2013 Autumn Statement: Give charities a break

4^th December 2013

Warren Alexander, Chief Executive of the Charity Retail Association argues for a freeze in small business rates

Given the political pressure over recent weeks and months it would be surprising if the Chancellor did not make an announcement aimed at tackling the increasing rates burden on businesses in his Autumn Statement this week. And with the commitment by Ed Miliband that the Labour party would freeze business rates, it seems likely that the Conservatives might want to use this week’s statement as a platform to steal a political march on the issue.

It’s right that this is an area of focus for Government action. Businesses have absorbed hefty rises in recent years: a 2.6% rise in April this year came on top of a 5.6% rise in 2012 and a 4.6% rise in 2011. And according to the British Retail Consortium retailers are footing nearly a third of that bill. At a time when the retail sector has been hampered by a sluggish economy and there are more than one in ten shops in our town centres standing empty, keeping up with this additional cost is clearly a cause of real concern for many high street traders.

One result of this financial pressure on traders has been some increase in criticisms of charity shops, which receive 80 per cent business rate relief in recognition of their social benefit. It’s unfair, so the argument goes, that charities should get such a concession when other retailers struggle to meet their business rate bill.

Charities rightly respond by arguing for both the significant social and economic benefits that they bring to local communities – primarily through their fundraising activities which go directly to the provision of services and provide £290 million to charitable causes every year. In addition, it’s often overlooked that, as well as 17,000 paid jobs that charity shops provide, they are responsible for probably the biggest volunteering programme in the country – acting as a springboard to employment for some of those with multiple barriers to work, and keeping many elderly people active and engaged in their community.

Independent research last week also found that without charity shops, high street decline in many areas would be likely to be much worse. The report found charity shops were maintaining and stabilising footfall in many town centres and occupying shops which would otherwise be empty: in other words, keeping the high street alive. It’s also often missed that business rate relief for charity shops is probably less than 5 per cent of the amount awarded in small business reliefs, making it relatively speaking a modest subsidy, particularly in light of the considerable social benefits above.

However, although this is important in terms of evidencing what’s really going on in town centres, it’s fair to say that all of this makes little difference to the small independent trader on the high street facing another hike in rates come April. And what some commentators miss is that if we really want to save our high streets the real solution is not to make things tougher for charities but easier for everyone else to operate. This could be achieved if the Government does step in this week to support small retailers further – with, as has been speculated, either a freeze in the rates rise, or an extension of Small Business Rate Relief. If the Chancellor does so, this is likely to be supported by charities, which as high street retailers have a vested interest in supporting healthy and diverse town centres.