Crackdown on out-of-town superstores to protect small shops and curb 'clone towns'

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Small shops are to be given some protection against competition from out-of-town supermarkets, Hazel Blears, the Communities Secretary, said. She added that this would help independent shops survive the credit crunch.

Planning guidance is also to be changed to help prevent "clone towns" from developing with identical shop fronts. In future new shops will have to pass a "diversity" test to ensure that not all high streets look the same.

Under the new guidelines planners will be able to reject applications for large-scale, out-of-town shopping developments if they are likely to have a damaging impact on nearby high streets.

However, rural campaigners and the Conservatives have attacked the plans, saying that they could backfire, and end up damaging town centres.

The Competition Commission has been investigating the effects that powerful supermarket chains such as Tesco are having on towns. The commission found that many areas lacked proper competition between supermarkets, giving consumers a poor deal. It said the change in the planning guidance proposed by Ms Blears would be helpful and suggested a new competition test in the planning system to ensure more choice for consumers.

The Government will formally respond to the commission's recommendations, including the competition test proposal, in the next few weeks.

One of Ms Blears' aides said: "Our priority is to ensure we do not see more and more stretches of the nation's high streets turned into bland 'every towns' where every high street has the same shops, the same look, and the same sterile feel.

"We plan to give councils more scope to curb 'clone town Britain' and to block large out-of-town developments. We know there are currently tougher times on the high street."

The rule changes would remove the "simplistic" planning test that judged only if a need existed for an out-of-town supermarket. It will be replaced by a general-impact test that assesses the risks and benefits of new businesses on existing small shops and the town centre.

The guidance would require local authorities to promote consumer choice and retail diversity and recognise that the planning system can help to support small shops and the identity of town centres. It also keeps a "sequential test" that requires developers to seek the most central sites first.

However, the Tories and the Campaign to Protect Rural England warned that the loss of the need test could backfire and could further fuel the dramatic decline of greengrocers, butchers, bakers and fishmongers.

Graeme Willis, a CPRE campaigner against supermarkets, said: "These plans could take away the rights of local authorities to resist large supermarkets on the grounds of need. The replacement – a new impact test – could shift power from planners who could say 'no' to developers who could say 'why not?'"

The Conservatives' planning spokeswoman, Jacqui Lait, said: "These changes are being driven by Gordon Brown and will ultimately hit small retailers and worsen the problem of 'ghost town Britain'. A surge in out-of-town development will not be environmentally sustainable and will hinder urban regeneration."

Speaking at the annual convention of the Royal Town Planning Institute, Ms Blears said: "Town centres are the hearts of our communities. I want to see our town centres and independent shops busy and thriving.

"I believe that the strengthened rules will guide future town centre development by giving councils the tools to attract investment, and protect and promote their high streets."

In relation to the debate over proposed "eco-towns", Ms Blears has been warned by MPs on the Communities Select Committee that it would be an "act of folly" not to spend some money on investigating the mistakes made with post-war new towns in the past.

Squeezed out by the big boys

Since it first opened its doors in 1946, residents of Withernsea, in East Riding of Yorkshire, bought most of their groceries from Proudfoot, the family-owned supermarket in the centre of town. As the "big four" supermarkets expanded their grip upon Britain's towns more and more independent shops went under but trade at Proudfoot remained brisk.

Then in 2004 Tesco came to Withernsea. Its first move was to send more than 6,000 residents vouchers offering an £8 discount for every £20 spent in the local Tesco store. Proudfoot responded with its own discounts but could not match Tesco. Sales at Proudfoot in the year following Tesco's arrival in town fell by 35 per cent.

The Proudfoot family were so outraged by what they believed was Tesco's "predatory pricing" policies that they tried to take the company to the Office of Fair Trading (OFT). Ian Proudfoot, who, with his brother Mark, runs the family stores, said at the time: "It is... an attempt to squash competition and dominate the catchment area." The OFT decided that Tesco's actions were not deemed "anti-competitive".

The store struggled on for another two years before finally folding when Aldi offered to buy them out. Mark Proudfoot thought it best to concentrate on the four other Proudfoot stores they still owned across the region. Since April, their stores have been reduced to three after Tesco took over the store in Barton-Upon-Humber.

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