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Welsh government to consult on restrictions for charity shops

Finance | Jonathan Last | 24 Oct 2012

The Welsh government has agreed to consult with the charity sector on proposed restrictions which could "create 160 extra empty charity shops".

In June this year, Brian Morgan, professor of entrepreneurship at Cardiff Metropolitan University, headed up the 'Task and Finish Group' which produced the Business Rates Wales Review: Incentivising Growth.

Included in this document were recommendations for the charity retail sector, namely that the Welsh government should explore reducing rate relief for charity shops, capping their numbers and restricting the premises they can occupy.

Charity shops currently receive 80 per cent rates relief, with the other 20 per cent at the local council’s discretion. The Business Rates Wales Review suggests reducing this figure to a statutory 50 per cent for larger charity shops trading in new goods in Wales.

Government to start a consultation

The Welsh government has now produced its response to the proposal, and said that although it understood the concerns of charities it would take forward a consultation on this.

It plans to set up a forum to collect evidence and bring partners together to consider charity relief.

“The Welsh government supports this recommendation to consult with the charitable and retail sectors,” the report states. “This issue has been one that has generated significant attention and it is clear that there are opposing viewpoints on the relief offered to charities.

“There are also issues to explore regarding whether increased reliefs should be available to social enterprises and credit unions.

“Therefore, the Welsh government will bring together partners representing charities, business and other partners to examine the evidence and suggest some next steps.”

CRA: ‘proposals would hammer charities’

Warren Alexander, chief executive of the Charity Retail Association, expressed his disappointment that the Welsh government has decided to consult, instead of rejecting the Business Rates Wales Review’s proposals outright.

“Though it is difficult to estimate the impact without further detail, talking to our members suggests that up to a third of charity shops could close, which would wipe £4m off the money going to charity in Wales and create 160 extra empty shops.

“That could mean over 200 jobs lost. Those shops that did manage to stay open would be much less profitable.

“In essence, these proposals would hammer Welsh charities and are based on prejudice against charity shops, not on evidence as to what’s best for the high street.”

The CRA, which represents 70 per cent of Welsh charity retail sector, estimates that rate relief is worth around £3.4m to charity shops in Wales, and that charity shops raise over £12m every year for Welsh charities.

It said in a statement that if the result of the consultation is to take the proposals forward, this will inevitably cause charity shops to close, leaving more vacancies on the high street and threatening around 200 of the 700 jobs that charity shops provide in Wales.

Charity retail sector remains strong

The 2012 Charity Shops Survey, published by Charity Finance in association with Fundraising, showed that the charity retail sector is going from strength to strength.

Charities reported a total income of £716.4m and total profits of £175.1m – growth of 6.8 per cent and 14.3 per cent respectively on the previous year.

You can order your copy of this year’s survey from Civisociety.co.uk here.

Directory: Charity Retail Association
Who's Who: Warren Alexander