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The government’s decision to simplify the planning process for out-of-town retail developments has been criticised as going against its policy of promoting the viability of town centres.

The Planning White Paper, released last week, suggests that the ‘needs test’, under which supermarket chains must prove that a new store on the outskirts of town is necessary, should be scrapped.

Association of Convenience Stores chief executive James Lowman said that a significant increase in out-of-town retail development would undermine retailers trading at the centre of communities. "The government has repeatedly stated its commitment to building communities and sustainable development," he said. "It cannot profess a commitment to a ‘town centre first’ strategy while removing the policy’s most important component."

He added that in Scotland, where there is no needs test, there was evidence that an increase in out-of-town developments had harmed town centres. “When a supermarket is built in an out-of-town location it has sweeping repercussions for the balance of the local economy across several retail sectors."

The White Paper suggests the government will introduce a new test that “promotes competition and improves consumer choice, avoiding the unintended effects of the current needs test.” Communities secretary Ruth Kelly is said to have been swayed by arguments from Asda and other supermarkets that the needs test prevented them from offering effective competition to market leader Tesco.
Consultation on the replacement test will begin this summer and be announced after the findings of the current Competition Commission inquiry into the grocery market are published, expected to be in February 2008.

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