Competition Commission proposals fall shy of sustainability objectives

Planning, 9 May 2008

Shopping is key to planning successful, exciting town centres and creating sustainable communities. The UK has distinguished itself from many other countries by consistently applying planning policies that have driven retail development to reinforce existing urban centres.

The proposals put forward by the Competition Commission in its final report into UK grocery market, released last week, are in danger of undoing progress since 1996 in achieving more sustainable town and city centres and are unlikely to have any major impact on food prices, which is what the commission set out to achieve.

Opportunities for people to make multi-purpose trips and increase walking, cycling and public transport journeys to retail outlets have risen. The economic health and offer of our town centres have improved, hours of activity have increased and historic buildings have been retained and adapted to new uses. This policy thrust has been maintained from Conservative to Labour and by the devolved administrations.

The UK's retail planning policy contrasts with the deregulated and market-led approaches, mostly in North America, where the quest for low-value land and accessibility by car has dominated choice of locations. This quest has led to a hollowing out of historic cities and a collapse in the market confidence needed for high-quality regeneration projects on inner urban land.

The capacity for central and local government to reduce carbon footprints by concentrating retail uses near population centres and public transport nodes has been limited. Open competition for retail locations with access assumptions based largely on car use is sometimes justified in terms of helping to keep food prices down. But it has the perverse potential for raising the carbon footprint of food.

Many changes could render the shifts in pricing sought by the policy directions of the commission insignificant. The drivers could outweigh the contribution of competition in supermarkets. Food is more expensive because of the increase in transport costs, which are affected by petrol prices.

Over the past 18 months, there has been pressure on commodity prices for sugars, grains and oil crops. Emerging mass consumer markets in China and India could raise demand for these staples. With several national governments seeking to increase biofuel production, the market value of previously rock-bottom food commodities is rising.

During the inquiry, the RTPI policy team voiced concerns that the commission was focusing on a deregulated market model. The potential for increased retail competition to expand consumer choice and lower supermarket prices by tiny fractions of one per cent per item was given excessive weight. It seemed to take insufficient account of the virtues of existing planning policies, which are based on consensus and prioritise the twin virtues of economic and social regeneration and environmental sustainability.

Many issues have arisen since the commission's investigation started. Sir Nicholas Stern has highlighted the need to take climate change seriously, while the Intergovernmental Panel on Climate Change has said we have about seven years left to achieve a material reduction in carbon emissions to avoid a dangerous acceleration of global warming.

In this context, the commission's proposal for a new competition test for retail applications over 1,000m2 appears fiddling while Rome burns. Such a test is sure to create a new bureaucracy. The Office of Fair Trading will receive a significant number of referrals from local planning authorities, which will probably delay their consideration.

Yet the test criteria are unlikely to deliver anything more than the slowest and most incremental change in the dynamics of supermarket retail performance. The price benefits, if there are any, will take many years to flow through. The world's economic and environmental horizons also suggest that much larger changes in the fundamental policy drivers will render them irrelevant.

The commission needs instead to focus on integrated policy-making. Only policies that integrate the social, economic and environmental dimensions of our lives can deliver a sustainable future.

- Rynd Smith, is RTPI policy director.