Talking Tesco: UK Competition Commission

Why are we publishing these comments?

Tesco has been reading with interest the third party comments on the Groceries Market Investigation that the Competition Commission has been publishing on its website. Our formal submissions have addressed many of the issues raised by these comments, particularly those of some of the professional lobbying organisations. However, a number of submissions on the Competition Commission’s website contain more specific comments about Tesco which we have not covered in our formal submissions.

Some of these specific comments are inaccurate and misleading, and we are providing a series of short notes in order to put the record straight. In the interests of transparency we are today publishing the first such series of notes.

Sheringham

Two consumers – Clive Osborne (Consumer No.2) and Colin Hullis (Consumer No.32) – and the New Economics Foundation raised concerns about our plans to build a store in Sheringham, Norfolk. There has been some suggestion that we entered into a deal with the Council that has prevented a Budgens proposal from being progressed. There was also some suggestion that there was a disregard of strong local opinion against the development. We would like to take this opportunity to explain the facts about our proposed development in Sheringham.

Not only would the proposed supermarket bring real benefits to the residents of Sheringham, we firmly believe that it would encourage more use of the town centre by shoppers and therefore offer the prospect of increased trade for other local businesses.

We have recently held a public meeting, with supporting exhibition, to hear the views of the residents of Sheringham. We received 305 comment cards from residents at the exhibition, of which 66% were for the development, 31 per cent against and 2 per cent undecided. Many residents commented that the store couldn’t come soon enough and that it would add to the vitality of the town. A recent independent radio poll also found that 84 per cent of residents were in favour of the development.

The fact remains that Sheringham is a town in need of a supermarket – at present less than one per cent of residents in the Sheringham area do their main food shopping in Sheringham local stores, with almost 50 per cent travelling to Morrisons in Cromer. The latest Experian National Shopping Survey also showed that at least 70 per cent of Sheringham residents leave the town to do their main food shopping.

We first looked at building a store in Sheringham over 10 years ago. Our research showed that there was an unsatisfied demand for a supermarket in the town and we believed that it would benefit from the low prices, high quality, broad range and great service Tesco has to offer. Originally we looked at an out of town site, but early on it became clear that the site in question was unsuitable in terms of emerging planning policy which, in 1996, began to direct retail investment back into town centres. North Norfolk District Council identified a site at Cromer Road for development and we thought that this would be a suitable location for a Tesco store. The site is located within the defined Sheringham town centre area. We also have plans to build a walkway to improve access to the rest of the town centre.

The land at Cromer Road is principally owned by the Council and Norfolk County Council. There are a number of existing uses on the site, including a fire station, community hall and housing, which will need to be relocated. Following almost five years of negotiations, we entered into an agreement with the Council for the sale of its land to facilitate the construction of a supermarket on the site. The Agreement was signed on 9 May 2003 and the sale of the Council’s land is conditional upon the grant of planning permission for our development.

The Agreement was not a secret. It does not prevent another retailer from finding a site and securing planning permission for a supermarket, nor does it prevent the Council from selling other Council owned land for retail development. Rather, the Council, in its capacity as landowner, is prevented from taking any steps which might be or become detrimental to, or increase the cost of, our attempts to secure satisfactory planning permission for a supermarket at the Cromer Road site only. This is a standard contractual provision when land owned by one party (irrespective of whether it is a local authority) is sold to a second party for development. The Agreement was endorsed by the appropriate Council committees, including the Executive of the Council and Full Council in May 2003. The Council took external expert advice on the drafting of the Agreement and the purchase price. The Council also took advice from the Office of the Deputy Prime Minister to see whether it was appropriate to enter into the Agreement in advance of the grant of planning permission; this was to ensure that the Council did not fetter its statutory powers as the local planning authority.

Our original planning application for Cromer Road was approved by the Council in January 2004 subject to conditions. Exhaustive negotiations over the conditions and Section 106 Agreement followed and we eventually reached agreement with the Officers. In spite of a positive Officer Recommendation, in September 2005, the Joint Development Control Committee Members voted to refuse the application. We asked for the reasons for the refusal and when no reason was forthcoming we launched an appeal on the grounds of non-determination of the application. The appeal was submitted in February 2006.

As part of the process of considering the appeal, Council Officers sought advice from a planning barrister as to the prospects of success. They also obtained specialist advice from highways and retail consultants. Although we have not seen the Council’s advice, our own advice would suggest that our appeal was likely to succeed; on the basis that our proposal for a supermarket is consistent with Government policy.

At the time of the refusal, Council Members also instructed Officers to give further consideration to the preparation of a Brief with the aim of promoting a supermarket on an alternative town centre site: the Station Road car park site. This site is currently used for town centre parking and the Sheringham weekly market. When the Council had earlier considered disposing of this site for a supermarket, they had decided against it, presumably because of existing policy which seeks to safeguard against the loss of town centre car parks, except as part of a scheme in accordance with a development brief. Budgens’ has the benefit of a planning permission to build a supermarket on part of the car park site, but would need to purchase land from the Council in order to develop the site.

In April of this year, the issue of the car park site was raised as an urgent item at a meeting of the Council’s Cabinet. Following internal investigations, it became apparent that some Members of the Council were not aware of the existence or terms of our Agreement.

A recent report, prepared by the Council’s Monitoring Officer and Head of Internal Audit at the request of the Council’s Chief Executive, concluded that there had been no impropriety on the part of Tesco, our advisers or Council Officers relating to the Agreement. It should be noted that:

  • the Tesco site at Cromer Road is, in our view, the most sequentially preferable site for a supermarket to meet the qualitative and quantitative needs of Sheringham. This is why we have focused our efforts on seeking to secure planning permission for a store on this site.

  • conversely, the Budgens’ proposal would not meet the identified retail need.

  • the Tesco proposal is in accord with the Council’s Local Plan, the wider Development Plan and the emerging Local Development Framework.

  • it is the Council not Tesco which is seeking to decide who builds what and where in Sheringham. The Council cannot and will not fetter its role as an independent local planning authority. This is respected in the Agreement. In the event that planning permission is not granted, Tesco will not be in a position to build a store on the Cromer Road site.

We still do not have planning permission for a store in Sheringham. We have, however, been invited by the Council to submit a new planning application. We hope, in the near future, to submit a revised planning application that will be reflective of the views of the majority of residents and will result in us bringing a great store to this community.