Communities act to mind the shop: Paul Gosling explains how Sussex villagers clubbed together to beat another threat to rural life

Click to follow
The Independent Online
A group of villagers in West Sussex has sunk pounds 28,000 into an investment scheme to save their village store. It is one of a number of plans being considered by villagers around the country who are worried about losing local shops.

Irene Howlett and her sister, Molly Lawrence, have been running the shop - a general store, off-licence and post office - in Whitemans Green, West Sussex, for six years, and making a profit.

Their bank overdraft, at 20 per cent interest, was crippling the business, and the bank was threatening to foreclose.

Had the store shut down, it would have been bad news for the sisters and for the village as a whole. Many elderly residents would have been unable to walk to the shop in the next village, which is up a steep hill.

'I read in an article that Sussex Rural Community Council (RCC) was trying to save village shops. I wrote to them, we had a meeting in the village hall, we had our accounts checked and a society was formed,' Mrs Howlett explained.

A total of 228 villagers formed Whitemans Green Resources Society, buying enough bonds to clear most of the overdraft. The minimum investment was pounds 10. More than 50 villagers put in pounds 200 each and the highest stake taken was pounds 1,000.

Mrs Howlett said: 'Our trade has increased. Even those unable to afford bonds are showing their support by buying more things.'

The society is an unincorporated association for people with 'like interests'. The sisters are restricted to drawing pounds 4,000 a year each out of the business, index-linked, with a restricted capital allowance on top of that.

Any extra profit is payable to the bondholders as a dividend. However, a dividend is not actually expected. The capital is repayable in 1996, provided the shop performs in line with a business plan drawn up in conjunction with the scheme. Mrs Howlett and Mrs Lawrence have given formal guarantees that they will repay investors in 1996, but if they cannot they will issue further bonds or sell the business.

The legal adviser to the society, Trevor Redman, who used to advise Glaxo, says establishing a local society had several advantages: 'It gave us a nucleus of local people,' he said. The shop is independent of the society, and the bondholders have no liability should the shop have financial difficulties.

'The bonds are IOUs from the shopkeepers, with no further liability beyond the risk of losing the loans,' Mr Redman explained.

The villagers were advised that the method they used for issuing bonds meant they did not need authorisation under the Financial Services Act or the Banking Act.

Sussex RCC is one of several RCCs anxious to protect village shops after a report by the Rural Development Commission - a government agency that partly finances the RCCs - indicated that four out of 10 parishes no longer have shops.

Steve Andrews, a research assistant at Sussex RCC, said: 'We see ourselves as a catalyst for community action. Using a society was easiest in this case, as the shopkeepers wanted to keep control and the villagers were happy with this, and with the service provided by the shop. It was an investment by the residents, and they will see their money again in 1996 if all goes to plan.'

Mr Redman and Sussex RCC say that the structure used at Whitemans Green would not necessarily be suitable elsewhere. Other RCCs are currently drawing up constitutions that would be suitable for registration as industrial and provident societies, so that village shops could become community stores owned by local residents.

(Photograph omitted)