As the Welsh Government consults on the reduction of subsidies, the charity retail sector waits to hear its fate.
Rate relief subsidies equate to around £3.4 million every year in Wales
In the early noughties charity shops carried the stigma of being bearers of old tat. Fast-forward 10 years and their popularity has increased dramatically.
In the current economic climate focus has shifted to reusing, recycling and buying cheap. Combine that with the desirability to purchase unique, and often vintage, items and charity shops have a whole lot more to offer than they did during the bleaker days of 2002.
The growth of their popularity has resulted in the charity retail sector raising more money for good causes than ever but despite this, the effect that stores have on the economy is arguably not always as positive.
There are now over 500 charity shops in Wales, a 60% rise since 2008. These stores raise £12 million each year for Welsh charities but in order to raise this phenomenal amount charity shops rely heavily on subsidies from the government in the form of business rate relief.
However, new proposals under consultation by the Welsh Government, call for huge reductions in rate reliefs, potentially leading to circumstances that The Charity Retail Association (CRA) argues would be “disastrous”.
Rate relief shake up
The proposals come as part of a report, compiled by Professor Brian Morgan from Cardiff Metropolitan University in June, entitled the Business Rates Wales Review.
Outlined in the review were proposals that the government should cut the rate of relief from 80% to 50%. In addition to this Professor Morgan recommended tighter restrictions on eligibility criteria for rate relief and limits on the number of charity retail premises allowed in one town.
One of the key reasons behind this proposal is the supposed negative effect high densities of charity shops have on the local economy. Independent retailers, who pay full council tax, are said to be unable to compete with charity shops that do not.
The CRA has spoken out against these recommendations. Its spokesperson, Wendy Mitchell, said, “Such cuts would compromise the ability to fundraise and would undoubtedly lead to shop closures.”
Estimates from the CRA claim that reduced rate reliefs would take nearly £4 million from Welsh fundraising, force up to 160 shops to close and result in a loss of over 200 jobs.
In an official statement chief executive of the CRA, Warren Alexander, also added, “These proposals would hammer Welsh charities and are based on prejudice against charity shops, not on evidence as to what’s best for the high street.”
The ‘prejudice’ described is the common misunderstanding that charity shops are responsible for the closures of other retailers. However, it is important to recognise that the proposed cuts would in fact result in more empty spaces, thus contributing to the problem of high street decline rather than solving it.
The biggest charity shop in Wales
The review comes at a time when the largest charity shop in Wales has recently opened in Newport town centre.
The store is one of five Friends of St Anne’s Hospice charity shops in the local area and covers two floors in the old Next building on Commercial Street.
Caring for her community: Laura Buchanan-Smith
Manager, Laura Buchanan-Smith, explained that the store came out of a small regeneration project. After an encouraging response she was keen to expand and in fact the landlords approached Laura to see if she would be interested in moving to the site.
The store was opened on 17 November by Sir Terry Matthews, owner of the Celtic Manor Resort.
St Anne’s Hospice is one of the only local palliative care centres in the Gwent area. Laura said, “The hospice depends on the profit of the shops very, very heavily because there is not enough funding and that is very important.”
Support for the new store has been fantastic and Laura attributes this to the fact that it is a local charity therefore close to many people’s hearts.
Sinead Quinn, a former volunteer and healthcare assistant at St Anne’s, whose mother is also a doctor there, also emphasised the centre’s dependency on its fundraising department. “They get some money from the government but the charity shops play a major role,” she said.
Newport: The first charity shop city?
During the press coverage of the shop’s opening, former manager of the store, Jonathan Hudson, told reporters he thought that Newport had potential to become “a charity shop city.”
When asked, Laura said, “That was the opinion of somebody. That was not the opinion of St. Anne’s.”
In recent years Newport’s town centre has taken a turn for the worst with the closure of many notable high street chains, such as H&M, Next, and soon, Marks and Spencer. It is not surprising then that Laura and many local residents do not wish to see Newport become centred around its charity retail.
Despite the crucial money that shops like St Anne’s raise for their respective charities, a city based so heavily on the charity retail sector would lead to a severe lack in council funding, leaving the local economy in a fragile condition.
The Welsh Government have now called for new evidence from the CRA to determine the best course of action but for now charity shops continue to prosper and adapt to the desires of the masses.
As the demand for good quality, second-hand fashion grows and the need for fundraising is as important as ever it seems like the time to encourage the sustainability and success of the charity retail sector, rather than inhibit its progress. Whether the Welsh Government will recognise this necessity, however, will be revealed in the New Year.