Examination of Witnesses (Questions 406
WEDNESDAY 23 JUNE 2004
Q406 Chairman: You have been listening
to the evidence from our friends in the charities world, and we
look forward to hearing what you have to say. Would you introduce
yourself, first of all?
Mr Alambritis: I am Mr Stephen
Alambritis. I am the Head of Parliamentary Affairs to the Federation
of Small Businesses.
Q407 Chairman: Thank you for submitting
evidence in writing and coming here today. May I start with a
very simple question, which is this: if what we have heard is
correct, and that firstly there is no tax advantage or tax difference
in the proposal that the charitable sector is to be allowed to
conduct trading more generally, why are you so agitated about
Mr Alambritis: We are agitated
because our members constantly, over the years, have expressed
concern about the tax breaks that charity shops in particular
enjoy, and are seeing increasingly the donated goods being shoved
to the back and bought-in new goods being displayed at the front.
Our members constantly talk to us about a level playing field,
and they are very concerned that charities, and shops in particular,
are now highly professional and business-like and have area managers,
business development managers and Chief Executive Directors. In
our evidence, Oxfam, for example, have 760 shops. It is the level
playing field that is of concern to our members.
Q408 Chairman: You make the point
in your evidence about Oxfam and 760 shops and its massive trading
profit of £17 million, and you compare it with Dixons and
Currys. How much did Dixons and Currys make in profit in the same
Mr Alambritis: I compared it in
terms of the numbers in the high street.
Q409 Chairman: You make a point about
Mr Alambritis: The comparison
is in terms of numbers. Obviously the profits of Currys and Dixons
are way above that of Oxfam.
Q410 Chairman: The competition is
more apparent than it is real, in other words?
Mr Alambritis: It is the perception
on the high street of the number of charity shops clumped up together
in a particular road, that is the concern of our members. When
talking to people as well they say that a particular road or a
particular high street has a lot of charity shops. I think what
I need to stress is the level of seriousness, the importance of
the business rates as a bill on the business sector, especially
the small business sector. Business rates can take up to as high
as a third of the percentage of the profits. I think that is a
key area to bear in mind, that the business rate, in terms of
its impact on businesses, is quite high, and therefore when they
see the charity shop next door enjoying the 80% mandatory rate
and then perhaps the local authority providing the other 20%,
I think that is a huge area of concern for smaller businesses.
Q411 Chairman: With respect, I fully
understand that and I absolutely respect the view from the sector
that, of course, in so far as possible, there should be a level
playing field, but this is a slightly different argument, with
respect. The argument that you are advancing on behalf of your
members is an argument about the current position and it is an
objection, as I understand it, to the current tax advantages that
charities and, in particular, charity shops enjoy on the high
Mr Alambritis: That is correct.
Q412 Chairman: But there is a quite
different argument, which you heard from the sector itself, about
the organisation, if you like, of how charities should go about
trading. These are quite separate points, are they not?
Mr Alambritis: Yes, they are.
Q413 Chairman: Your objection is
to the very principle of charities enjoying any tax relief; is
Mr Alambritis: No, our objection
is to the business rate tax relief and the various zero rating
and Inland Revenue tax profit exemptions enjoyed by charity shops.
It is the charity shop element only that we are
Q414 Chairman: To be absolutely clearand
that is very helpfulyou would like to remove the tax advantages,
in terms of rates, that charity shops enjoy; is that right or
Mr Alambritis: We would like to
see a bigger debate about the business rate discretion allowed
to charity shops where increasingly those charity shops have a
high profile presence in the high street. It could be that what
we could recommend is that the 20% discretion should be stopped
on the part of the local authorities and that the 80% mandatory
relief should actually be discretionary, so that it is up to each
local authority as to whether it provides the business rate relief
to charity shops, and it should not be mandatory.
Q415 Mr Foulkes: Mr Alambritis, I
do not dispute that that may be your members' perception, but
that perception could be wrong. The only evidence I have seen
is from a study carried out in Stockbriggs in EdinburghI
do not know if you know about thiswhere in fact empty shopsand
you say this in your evidencein the high street were taken
over by charities and revitalised the centre of the town and brought
people back into the high street and actually helped the small
businesses in the high street who had been losing out because
of out of town shopping centres. So that the charity shops actually
revitalised the centre of the town and the high street and did
not disadvantage your members. Have you any evidence whatsoever
to counter that or contradict it?
Mr Alambritis: There are areas
where the presence of the charity shops has, in filling up empty
spaces within the high street, been beneficial to the area. I
think our argument is the principal basis of the shop next door
trading commercially, selling new bought-in goods and enjoying
the business rate relief; that is the principal objection for
our members. I appreciate that there have been areasand
it all started in the 60s, and the early 90s with the recessionwhere
there were a number of empty shops where the charity shops took
root. Even according to the Association of Charity Shops, what
they now do is pick prime spots in the high street in order to
Q416 Mr Foulkes: Have you any evidence
of your members going out of business specifically because of
charity shops? Can you give us specific examples?
Mr Alambritis: I think that will
be increasingly the case with regard to the propensity of charity
shops to move into the catering sector. Yes, we can look at our
surveys and the concerns of our members where we may have some
evidence of shops closing down, especially in the catering sector,
where you have a number of these charities wanting to set up coffee
bars, and then that could impact on the local shops.
Q417 Mr Foulkes: With respect, that
is something that you are predicting for the future. You have
not in your written evidence, and you are not now giving us any
indication whatsoever of any specific businesses of your members,
that have closed down as a result of the operation of charity
Mr Alambritis: No, I could not
say to you that shops have closed down as a result of the charity
Q418 Mr Foulkes: There are only 6,000
charity shops in Britain, whereas there are 1.6 million small
Mr Alambritis: There are 1.6 million
businesses that pay business ratesthere are 3.8 million
small businesses throughout the UK. The concern of our members
is the bunching up of the charity shops. For example, in Darlington
I look up Darlington High Road and there are roughly eight charity
shops there on and off the high road.
Q419 Chairman: We have more charity
shops than virtually any other part of Britain.
Mr Alambritis: In the high street
in Colchester, five; in Front Street, in Durham, fourvery
bunched up; and on the road into Sutton Coldfield, Birmingham,
three charity shops. It is the bunching up.