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

Memorandum by Chris New, New Markets Solutions (MARKETS 19)

  I have over 40 years experience in the management and development of traditional retail markets. This includes working as an Assistant Director/Head of Markets/Chief Officer with a major metropolitan district authority and in my present role as a specialist markets industry consultant. You have requested that I submit evidence to assist the Select Committee and I am pleased to do so.

  I trust that the NABMA and the NMTF will be presenting you with much detail in response to your enquiry.

  Suffice to say, therefore, that there are three main strategic drivers of the significant decline of the traditional markets industry, namely:

    (a) The intense competition caused to the markets industry due to the immense escalation in retail square footage and the power of the supermarkets over the last 20 years.

    (b) The public's desire for more qualitative and wider forms of shopping that was met by big retail business whilst local authorities left their markets services in a vacuum of disinterest, due to the apolitical nature of markets services.

    (c) The failure of national and local politicians to recognise and bolster markets as a public good* in order that they could withstand the commercial pressures of big business.

(*The public good is through the facilitation of small trader entrepreneurialism, the contribution to the vitality and regeneration of town centres due to the differentiation factors, the support that markets give to social cohesion and to the culture of local communities, the VFM contribution to healthy eating, the self-sufficiency of many tens of thousands of individuals in self employment who also provide tens of thousands of employment opportunities ….)

  Markets come in all shapes, sizes and types. Most markets are operated by local authorities. Most are in severe decline. The last two statements have connection. There are councils where there are key exceptions of best practice—where specific local excellences have created notable, viable markets but—generally—traditional markets will not survive without governmental strategic intervention because the decline is now deep rooted and endemic. Minor changes to planning and licensing arrangements would be totally inadequate to make a significant beneficial difference to the state of the markets industry. There will be significant loss to society and to the public good, therefore, unless there are governmental strategic interventions.

  My key proposals to counter the serious decline in the markets industry are:

    Proposal 1:  Government direction requiring local authorities to actively promote markets as a key driver in reactivating town centre vitality and viability—and as a support mechanism to lessen unemployment.

    Without central direction to create a real raised profile for markets services they will continue to be ignored and will die.

    Proposal 2:  Grant-aided hypothecation of capital and revenue investment in local markets.

    Markets services have been used as a cash cow so that their income and self-generated profits have been used to support other council services rather than being reinvested. Other services have not only been tax-borne but capital grants have been available for their development, unlike markets services. The development of markets services has fallen in between these two financial regimes and without strategic financial intervention of a hypothecated nature there is no future for many markets.

    Proposal 3:  A National Markets Training Regime that would create:

    (a)  Strategic understanding/knowledge of markets for local authority senior politicians and officers responsible for town centre viability and vitality.

    The downgrading of markets management following local government reorganisations meant that there is a near-total lack of understanding and appreciation by senior local politicians and chief officers of the benefits of markets. There is a lack of commercial understanding of the factors that can create successful markets and no desire to understand as senior politicians are driven to more politically attractive services. For markets to have a future, this mindset needs to change.

    (b)  Tactical and operational training in markets development and management for local authority market officers and private sector markets management.

    The decline of markets has greatly reduced the availability of professional/specialist management training. The training capacity to regenerate markets services is lacking and would require strategic intervention to correct this.

    (c)  Market trader training in specific markets small business operation and marketing, particularly in small retailer skills, customer relations, good purchasing practice and merchandising.

    Due to the fragmented nature of markets services across the country—and despite there being many tens of thousands in the industry—there has never been (unlike in some European countries) any coordinated specialist/qualitative training available for market traders and their staffs. Whilst big retail business is well supported in professional training methods, markets have "lost out" in not being able to adequately compete due to this vacuum.

    Proposal 4:  Government-backed subsidies to new market traders commencing self-employment in the markets industry.

    A 1970's government scheme encouraged people from unemployment into self—employment via a £40 a week subsidy. Many traditional markets benefited from the added viability this scheme created. The current government is providing £50 a week employment subsidies to employers taking on staff in the recession. A similar scheme should be payable for market trader self employment, with the 1970's rate indexed to current standards over a fixed three-year period in order to give the necessary encouragement and confidence to new starters. However, this scheme should be tied into active participation in the trader training programme.

    Proposal 5:  The creation of a National Markets Agency to monitor, research, encourage and direct local authorities to support the implementation of the above proposals.

    There would be a need for active central promotion of such policy initiatives. Raising the profile of markets and the benefits they create, supporting and initiating qualitative markets activity, driving results at national level and coordinating national markets representative organisations towards markets regeneration, would be the means to making the difference so that there is a realistic and sizeable markets sector in the future.

  The alternative to these or similar high-level strategic interventions is that for the next generation traditional markets will simply be an interesting footnote in the cultural and economic history of this country.

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Prepared 23 July 2009