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

Memorandum by the Communities and Local Government and the Department for Environment, Food and Rural Affairs (MARKETS 31)


  1.  The Government recognises the valuable contribution that street, covered and farmers' markets can make to local choice and diversity in shopping, as well as to the vitality of town centres and the wider rural economy. These markets complement high street shopping and our policy is that local authorities should retain and enhance existing markets, or reintroduce or create new ones, and invest in their improvement.

2.  Our concern is to ensure that local authorities consider their markets as part of their retail needs, ensure a diverse retail offer and that, where appropriate, consider the need for new markets. But markets need to adapt to changing conditions and challenges.

3.  The All Party Parliamentary Group on Markets launched its Markets Policy Framework, in June 2007. This highlights the role markets can play in contributing to a number of important issues. In particular it highlighted the key priorities for the market industry covering:

    — regeneration and the economy;

    — food and health;

    — culture and tourism;

    — community cohesion; and

    — the Environment.

  4.  These priorities will be developed into detailed policy statements over the coming months, offering advice and guidance at the local level.


  5.  There are a wide variety of challenges faced by markets today, arising both from competition and, more recently, from the economic downturn. However, these challenges are not fundamentally different to those facing other small retailers. For example, there is competition from major supermarkets and the need for regeneration of old style shopping arcades, which is, in turn, dependent on landlords. There is also increasing competition from the internet.

6.  Although many market operators across the country undertake local surveys into the sector, there has been very little research carried out nationally to measure the cumulative value of a market. Perhaps the broadest recent research on the market sector is the First National Retail Markets Survey (the Rhodes Study), published in 2005, which take account of a range of factors including numbers of markets, localities, type, occupancy rates, trader ethnicity, employment, visits and turnover.

  7.  Amongst other things, the study revealed that there were over 1,150 markets operating in the UK in 2005, with 150,000 stalls per week generating £1.1 billion in sales. However, the report also indicated that occupancy rates were around 75% and falling.

  8.  Competition from the high street and larger retailers, allied to the growth in internet retailing, has provided a challenge to traditional markets. However, there is evidence to support the view that the number of people wanting to become traders is also falling.

  9.  The Government is supportive of the role of retail markets and has pursued policies to ease the creation of new markets. For example, local authorities have been asked to seek to retain existing markets, or to recreate or introduce new ones, and to invest to ensure their markets remain attractive and competitive.

  10.  The Government has also supported the business-led Under-Served Markets Initiative, which aimed to promote retail investment in deprived areas in England to stimulate regeneration. New retail investment can act as a catalyst to attract further investment, and provide increased access to products and services, and provide employment and training opportunities for local people.

  11.  The project identified four pilot areas—Bradford, Lewisham, Oldham, and Waltham Forest—to test a model for promoting private sector investment in deprived areas. The pilot phase of the initiative ended in March 2007. The first pilot store, a Tesco regeneration store, opened in Failsworth, Oldham in July 2007, and created 390 jobs, of which 75 went to local, long-term unemployed and socially disadvantaged groups.

  12.  Positive outcomes from this first pilot include a good practice guide and Government looks forward to a full evaluation of the impact of the scheme and an assessment of its overall impact on the local community.


  13.  The Government recognises that farmers' markets can bring benefits for both producers and consumers. By selling direct to consumers, producers can get the full consumer price, save on packaging and transport costs and get instant feedback about their product from their customers. Equally, this direct contact enables consumers to find out exactly how the product they are buying has been produced and discuss their needs with the producer. It is also an excellent way for consumers to show their support for local food producers.

14.  There can be benefits for the wider community too in the form of revitalised urban centres, employment opportunities, increased customer potential for adjacent retailers and opportunities to encourage farm diversification. They have been shown to help bring life back into town centres and stimulate trade in surrounding shops on days when they are held. They can also play a part in reinstating individuality to the local area, fostering a traditional "market town" atmosphere.

  15.  The UK's first farmers' market took place in Bath in September 1997. Government involved at this early stage in working with a range of organisations to help establish the concept. The then Ministry of Agriculture, Food and Fisheries worked with the Farm Retail Association (FRA) and then helped with the formation of the National Association of Farmers' Markets (NAFM) to represent the sector. Subsequently, in 2003, Defra helped to facilitate the merger of FRA and NAFM into the National Farmers' Retail and Markets Association (FARMA).

  16.  Following on from this the Government has provided funding, at both a national and regional level, under various grant schemes to help establish and raise awareness of farmers' markets. For example, in 2003 £100,000 was awarded to the National Association of Farmers' Markets (NAFM) to raise the profile of farmers' markets across England and to increase public awareness of them. NAFM also received funding from Defra under the Agriculture Development Scheme for the publication of information booklets and to help producers develop their knowledge of sales and marketing. The funding also helped NAFM develop its certification programme for accrediting farmers' markets. Over £600,000 of the old England Rural Development Programme funding was awarded to projects related to the establishment of or support for farmers' markets.

  17.  In addition, Government has encouraged farmers' markets by stressing to local authorities the benefits to the rural economy and to town centres which such markets can bring. Following on from the recommendations in the Curry Commission report, Lord Whitty wrote to all local authorities in November 2002 outlining the benefits farmers' markets bring and the role they play in bringing urban and rural communities together. Prior to this, we sponsored the Local Government Association Guide on Farmers' Markets, Developing good practice for sustainable farmers' markets—a practical guide for local authorities.


  18.  We recognise that, in a few areas, there have been tensions between supporters of farmers' markets and existing charter markets, with the former arguing, for example, that the existence of charter markets has prevented the establishment of a farmers' market in a particular town. The responsibility for applying charter market rights lies with local authorities, but there is no reason why farmers' markets and charter markets cannot co-exist happily.

19.  The National Association of British Market Authorities (NABMA) which represents charter market operators works closely with the National Farmers' Retail and Markets Association (FARMA). Defra officials meet regularly with representatives from FARMA to explore how we can work together on our common goals of reconnecting farmers to their markets and helping them to add value. FARMA have also presented to Defra's Regional Food Cross-Cutting Group which includes representatives from all the Regional Development Agencies.


  20.  The Government's key objective for town centres is to promote their vitality and viability by planning for growth and development in such centres. We believe that street 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. The Government recognises that efforts to secure the survival of street markets can lead to regeneration of the wider area.

21.  Making Assets Work: The Quirk Review of community management and the ownership of public assets, examined barriers to the transfer of management and ownership of public assets to management groups.

  22.  There are examples of positive action by community focused groups, for example, at Heywood Magic, Rochdale. There, traders, threatened with closure of their market, set up a committee to take over its management. Of the several proposals put to the Council for redevelopment, the successful approach put forward a case for wider benefit to the community.

  23.  This set up the MAGIC (The Market Action Group in the Community) trust which developed a business plan that enabled the market to run profitably and identified a need for community activity and training. Since the trust took over management of the market, it has been highly successful: trader occupancy was 100% and the training facility fully occupied, with community grant awards made annually by the MAGIC Board out of the profits.

  24.  More specifically, farmers' markets, also support the local community and economy. They are often used to showcase local and regional produce and can inject money into rural economies and help boost the development of small businesses.

  25.  A National Farmers' Union study found that 80% of neighbouring businesses saw a boost in trade following the establishment of a market nearby. For example, WH Smith and Debenhams in Winchester, which are both adjacent to the local farmers' market site, reported a rise in takings of up to 30% on market days.

  26.  In addition, markets can offer social benefits, such as improved community spirit and pride in local producers, reconnecting consumers with producers as well as to build social capital. Evidence from the US suggests that farmers' markets can act as business incubators, with companies that started off in farmers' markets growing into large businesses (eg Starbucks).


  27.  Many markets have been in existence for centuries, originally set up to sell animals, but now sell a wide range of goods, from fruit and vegetables, meat and other food, clothing and household goods. Many markets, including charter markets, are managed by local authorities and today, there are around 1,400 in this group. Other markets are privately run and governed by local authority bye-laws. We have no reason to think the standards of governance for different types of market are fundamentally different.

28.  The oldest markets were those established under Royal charter, for example at Kingston-Upon-Thames. Statutory markets carry the benefit of a common law right to protection from rival markets within a radius of six and two-thirds miles, to ensure they are as successful as possible.

  29.  Like farmers' markets, markets run by local authorities have a key role to play in supporting communities. They also have a contribution to make to encouraging good environmental practice. For example, market traders are encouraged to sell goods with minimum packaging, and loose wherever possible. In doing this, they can provide healthy local food at affordable prices and may help connect people more directly with the producers.


  30.  Government has a strong policy on markets. Whilst markets require planning permission, they also benefit from some permitted development rights enabling them to take place for limited periods (up to 14 days) in any calendar year without planning permission and our planning policy goes further in recognising their value.

31.  As stated above, the Government recognises the valuable contribution to local choice and diversity in shopping that markets provide. We also acknowledge their contribution to town centre vitality and the rural economy and therefore require local authorities, as an integral part of the vision for their town centres, to seek to retain and enhance existing markets and, where appropriate, re-introduce or create new ones.

  32.  It is important that local authorities look to ensure that their markets remain attractive and competitive by investing in their improvement. It is in the interests the Government's wider policies on supporting communities and promoting cohesion and regeneration, and of local authorities and the communities they serve, to support the development of clean, safe and vibrant town centres, throughout the day and into night.

  33.  Government has therefore encouraged local authorities to manage their town centres in a positive and pro-active way, working in partnership with the private sector and with local communities. For example, we have:

    — published guidance on how to manage town centres and how to develop business-led town centre partnerships. Over 500 town centres now benefit from some form of management;

    — introduced Business Improvement Districts (BIDs)—allowing local business/public sector partnerships to use funds raised from the business rate to improve the local trading environment. 71 BIDs have been established since 2004; and

 — provided guidance through Planning Policy Statements on economic development and planning for town centres.

  34.  We know that town centres are facing particular challenges in the face of the downturn, eg with an increase in vacant properties. The tools and approaches we have developed should help, and we are considering what further help we might provide to assist town centres in dealing with these issues.

  35.  Our focus remains on town centre development and the Government is absolutely committed to the town-centre first policy and promoting the vitality and viability of town centres is a key objective.

  36.  Successful town centres need investment and a strong retail mix—that includes multiples and independents, niche retailers, large and small, which attract shoppers and provide consumer choice. Markets are part of that mix. Retailers face greater challenges than ever, from global competition, the internet, and the recession so there is no room for complacency. That is why we need to refine and enhance the effectiveness of our policy.

  37.  The draft policy revisions to Planning Policy Statement 6, published in July 2008, recognised the importance of achieving a broad range of retailer representation, both small and large, in improving the attractiveness of town centres and promoting competition and consumer choice.

  38.  Local authorities should develop a vision, in partnership with businesses and the community, for how they want their area to develop. This vision should be reflected in their development plan, which forms the basis for their decisions on individual planning applications. Applications are then refused or permitted primarily in terms of whether they accord with the policies in their plan, alongside other relevant material considerations.

  39.  Although a local authority's planning policies cannot necessarily be based on protecting any specific commercial interests, they can aim to protect the vitality and viability of a town centre as a whole, and to ensure that a mix of uses is maintained, in order to meet the needs of the community and promote consumer choice.

  40.  We are encouraging local authorities to adopt a proactive positive planning approach to their centres and maintaining a diverse and competitive economy. Through flexible town centre strategies local authorities can encourage new retail and other opportunities such as markets.

Communities and Local Government &

Department for the Environment, Food and Rural Affairs

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Prepared 23 July 2009