Tuesday, 13 August 2013

Is Outsourcing Parking a Poisoned Chalice for Supermarkets?

Many supermarkets outsource their parking management to third parties. They are lured by the promises of the parking companies, who offer to do this for free. Of course, there is no such thing as a free lunch. The only way the parking companies can make money out of this is to charge penal amounts for minor transgressions and to brutally enforce these. Over the last few months The Prankster has been made aware of cases where the parking companies still attempt to enforce their charges in cases where the vehicle has broken down, the motorist had to wait for a diabetic passenger's blood sugar to level, the motorist had to breastfeed her newborn baby, the pay and display machines were out of order and many more. It is obviously in the parking companies interest to sail as close to the wind as possible (and beyond) to maximise their income.

The downside of this predatory behaviour is a backlash against the supermarket, resulting in huge negative publicity and loss of income as shoppers move elsewhere. Somerfields found this to their cost some time ago. Their parking operator, ParkingEye, caused them endless customer relation problems so they terminated their contract. ParkingEye promptly sued them. Even though the judge found that ParkingEye were deceitful Somerfield still had to fork out £350,000 to ParkingEye to get rid of them. This was the amount the judge decreed ParkingEye would have gouged from Somerfield's customers over the lifetime of the contract.

Aldi are currently going through the same problem with ParkingEye. Their Facebook page is still receiving messages from disgruntled shoppers regarding parking charges.

Aldi either have to bite the bullet, get rid of ParkingEye, and face a large damages cost, or lose business and see their customers desert them for other supermarkets.

However, there is a new smoking gun which may hit supermarkets even harder, as this exchange in Hansard records.

Graham Jones (Hyndburn) (Lab): I congratulate the hon. Lady on securing the debate. There is a related issue, and I wonder whether it should be put out there as public knowledge. The Government need to come clean about whether we can tidy this matter up. These pieces of land were given a zero rateable value when the companies were given planning permission, or whatever permission it was, and now an income is being made from that land. The Government need to look closely at whether the Valuation Office Agency should try to revalue pieces of land where car parking charges are being applied, on the grounds that as there is now an income from it, the rateable value should be reviewed. I hope that the Government look at that, and I want to put that on the record.

Most supermarket car parks are zero rated. However, it is clear that Parking Companies are making large profits out of these areas. There is no requirement to wait for government to sort this issue out. Any motorist who has received a parking charge can contact the Valuation Office Agency (VOA) with their concerns that their local council is being deprived of money to which they are legally entitled. The VOA will then investigate and if necessary assign a rateable value to the land. The council can then charge the supermarket a fair market rate for the car park, backdated to when the parking company stated to operate.

This of course will be a disaster for the supermarket. They will not be able to charge this back to the parking company because the contact will not allow for it. The parking company will be laughing all the way to the bank as they trouser the money from motorists. The supermarket will be left to pick up the rate bill. The promised 'free parking management' has now become an expensive mistake, but there will be no way out of the contract without incurring penalties.

Update: Mr Mustard points out that although the supermarkets will be hurt initially, the costs will be built into new contracts with parking companies. The Prankster agrees this will happen, but thinks that now the genii is out of the bottle it cannot be put back in. As questions have been raised in parliament it is inevitable that councils will eventually get round to investigating this, and as they can backdate rates The Prankster thinks this might as well happen sooner rather than later. The crunch time will be when Aldi or other supermarkets have to renew their contract with the parking company. They may well choose not to renew at all, and apply for the rates to be reviewed again. Passing the costs onto the parking company will open another can of legal worms.

Happy Parking

The Parking Prankster

The Prankster thanks the motorist who sent him the Hansard link.


  1. Any VOA action will hurt the supermarkets for now but this cost will then get built into new contracts with parking companies paying that amount and they will become even keener to penalise motorists. I am not sure this is the best way to go.

    1. An excellent point. I have updated the blog to consider this.

    2. Hmmmm... but aren't parking companies' incomes kind of already fixed. i.e. they have a maximum charge, and I they are already milking motorists in any way possible.

      Also, I'd imagine car parks fall into two camps - ones which are genuinely being abused (e.g. near station), and ones that dont *really* need it. For those in the latter camp, it may deter supermarkets from signing up to this companies.

      Anyway, how could this rateable value cause a genuine pre-estimate of loss to increase... (no need to answer that one)

  2. The Co-operative are employing these companies in a number of car parks owned by them. Euan Sutherland, their CEO, seems happy to support their services. So I wonder if they are frightened by the threat of court action and prepared to put that ahead of their reputation and loss of customers. I for one will not be shopping with such an unethical company and would a similar course of action to friends and family as well!