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High street blight: are pound shops better than empty shops?

Even McDonald’s has left Rochdale town centre. But what can struggling high streets do to bring shoppers back?

The north-west of England has the highest number of empty shop units in the UK, and as big retailers leave our town centres, the kind of businesses that thrive in hard times are moving in.

Town centres across the region are becoming swamped with payday lenders, pawnbrokers and pound shops. As our high streets become increasingly geared towards making money from people who don’t have any, shoppers with disposable income are going elsewhere – and so are big name retailers.

Things aren’t looking good for my home town of Rochdale. Even McDonald’s fled the high street in 2011 after “seeing trading patterns in the town centre change”. Since then, many other big names have followed suit.

The shop unit where McDonald’s once stood is still vacant. Next door a nameless discount store has sprung up, and B&M Bargains has opened up across the street.

Nearby, a charity shop sits alongside a pawnbrokers. There’s a Quicksilver arcade next door, followed by Pound Zone, with two more charity shops opposite. Further up, The Money Shop stands opposite Cash Generator, and most of the surrounding units are closed or vacant.

It’s a bleak picture. Nearly one in five shops in the town now stand empty, according to the Local Data Company.

Though the 18.6% figure for Rochdale is lower than the regional average of 20.2%, many in the town expect the figure to increase as more shops face closure.

“High rent and business rates have now made trading unsustainable in Rochdale,” local business owner and campaigner Paul Turner-Mitchell, stated last month, when announcing the closure of the town centre fashion boutique he and his wife Kelly had run for several years. “Footfall and spending power is nowhere near as strong as it used to be, and the town faces a big challenge to get people with disposable income … to come back into Rochdale. At the moment, for a variety of reasons, they’re giving the town centre a wide berth.”

In the same month, the Rochdale branch of Mothercare closed its doors, saying they hoped customers would shop at its Bury store in future. Rochdale’s HMV store, which closed in February this year, also asks customers to visit its Bury branch. Optical Express meanwhile redirected surprised customers to the Trafford Centre, almost 20 miles away, after its sudden closure last year.

These units now stand empty, but others have been taken up by the kind of businesses that thrive in hard times, such as payday lenders.

The Office of Fair Trading recently accused these companies of causing “misery and hardship” for many borrowers because of irresponsible and unlawful lending practices, saying these businesses often rely on borrowers not being able to pay back their original loans.

Meanwhile, Labour leader Ed Miliband said last month that payday lenders are “taking advantage of the retail crisis to open businesses in town centres, tempting the unemployed and low-paid with loans at extortionate interest rates. In hard times it is no wonder people turn to them. But often they just engulf people in debts that they cannot pay.

And here in Rochdale there are plenty of people on hard times, with unemployment rates in some deprived areas of the town centre at up to 72%.

Payday lenders insist that, rather than taking advantage of people in desperate situations, they are providing a “credit lifeline”.

“Regulating supply will not regulate demand, and will force many people who currently use licensed lenders into the arms of loan sharks, who pose the most risk to consumers,” said a spokesperson for the Consumer Finance Association, which represents companies like QuickQuid, Cash Converters, Cash Generator and The Money Shop.

As the high street changes its focus towards making a profit from those with little or no money to spend, shoppers are getting fed up with the lack of quality and choice on offer.

Becky Armstrong works at one of the town centre’s bookmakers, William Hill, but shops in Bury because she says Rochdale is dull and “full of pound shops, bookmakers and phone shops.”

“There are no big name shops apart from River Island and New Look, but even those don’t have all the stock like the bigger stores,” she says, adding that there are few places to eat in the town centre, and no children’s clothes shops left at all.

As unhappy shoppers flee to nearby Bury, retail bosses there say sales are up once again in sharp contrast to the latest gloomy national figures.

The director of the Rock shopping centre in Bury, Arnold Wilcox-Wood, told the Bury Times that the complex had “beaten the national figures each and every month” since last August, adding that the centre was now attracting people from Oldham, Rochdale and other areas of North Manchester.

Oldham has one of the UK’s highest shop vacancy rates at 28.7%. “Oldham is dying,” said resident Vincent Blackburn, “I used to like Rochdale — it used to be a great place to eat, drink and shop, but I go to Manchester now.”

What can struggling high streets do to bring shoppers back? Free parking might be a start. Greg Couzens from the Rochdale High Street Foundation, points to the success of the town’s “Free after Three” parking scheme. He says parking spaces in the centre are now very hard to find after 3pm, and more parking spaces are now planned.

“Many towns up and down the country are considering free parking 24/7 but can’t afford the loss of revenue,” he says, “It should never have been revenue in the first place.”

Greg says Rochdale town centre needs “more unique independent shops” and suggests that other things which could help bring the town centre back to life include the introduction of café bar culture and farmers markets, as well as a focus on local heritage.

“Perception is the main problem in Rochdale,” he says, adding that “Pound shops are better than empty shops.”

Nursery reforms could cut childcare costs by 28%, DfE calculates

New calculations released by Department for Education will boost those seeking to push stalled plans through

The cost of childcare could be cut by as much as 28% if the government was to go ahead with stalled plans to raise ratios of children to staff in nurseries.

Government plans are currently stalled due to a disagreement within the coalition between the Liberal Democrats and the Conservatives.

The new calculations released by the Department for Education under a freedom of information request said parent costs could be cut from £4 an hour to £3.49 an hour (a 12% cut) while teacher salaries could go up. Alternatively, if the extra revenue was used solely to reduce costs for parents, this could yield costs savings for parents of up to 28%.

Conservative ministers had been hoping to relax staff-child ratios by September, but Nick Clegg, the deputy prime minister, vetoed the plans saying he thought the proposed ratio changes would lower the quality of childcare. Conservatives are likely to use the figures to show they have been on the side of parents and choice, but are being blocked by the Liberal Democrats.

Department estimates suggest that if legal ratios for under-threes rose from four children for each member of staff to six and increased from a ratio of one to eight to one to 13 for staff looking after over-threes, the number of full-time places could be expanded by 52% to 73.

This increase in places creates a gross additional revenue of around £200,0000 based on the nursery charging £4 an hour. Even assuming the setting required the employment of a graduate, revenue would rise by £166,0000. Distributing this over 73 childcare places for 52 weeks a year and 39 hours a week the nursery could maintain its revenues and reduce its fees from £4 an hour to £2.88 an hour, a reduction of 28%.

The figures are bound to be raised by allies of the education secretary, Michael Gove, and the children’s minister, Liz Truss, to show that parents are being denied a large-scale cut in their childcare costs by Liberal Democrat objections.

It is not yet clear if the plans can be revived, but Gove has acknowledged that his plan to introduce the changes by September are looking hard to implement. He claimed that Clegg had vetoed the plans because he was worried he was about to be challenged for his party leadership by the business secretary, Vince Cable.

The Daycare Trust earlier this year showed nursery costs rising while wages are stagnating: it found average childcare costs were increasing by more than 6% a year (more than double the rate of inflation).

After-school care costs more than a family holiday to Florida and the costliest nurseries are more expensive than top public schools.

Tata Steel loses £840m as demand drops

India’s Tata Steel has dropped into the red after wiping £1bn off the value of its European arm, largely due to the writedown

India’s Tata Steel has plunged into the red with losses of £840m after wiping £1bn off the value of its European arm, which employs 18,500 people in Britain.

The overall post-tax figure for the group represents a sharp fall from the previous year’s £642m profit, and is largely accounted for by the writedown.

Tata said “severely depressed conditions” in Europe and Britain had left steel demand almost 30% lower than 2008 pre-recession levels – leading to last week’s move – though underlying performance in the region had improved with increased volumes in the last quarter. The company did not give a pre-tax profit figure for its European arm. The overall group figure, excluding the impairment, was £387.7m in the black, down from £621.6m.

Unions have said the company’s woes will worry British staff at sites including Port Talbot, Rotherham and Scunthorpe, which are still reeling from 900 job cuts last year. Tata, which bought Anglo-Dutch steel company Corus in 2007 for £6.2bn, has endured a tough time during the downturn as demand from construction and car-making dived, forcing thousands of layoffs and plant closures.

Its UK employees represent more than half of the company’s European workforce. The firm announced its latest wave of redundancies in November, including 600 in south Wales. Tata said deliveries were down in its European operations over the year, largely due to repairs and outages, but that the re-lighting of a blast furnace at Port Talbot after a £220m rebuild helped in the fourth quarter.

The company said that it was continuing a programme of restructuring, cost-cutting and efficiency while also taking on 500 apprentices in Britain over the past couple of years.

HSBC faces court threat as deal on money laundering charges stalls

Judge may take action that could leave HSBC facing a criminal prosecution and threat to its ability to do business in the US

HSBC’s controversial $1.9bn (£1.6bn) settlement deal with the US authorities over money laundering charges has stalled after a row between the justice department and the judge overseeing the case.

The deal – known as a deferred prosecution agreement (DPA) – meant HSBC was exempt from prosecution and triggered a storm of criticism. Judge John Gleeson is now believed to be considering rejecting the deal, a move that could leave HSBC facing a criminal prosecution and the threat that its charter to do business in the US could be revoked.

The bank will hold its annual meeting in London on Friday and is expected to be asked for an update on the agreement.

US authorities reached the deal with HSBC last December after uncovering evidence that the bank had illegally conducted transactions on behalf of Mexican drug lords, terrorists and customers in Cuba, Iran, Libya, Sudan and Burma – all countries that were subject to US sanctions.

Gleeson, a former assistant attorney general, made his name prosecuting drug rings and organised crime, most notably securing the conviction of John Gotti, the Gambino crime family boss. The justice department is believed to be challenging the need for Gleeson’s approval after failing to get a quick signature while the judge is upholding his opinion that he must sign off on the DPA.

Court officials would not comment on the case. The judge last referred to the case on 15 February, noting solely that he had not yet approved or disapproved of the settlement. Last December Gleeson said there had been “much publicised criticism” of judges rubber-stamping DPAs.

The agreements are an increasingly common settlement which allow a company to pay a fine to stop a criminal prosecution.

John Coffee, Adolf A Berle professor of law at Columbia University, said judges were increasingly unhappy with DPAs.

“There is a serious disconnect between judges and prosecutors about whether prosecutors are doing anything meaningful,” he said.

Senator Chuck Grassley lambasted the justice department over the settlement last year and said it was “inexcusable” that they had not brought a criminal prosecution against the bank. “What I have seen from the department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that ‘the government has bought into the notion that too big to fail is too big to jail’,” he wrote in a letter to attorney general Eric Holder.

At the time of the deal’s announcement Stuart Gulliver, HSBC chief executive, said: “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again.”

HSBC has undergone a drastic management overhaul since the issues came to light and has strengthened its compliance policies and procedures. It is continuing to implement those changes as the US authorities work on a resolution to the DPA disagreement.

Stuart McWilliam, senior campaigner with lobby group Global Witness, said: “News that the DPA hasn’t yet been signed off gives the justice department a clear opportunity to reconsider the penalties HSBC should face for its widespread money laundering failures.

“Given that over 35,000 people were brutally slain in Mexico at the hands of drug traffickers while HSBC laundered at least $880m of their money, it’s shocking that the current system of sanctions does not include senior executives being held personally responsible for the actions of their institutions. Is HSBC too big to jail?”

Gleeson would not be the first judge to challenge a DPA in recent months. Last year Jed Rakoff refused to sign off on an agreement between Citigroup and the Securities and Exchange Commission over the sale of “toxic” mortgage bonds. In his opinion the $285m settlement was “neither reasonable, nor fair, nor adequate, nor in the public interest”. That dispute is ongoing.

Booker sees boost from horsemeat scandal

Cash and carry group sees profits rise as caterers turn away from processed meats

Cash and carry group Booker has benefited from the horsemeat scandal as more caterers have turned away from processed meats and started making meals from scratch, according to the company. Chief executive Charles Wilson said: “We are the biggest meat supplier to the catering industry in the country and since the scandal we have seen quite a lot of the caterers turning back to making their own burgers and lasagnes. So, we’ve moved from selling pre-packaged burgers to selling more fresh mince instead.”

Booker’s profits jumped 13% to £101m, on sales up from £3.5bn to £4bn a year earlier. Wilson said the rise was also due to a boost in demand from small retailers who have managed to ride through the recession relatively unscathed: “There are quite of lot of good entrepreneurs and talented people saying ‘I want to set up a deli’ or a new format. We’ve also seen a big rise in high-quality steaks being sold, with a number of Brazilian and Argentinian steakhouses driving sales.”

The company bought struggling rival Makro last year with the Competition Commission deciding the deal could be completed last month. Bosses believe this will add around £10m of sales next year.

The War on Drugs: the Observer debate – live

Join us for tonight’s panel discussion on drug laws with David Simon, writer of The Wire, documentary maker Eugene Jarecki, Rachel Seifert, British director of Cocaine Unwrapped and others at the Royal Institution of Great Britain. The debate will be chaired by Observer editor John Mulholland

Woolwich attack: questions Scotland Yard and MI5 will be asking themselves

Intelligence officers will be considering whether they missed anything that could have miscalculated the intentions of the men

Scotland Yard and MI5 will have known very quickly that the two suspects in the Woolwich attack were on their files; the men had apparently been “on their radar” for up to eight years, having cropped up as peripheral figures in different counter-terrorist investigations, with at least one of them involved with the now outlawed group, al-Muhajiroun.

The question investigators will be asking themselves – as they prepare for scrutiny from the Independent Police Complaint Commission (IPCC) and the intelligence and security committee – is whether they missed anything that could have miscalculated the intentions of the men, or set aside any intelligence which would have prevented the attack.

The definitive answers may not emerge until any forthcoming trial but the strong hints emerging from a number of well informed sources in Whitehall indicate the information held about the men did not suggest they were capable of such violence, or that they had crossed the threshold from extremist “thinkers” to jihadist “doers”. The judgments are sometimes fine, and the science around them hazy.

The Metropolitan police and MI5 work very closely on domestic counter-terrorism, and never more so than in the runup to last year’s Olympics, when both the police and the security service beefed up their operations to cope with any threat.

MI5 adapted their usual way of sifting information – making the mouth of the intelligence funnel wider, and increasing the number of analysts assessing the leads coming in from agents, informers and foreign intelligence organisations.

This comprehensive undertaking left officers at Thames House with between 2,000 and 3,000 names of people on a potential worry list – far more than the agency or the police could ever hope to cover with comprehensive surveillance. The two men in custody were probably on that list.

Investigators were already aware that one of them had expressed an interest in travelling to Somalia, presumably to join the al-Qaida affiliate, al-Shabaab.

Only a small number of Britons have gone to Somalia, and those that have tried have been easily identified by the police because the simplest way into the country is via neighbouring Kenya, and there is routine monitoring of the flights to and from Nairobi.

It is not thought either of the men in Woolwich actually made it to Somalia. One suggestion is that one of them had been put off by a “tap on the shoulder” as he prepared for the trip. Nobody in Whitehall would be drawn on the specifics, but the conclusions drawn by specialists who have to make excruciating decisions in this field, having weighed up all this material, is that the men did not warrant moving up the worry list; they did not pose an imminent threat to national security.

Part of any assessment of this kind is likely to have involved the behavioural science unit at MI5, which looks at the profiles of individuals, and tries to judge where on the spectrum a suspect might be in terms of being prepared to turn words or boasts into action.

“The security service cannot look at everyone; that would be impossible, and undesirable,” said one Whitehall source. “There are limited resources, so for every file you want to open, another one has to close. That does not mean that the police and MI5 are disregarding a potential threat, it means there are other people out there they are more worried about, and difficult calls have to be made.”

Another source added: “Intelligence-gathering cannot be open-ended. You have to stop looking at some things to give yourself the opportunity to look at other things.”

Though David Cameron did not say so specifically, the prime minister will have been briefed on what the police and MI5 knew about these men when he chaired Cobra, the crisis committee convened in times of emergency. Afterwards Cameron chose his words very carefully – offering both encouragement and an exhortation.

“The police and security services will follow every lead, will turn over every piece of evidence, will make every connection and will not rest until we know every single detail of what happened and we’ve brought all of those responsible to justice.

“I know from three years of being prime minister that the police and intelligence services work around the clock to keep us safe from violent extremists. I watch their work every week. They do an outstanding job.”

Uncovering all they had on them, and building a case that might lead to criminal prosecutions, remains the priority. But the questions won’t end there.

Jeremy Hunt under fire over GP reforms

Andrew Sparrow‘s rolling coverage of all the day’s political developments as they happen, including Jeremy Hunt’s speech on GP reforms

Benefits cap will have catastrophic effect on families, court will hear

Vulnerable families challenging £500-a-week cap say it may force victims of domestic violence to return to their abusers

Families will suffer catastrophic effects and victims of domestic violence may be forced to return to their abusers, it will be argued in the first test cases challenging the government’s imposition of a £500-a-week cap on benefits.

A judge has already given permission for a full judicial review of claims that involve four vulnerable families relying on welfare payments. One household is facing imminent eviction, according to documents filed at the high court.

One of the families lives in Haringey, one of the four London boroughs selected by the Department for Work and Pensions (DWP) as pilot areas for introducing the controversial benefits cap.

The families have not been identified. Two of the claims involve victims of domestic abuse; their claims are supported by the refuge charity Women’s Aid.

The DWP restrictions are supposed to provide an incentive for those on benefit to seek work and prevent families from receiving more by remaining dependent on welfare.

The government’s own impact assessment of the Welfare Reform Act estimated that as many as 56,000 households would be affected, losing on average around £93 a week. The overall cap has been set at £500 per household and £350 for single adults.

There is no right of appeal against benefit reductions. The cap applies however many children there are in a household. Large families are therefore likely to be disproportionately affected by the regulations.

“The families who bring this claim are indicative of … concerns regarding the legality of the policy, including its discriminatory effect, given its disproportionately adverse impact upon women (particularly single mothers), children, the disabled, and certain racial and religious groups,” the court papers explain.

The families will suffer catastrophic effects if the cap is imposed on them, it is said. “Two of the families will receive nil for basic subsistence (food, clothes, heating) as their rent exceeds the £500 per week cap. They will immediately fall into arrears, face eviction and street homelessness.

“Two of the families have fled domestic violence in circumstances where they were financially reliant upon their abusive partners, and they now face a stark choice between descending further into poverty and risking losing their homes, or returning to their abusers in order to escape the imposition of the cap.”

Rebekah Carrier, the solicitor at Hopkin Murray Beskine, who acts for all of the claimants, said: “This is a cruel and misguided policy. It will have a catastrophic impact on our clients and many thousands more vulnerable children and adults. They face street homelessness and starvation.

“A year ago the children’s commissioner warned the government that these changes would result in a sharp increase in child poverty and homelessness, with a disproportionate impact upon disabled children and children of disabled parents, and some BME groups.

“The difficulties now faced by my clients were predictable and avoidable. The reason for the policy is said to be to encourage people to obtain work but my clients face difficulties in securing employment because they are lone parents with caring responsibilities for babies and toddlers, and disabled adults who have already been recognised as unable to work due to their disabilities.”

The case will be argued by Ian Wise QC and Caoilfhionn Gallagher of Doughty Street Chambers. Lawyers are looking at least another 15 similar claims as law centres are approached by desperate families seeking advice about the effect of the benefits cap.

In a supporting statement, Niki Norman, deputy chief executive of Women’s Aid, says: “The benefit cap is likely to have a significant adverse impact on women seeking to move on from refuge accommodation into other housing, and therefore on the availability of refuge space to women in crisis who seek urgent safe shelter.

“The inevitable result of the implementation of the benefit cap for women as they leave refuges is that some families will suffer destitution, some will become homeless again very quickly, and some will choose not to leave refuges, with all the resulting difficulties for refuges.”

A DWP spokesperson said: “We are confident that the benefit cap measures are lawful and do not discriminate against any groups. The benefit cap sets a fair limit to what people can expect to get from the welfare system – so that claimants cannot receive more than £500 a week, the average household income.”

The DWP has recently faced a number of judicial reviews on its welfare reform programme. Earlier this week a tribunal ruled that the work capability assessment (a test determining eligibility for disability benefits) put people with mental health problems at a substantial disadvantage. A separate judicial review has been considering whether the impact of the government’s so-called bedroom tax on tenants “under-occupying” social housing is discriminatory.

ENRC fears data loss from hacking and stolen laptop

Mining group Eurasian Natural Resources Corporation notifies the information commissioner about the data loss

The mining group Eurasian Natural Resources Corporation, warned on Thursday that it may have lost internal data as a result of computer hacking and the theft of a laptop.

The problems add to a complicated picture for ENRC, a London-based but Kazakh-facing producer of minerals from iron ore to coal, which received an indicative takeover offer last week but is also the subject of an investigation by the Serious Fraud Office.

ENRC said it had notified the information commissioner about the data loss saying: “The first incident relates to the theft of a laptop during a domestic burglary, while the second incident relates to an intrusion into the group’s electronic systems by a third party.”

Affected staff have been provided with guidelines on precautionary actions to take and ENRC said the employees involved have been offered the use of an identity protection service.

ENRC received an approach last Friday from its founding shareholders Alexander Mashkevich, Alijan Ibragimov and Pathokh Chodiev in partnership with the government of Kazakhstan. Independent directors said ENRC was worth more than the 260p per share offer price.

The SFO said in April it had started a criminal probe into ENRC amid allegations of fraud and corruption.