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Gambling on the future of the High Street?

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Calls to ‘let the British high street die’ have come from a number of experts in the retail and business sector. Their argument is that many high streets are irrelevant to the needs of the consumer but this increasing “irrelevance” is not only due to the recession. A recent Experian report said: ‘It would be wrong to depict the decline of town centres as simply the unfortunate consequence of recessionary times. The difficult economy has merely exacerbated a problem which has been long in the making”.

According to figures released by the Local Data Company, High Street vacancy rates remained stubbornly high (14.1%) in the first half of 2013 and those figures are projected to get worse. Research by Jones Lang LaSalle suggests that vacancy rates on some British high streets could hit 50 per cent within three years, as half of all high street leases are due to expire by 2015 and struggling retailers will take that opportunity to walk away. So how then do we revitalise our High Streets?

In the belief that “a swift and responsive planning system is vital for securing sustainable development”, the coalition government enacted The Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013,which came into force on 30 May 2013.

One of the changes made to the planning system by the 2013 Order was aimed at “people looking for premises to test new business ideas and other popup ventures” and permits, for a single period of up to 2 years, a change of use from A1 (shops) A2 (financial and professional services) A3 (restaurants and cafes) A4 (drinking establishments) A5 (hot food takeaways) B1 (Business) D1 (non residential institutions) and D2 (assembly and leisure) to flexible A1 (shop) A2 financial and professional services A3 restaurants & café) or B1 (Business). One of the results of that more “responsive planning system” is that shops can switch use to bookmakers without planning permission.

There has, however, been something of anti- bookie backlash following the introduction of the 2013 Order. The principle concern expressed by those who object to bookmakers being allowed to use premises without a planning permission being granted is the increasing proliferation of betting shops in certain areas (clustering). The argument is that they effectively restrict choice on the high street, add to perceptions of ‘declining’ or ‘poor’ areas, and in some cases have had a more profound impact through increased levels of anti-social behaviour and crime. There is also the not insignificant concern about gambling addiction.

However, at a time when so many are expressing concerns at high street vacancies running at 14.1%, the notion that an empty shop is preferable to a betting shop is an odd one. The Association of British Bookmakers (ABB) have no doubts about the positive economic effect of betting shops: a recent report compiled for the ABB by Deloitte found that there were 35,000 full-time equivalent jobs in retail betting, and the sector contributes £1.8 billion to the economy in direct Gross Value Added. Persuasive figures indeed but unsurprising given the source.

If local authorities are determined to prevent “clustering” and create a more “balanced” high street choice, are there any other methods of defeating a bookmakers’ occupation of high street premises under the two year rule introduced by the 2013 Order? It is possible for a local authority to issue an ‘Article 4 direction’, under the Town and Country Planning (General Permitted Development) Order 1995, the effect of which would be to withdraw the permitted development right created by the 2013 Order. The relevant guidance, however, provides that permitted development rights should only be withdrawn if there is reliable evidence to suggest that such rights could damage “an interest of acknowledged importance” and is capable of being overturned by the Secretary of State for Communities and Local Government. An Article 4 Direction would, therefore, be subject to legal challenge by any bookmaker who feels prejudiced by the making of such a Direction. In addition, Councils may also be liable to pay compensation to those whose development rights are affected. So perhaps an Article 4 Direction will not be the panacea to the perceived evil of bookies on the high street. The gambling licensing system also provides an opportunity for local authorities to restrict the number of betting shops from opening but recent case law suggests that it may be difficult to deny a bookmaker a licence.

Ultimately, it is the landlords who have the power to prevent the spread of betting shops by renting their properties to other businesses. Where the high street is under the ownership of a single organisation, the landlord is bound to want a “tenant mix” so a diversity of retailers is a natural corollary and bookmakers may well form part of that tenant mix. But a high street comprising of premises owned by multiple landlords will inevitably lend itself to a desperate scramble to avoid empty premises and the rates liability that sits alongside such vacant space. In those circumstances, granting a lease to a bookmaker (whose covenant strength is strong) is good from both a rental and reversionary value point of view, even if there are a number of other bookmakers nearby.

It is undoubtedly the case that nostalgia plays a great part in the arguments for the support and retention of high streets as we knew them but we have to accept that alternative forms of consumption are occupying sales space previously held by high street retailers. Internet shopping has a greater share of the retail market and our high streets do not supply the shopping experience that we have come to know. The high street needs to re-invent itself and although retail will continue to play a part, it is likely that leisure, entertainment and cultural facilities will become the main attractions.

Published on Friday 06 December by Editorial Assistant

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