Comment: Corporations are killing the British high street
Mary Portas' proposals will change nothing. To save the British high street you have to be brave up enough to stand up to the corporations.
By Ian Dunt Follow @IanDunt
My local butcher closed recently. It was nothing particularly special, but I liked the fact they wore the old-fashioned butchers outfits – evidence of shameful, middle-class sentimentality, I know. I liked the fact they knew my name, and I knew most of their names, and we would talk about, well, mostly the weather, as you might imagine. I liked knowing I was eating meat from an animal that had been treated well and it tasted better. Although that may have been because I thought it had been treated well, rather than the other way round.
In my local supermarket, where I'm now forced to go for my meat, a whole chicken costs £2.07. I'm not much of an animal rights activist, but I can't help but shake the idea that this chicken cannot have had an agreeable life if I can buy it for £2.07. No-one knows my name in the local Tescos, none of the people who take my money receive any of it. I don't feel good about it. I don't talk about the weather.
The death of the British high street is not the result of the economic downturn. It was happening long before that. It is the inevitable result of corporate Britain's legal, economic and political dominance. To save the high street you would need to be willing to challenge corporate Britain and neither this government or its predecessor showed any inclination to do that. We got a prime example of what happens when you're not willing to make that call today with the publication of Mary Portas' report into saving the high street. This is Mary Portas of TV fame, but also, more interestingly, behind the marketing for two Westfield centres and host of chain high street outlets. Her proposals? More flexible rules on night-time deliveries, higher parking charges for out-of-town parks and less planning regulations to encourage entrepreneurs. Those are the kind of sticking-plaster proposals you get in a society afraid of pointing at the real bogey man.
The traditional response to this argument is that it's a pet peeve of the middle classes, who can afford to pay more for their fruit and veg and don't respect how supermarkets have driven down the price of food for those on modest income. Actually, supermarkets make poor areas poorer – they make us all poorer – because the money we spend in them disappears rather than circulate through the community. The New Economics Foundation (NEF), an independent economic thinktank, compared people buying food at a supermarket with a local farmers' market, and found twice the money stayed in the community when people bought locally.
"Money is like blood. It needs to keep moving around to keep the economy going," said NEF researcher David Boyle. When you go to a supermarket, "it flows out, like a wound".
Buying locally also increases the 'velocity' of money. Because local shops don't make such a big profit, the money they make circulates much faster than it would in a large corporation, as owners purchase supplies and employ workers – driving the money right back into the community. The faster money circulates, the more hands it passes through, the better it is for our economy. Velocity was stable from the 1950s to the 1970s, but it slowed with the advent of increased inequality in the 1980s under Thatcherism/Reaganism. The money started to divert to the financial sector, average wages stayed still, inflation rose due to higher incomes at the top, spending power reduced, people took out loans and….well, you know the end of that story.
The people at the real receiving end of corporate dominance are the small independent retailers. Again, supermarkets are the worst example but the same pattern occurred with books, entertainment, clothes and office supplies, to name just a few. The economies of scale sank British shop-owners and the government did precisely nothing to come to their aid, citing, with a total lack of irony, the free market. Tesco now controls over 30% of the grocery market in the UK. In 2011, the supermarket chain announced profits of £3.4 billion. It has expanded from groceries to electrical goods, insurance and computer software – and that's just the top of the mountain. Its takeover of the 'metro' market – smaller convenience shops – has forced a new set of shop-owners to close down their business.
This is not a result of the recession, although plainly that made it worse. In the five years to 2002, some 50 specialist shops were closing every week. By 2005, 2,157 independent convenience retailers closed – double that of the year before. By the time the all-party parliamentary small shops group looked into the matter, it found that independent convenience shops would not survive until 2015 and neither would independent newsagents.
Large supermarkets readily abuse their spending power, opening huge stores with massive cost-cutting measures and driving the competition out of business. The Competition Commission's report on the grocery market found the top four chains constantly sold products below market price
And it's not just the competition who get the sharp end of the stick. Producers and workers are no better off. Thousands of farmers leave the industry each year because of the low prices they receive for their produce. With extraordinary buying power and a complete monopoly of the market, major supermarkets make sure the burden of costs falls disproportionately on producers, with most of the spare cash going towards profits, not reducing prices. With control of 80% of the British grocery market, they dictate terms and cost to suppliers. Any complaint and they can move elsewhere. In 2000, the Competition Commission found 52 different kinds of abusive trading practice. The voluntary code of practise which was introduced in response is generally considered weak and ineffective, as voluntary codes of practise typically are.
The same standards of treatment apply to the workers who toil for the supermarkets, especially in meat and poultry processing, where unions say agency and migrant workers are subject to mistreatment and exploitation.
Supermarkets point out that they are successful because people buy from them, so these criticism are just the ramblings of someone standing between the willing shop owner and a willing customer. Of course, people will buy cheap, especially during austerity. They also appreciate the convenience of a supermarket. But local communities across this country are standing up to the great supermarkets, and finding themselves at the losing end of a battle which is run according to supermarket principles: namely, a staggering inequity of means. Planning law is as subject to power and capital as everything else.
The planning system favours multiple retailers over independent shops, and does little to prevent out-of-town development, quite against its stated aim of increasing "vitality" in town centres. It does not include the construction of mezzanine levels in planning permission. Supermarket lobbying, with staggering amounts of money behind it, usually defeats local communities' opposition to new supermarkets.
In general, they have more power than local councils. A typical weapon is a section 106 agreement, where the supermarket can get 'planning gain' if it agrees to pay for a communal facility. With their piles of capital, this is not a problem. Similarly, the supermarkets can afford the cost of appeals against planning decisions, something councils are increasingly reticent about given their current financial straits.
Far from doing anything about it, the government relaxes local planning rules and sucks money from local councils, making them even weaker in the face of these companies, who are meanwhile made richer with George Osborne's cut to corporation tax.
This is the politics of scale. If you let something get too big and too rich it will not be subject to the same rules as everyone else. It can drive providers into financial ruin, it can afford to undercut local competitors, it can throw its financial weight on to legal decisions. But it won't remember your name and it won't talk to you about the weather.
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