Written evidence submitted by the British Retail Consortium [PDR 087]

 

Key points

 

About the BRC

As the trade association for retail businesses, our purpose is to make a positive difference to the retail industry and the customers it serves, today and in the future.

Retail is an exciting, dynamic and diverse industry. It is a driving force in our economy, a hotbed of innovation and the UK’s largest private sector employer. Retailers touch the lives of millions of people every day, supporting the vibrancy of the communities in which they operate. The industry today is going through a period of profound change. Technology is transforming how people shop; costs are increasing; and growth in consumer spending is slow.

Retailing will continue to evolve and advance. Online retail will continue to grow as retailers invest in new emerging technologies; there will be fewer stores and those stores remaining will offer new experiences; there will be fewer, but better jobs and a career in retail in the future will be very different to today.

We are committed to ensuring the industry thrives through this period of transformation.

We tell the story of retail, work with our members to drive positive change and use our expertise and influence to create an economic and policy environment that enables retail businesses to thrive and consumers to benefit.

We do this in a way that delivers value back to our members, justifying their investment in the BRC. This membership comprises over 5,000 businesses delivering £180bn of retail sales and employing over one and half million employees.

 

 

 

 

Introduction

  1. The BRC welcomes this opportunity to submit evidence to the Communities and Local Government Select Committee on this important topic. This response will focus on the impact of Permitted Development Rights (PDRs) generally, and particularly on impact on retail of the recent PDR to convert Use Class E properties to residential use.

 

  1. Many PDRs have been introduced in recent years, primarily with the objective of increasing the supply of new homes and reducing applicants’ burden of complying with planning requirements. The BRC supports these objectives, and welcomes the Government’s focus on ensuring that the planning system is as efficient, rapid and certain as possible.

 

  1. Some BRC members report that many local authorities have outdated views of their local high streets, seeking to preserve or renew them according to a vision that might have applied in the 1980s, but which doesn’t reflect modern shopping habits. Equally, the evidence base for the amount of retail needed that informs local development plans and retail can often be out-of-date by the time the plans are adopted, due to the time taken to approve them. PDRs can be a useful counter to these attitudes and time lags.

 

  1. Many of our members have also raised concerns that the planning system in general is cumbersome, with evidential requirements for planning applications being burdensome and inconsistent across different local councils, and so any measure that seeks to reduce these is welcome in principle.

The impact of permitted development rights

  1. However, we note that the increased supply of new homes through PDR has often been accompanied by criticisms that many of these converted homes have been of low quality as they have not had to adhere to the same space and design standards as new build housing. Equally, the use of PDR to achieve this increase in supply has reduced local authorities’ ability to properly plan new development, and to secure planning gains (through section 106 agreements) that can mitigate the impact of development. These are clearly adverse impacts that must be carefully considered when proposing new PDRs.

 

  1. The BRC was opposed to the proposal to allow Use Class E properties to convert to residential use in the form proposed by the Government in its consultation. We considered that the potential adverse impact on town centre viability from unmanaged conversions could outweigh the benefits of increased housing supply. We proposed a mitigatory measure so that one of the conditions that should be taken into account as part of the prior approval process would be the impact of the conversion on the commercial viability of the location, where it was located in a designated high street or town centre. However, this suggestion was not taken up in the final design of the PDR.

 

 

 

  1. Before the pandemic began, it was estimated that there was an oversupply of retail floorspace of around 20% across the UK. This is likely to have increased as consumers have shifted spending towards online sales since March 2020, with a consequent increase in demand for logistics and warehouse space. While the BRC expects some reversion of consumer spending towards shops and high streets as the economy reopens, it is not likely to completely revert to the position before March 2020. We therefore expect the oversupply of retail floorspace to be bigger now, and in the coming months, than pre-pandemic. At the same time, many commercial occupiers – not just retailers – have found it challenging to meet their rent obligations due to falls in turnover during the pandemic. It is likely that, once protections for tenants against landlord enforcement of rent arrears fall away after 30 June, many tenants will be forced to forfeit their leases.

 

  1. The BRC expects that these two factors will combine with the new right to convert E use class properties to residential to result in a large number of such conversions in the coming years. While this will increase housing supply, we remain concerned about the potential impact on the viability of the commercial units that surround such conversions.

 

  1. By their nature, use class E to residential conversions using the PDR will be uncoordinated, falling outside existing plans, with local authorities being able to exercise only limited control over them. As such, they risk creating commercial locations that are less concentrated, less compact, and less navigable by customers than if high street uses were contiguous. Customers are less likely to walk past dispersed and ‘gap toothed’ shopping locations than ones where shops are in a row. Unplanned conversion of high street uses to residential therefore risks making the remaining commercial units less viable as fewer shoppers will be willing to walk to them. While this will be somewhat offset by the footfall generated by the occupants of the new homes, it is unlikely to be enough to fully compensate for the impact of the conversion.

 

  1. It is clearly not an objective of the Government to reduce the viability of high streets and town centres. Indeed, initiatives such as the High Streets Task Force and the Future High Streets Fund explicitly seek to improve the attractiveness of high streets. Therefore, we recommend that the Government monitor the impacts of the PDR change allowing conversion from E uses to residential. If it is found that the right adversely impacts high street or town centre viability, the Government should step in to amend or scrap the right accordingly.

 

  1. Given that many of the PDRs that have been introduced in recent years have been accompanied by concerns about the quality of development and the broader impact on local communities, we suggest that all PDRs should be subject to a review mechanism. This would allow them to be scrutinised and, if necessary, amended or scrapped, once their impact has become clear. This could be in the form of a sunset clause, requiring their periodic re-approval by a vote in Parliament. This would automatically give an opportunity to assess the impact of each new PDR and respond appropriately.

 

 

 

  1. Even where a PDR may be beneficial in general terms, it may not work in particular locations. Where this is the case, local authorities are able to suspend or otherwise restrict a PDR by use of article four directions. However, the BRC understands that these can be time consuming and/or expensive for councils to implement, with the process potentially taking a year and requiring approval by the Secretary of State. A significant amount of harm can occur in a year through inappropriate changes of uses. We recommend that Government look to reduce the amount of time it takes to produce an article four direction, so that local communities are better able to use planning mechanisms to protect local areas from harm.

 

May 2021