Joint Committee on the Draft Charities Bill Minutes of Evidence

Examination of Witnesses (Questions 406 - 419)



  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 it?

  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 year?

  Mr Alambritis: I compared it in terms of the numbers in the high street.

  Q409  Chairman: You make a point about the profit.

  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 street.

  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 that right?

  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 clear—and that is very helpful—you would like to remove the tax advantages, in terms of rates, that charity shops enjoy; is that right or wrong?

  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 Edinburgh—I do not know if you know about this—where in fact empty shops—and you say this in your evidence—in 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 areas—and it all started in the 60s, and the early 90s with the recession—where 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 promote themselves.

  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 shops?

  Mr Alambritis: No, I could not say to you that shops have closed down as a result of the charity shop element.

  Q418  Mr Foulkes: There are only 6,000 charity shops in Britain, whereas there are 1.6 million small businesses.

  Mr Alambritis: There are 1.6 million businesses that pay business rates—there 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, four—very bunched up; and on the road into Sutton Coldfield, Birmingham, three charity shops. It is the bunching up.

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