cigarette pack Charity Shops.
A tax on all ratepayers.
cigarette pack

Been years since the book exchange in Leith closed. Nice lady ran it, shelves packed solid with cardboard boxes on the floor for the big hardbacks. Wonderful musty smell. You buy a second hand book then, when you've finished, take it back and she'd refund you half what you paid. Brilliant - and I always looked for those with well cracked spines because lots of people had read them, so it was usually a worthwhile yarn.

But the owner had to close because she couldn't compete with the charity shops. They get their stock from house clearances, the general public, hotels, bus companies and other places where we're likely to forget or discard books, including airports. And they depend on volunteers to work in their shops. While they're seldom in charge of the shops, they're perfect for menial tasks and to cover for lunch hours and holidays, meaning that instead of having two full time staff, charity shops only need to employ one. With the minimum wage currently set at £7.50 for people over age 25, that's an enormous saving.

It's similar with the junk shops that were so common in my youth. Yes they gave a predatory price for old but good quality furniture - and nothing for the rest, yet they'd clear a house and recycle the whole lot within the community at a profit. Some of the stuff I have in my house came from those junk shops - and I'm very pleased with the deal I got on a drop-leaf table.

Yet one by one they had to close or move to the outskirts of town. It's not just the retail premises they need to have, there's the question of storage - and it was either at the back of the shop, or a remote warehouse that meant moving stock by van. Double yellow lines deter people who need to park and collect, so they had to charge a fair amount for delivery - and that's an issue for single items, meaning my table would have been prohibitively expensive.

Charity shops beat them on so many counts, from the cost of stock (zero) to the fact they can employ one person full time to drive their delivery van from their warehouse to deliver to all their shops within a 30 mile radius and do drop-offs to householders as they pass by. As there can be dozens of shops in a 30 mile radius these van drivers earn their keep.

But the greatest advantage charity shops have is they don't have to pay business rates on whatever premises they lease anywhere in Scotland. With some businesses facing increases of up to 260% on their rates (01), it gives charity shops a killer advantage.

It used to be that these shops were in out of the way locations or in the periphery of town, but with so many businesses closing in Edinburgh and with landlords forced to accept exploitative long term tenancies, they've been able to gain control of premises in some of the most desirable parts of Edinburgh at peppercorn rents. And by using volunteers they're able to open 7 days a week; something commercial operations find very difficult especially at weekends, when time and a half is the bare minimum.

Shandwick Place is a short stroll from Princes Street. The chaos of "The Tram" closed that street for months, resulting in wholesale closures - and that created the perfect opportunity for The British Heart Foundation to grab a deal. This is their new shop.

British Heart Foundation shop Shandwick Place

While most people couldn't give a fig about junk shops, book exchanges or those little places that recycled records, CD's and other bric a brac; local retailers do. In Helensburgh they are so ticked off at the legislation:

"A non-profit-making organisation which is charitable, or providing social benefit, receives 100 per cent discretionary relief on business rates or non-domestic rates."

that they took to the media to promote their petition to offer local businesses the same deal as charity shops, or remove the relief given to charity shops to create an even playing field (02).

And they're not even remotely efficient at what they do. The now infamous anti-Brexit Gina Miller is also founder of the True and Fair Foundation (03) that helps out charities involved in social and environmental issues. In that capacity, back in 2016, she laid into the whole business of charity shops with a scathing report that she summed up (04):

"When you include the sizable tax benefits they receive, the competitive disadvantage and crowding out of commercial small high street shops, and the wider consumer shopping trends, I believe the inescapable conclusion is that charity shops and tax reliefs need to be fundamentally reformed."

And with inescapable facts such as "the 10 largest charity shop chains in the UK typically have a profit margin of 17 per cent, compared with the 83 per cent that Goodwill Industries has in the US". Something's badly wrong within the charity industry and we're being scalped to keep the sham going.

Of course the response by the charities themselves is that they do good works and deserve every break they can get to further whatever their specialization is. However the one thing the large charities do is offer very generous incentives to their staff, including access to their Group Personal Pension Plan (05) if you work for the British Heart Foundation, or a full blown indexed linked pension if you work for Cancer Research UK (06). A quick look through all the household name charities reveals similar terms, and all run their own pension schemes.

These are not things small retailers can hope to provide for their employees - pensions like this can only be afforded because of the huge number of donations from the public and corporations as well as legacies. More recently some have taken to "endorse" certain products as Cancer Research UK has with Nivea Sunscreen.

Nivea Sunscreen advert with CRUK logo

The price is not cheap, but it does help sell a so-so product in a crowded market. And there are many more household names that love chumming up to CRUK (07). This is why they advertise on television and why they make sure their store fronts are plastered with huge letters advertising their name. That's branding - and it's in your face everywhere.

Of course the recent business rates hike has hit the charity shops in England, where most only get an 80% discount on their rates, and they too made their pitch to try to get the government to free them of any business rate obligations (08). In this their main argument is that only 17% of people in a poll (commissioned by them) support the concept that charity shops should pay business rates, so implying that 83% don't.

That's crap. Public confidence in charities has been falling like a stone for years, with about 45% having little if any trust in them (09). Again they try to give reasons why this might be a one off, but there's no doubt that the public has become far more cynical of the status quo and - when scrutinized - the charity sector, especially the household name ones, fall short on every measure with few capable of putting more than 60% of what they're given reaching the front line. Most chew up about half of their income in administration - and with recent negative articles on the salaries for top people as well as the uproar about taxpayer money being handed over to fake charities like Kids Company, the end result is it's very unlikely the charity sector will ever regain broad public trust.

Another issue is the outrage about taxpayers being forced to cough up for "overseas aid". It's perfectly understandable that many taxpayers have reduced their personal contributions, taking the view "why give to charities if the government's doing it with our taxes".

There's also that aspect of fund raising, about the use of contract firms to cold call and to hassle vulnerable old people. Their callous exploitation of donors personal information, for which several big names in the charity business were fined (10), so serving as a warning to them and others that there are limits to public tolerance of the charity sector.

Then there are the television adverts; they're incessant and deliberately target daytime viewers that includes a high proportion of retired, aged and vulnerable people. They may know that 4 pence of the carry bag tax goes to charities, but it's unlikely most people will know that Action on Smoking and Health was deliberately set up as a charity, because that way they do not have to open their books to anyone.

Raedwald has written of their frustration at political campaigning restrictions, so they can assist in changing the governing party (they love Labour) (11). There are ways round that and Oxfam are openly interfering in politics, with their annual reports urging politicians to screw the wealthy and give the proceeds to charity by means that are classic communism (12). Indeed if even a portion of what's thrown at charities became public knowledge I suspect support for the charity sector would evaporate.

And we're being conned about outcomes, especially Cancer Research UK who make out they can "beat" cancer. They can't and they know it; 71% of all cancers are caused by random typos in DNA that occur as normal cells make copies of themselves or because we inherited something from our parents, so they're only in business for the 29% that may be associated with "lifestyle choices" (13).

I've imagined a town with a high street consisting of just 10 shops, 3 of which are charity shops. The local council has to give 3 a full 100% relief on business rates (or 80% in England), yet the town has to maintain the roads, provide street lighting, clean the pavement and so on. The town elders have to budget based on all ten shops coughing up their fair share, but with 3 untouchable and council tax frozen in Scotland, then either the remaining shops must pick up the tab, or public services must be reduced elsewhere. Most go for something in between.

The result is business rates become prohibitively expensive for the remaining seven shops and that in turn means they're more difficult to sell as a going concern or far too costly for small startups. It becomes a vicious cycle that now favors charity shops.

The only figures available are for England where, by their own admission, charities are benefiting by the amount of £1.5 billion each year from business rates relief (14). That's a tremendous drag on local authorities budgets - and that's one reason why roads and pavements are not being maintained, to say little about libraries closing and all manner of services being under-funded. Proportionately the figure's much worse for Scotland because they get a 100% rebate.

The rebate means it's a tax on ratepayers. Whether you like the charities behind these shops or not, householders are paying for them to be in their High Street - and that's just plain wrong. Whatever reasons existed all those years ago to allow business rate relief to charity shops, what's clear is they're taking massive advantage of their status, inevitably to the detriment of other legitimate businesses.

A complete review of the entire "charity" sector is urgently needed. There are for too many of them, all competing with each other for donations, mainly needed to fund their administration costs. The big ones drown out the smaller charities, because it's all about name recognition and legacies. And that's the principle reason the big name charities have so many shops.

Government needs to quit with the notion that we all share the same white, middle class Christian values and that all charities are good. We're not, we don't and very few charities come close to being benevolent; for the most part there are strings attached to all their "good works". Britain has changed out of all recognition over the past fifty years. It's wrong to force people to subsidise charity shops through their council taxes.

With recent increases in business rates resulting in revaluations of over 100%, it simply increases the competitive advantage for charity shops. It's got to stop. No gradual reduction in the discount, no period of transition. Just stop it.

They're not sacred cows, they're not untouchable and there will be no voter backlash. Rather it's likely most domestic rate payers - and close to all business ratepayers will welcome such a move once the extent of subsidies given at their expense, as well as the drag on local businesses and communities are explained.

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Smoking Scot
June 2017