Market Failure?: Can the traditional market survive? - Communities and Local Government Committee Contents


We undertook our inquiry into traditional retail markets to determine whether local authorities and central government should be doing more to support them.

Having looked at a wide range of markets we have come to appreciate the complex and diverse nature of the traditional retail markets sector. A significant number of all types of markets continue to thrive, but the number in decline appears to be greater than the number that are more than holding their own. There are a number of reasons for the decline, the most significant being increased competition from supermarkets, other alternative cheap retail outlets and the internet. Nevertheless, a growing number of markets are adapting successfully to change, and we see reasons to be optimistic about their future.

We believe strongly that local authorities and central government should care about markets, because of the multi-faceted nature of the benefits that successful markets can bring to local towns and communities. Our report identifies five key benefits. The economic benefits are perhaps the most obvious. However, we consider that the social benefits of markets are equally important. For example, markets can play a significant role in encouraging social cohesion. We identify further roles for markets in assisting the regeneration of town centres, in promoting healthy eating ,and in reducing environmental impacts in the retail sector.

Our report considers the role of local authorities in regulating, managing and promoting different types of markets. We look first at the role of local authorities with regard to farmers' markets. Over the last decade, farmers' markets have helped bring a new vibrancy to the market scene. We assess the further dimension they can bring, and how they interact with older markets.

We then turn our attention to the two big challenges facing local authorities seeking to sustain big metropolitan markets in the current austere economic climate: finance and management. We note lessons from elsewhere in Europe, including the use of longer-term contracts with private operators. We identify best practice, and recommend that councils consider using prudential borrowing, market champions at a senior level within the council, and co-operation with the private sector. We also examine the challenges facing some local authorities running markets in London, where local legislation is constraining their ability to improve their street markets.

Our report looks at the challenges facing medium and small town councils seeking to keep smaller, local markets alive. We urge these councils to consider carefully whether their markets are sustainable in the longer-term, but caution against making a hasty decision to close them given the range of benefits they can deliver. We offer a number of suggestions to help them manage their local markets, including sharing the cost of joint market champions and market operators, improving dialogue with market traders and looking at the potential to attract non-council streams of funding to further complementary goals through the market.

We welcome the progress the industry has made in recent years, providing more coherence and vision across the sector, promoting markets, recruiting new traders and disseminating best practice. We note, though, that there is still much to do, particularly with regard to better promotion and recruitment and training for existing traders and market managers.

Finally, we consider the role of central government. We accept the Government's contention that, with regard to markets, local government is properly in the lead, and that Government's main role is at the strategic level. We welcome its efforts to include markets in strategic planning guidance, but recommend that greater emphasis be given to the non-economic benefits of markets in the new planning guidance out for consultation.

We are concerned by a lack of clarity within central government as to who has overall responsibility for markets. We believe Government is missing opportunities to help local government and the market industry make strategic change, and to use markets as a vehicle to promote key departmental objectives. We want CLG to provide a clear central government focus for markets, and become the first point of Government contact for industry and local authorities with concerns about market legislation and other 'big picture' issues. We also recommend that CLG establish an inter-departmental working group to ensure that departments make best use of markets as a vehicle to further wider Government objectives.

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Prepared 23 July 2009