63.The final aspect of policy which we consider warrants clarification is the role which superstores can and do perform as district centres. Provided stores are well located relative to the catchment they serve, and are readily accessible by alternative means of transport, we consider there is a case for considering designation of such stores as district centres, (or stores in conjunction with adjoining facilities), with all the policy consequences that such designation infers i.e. ‘legitimate’ protection from out of centre competition and support for further investment.

64.We consider this support should also apply to appropriately located new large foodstores where they offer the potential to create a new district centre which meets the needs of a particular catchment which is poorly served at present. Local authorities should be required to consider which stores or developments do now or could in the future fulfil such as a role.

Conclusions

65.We believe that superstores and large supermarkets perform an important role, which has been consistently recognised in Planning Policy Guidance. Such stores often provide one or more of the anchors in smaller town centres, may provide a catalyst for new development and investment to sustain the quality of the environment, and can, in their own right or in conjunction with other stores, provide the nucleus for appropriately located district centres.

66.The principal adverse impacts which have arisen from supermarket development have occurred where inappropriate development has taken place outside established town centres, where by nature of its scale and cumulative impact, it has led to a reduction in economic activity, and prejudiced the potential for new investment, or led to disinvestment in existing high streets.

67.We consider Planning Policy Guidance should continue to focus on the key issue of location for new retail development, as a legitimate land use planning consideration, rather than to regulate competition between large supermarkets and other forms of retailing. Where tension exists, it is as a consequence of pressure from superstore operators to extend further the scale and range of their operations to a point where they are unable to locate satisfactorily within existing centres.

68.The sequential approach recognises and applies itself to this tension. It places on the one hand a responsibility on local authorities to take a positive approach towards identifying and assembling town centre sites, and on the other, urges retailers and developers to be flexible about their requirements. There is evidence that most retailers and developers and their advisors are heeding this advice.

69.The decision by a number of retailers to develop smaller town centre stores should be welcomed. We do not consider there is any legitimate ground to oppose new town centre supermarket development in planning terms, even if such regulation was feasible and enforceable.

70.Overall, we consider that PPG6 and subsequent Ministerial clarifications provide a coherent and relevant policy basis for considering proposals for the development of new food supermarkets and superstors, subject to further clarification on the related issues of store extensions, need, the sequential approach and the role of district centres.

71.We consider there is justification for giving more explicit acknowledgement to the role which superstores can perform as district centres in their own right, provided developments are well located relative to their catchment, accessible by alternative means of transport, and consistent in scale with the needs of their catchment.

72.We recommend that local authorities should be positively encouraged to use CPO powers so as to regenerate declining centres and to plan positively for new retail provision. Councils should, especially in identified Urban Priority Areas, be afforded assistance by way of additional funding support, perhaps via an appropriate regeneration ‘bank’, to expedite the land assembly and the urban regeneration process.

73.As advisers to retailers, developers and in particular, local authorities, and authors of the DETR Market Towns research, we are very familiar with the negative economic and environmental aspects of superstore competition. However, we consider that a balanced analysis of this issue should also recognise the vital contribution which such development has played in many town and district centres, and the role which such developments should continue to perform provided they take place in the right location.