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


Memorandum by the London Borough of Southwark (MARKETS 10)

EXECUTIVE SUMMARY

  1.  The picture in Southwark reflects the national one of mixed success with many traditional retail markets in decline and others thriving. However traditional retail markets still have much to offer.

  2.  Markets have both social and economic benefits. Given the right conditions and support markets can be platforms for entrepreneurship and innovation and create local employment. Markets also remain important sites for social interaction in the community and can add to the vitality and vibrancy of the public realm.

  3.  Local government has a key role to play in the management and development of markets as part of its central role in fostering local economic development and placeshaping.

  4.  We believe that there is potential in considering alternative management vehicles for local markets for example management by non-profit making organisations.

  5.  The legislation in London is cumbersome and restrictive and needs a thorough review and overhaul.

  6.  The development of markets is not helped by the fragmented nature of national, regional and local responsibilities. It is at the local level, given the right support and investment, that we can ensure that markets have the greatest benefits to local communities.

  7.  The Planning system offers some support for markets but this is not consistent and greater use should be made of Section 106 agreements to foster the development of local retail markets.

BACKGROUND INFORMATION

  8.  Southwark Council supports street markets and street trading because we believe they are economically, socially and culturally important to the borough. We believe that well managed and supported Street Markets have the potential to:

    — Be successful economically, socially and culturally.

    — Encourage more entrepreneurship, independence and innovation.

    — Support a range and variety of local businesses.

    — Promote vibrancy in a well managed and maintained public realm.

    — Attract visitors and destination shoppers.

    — Provide access to affordable, healthy and high quality food and other commodities.

  9.  Southwark has over 26 trading venues with some 800 available pitches.

  10.  Southwark currently has around 570 registered traders, which includes temporary and permanent traders. These traders are located in different market areas geographically spread across the borough including:

    — East Street;

    — Southwark Park Road;

    — New Caledonian/Bermondsey Antiques Market;

    — North Cross Road;

    — Westmoreland Road;

    — Peckham Square.

  In addition to these there are a number of isolated trading sites throughout the borough with between one and four pitches.

  11.  Southwark Council's Markets and Street Trading Service is located within the Public Realm Division of the Council's Environment & Housing Department. Environment & Housing provides a wide range of services that aim to make the Borough cleaner, greener and safer. The Markets Service manages all the Street Markets and Street Trading pitches in the Southwark area. These trading locations were once thriving areas. They were very popular with the shopper, attracted visitors to the borough and most sites had lengthy casual trader queues.

  12.  In addition to the sites operated by the Council, there are a significant number of private markets being operated in the borough. These include:

    — Borough Market (itself a market protected by statute).

    — East Dulwich Indoor Market.

    — Peckham Rye Lane Market (trading from two sites on Rye Lane).

    — Elephant and Castle.

  Many of these private markets appear to be trading well and there is no current strategic or legal framework controlling them.

  13.  In October of 2008 Southwark Council launched a strategic review of markets and street trading across the borough working with traders and with the National Association of British Markets Authorities to look at:

    — the role of Markets;

    — how we develop markets;

    — how we modernise trading practices and whether some of the current practices/regulations are outdated and too restrictive;

    — how we take advantage of new opportunities like more specialty markets;

    — how we make markets more competitive so they offer more choice and play a bigger part in the regeneration of the borough; and

    — the aim of the review is to ensure that we provide the right conditions so that enterprise can flourish and markets become platforms for entrepreneurship and innovation. It will look at how we make sure that we have the best people in place with the right expertise to manage the service and move it forward.

  14.  The review will be completed by the end of January 2009 and is part of Southwark's work to take a more strategic and holistic approach and identify the future vision for markets in the Borough. It will also articulate the change process required to transform our markets to meet changing retail habits, changing demographics, policy priorities such as the national Obesity Strategy, regeneration, and the external relationships necessary to make that transformation that have been lacking in the past.

RETAIL MARKETS TODAY

  15.  Like many places nationally Southwark's markets show a mixed pattern of success with some thriving while others have been declining over a number of years due to a range of national economic factors but also to local factors that we are working to address. Traditional markets like East Street have seen a decline in numbers of traders that has accelerated in recent years while for others like Northcross Road there is a significant waiting list of traders at weekends. To some extent this echoes the national trend with a surge in popularity of specialist and farmers markets. Our view is that these can integrate successfully with older markets and with the wider retail economy.

  16.  It is against this background of national decline that the council is working to improve street markets.

  17.  Factors that have contributed to the national decline in traditional retail markets over at least a decade include:

    — Shoppers have more choice.

    — Shoppers have more mobility.

    — The advent and expansion of supermarkets.

    — The introduction of out of town shopping.

    — Sunday trading.

    — Increasing sales made online.

    — Other retailers providing good products at very cheap prices.

    — Lack of investment in traditional retail markets.

    — The regulatory framework.

  18.  However some markets have overcome these issues and remain popular eg Borough Market and Northcross Road at weekends. It is also noted in paragraph 5 above that there are a significant number of private markets operating in the borough and these appear to be trading well however there is no current strategic or legal framework controlling them. Thus it would appear that while the number of street traders has declined sharply the total number of traders has not. It would seem to be the case that where the opportunities and the environment are right there remains a viable market trading sector.

  19.  There are opportunities to create new markets and the rise in popularity of specialist markets, farmers markets, continental and arts and crafts markets are noted elsewhere in this paper. This however needs to consider the impact on existing markets and sit within the context of a strategic approach to market development at local level. There are a number of challenges in doing so and these are set out below.

REALISING THE POTENTIAL OF TRADITIONAL MARKETS

  20.  Responsibility for Markets at a National level is spread across a number of government departments. This fragmented responsibility means that there is no overarching holistic approach to markets nationally with a number of policies across several departments many of which fail to realise the full potential of retail markets.

  21.  In our view there are strong advantages to the involvement of the private sector in the operation of markets in terms of bringing in commercial and retail skills that are necessary to make markets successful however we do not see that there is a one size fits all approach, what matters is what works in the local circumstances. Our view is that whatever arrangements are in place local government has a key role to play as part of its central role in local economic development ensuring that markets play a full part in meting the needs and aspirations of local communities providing economic social and cultural opportunities. Markets also have a part to play in the role of local government as place shapers, as part of regeneration schemes, providing local employment and linked to the other strategies of local authorities, local strategic partnerships and the partners that they work with. Local government needs the capacity to ensure that markets meet their potential as part of these wider agendas and local government is best placed to develop markets as part of developing the vitality and viability of their local economies and ensuring that enterprise benefits local communities. While national and regional government have a role this cannot be achieved working only at a national or regional level. What is needed is for local authorities to move beyond their traditional regulatory functions re fair trading and nuisance control to actively support the development and growth of markets for their contribution to the local economy and wider benefits to the local community.

  22.  The London Development Agency (LDA) has provided funding for the implementation of the London Food Strategy. The main actions underway relate to a wholesale market and training public sector catering staff. Unfortunately little has been done to implement the actions relating to retail markets, although we accept that supporting the wholesale sector is an important piece of the overall picture. The London Development Agency (LDA) has also funded specific regeneration initiatives at certain markets (for example Borough Market), provided business support programmes for market traders (which in our view are an essential part of developing the business skills of traders) and is responsible for wider promotion of London through Visit London. We feel that much more could be done to invest in the promotion and development of key retail markets in London.

  23.  Paragraph 14 above refers to the importance of business support schemes for market traders our view is that local government should have a central role in ensuring that this support meets the specific needs of local businesses and local markets.

  24.  Central, regional and local government could make better use of markets to achieve wider policy goals and there is much good practice in the sector that demonstrates how this is possible. Markets can provide access to good quality affordable food contributing to the health agenda, markets are fertile environments for new business start ups and the development of business skills, markets provide relatively fewer barriers to entering employment and business than other forms of enterprise including to black and ethnic minority communities and markets have a significant social and cultural role as places where people come together. Markets can also provide access to local produce contributing to policies aimed at environmental sustainability and sustainable development.

PLANNING, LICENSING AND LEGAL ISSUES

  25.  Like the majority of London Boroughs the market and street trading operation of Southwark Council is governed by the provisions of the London Local Authorities Acts 1990 (as amended). The focus of the London legislation is street trading and while the street trading may have the appearance of a market the activity does not fall within the definition of a market that gives rise to market rights etc.

  26.  Markets arising from franchise (eg charter markets) or statute are afforded certain rights in law. They have the right and power to control the establishment of "rival" markets within a given distance of the franchise or statute market (6.66 miles). Whilst the London Local Authorities Act 1990 gives some restricted control over markets close to a public highway, it does not afford the same level of protection. There are many reasons why market rights are important. The ability to control other market events and the ability to use market rights enables many local authorities outside London to organise markets on a more structured basis.

  27.  In our view the consequence of the legislation in London has been that historically, the management of the market and street trading portfolio has been seen solely as a regulatory/enforcement role. This has sometimes meant that the experience and skills required to successfully manage modern markets are lacking. In particular, an understanding of the commercial world—with its retail, marketing and customer-focused approach—and the social value of markets.

  28.  A third issue with the London legislation is that currently street trading is limited in terms of what can be charged by allowing only "as may be sufficient in the aggregate to cover in whole or in part the reasonable administrative or other costs in connection with their functions under this Part of the Act". This can work against applying commercial considerations to market activity and in our view is too restrictive and hampers a more proactive approach to developing markets. We are currently exploring as part of our review whether the Food Act 1984 provides a better and more flexible legislative framework for operating markets and this is the legislation that is commonly used in most authorities outside London.

  29.   The Department for Communities and Local Government's planning policies include the statement that "streets and covered markets (including farmers' markets) can make a valuable contribution to local choice and diversity in shopping as well as the vitality of town centres and to the rural economy. As an integral part of the vision for their town centres, local authorities should seek to retain and enhance existing markets and, where appropriate, reintroduce or create new ones. Local authorities should ensure that their markets remain attractive and competitive by investing in their improvement". Some local authorities like Southwark have planning policies that protect markets but this is not always the case. In Southwark we are also have proposals to integrate markets as parts of regeneration schemes. It is our view that there is potential for greater use of Section 106 agreements for the Town and Country Planning Act of 1991 to create and protect markets as part of a balanced retail offer in and around new developments. Markets need to be seen as part of the wider local retail economy and can play a key role in developing future retail provision.

  30.  At a regional level, the Mayor of London supports markets through planning policies in the London Plan (including the requirement that "boroughs should work with retailers and others to prevent the loss of retail facilities, including street and farmers' markets that provide essential convenience and specialist shopping…". The London Mayor also has a Food Strategy with an aim to improve the health of Londoners. It is disappointing that the Food Strategy has few actions that relate to retail markets.

CONCLUSIONS AND RECOMMENDATIONS FOR ACTION

  31.  The picture over the last ten years has been of mixed success with many traditional retail markets in decline and others thriving. However traditional retail markets still have much to offer and with proactive and forward thinking management can play a major role in the viability of local economies.

  32.  Markets have both social and economic benefits. Given the right conditions and support markets can be platforms for entrepreneurship and innovation and create local employment. Markets also remain important sites for social interaction in the community and can add to the vitality and vibrancy of the public realm.

  33.  Local government has a key role to play in the management and development of markets as part of its central role in fostering local economic development and placeshaping and should move beyond mere regulation and control.

  34.  We also believe that there is some potential in considering alternative management vehicles for local markets for example management by non-profit making organisations.

  35.  The legislation in London is too cumbersome and restrictive and needs a thorough review and overhaul or simply replacing with the Food Act provisions.

  36.  The development of markets is not helped by the fragmented nature of national, regional and local responsibilities. While all levels of government have a role there should be a coherent and holistic national approach to markets. There has been some progress, Food Matters (the governments review of Food Policy) recognizes the central role of retail markets but all to often retail markets are ignored in national and regional policy and investment It is at the local level, given the right support and investment, that we can ensure that markets have the greatest benefits to local communities.

  37.  The Planning system offers some support for markets but this is not consistent and greater use should be made of Section 106 agreements to foster the development of local retail markets.









 
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