Business Rates relief for Charity Shops. A good thing?

PrestonLad

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Charity shops often get quite a nice reduction on business rates... I understand this is frequently 80-100%. Is this a good thing?

Personally, I don't have a problem with them getting rate relief, but I think the relief shouldn't apply on prime and semi-prime locations.

They are pushing deeper into town centres... as they can out-compete hard-pressed retailers... presumably reducing the downward pressure on rents... and it isn't good for consumers either. I presume it's not good for the public purse either... it would be better to refund a small rates bill than a big town-centre one.

Have I got the wrong end of the stick? Is this a real issue?
 

mhall

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Wrong end of the stick?

No no, a thousand times No

and it's a MANDATORY 80% minimum reduction in the rates, the Council HAVE to do it so I can't even moan at them

They can even afford to go into the shopping Malls now as they employ agents who will play the charity card with landlords and are pushing the "social responsibility" angle. A couple of our ex-suppliers are supplying a few of them with standard stock that they sell as any other shop would do, but with the massive rates/rents advantage they have they will win. They rate even higher on my annoyance list than Christmas pop up shops who dissapear before the Council can chase them for Rates and if just one more of them come in and ask me for a donation as a "good neighbour" I will not be responsible for my actions
 
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PrestonLad

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Wrong end of the stick?

No no, a thousand times No

and it's a MANDATORY 80% minimum reduction in the rates, the Council HAVE to do it so I can't even moan at them

They can even afford to go into the shopping Malls now as they employ agents who will play the charity card with landlords and are pushing the "social responsibility" angle. A couple of our ex-suppliers are supplying a few of them with standard stock that they sell as any other shop would do, but with the massive rates/rents advantage they have they will win. They rate even higher on my annoyance list than Christmas pop up shops who dissapear before the Council can chase them for Rates and if just one more of them come in and ask me for a donation as a "good neighbour" I will not be responsible for my actions

OK.. it's just that another shop in my High Street has just changed from an interesting gift shop, into a gawdy looking charity shop. It just seems wrong. The shop never even came on the open market for rental.

I just thought it seemed so blatant that I must be missing something.

Did the Portas report identify this issue? (I don't remember it doing).

Have there been any organised campaigns? (although I can see that they would have to be sensitively done).

Edit... I notice you said they have a rent advantage. Do you think that's true?
 
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mhall

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Edit... I notice you said they have a rent advantage. Do you think that's true?


Charities are big business. They have the best card of all when dealing with Landlords - "but we are a charity" and they employ the very best finders who would, I am sure, play this angle to the limits.

The mere mention of the word charity makes most people bend a little in fear of being branded uncaring - helped no doubt that, because they have the rates advantage, they can offer a landlord long term leases in return for the reduction in rent. It's nothing we wouldn't do if we could guarantee that we would only have to pay a pittance in rates.
 
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ecommerce84

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Wrong end of the stick?

No no, a thousand times No

and it's a MANDATORY 80% minimum reduction in the rates, the Council HAVE to do it so I can't even moan at them

They can even afford to go into the shopping Malls now as they employ agents who will play the charity card with landlords and are pushing the "social responsibility" angle. A couple of our ex-suppliers are supplying a few of them with standard stock that they sell as any other shop would do, but with the massive rates/rents advantage they have they will win. They rate even higher on my annoyance list than Christmas pop up shops who dissapear before the Council can chase them for Rates and if just one more of them come in and ask me for a donation as a "good neighbour" I will not be responsible for my actions

Could you ever see the Governent changing it from Mandatory 80%? I couldn't see any of the 3 main parties doing so, as I imagine the general public (i.e not those who run shops) would go mad about it - imagine the BBC asking people in the sreet what they thought of it after being announce?

Personally I don't like it at all. I have nothing against charities and appreciate that it is hard to raise money, especially at the moment, but it is also hard to run a business and there needs to be a level playing field.

Some of our local charity shops are selling new stock at big discounts, but it is easy when you have low rates, no wages and I am sure that most Landlords give a discount.
 
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PrestonLad

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I suspect they are very good for the publics purse.

Maybe you could explain how you think otherwise.?

:| You deleted my explanation. the full sentence said

I presume it's not good for the public purse either... it would be better to refund a small rates bill than a big town-centre one.

That read better when it was in context, but to put it into even plainer English... if you are a local council, and The Slug Protection League sets up shop in the very best unit in the high street - one where they'd normally expect to pay 30 grand rates - then the council is forced to grant a 24 grand discount.

My suggestion is that there should be a threshold imposed, so that charities cannot take the best (or indeed the second best) shops in town, unless they fund it themselves. So the discounts they receive would be more likely to be 5 grand... hence hurting the public purse a lot less (and stop them from, IMO, ruining the high street).

One or two charity shops is ok... but too many towns have such a high proportion of charity shops, that it affects everybody's user experience.

As far as I'm aware, I could probably register a charity for the protection of slugs - and if so minded, I could take the best unit in town... and demand my rates discount. Ideally, there should be some sort of judgement as to which charities are allowed to extract money from the public purse when they take retail units. Oxfam is OK... Slug protection is not.
 
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:| You deleted my explanation. the full sentence said

I presume it's not good for the public purse either... it would be better to refund a small rates bill than a big town-centre one.

That read better when it was in context, but to put it into even plainer English... if you are a local council, and The Slug Protection League sets up shop in the very best unit in the high street - one where they'd normally expect to pay 30 grand rates - then the council is forced to grant a 24 grand discount.

My suggestion is that there should be a threshold imposed, so that charities cannot take the best (or indeed the second best) shops in town, unless they fund it themselves. So the discounts they receive would be more likely to be 5 grand... hence hurting the public purse a lot less (and stop them from, IMO, ruining the high street).

One or two charity shops is ok... but too many towns have such a high proportion of charity shops, that it affects everybody's user experience.

As far as I'm aware, I could probably register a charity for the protection of slugs - and if so minded, I could take the best unit in town... and demand my rates discount. Ideally, there should be some sort of judgement as to which charities are allowed to extract money from the public purse when they take retail units. Oxfam is OK... Slug protection is not.

So tell me again ,who do charity shops serve.?:|
 
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kulture

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    So tell me again ,who do charity shops serve.?:|
    I must have missed you asking that question. Does it really matter?

    The thread is about whether business rate relief for charity shops is a good thing.

    It is clearly a good thing for the charity shops. It means that the people running the charity shops (managers, area managers, plus the admin depts etc etc) all get well paid. It also means the charities themselves get money.

    It is a good thing on one level for the people of the town. They can dump their used goods on the shop and not have the bother of driving miles to the nearest tip(if any are still open).

    It is a bad thing for competing retailers as it is a very unfair playing field.

    It can be a bad thing for towns if too many charity shops open.

    It can then be a bad thing for people as their town dies.

    As for the local councils, since the rates collected (or not) all go to central government, it is meaningless.
     
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    PrestonLad

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    I must have missed you asking that question. Does it really matter?

    The thread is about whether business rate relief for charity shops is a good thing.

    It is clearly a good thing for the charity shops. It means that the people running the charity shops (managers, area managers, plus the admin depts etc etc) all get well paid. It also means the charities themselves get money.

    It is a good thing on one level for the people of the town. They can dump their used goods on the shop and not have the bother of driving miles to the nearest tip(if any are still open).

    It is a bad thing for competing retailers as it is a very unfair playing field.

    It can be a bad thing for towns if too many charity shops open.

    It can then be a bad thing for people as their town dies.

    As for the local councils, since the rates collected (or not) all go to central government, it is meaningless.

    You answered the question very well thanks! (I was careful to say that these high rebates are detrimental to the 'public purse')

    I'd emphasise again that I am not proposing that all charity shops are chased out of town - so all existing stakeholders would still be served under my suggestion.

    Allowing them to claim nearly free rates on the best shop units in town.... it doesn't make sense. If an unemployed family needs a home, our society looks after them by getting them a decent council house... not the very best mansion in town.

    But when I say all stakeholders are looked after, perhaps not ALL, because I had a 2 part wish. The second part was to render the Slug Protection League (and their ilk), ineligible for rebates. This sounds tongue in cheek... but there are many charities that I would lump in there with the slugs. Some massively rich private schools, charging thousands per term, are registered charities, and could benefit if they so wished. And there is a proliferation of animal charity shops... where I'd personally like to have just the RSPCA, rather than one shop for dogs, two for cats, one for donkeys, one for horses, one for slugs etc. I could go on, but you get the point! We need to find a way to limit the numbers... perhaps involving some local representatives in the decision.
     
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    mhall

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    There has to be a solution found, and perhaps a cap based on rateabale value is the way forward. It really isn't hard to become a charity. I could do it within a month as long as all the "profits" went to a group of which I would not personally benefit. I could pay myself a whopping salary instead -
     
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    mconridge

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    It's important to support Charities and providing subsidies for Charity Shops allows them to keep their Fixed Costs down. I have no problem with.

    I have a BIG problem with the number of charity shops. There are far far too many around and parts of towns and cities turn into 'Charity Shop Alleys'. It's got worse in recent years with Charity Shops selling new products as this is then in direct competition with other retailers, especially small ones.

    An example in Exeter, there is a new Charity Funiture Superstore in the centre of an industrial estate. It's large, and competes with another recently opened privately owned shop. The privately owned shop employes people, pays NI, pays Business Rates and contributes to the local community. The Charity shop does not pay NI, pays a small amount of Business Rates and relies on volunteers. The private business will go out of business as it can't compete, meaning people unemployed.
     
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    Maxwell83

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    All I hear from b&m retailers is how tough it is for them. They forget that they exist only when customers want to buy their products.

    You all know as much as I do that the business world owes nobody anything. Consumers don't care about your rates, and if the charity next door are selling the same stock as you brand new for less, then it's time you either found a new USP that appealed to your market or moved. Why do you need to remain on the high st if consumers aren't coming to you?

    From a consumer's point of view, I'd rather a charity shop that everyone is happy to buy from than a shop that never has any customers in it?

    If everyone else is converting to charity status to survive, then why aren't you?
     
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    DavidAshdown

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    All I hear from b&m retailers is how tough it is for them. They forget that they exist only when customers want to buy their products.

    You all know as much as I do that the business world owes nobody anything. Consumers don't care about your rates, and if the charity next door are selling the same stock as you brand new for less, then it's time you either found a new USP that appealed to your market or moved. Why do you need to remain on the high st if consumers aren't coming to you?

    From a consumer's point of view, I'd rather a charity shop that everyone is happy to buy from than a shop that never has any customers in it?

    If everyone else is converting to charity status to survive, then why aren't you?

    I totally disagree. Charity shops have a completely unfair advantage as they have a big 'leg-up' from the government, the very people who say they want to help small businesses.

    This is unfair competition.
     
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    Maxwell83

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    I totally disagree. Charity shops have a completely unfair advantage as they have a big 'leg-up' from the government, the very people who say they want to help small businesses.

    This is unfair competition.

    Perhaps, but the reason for their advantage is because they are a charity surely, thus the money is (supposedly) going to a good cause and not to a fat cat capitalist.

    Is it being suggested that these charities are just businesses being run as charities but essentially just to feed other fat cat capitalists in the form of super high salaries with little or no 'profit' being made and so little or no money actually getting to the good cause?

    And if that is the case, why aren't more businesses going down the charity route?
     
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    DavidAshdown

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    As you say 'supposedly'.

    With the exception of probably the big well established ones, then yes that may well be the case. The reason others aren't following that route is probably that most of us have more morals than that even though you seem to regard capitalists as something that is a bad thing.
     
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    As you say 'supposedly'.

    With the exception of probably the big well established ones, then yes that may well be the case. The reason others aren't following that route is probably that most of us have more morals than that even though you seem to regard capitalists as something that is a bad thing.

    Morals and Capitalism.

    Contradiction in terms.

    Ask any banker or financial advisor.;)
     
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    Perhaps, but the reason for their advantage is because they are a charity surely, thus the money is (supposedly) going to a good cause and not to a fat cat capitalist.

    Is it being suggested that these charities are just businesses being run as charities but essentially just to feed other fat cat capitalists in the form of super high salaries with little or no 'profit' being made and so little or no money actually getting to the good cause?

    And if that is the case, why aren't more businesses going down the charity route?

    You haven't visited the Oxfam headquarters have you? A multi million pound plushy office block and guess what else it has....a buying department! They buy from suppliers, so does PDSA (trading ltd, not charity). They buy from the same suppliers as a lot of high street retailers yet they get 80% relief on rates and other benefits that only go with charity status.

    Now. The lines are becoming a bit blurred. See how I mentioned PDSA Trading Ltd. Lets take a look at the nature of their business:

    47789 - Other retail sale of new goods in specialised stores (not commercial art galleries and opticians)
    66190 - Activities auxiliary to financial intermediation not elsewhere classified
    74909 - Other professional, scientific and technical activities not elsewhere classified
    92000 - Gambling and betting activities


    Hmm. Less charity, more corporate organisation perhaps?
     
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    Maxwell83

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    As you say 'supposedly'.

    With the exception of probably the big well established ones, then yes that may well be the case. The reason others aren't following that route is probably that most of us have more morals than that even though you seem to regard capitalists as something that is a bad thing.

    I personally don't think of capitalism as a bad thing, I was using the term tongue in cheek (should have used ' ') to represent those doing it for themselves (nothing wrong with that but accept the bad with the good and be prepared to do it on your own) and those doing it for good causes who are entitled to government hand outs.

    I am obviously one of the former myself.

    Funnily enough, one of my other businesses is empty rates mitigation - I provide occupiers to let a property for 6 weeks and when they leave, the owner gets a 3/6 month rate free holiday. The tactic discussed in Sirearl's link is another strategy used by landlords but not one that I offer as you don't need a middleman to find charities wanting a deal on rent!
     
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    Websitehandyman

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    I have no great problem with charity shops, I often get some of my stock from them but i tend to think these big charities shouldn't get any help setting up shops and I would prefer to restrict it to local charities that are doing good for the community they trade in.

    Problem is you can soon get a bad reputation if you don't support charities. But a fair few of them do more harm then good, for example these people setting up food for UK outlets are in most cases enabling substance & benefits abuse. I mean why spend your dole on food when you can walk down the road and get it given to you for free.
     
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    Maxwell83

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    I assume that this is not a serious question?

    Of course its serious, I want answers from those bleeting on about how easy it is to become one and how advantageous it is! if those statements are true, then why aren't you all converting to charitable status?

    Seems to me that its not that easy or that advantageous at all, otherwise more and more retailers would actually be doing it.
     
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    Maxwell83

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    Perhaps because we have ethics?:)

    Where has ethics come into this?

    If you run a charity shop properly, then it is not unethical. You are actually doing a good thing.

    Perhaps the truth is that to make any real money out of it, you would have do to it unethically (oversized salaries, little profit to good causes). If that's the case then charities aren't the problem here, the lack of regulation of charities is the problem.
     
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    kelvin1950

    Of course its serious, I want answers from those bleeting on about how easy it is to become one and how advantageous it is! if those statements are true, then why aren't you all converting to charitable status?

    Seems to me that its not that easy or that advantageous at all, otherwise more and more retailers would actually be doing it.


    < personal comment removed by moderator>

    On the one hand, it may be easy to become a registered charity, one assumes this by the number of organisations who are charities when you would think that maybe they shouldn't be. On the other, I would certainly have a problem as I would need to become the Society for the Protection of abused and Distressed Sweet Eaters or something similar. I'm sure that many other retailers would have the same problems.

    The advantages are easy and mainly taxation based. A simple Google search will show you that.
     
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    Maxwell83

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    <response removed by moderator>

    In any event, what you say is my whole point - why are retailers moaning about the advantage charities get when, in your own words, yourself and many other retailers would have problems becoming a charity based on your current business model?

    Being a charity is not the sweet bed of roses that its being made out to be here. It seems like this is moaning for the sake of moaning going on in this thread because in actual fact, most retailers wouldn't want to be a charity! That pesky little concept of 'having to do something to benefit others' will just keep getting in the way won't it.

    Tax advantages and whatever else google says aside, the main point is that a properly run charity is not going to make you rich (unless you start at Oxfam's size which is not possible) but your small b&m business may be very lucrative if you're doing it right. Charities deserve advantages that the speculator in it for himself does not.
     
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    kulture

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    As has been said here before. It is not the individual charity shops that are the problem. The problem is when they start becoming real retailers and directly competing by buying in new stock from the same suppliers. Rather than stocking by contribution.

    Then there is the problem when a town center becomes over filled with charity shops and ALL loose out.
     
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    mhall

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    Strangely, as reported today - Help for Heroes opens its "first" Retail Shop- The Shop fit was provided by Moss Bros,

    As for the landlord - "Capital Shopping Centres and Land Securities are supporting the project within a wider programme of initiatives across the CSC portfolio. The move is part of a 12 month commercialisation activity between CSC and the charity which will see Help for Heroes having a presence in a number of CSC shopping centres including Lakeside and Braehead.

    So that's their "corporate responsibility" sorted so they don't have to worry about supporting anyone else.

    I guarantee no-one, but no-one, not even Muslim fundamentalists will dare to even raise an eyebrow for fear of being branded a whatever.

    As they appear to be selling H4H branded merchandise it's not quite so bad as a charity shop selling main street stuff.
     
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    jarod74

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    Not sure if this is useful to the thread or not, but thought I`d share some `insider secrets`. I volunteered for a `well known` Charity shop for just over a year & was surprised at how it was run. The price guide for starters was frightening!, An item of clothing was judged if it was Market/ high street/ catalogue/ designer/ supermarket. They had `year on year` sales (just like in Asda!, & targets for donated/ gift aided or new goods sales per day/ week. If sales were `down` (had to be roughly £150-200 per day) & it was due to the weather rain, sleet or snow....the Manager was told "People still had to shop, so that was no excuse". It was all very ruthless!. I didn`t get paid `travelling expenses & you`re allowed 30 mins lunch. Of course I choose to volunteer, but decided to leave after I was told, by putting out a Hand written sign explaining there was a `sale on books` ( which had been there for months, which then sold & boosted the total sales by quite a lot!), was "against" company policy!
     
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    Not sure if this is useful to the thread or not, but thought I`d share some `insider secrets`. I volunteered for a `well known` Charity shop for just over a year & was surprised at how it was run. The price guide for starters was frightening!, An item of clothing was judged if it was Market/ high street/ catalogue/ designer/ supermarket. They had `year on year` sales (just like in Asda!, & targets for donated/ gift aided or new goods sales per day/ week. If sales were `down` (had to be roughly £150-200 per day) & it was due to the weather rain, sleet or snow....the Manager was told "People still had to shop, so that was no excuse". It was all very ruthless!. I didn`t get paid `travelling expenses & you`re allowed 30 mins lunch. Of course I choose to volunteer, but decided to leave after I was told, by putting out a Hand written sign explaining there was a `sale on books` ( which had been there for months, which then sold & boosted the total sales by quite a lot!), was "against" company policy!

    Naming the charity would be of help?
     
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    Billmccallum

    Not sure if this is useful to the thread or not, but thought I`d share some `insider secrets`. I volunteered for a `well known` Charity shop for just over a year & was surprised at how it was run. The price guide for starters was frightening!, An item of clothing was judged if it was Market/ high street/ catalogue/ designer/ supermarket. They had `year on year` sales (just like in Asda!, & targets for donated/ gift aided or new goods sales per day/ week. If sales were `down` (had to be roughly £150-200 per day) & it was due to the weather rain, sleet or snow....the Manager was told "People still had to shop, so that was no excuse". It was all very ruthless!. I didn`t get paid `travelling expenses & you`re allowed 30 mins lunch. Of course I choose to volunteer, but decided to leave after I was told, by putting out a Hand written sign explaining there was a `sale on books` ( which had been there for months, which then sold & boosted the total sales by quite a lot!), was "against" company policy!

    I was keeping out of this thread because of bias, I'm an ex-charity manager and ex- charity shop manager (and my wife is also a charity shop manager).

    But this comment did touch a nerve, volunteering for a year in a charity shop does not really give insider knowledge, it gives some insight based on the limited access to information that you may have had.

    Most charity shops exist on turnover of £4,000 per week or less, most retaillers will know that a high street store would need to do double that to make it really viable.

    The majority of that income would be spent on the shop, rent, utilities, etc and staff wages (most do employ at least 1 full-time manager and 1 part time deputy), probably 40% of the income would be passed on to the charity for the charitable work they do.

    A business cannot be a charity, charity shops are just a fundraising mechanism, one of the many routes to generating income that they use.

    Without charity shops, the high street would be a less than attractive street scene, with many more for sale signs than we have now.

    Charity shops employ thousands of people around the country, who then spend their cash in the shops of other retaillers.

    Where charity shops do sell new goods, where do they get them? other companies who sell to the trade....

    Charity shops do use volunteers, but they also provide valuable training to young people, people with learning difficulties and opportunity for people on community service orders to repay the community....but they also pay tax and NHI, they dont get a pass on those.

    Where charity shops sell new goods they have to pay VAT like the rest of us, adding to the public purse.

    There are pro's and con's in the debate about rate relief, no amount of debate will resolve it, some will agree some wont.
     
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