Prescott proposals prompt warning by B&Q

Purchases from DIY stores will cost 30 per cent more if the Government presses ahead with plans to restrict retail developments in town centres, B&Q has warned.

The Kingfisher-owned company believes new proposals being hatched by the Deputy Prime Minister, John Prescott, would turn its business model on its head. This would leave it with two choices: raise the price of its goods or halt expansion in the UK.

Terry Hartwell, B&Q's property director, said: "The policies are totally unrealistic. We would have to raise prices to maintain profitability or have no growth in the UK and direct future investment elsewhere."

B&Q had planned to open 10 to 15 new DIY warehouses next year, creating nearly 4,000 jobs. But it will drop the programme if Mr Prescott maintains a hard line when the final policies are published in the autumn.

Mr Prescott is revising a planning policy guidance document that covers retail developments. Known as PPG6, it states that developers and planning authorities must give priority to town centre and edge-of-town sites. However, it is acknowledged that town centre sites may be inappropriate for retailers of bulky goods such as DIY items.

At present, around half of B&Q's planning applications for developments outside towns are approved. It is understood that Mr Prescott is considering tightening the rules to include DIY retailers when the new version of PPG6 is published.

B&Q's conclusion that prices would have to increase is based on the findings of a specially commissioned report by property consultants CB Richard Ellis and transport specialists Mayer Brown. This found that if DIY retailers were forced into the town centre, their rental bill would double and the range of goods available would fall.

The report also highlighted a number of transport issues. Public transport users would find it "physically impossible", it says, to carry bulky items. And B&Q's logistical costs would double.

The last Conservative governmentintroduced proposals to restrict retail develop- ment outside towns. Since then, retailers have expanded by opening smaller town-centre units, such as the Tesco Metro format. However, Mr Hartwell said,this would be inappropriate for B&Q: "It wouldn't be a B&Q store if we started to cherry pick from the range of goods."