May 29, 2012

On your marks, get set….let’s shop

2012 is shaping up to be an important year for the UK, but with the Government remaining concerned as to the pace of growth within the UK economy, they have recently announced two measures aimed at stimulating the retail sector during 2012.

Relaxation of Sunday Trading Laws

In the Government’s recent Budget, the Chancellor announced a temporary measure to boost the retail sector during the summer’s Olympic and Paralympic games:

“Recognising that the Olympics and Paralympics represent a unique opportunity for UK business, the Government will relax Sunday trading laws from 22 July to 09 September 2012 (inclusive), to allow retailers to make the most of the occasion.”

For some, this is a unique opportunity to increase trade over the summer months at a time when the UK is expecting an influx of tourists. Unfortunately, however, not all retailers are set to benefit from this relaxation of trading laws.

The Sunday Trading Act 1994 applies to shops in England and Wales with an internal retail floor area exceeding 280 square metres, and prohibits them from opening for a continuous period of more than six hours between 10am and 6pm.

It is, therefore, only “large” stores (defined as those with an internal retail floor area exceeding 280 square metres) that will benefit from this temporary relaxation in trading laws to allow them to trade “around the clock”.

Shop owners not only need to consider whether The Sunday Trading Act 1994 applies to their business, but also whether there any conditions attached to the planning permission for their shop which may restrict these additional opening hours. In addition, those retailers who lease their shop premises may also need to consider some or all of the following:

  • Trading Hours – does the shop lease contain any provisions which restrict trading days and/or hours of trade?
  • Keep Open Clause – does the shop lease contain a clause requiring the tenant to keep the business open for trade during all times permissible by law, or at all times that other retailers in the locality do?
  • Signage – does the lease require you seek landlord’s consent to erect signage to advertise any additional opening hours?
  • Turnover Rent Provisions – does the tenant pay annual rent based on turnover (known as ‘turnover rent provisions’)? If so, what impact will additional opening hours potentially have on the rent?
  • Shopping Centres – if the tenant’s shop forms part of a shopping centre, are there any additional charges which the landlord can impose for the provision of “out of hours” access and services (i.e. to cover the staff working in the common parts / security for the additional opening hours)?

In the event that some or all of the above restrictions apply, shop owners face a choice. Do they try and obtain the necessary consents before the trading laws are relaxed on 09 July (spending time and money trying to do so), or do they take a more commercial view, that there is likely to be little time or the inclination for a landlord or Council to take enforcement action during the nine week period the trading laws are suspended for, and therefore trade regardless? Any breach can of course be easily remedied in any event, by the shop owner simply ceasing to trade further on Sundays.

The “Portas” High Street Review

In addition to the temporary relaxation of Sunday trading laws, the Government commissioned Mary Portas (a retail market consultant based in London, perhaps more commonly known as “Mary, Queen of Shops”) to undertake a review into the reviving the declining fortunes of high streets throughout the country.

Having now accepted the vast majority of the 28 recommendations made by Mary Portas, the Government has initially launched a competition to choose 12 high streets or town centres to become “Portas Pilots”, which will implement a number of the recommendations made to evaluate the success of the ideas proposed. These high streets will benefit from a share of £1m to restore their fortunes, before the scheme is implemented throughout the country if the “Portas Pilots” prove successful.

In addition, the Government are to further consider, and action when possible, the remaining recommendations. These include creating a “Town Team” (a strategic and operational management team for high streets), establishing a “National Market Day” (to allow potential shopkeepers to try operating their business at a low-cost, the first of which is to be held on 23 June), creating a new parking league table, to encourage local areas to implement free controlled parking schemes that work for each individual town centre and making high streets accessible, attractive and safe. The focus of the recommendations is very much on the community.

In addition to the recommendations above, the Government has also decided to go one step further (dubbed the “Portas-Plus” plan), due to level of interest this review has created throughout the country. Such additional measures include a £10m pound ‘High Street Innovation Fund’, to focus on bringing empty shops back into use, doubling small business rate relief in England for two and a half years (in addition to the new powers given to Councils through the Localism Act 2011 to introduce and fund business rates discounts where possible, although these remain subject to European rules on the giving of state aid), and allowing the conversion of space above shops to two flats, without the need for planning permission (the current limit is one).

If you would like to talk to someone about any of the issues raised above, then please contact Michael Finnett, a solicitor at Gordons, on 0113 227 0255 or at michael.finnett@gordonsllp.com.