FACE THE FACTS
Presenter: John Waite
TRANSMISSION: Friday 18th August 2006 1230-1300 BBC RADIO 4
This week's Face the Facts investigates Britain's biggest retail chain Tesco and the way it bends and on occasion even breaks planning law to get what it wants. Part of a tough business strategy that has seen the company rise from the supermarket ranks to its pole position today. We'll be visiting communities all over the country which accuse Tesco of brazenly flouting planning regulations. In one case, for example, building a far bigger superstore, some 20% bigger, than it had permission to. Well "Every Little Helps" is the company's slogan but if you or I did something similar, argue Tesco's opponents, with a house extension say, we'd be ordered to take it down. Tesco's response, however, has been to carry on trading from the store for two years while it applies for proper permission. Just one example of many, according to campaigners, which show the supermarket giant putting profits before proper planning procedures.
They're almost more powerful than local government or even national government.
I think they're the silver backed gorilla of the supermarket world, they are all powerful.
They [indistinct word], they have their knuckles rapped, it doesn't hurt them.
It seems they have the clout and the clout to flout.
Here we are down on the Gallagher Retail Park, just on the outskirts of Scunthorpe, standing outside the Tesco Extra, which was built in 2002.
John Hayes is chair of Scunthorpe's local chamber of trade, which reacted with great interest and no little trepidation here when in 1998 Tesco applied for planning permission to build one of its superstores on the outskirts of this Lincolnshire town. And since it's been opened, John says, those fears have been realised.
Well it's turned out disastrous really for the local retailers. They now I think have something like 40% white goods and 60% food. How they can say it doesn't have an impact I don't know but it's bound to be with the 40 odd thousand people down here they can only be in one place at one time.
But despite the anxieties of local traders at the beginning of 1999 the local planning authority recommended granting permission for the new superstore. With concern nationally, however, increasing about out of town stores destroying traditional town centres the application was called in for consideration by the Secretary of State for the Environment, who ordered a public inquiry in early 2001. Mike Welton is Development Control Manager of North Lincolnshire Council.
As with all public inquiries the inspector listens to the evidence and then has to make a recommendation, including what conditions he feels maybe appropriate to restrict the impact of the development.
So when Tesco got the go ahead to build its out of town superstore, to try to protect Scunthorpe's town centre, that approval came with important conditions.
One of the conditions, number 17, specifically limited the floor space which Tesco's would be allowed to use for what we call comparison goods retailing, only 25% - a quarter of the store - could actually be used by Tesco for selling such things as televisions, other electrical items, clothing, shoes and so on.
When the new 8,500 square metre store opened for business four years ago it wasn't long before planning officers, who were doing their shopping there, became concerned at just how much floor space in the new store had been given over to selling lucrative so-called comparison goods.
It became apparent that in fact the floor space that was being devoted to comparison goods appeared to be well in excess of the 25% that had been imposed by the conditions and it would be the sort of thing that we would comment in the office - Well have you been down to Tesco's, looks a bit big for 25% don't you think.
So council officials wrote to Tesco demanding an explanation. And Tesco made no effort to deny what it was doing. It simply submitted a retrospective planning application to increase the floor space available for all those DVDs and white goods, clothing and shoes. In response to a fast changing market - it said. A further application that required a further planning inquiry, all at the expense of North Lincolnshire Council taxpayers. An average inquiry can cost a quarter of a million pounds, involve dozens of council officers and lasting sometimes for months. In the event Tesco got its way and in February this year was finally given permission to do what it had been doing anyway - leaving the council with a large bill and a sour taste in the mouth for some of those who'd followed the case.
If they wanted to trade at 40% then they should have said so at the outset, at least the original inspector could have then made a decision as to whether 40% was reasonable at that time.
I think they contravened the rule from the beginning they always pushed and pushed and took the council to the edge.
Local authority resources are not a bottomless pit, we know that we have to defend quite properly our decisions if needs be through appeal and as with all authorities we have limited resources to be able to defend those.
They have the weight, they have the power and you know they're going to win in the end.
Somewhere else where Tesco is at loggerheads with the council is here in Portwood, a suburb of Stockport in Cheshire, where in November 2004 the company opened a new superstore - a Tesco Extra as they're called. It's on a retail park and it's doing good business and its origins date back to a planning application approved by Stockport Council in May 2003 for a store of just over 9,000 square metres, that's the equivalent to two football pitches. But what was actually built was a super size superstore of more than 11,000 square metres, virtually 20% bigger. Which, as you might imagine, came as something of a shock to the council and its planning committee chairman Councillor Kevin Hogg.
When Tesco actually brought it to our attention, which was after the store had been built, I was actually very, very surprised. They are a major retailer in the country and you would think that they would abide by the planning rules that are set down or were agreed.
Was the council angry at what had happened?
Obviously not best pleased because they have ridden a little bit roughshod over the council on this I think.
Well they've completely broken planning law haven't they, you gave them permission for one sized store and they built something totally different?
Yes, yes, the entire store has no planning permission on it. Not just part of it - to say that 9,000 square metres would have planning permission, it doesn't, because it doesn't comply with the original planning permission. The store in its entirety doesn't have planning permission.
And if the council was not best pleased at what Tesco had done neither were some local residents, like Sheila Oliver. It seemed to Sheila that the supermarket giant clearly felt it could just break the rules, whereas smaller local traders had to obey them.
My local Chinese takeaway put silver shutters on their premises and the whole might of Stockport Council came down on them to get them to remove them. At the same time as in the press about Tesco who presumably had done this deliberately, whereas the people in the local Chinese takeaway had made a genuine mistake.
Mrs Oliver has written to Tesco's Chief Executive Sir Terry Leahy on several occasions to raise her concerns, only to learn that such occurrences are routine, at least according to one of his senior colleagues.
Well I got a letter from Shaun Edgeley.
Shaun Edgeley's the Property Communications Manager for Tesco.
That's right. And he says: As soon as Tesco realised we needed to build the store in Stockport slightly bigger we applied to Stockport Council for planning permission for the extra space. There was never any attempt by Tesco to bypass the planning system or mislead the council. The planning officers of the council were aware that we were building the store to the larger size whilst we sought planning consent, a very common procedure across the whole construction industry.
So is it really common procedure for stores to build larger premises than they have planning permission for only to get the go ahead later? And were Stockport's planning officers really aware that Tesco was building the store while seeking planning consent for it? Not according to the council's planning chair Kevin Hogg.
The council didn't know that this store was 11,000 metres, the store was on the verge of opening when we were asked to vary the conditions.
It then goes on: And this is a very common procedure across the whole construction industry. Is it?
No I work in the construction industry from the control side and it isn't common at all. I've been a councillor now for 16 years, going on 17, been on the planning committee every year since I joined and I think this is the first occasion when anything like this has happened.
Well to this day the Portwood store continues to operate much to the annoyance of nearby smaller competitors. Indeed it's a case that's attracted national interest where the All Party Parliamentary Small Shops Group held an inquiry into the future of the British high street and when MPs asked how it could be that Tesco managed to build a store 18% bigger than permitted. On that occasion Tesco came up with another excuse when in the words of its company secretary - Lucy Neville Rolfe:
The people who were fitting the store decided that they needed more space, mainly for backroom operation and so therefore built the store bigger than the original planning permission. I don't know quite why but they did.
And when he heard that explanation Steve Parfett, who runs a cash and carry business just down the road from the Stockport store, didn't quite believe his ears.
They claim not to have realised what was going on at any stage which considering this was a multimillion pound construction project with very senior consultants and architects on it is incomprehensible to me. And the latest figures with the latest application show that they're taking more than a million pounds a week in sales terms at this store, so it's obviously incredibly profitable for them. And they just keep on delaying and delaying and prevaricating with the council whilst they obviously make hay while the sun shines.
Well on the other side of Cheshire is another problem with Tesco, here in Morton on the Wirral where the Tesco Express store across the road has landed the company in court. Council minutes reveal that Tesco was in breach of seven planning conditions from the moment work started on its store here a couple of years ago. And yet the company's punishment was piffling, according to Chris Blakeley, the Conservative councillor for the ward.
They were fined for breach of five conditions, costs to the council, the total bill to Tesco's was £1,843. The company [indistinct word] £34 million with a £2 billion profit a year and what's £1800, it's not even loose change.
How would you characterise, from your experience, Tesco's attitude towards the planning laws?
They look daft, Tesco's know that even if the council take them to court the fine they're going to get, the slap on the wrist, is going to be worth absolutely nothing to them, it's peanuts, it's pennies.
The court found Tesco guilty of five breaches of two conditions. One involving lorries arriving earlier than permitted. The other for using lorries that were larger than permitted. Such conditions can seem over restrictive to supermarkets, according to Peter Sitch, who worked for 12 years in Safeways property department, even so, he says, that's still no excuse to end up in court over them.
Conditions can be very onerous. The usual ones which limit delivery times are sometimes the most difficult ones to manage for the store. And it's quite common for food stores to negotiate away conditions as actively as possible.
But how usual would it be for a supermarket to simply ignore them?
Well you really don't do yourself any favours. You have every route to go back and negotiate those conditions away. And in fact there was a very active programme when I was at Safeway negotiating away delivery restrictions.
Council minutes show that as well as the planning breaches which landed Tesco in court, at the time of opening, the company also failed to comply with four other planning conditions at its Morton store. Not the most auspicious start for Tesco in its new home on Merseyside, according to Councillor Blakeley.
The chief exec Sir Tony Leahy, a Liverpool lad - local lad - wouldn't you think he'd have a lot more concern about local communities? He's grown up in a local community, he's made the big time, he's done a real good job of that but let's have a feel for our communities and not profits. And if Tesco's are going to build a store then let's build it appropriately, let's stick with the planning conditions that are put upon us and let's be good neighbours.
But that's what Tesco claims that it strives to be, at least according to its corporate website, under the heading "Communities".
TESCO WEBSITE We are sensitive to both the opportunities and concerns raised when we invest. We try to work within the grain of planning law and social change.
Try telling that though to many of the residents of Gerrards Cross in Buckinghamshire, where Tesco's plans for a superstore in the town went very much against the grain. Plans that have literally collapsed, at least for the moment. The store was being built on land on either side of a main commuter railway line, with a new tunnel bridging the railway cutting, when in June last year:
NEWS CLIP Supermarket giant Tesco has apologised to railway passengers after part of a tunnel being built for a new store collapsed onto the tracks. The controversial development at Gerrards Cross in Buckinghamshire is being built across the Chiltern Line from London to Birmingham.
But the end of the building wasn't the end of problems. Like where thousands of tonnes of spoil from the collapse ended up.
Well I've arrived in the heart of leafy Buckinghamshire, this part of Buckinghamshire near old Amersham is an area of outstanding natural beauty. And Ruth Marshall lives here, we're just going down to the bottom of her garden because Ruth has a new neighbour.
We have a large spoil heap which appeared about a year ago. It's grey dusty slag, about 20 feet high, we can't see the other side of it, but dumped here courtesy of our friends Tesco. The following summer, it's been here a year, and nobody's ever had the courtesy to explain to us what's going on, when anything is going to change.
Because you're right in the middle of the countryside here, there isn't another house in sight, the most unspoilt view, apart from now, as you say, the new Pyrenees. What do you make of Tesco's behaviour?
Well it's high handed, isn't it. This lump here is kind of out of sight, out of mind. The only people that see it are us and the only other people that see it are people walking the Chiltern footpaths. But it seems to have been forgotten.
That massive mound that Ruth has dubbed "the Pyrennees" is actually 27,000 tonnes of lumpy grey incinerator waste, which had been used to pack out the sides of the Gerrards Cross tunnel before it collapsed. And it's being stored on land belonging to a contractor working for Tesco while the company decides whether to continue with its project in south Buckinghamshire.
The company is allowed to keep it there for 28 days - after that formal planning permission is required. Which was turned down, last October, by Buckinghamshire County Council. It then served an enforcement order which required removal of the material by the end of June. But it's now late August, it's been there a year and it's still there now. Tesco says it's working with its contractor to try to resolve the situation. But in the meantime the contractor has appealed against the enforcement order - forcing another expensive public inquiry, and one that won't be heard for at least another couple of months. So a new peak remains among the Chiltern hills - much to the exasperation of locals like Graham Hoeness.
If it had been dumped outside Tony Leahy's house it would have been moved immediately, it would not be there, we all know that. However, this has been here for over a year and it's probably going to be here for a lot longer. They're wearing us down and I think it is part of their tactics to actually make us so fed up with the mess they're leaving us that we simply say oh for goodness sake get on with it.
A hundred miles west, many locals are similarly "fed up with Tesco" in the village of Cam in Gloucestershire. Where the parish council has ambitious plans to revitalise the village around a new village square.
BROCHURE READING Vibrant future for the centre of Cam - to include shops, housing and a community resource centre. This will house the parish council...
A plan which seems tailor-made to fit in with that Tesco corporate statement on communities...
TESCO WEBSITE We try to work within the grain of planning law and social change - embracing town-centre stores and bringing life back to declining urban areas where possible.
But not it seems here in Cam where, Tesco holds the covenant on a car park which the parish council has earmarked as part of that regeneration project.
The covenant stipulates that the car park must remain a car park and thus conveniently prevents the land falling into the hands of a rival retailer. The council had trusted that Tesco would share its vision to "bring back life" to the village centre and release the land from the covenant. Tesco refused. Parking spaces are important, it says. Proof, according to the Liberal Democrat councillor Dennis Andrewartha, that, for the supermarket giant, profits not local people come first.
We've reduced our ambitions, we're leaving part of the site that they have effectively got control of, through covenants, unattached, they are in business to make money. Let them say that clearly and honestly and do not pretend to deal with communities in an amicable and friendly way because they don't.
A somewhat cynical view - but one that's shared in Sheringham in North Norfolk - a historic, bustling, seaside town
Sherringham's thriving high street supports a wide selection of independent shops, including an ironmongers, pet shop and fudge shop, which are very popular with residents and visitors.
You don't see many like this anymore.
No you don't, [indistinct words] aren't they.
You sign the book darling. There you are.
John Waite , Radio 4, I'm here to see James Pye your property director.
Okay I'll let him know you're here. Would you like to sign in for me?
Budgens have been involved in trying to obtain a planning permission in Sheringham for at least the last 10 years. Eventually, the back end of 2003, were finally granted a planning consent on appeal. Here we are in 2006 and unfortunately we're still not in a permission to be able to implement that planning permission.
And what has stopped Budgens implementing that planning permission is a deal between North Norfolk District Council and Tesco. A deal which contained an important clause which hardly anyone seemed to know anything about - until its provisions became public this spring.
READING - CLAUSE The seller as estate owner shall not take any action or promote any competing development or planning application which is or might be detrimental to or increase the cost of the endeavours to obtain satisfactory planning permissions.
That clause was part of an agreement stuck between the council and Tesco in 2003 over a council owned site in the centre of town. An agreement for the council to sell the site to Tesco and remove a restrictive covenant. In return Tesco dropped plans to build an out of town store, which the council feared would be detrimental to Sheringham's small shopkeepers. Tesco also agreed to build new flats for social housing and pay £150,000. It was a clause, however, unbeknown to councillors, that prevented the local authority from supporting any rival to Tesco, like Budgens, with plans to develop on council land in the town. Which means, says Simon Partridge, the new Lib Dem leader of North Norfolk District Council, that a new Tesco is virtually guaranteed for the town, despite considerable local opposition.
Unfortunately for the people - some of the people in Sheringham who really do not want a Tesco's that is bad news, I cannot foresee that a Tesco's will be able to be prevented from coming. Having said that they will have to go through the full planning procedure and it will be in open debate. But with the current position we find ourselves in I cannot see how Tesco's can be prevented from coming to Sheringham.
At the time the deal was concluded, the control of the council was in flux during a period of local elections, and all the officials involved have since left. It only became public in April, when councillors were drawing up a development plan for a possible future supermarket. Only then was it drawn to their attention.
And to Budgen's. Because despite spending several years and several million pounds winning planning permission to build on council land in Sheringham, unaware of the agreement, Budgens has been wasting its time.
How did you feel when you learned that you'd been working for 10 years on this project and finally thought you had planning permission but ah ha out of almost a bottom drawer of a desk comes an agreement with Tesco?
I think probably the best way to sum it up is a feeling of total disbelief. It is incredibly frustrating and in some respects it's difficult to understand.
And Budgens aren't the only ones who are finding this agreement hard to comprehend. Many locals find the whole affair deeply disturbing, and there are now regular protests on the streets of Sheringham aimed at Tesco. Among the demonstrators I spoke to Eroica Mildmay.
It was carried out in a fallow period between local elections. To be honest with you it really does appear that Tesco sort of wade into towns and say right it's going to be like that and we're going to do it this way, alright? It's undermining local democracy, it's just diabolical really.
So what does Tesco have to say to its critics in communities around Britain? No one from the company was willing to be interviewed, and the statement we were sent was a brief one, pointing out that:
TESCO STATMENT Tesco works with hundreds of councils to bring investment, jobs and lower prices to communities, which is especially important for families and households on a budget.
However, Tesco admits:
We don't always get things right, as was the case in Stockport.
Where their superstore, you'll recall, ended up being built almost 20% larger - we don't quite know why, but it did.
But we have worked with the council there to find a solution.
As for the three other cases we've heard about today - the mountain of incinerator waste dumped in an area of Outstanding Natural Beauty in Buckinghamshire; the list of breached planning conditions at a new store on the Wirral, and the rumpus in Scunthorpe over the amount of comparison goods Tesco started selling - on all of these, the company statement had nothing to say. We don't know quite why but it didn't.
Although, adds Tesco:
We have nothing to hide. In Sheringham, for example, the agreement signed with the council certainly did not prevent other retailers entering the town. We are delighted that the council have asked us to submit a further planning application and are encouraged by the level of support shown by local people at our recent public meeting.
As to the exclusive agreement that it reached with North Norfolk Council, Tesco added that the council received expert advice from consultants and lawyers and delegated powers to its chief executive officer. And if there are any new councillors who claim not to know about that tricky little clause, then that says Tesco is the responsibility of the council.
And, just to put the record straight:
Local authorities control the planning process, not Tesco, and it is a democratic and tough regime. We work hard to put forward proposals that reflect peoples concerns and are acceptable locally.
But is that how the planning process works in practice? Not according to many people we've met whilst preparing this programme. They believe companies with deep pockets like Tesco can and do manipulate the system, turning it into a battleground between councils and supermarkets, but where the opposing forces are very unevenly matched. And those critics include planning experts like Gareth Morgan from the Royal Institution of Chartered Surveyors.
MORGAN It is a battle which many councils and local authorities feel that they're losing. Tesco's understand the law specifically in relation to the planning system far better than even many local authorities do. Where the law is uncertain or where it is capable of interpretation then they will interpret that law to the best of the ability of the experts that they can employ. And they will spend the money in order to be able to make the money.
WAITE Gareth Morgan from the Royal Institution of Chartered Surveyors ending this week's edition of Face the Facts, which was produced by Melanie Abbott.