The recession has taken a grim toll on high street retail chains with family favourites such as JBB Sports, Peacocks and my own favourite, Jane Norman, either closing or slimming down. But other retails outlets are thriving. Payday lenders, pawnbrokers and betting shops have proliferated, in some areas changing the look and feel of the high street.
The rapid expansion of payday lenders is well documented. For example, The Money Shop increased from 168 branches in 2006 to 450 in 2011. And people aren’t borrowing to pay for treats or extras. Research by Unite found that 82% of employees surveyed said that they did not have sufficient money to get to the end of the month and 12% of these said that they had used payday lenders such as Wonga, Money Shop and Quick Quid to help them until they were next paid.
In August, a Channel 4 Dispatches programme investigated the rise of high street gambling and found a growing number of betting shops clustered in areas of poverty and high unemployment. In places such as Deptford High Street there are now ten betting shops in the space of less than a square mile.
Since the Gambling Act, the number of British bookies has risen by more than 300, roughly one new shop a week with a growing number of betting shops clustered in areas of poverty and high unemployment. Dispatches found that in relatively prosperous areas with low unemployment, there are about five bookies per 100,000 people. But in poorer places with high unemployment, there’s an average of 12 bookies for each 100,000 inhabitants.
Figures from the National Pawnbrokers’ Association (NPA) suggest that this industry is also benefiting from the recession. It is growing by ten per cent a year, with a new shop opening on average, every week in the UK. Households are cashing in on rocketing gold prices to make family budgets stretch further.
This proliferation of high interest lenders is not just ruining the look and feel of high streets, with a reported increase in anti-social behaviour linked to these clusters. They are also hampering economic growth with money that would have been spent locally on goods and products being syphoned out in the form of high interest payments and gambling losses. According to Dispatches, in 2011 British punters lost well over a billion pounds gambling on Fixed Odds Betting Terminals (FOBT), located in high street betting shops.
The Association of British Bookmakers defends their expansion, stating that up to 80% of new shops are opened in vacant units, providing jobs and investment that would otherwise be absent. And the Money Shop claims its plans to open 50 new shops in 2012 will result in the creation of over 300 new jobs. There is also the question of supply and demand. Households and businesses are finding it increasingly difficult to access fair credit from mainstream lenders such as high street banks. This leaves them no alternative but to use high interest lenders to plug the gaps in family finances.
So how do we tackle this? By changing planning rules and increasing access to fair credit. Changes to planning policy could place betting shops in a separate ‘use-class’ of their own, giving councils more control about numbers and locations. According to the RTPI, this would require a statutory instrument rather than a simple amendment of local plans.
However, it was one of the recommendations of the Portas Review into the future of high streets and the government has indicated that it may support the required change. Increasing access to fair credit by encouraging high street banks to lend on more favourable terms and expanding alternative providers, such as credit unions, would ensure a better deal for those needing to borrow. It is probable that more money would then remain in the local community, helping economic growth and high street vitality.
Spot on – but let’s not forget community finance providers (CDFIs) alongside credit unions when we call for ‘expanding alternative providers’. These ethical locally based lenders supported 29,000 households last year; many customers had previously been users of high interest credit. But while CDFIs are a great success story – they need significant further support too. More here: http://www.cdfa.org.uk/2012/10/04/demand-for-community-finance-soars-as-ethical-lenders-take-on-the-wongas/
Thanks Jamie and you are absolutely right about CDFIs. In fact CDFA is a member of the Community Investment Coalition.
I think you raise some interesting points here. I do think high streets now have an over reliance on pawn shops, bookies, gambling arcades and I’d also add charity shops. I suspect it all too easy for local councils to allow this to happen to avoid vacant spaces and void properties.
Extending that line of thought on – would you also advise that shops that sold cheap but unhealthy food also have their numbers limited in areas of poverty and high unemployment? Or perhaps shops that sell alcohol? What about pubs?
I guess what I’m asking is how much influence can or should planning have over people’s lives?
Hi Robert, thank you for that comment. I think that is an interesting point about whether empty retail units are better than ones filled with retail that may, in someway, be detrimental to local communities. I also think in these harsh times it is hard for landlords / councils to miss any opportunity for rent, employment and rates (especially with councils now able to keep some of the rates). Some councils are thinking creatively about how they can fill vacant units with social enterprises, other non-retail businesses and even changing use to housing so maybe the key is looking to those vibrant high streets that do exist and sharing the learning.
Great example of Holyhead in Anglesey which in 2009 had the highest vacancy rate of any town centre in the UK with 39% of premises empty. Their community-owned regeneration organisation approached owners of vacant shops – a mix of local people and owners further afield in London – to discuss their views on entering into rent-free periods on their properties.
6 vacant shops were secured for the initiative; 3 of these shops were offered rent-free for periods ranging from 6 months to 12 months whilst another 2 units had rents reduced by over 60%.
By the end of 2011, 6 previously empty premises were open – creating 5 new businesses which currently employ 12 people. More about this here: http://towns.org.uk/2012/05/08/wales-holyhead/
I was a Legal Aid debt advice supervisor for nearly a decade and dealt with many cases involving payday loans (and logbook loans) and can confirm that these are the most cynical forms of cynical exploitation of our increasingly struggling population. In some cases, the clients’ own banks closed their accounts when the payday lenders presented the cheques that borrowers lodge (and try to maintain extortionate repayments to avoid being cashed). This meant they had to make alternative arrangements for wages, etc.
Empty shops in high streets should, I suggest, be made available as community spaces – where creative projects or other initiatives of local benefit can benefit from cheap accommodation – until a trader or business eventually registers interest in longer-term leasing.
Bookies, payday lenders and, perhaps, £1 shops on high streets are signs of stagnation and decay.
Thanks for the insightful blog post, Jennifer.
Jamie – thank you for that case study. Really interesting. Russell, thank you for those comments – I think as Jamie has highlighted some councils are doing good work in this area and perhaps the Portas review and realisation that the nature of retail is changing will encourage more to do the same.
I just wanted to clarify/comment on Robert & Jennifer’s thread “it is all too easy for councils to let…” & “it is hard for councils to miss opporuntunity for rent/rates…”
If a property is already classified as retail (A1) – then no planning application is required to change from a normal to a charity shop – which comes with mandidory 80% rates reduction. Therefore the Council has no influence one way or the other. The only longer term way I can see to try to reduce the number of chairty shops in our key shopping areas, is to talk to MPs about their impact on the High Street, and to try to amend the manditory rates reduction so that it only applies to secondary shopping areas. This would mean that independent retails would have a more level playing field, and quality retailers maybe better attracted to smaller towncentres which currently have a high concerntration of charity shops.
In terms, of betting or money lending shops, if the property is currently retail (A1), then planning permission would be required (change to A2). Thus local residents or neighbouring property owners should contact the local council at the time of the planning application to make their views heard on if this is suitable site or if they have concerns regarding the number of similar businesses.