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Richard Harrington (Watford) (Con)
It is a pleasure to introduce this debate under your chairmanship, Sir Alan.
I chose to call a debate on retail for two purposes. From a parochial point of view, retail is a significant employer in Watford and a significant contributor to the economy. Also, the press that retail receives nationally, with glamorous Sky reporters standing in front of shops such as Blockbuster and HMV that are shutting down, gives a false impression of the sector’s overall prosperity and contribution to the economy.
Members of Parliament and the public at large should realise that retail is a big sector of the economy, and contributes in excess of 5% of GDP. Although the Government are trying to encourage growth in the manufacturing sector, the retail sector contributes more added value to the economy.
Retail is able to offer increasingly sophisticated employment. The old impression that people work in shops because they cannot do anything else is no longer relevant. Retail jobs are highly trained, and there are many apprentices. Many people, including me, started their business career in the retail sector. Following my law degree, I was a graduate trainee at John Lewis, which gave me ideas for developing my life both in business and more generally. It all went well until I became interested in politics.
Retail contributes employment and taxation not only through pay-as-you-earn and corporation tax but through business rates. The sector is a big contributor to urban regeneration. People do not think of retail as a factor in urban regeneration, but they only have to look at places such as Westfield on the Olympic site. When I went to work in Watford’s Harlequin centre, which is now known as Intu, in 1980, it was the poorest part of town, notwithstanding the efforts of John Lewis and other old retailers that had been there for 50 years, 100 years or more. The Harlequin centre was certainly not the sort of place people would want to go unless they had to go shopping.
Mr Lee Scott (Ilford North) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree that the vibrancy of high streets that are under pressure from some of the multiples is also down to niche independents? Allowing niche independents to thrive and grow is vital.
Richard Harrington
My hon. Friend makes a good point, and I would expect nothing less. Independents are very much part of the story, and they are necessary, but large companies developing real estate and operating shops create massive employment, massive taxation and a massive contribution to urban regeneration, although that takes nothing from the validity of my hon. Friend’s point.
Things have changed. Everyone knows that in the past, apart from the high street, most towns had parades of shops. The developers of the masses of residential areas across London and the home counties from the time trains opened up those places would, for every few hundred houses, build a parade of shops that included a fruiterer, a greengrocer, a fishmonger, a general grocer and so on. Various things in the cycle, certainly in my lifetime, have kept those parades going.
I remember when the supermarkets started to take hold and some of those shops became empty and were replaced by banks, which were opening chains of local branches. It is hard to imagine now, but there was a big fight for which bank could get there first. Then there were estate agents. Again, if there was a spare unit, people would open an estate agency. There always seemed to be something, but that is not the case now.
With the internet there is less demand for individual units. There is plenty of supply, because, in many cases, the units were built before the second world war, if not before the first world war.
Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Gentleman on securing the debate.
One of the changes is that massive supermarkets are also becoming dominant players in the convenience sector and are appearing in every community, rather than simply in out of town or city centre locations. Has the hon. Gentleman reflected on the health, or otherwise, of that for British retail and market diversity in those communities?
Richard Harrington
Yes, I have reflected on that fundamental point. Many hon. Members want to contribute, so I cannot address all aspects of retail. Suffice it to say that although in the past shops appeared, on the surface, to give people much greater choice, if we add the internet and other channels, people have great choice now. I do not completely agree with the hon. Gentleman, but his point is valid.
Many people of my father’s generation came out of the Army with a small amount of money and could never dream of opening a big factory or going into a big form of business, but they were able to use their money to open a market stall, as my father did in Yorkshire. Unfortunately, the Marks and Spencer dream of going from a penny bazaar to a major multinational did not happen in my family, but we ended up with two market stalls. My father’s business doubled in size over 30 years from one market stall to two.
The serious point is that in those days the barriers to entry were low and could be met by people with small savings and an idea. For almost any item of clothing, household goods, luggage or anything that people could think of, there was a place for a niche shop. It is easy to say, “All that has changed. It is now in the hands of Tesco and the other big companies.” I do not quite buy that, although, yes, in the start-up system it is generally true that not many people, for a number of reasons, are opening shops; they are not saying, “I want to sell shoes, so I am going to take a store in Watford high street.”
Even if someone is acceptable as a tenant, they probably cannot afford to pay the rent or the rates. Compared with my father’s generation, there probably is not the same demand for the high street, but that does not include internet start-ups. There are many such examples in my constituency, including the sister of Jenny Reed, who works in my office. Hayley Reed had no business experience, but she set up a shop in her spare room. If I might ruthlessly plug the shop, it is called ProperPresent.com, and is similar to what previous generations would have created in bricks and mortar. The retail sector, albeit differently, still allows for start-ups and for choices that fit people’s modern lifestyle.
Mr Robin Walker (Worcester) (Con)
I congratulate my hon. Friend on securing this hugely important debate, and I support his point. The coming changes in technology represent enormous challenges and opportunities for retail. Does he agree, therefore, that it is important that the Government take a long, hard look at the changes taking place in the sector and the policies that we need to implement to maximise employment opportunities? Does he welcome the news that the Select Committee on Business, Innovation and Skills has recently agreed to launch an inquiry into the changes that are taking place in the retail sector?
Richard Harrington
I more than welcome the inquiry. It shows that retailing is being treated seriously as an industry in its own right, rather than as just a mechanical part of the distribution chain. It contributes as much as manufacturing and other sectors. I warmly endorse what my hon. Friend says.
The ultimate answer to the question of choice in retail is whether the public are given a better service today. I argue that they certainly are. When I worked at Trewins, which was John Lewis in 1980, we shut on Saturday at lunch time, on Sunday and on Monday. Now the equivalent—the Intu shopping centre, formerly known as the Harlequin, in Watford—is, for better or for worse, open every day. People have the choice to shop all the hours they want. Similarly, from the small independent point of view, although I agree that the butcher, the baker and the candlestick maker are not there, the internet gives the public a huge amount of choice and very good service. Although the developments in the retail trade are muted in people’s minds by the shops, chains and household names that have closed down, the public are given a much better service.
We need only look at the effect on the economy. Again, to be parochial, the main shopping centre in Watford replaced a sprawling mix of businesses, including the smallest abattoir left in England, an old Sainsbury’s branch and lots of different warehouses. For the past 20 years, the main shopping centre has had 147 stores, but the important thing is that it directly employs more than 4,000 people, plus the distribution chain and all the businesses in it. The shopping centre contributes about £14.5 million in business rates, which is a tremendous amount. It has about 750,000 square feet of infrastructure, and has upgraded that whole part of town.
I am not saying that there have not been consequences. It would be wrong of me to say that things are all one-way and all about prosperity; I am aware of the effect that shopping centres have on other things, but they are economic powerhouses in their own right. By any standards, the shopping centre is a big business, employs a lot of people and contributes a lot to the economy.
Similarly, nationally, companies such as Westfield have come from abroad to invest significant amounts of money in what it sounds trendier to call “urban regeneration” than “retail”. The east end, White City and other places throughout the country are major, long-term investment projects. Westfield has invested about £3.5 billion since it came to the UK in 2000, and created 25,000 jobs. If it were another kind of business and that sort of growth were announced over 10 years, there would be headlines all over the place.
Although I accept that retail is not the total answer to our economic problems, we must accept what it does for employment, infrastructure and areas where the rest of the private sector and the public sector have failed completely. It is a significant and serious business, and its problems must be considered by Government. I am delighted to see the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon) in the Chamber; I know that he is experienced in this subject. Government must turn their mind to retail, because it is such a significant employer and a significant contributor to the national economy.
Jessica Lee (Erewash) (Con)
I thank my hon. Friend for giving way and congratulate him on securing the debate. The issue of employment has been raised, but does he agree that apprenticeships are another of retail’s valuable contributions? Sectors such as retail and catering offer important apprenticeships. They certainly do in Erewash. I recently visited Anderson’s on the High street, an independent coffee shop and caterers offering apprenticeships. Next week is national apprenticeship week. It is another important aspect of this debate that we must not miss.
Richard Harrington
I very much endorse what my hon. Friend says. As I said, it is easy to think of retail as “Open All Hours” with Ronnie Barker or Young Mr Grace appearing and saying “You’ve all done very well”, but shops invest a lot of money in training staff, and they know that a lot of their capital assets lie in the skills of those staff. Retail used to be minimum-wage drudge work, but it is fair to say, despite my lack of success in the John Lewis hierarchy, that now the management teams in some retail firms are comparable with almost anything else in this country, and the work starts from apprenticeship level. I totally agree.
However, there are some industry issues that we need to consider, and I will speak of them as I perceive them; I am not in any way a spokesperson for the industry, but I have tried to observe it and take all things into consideration. Business rates are a significant issue. In many cases, they are a more important overhead than rent. I believe that the industry contributes just short of £24 billion a year in business rates. That is a direct contribution to the local and national economy, and it is a serious amount.
The way that rates are linked to the retail prices index means that average shop rates have more or less doubled in the past 20 years. As most other valuations in the Government system these days are being linked to the consumer prices index rather than the RPI, that seems a little unfair. The industry’s greatest disappointment, which seems to have merit, is that there was talk of a fundamental revaluation that would remove many of the anomalies in the system, but it has now been postponed. It seems to me that there is a legitimate argument that in the interim, until the system is properly reviewed, rises should be limited by linking rates to CPI instead of RPI.
Gloria De Piero (Ashfield) (Lab)
I agree that business rates are crucial. I also think that we cannot divorce this debate from the general economic climate. Towards the end of last year, Ashfield lost its two Jonathan James shops. One of them, in Eastwood, has now been replaced by the Money Shop, a payday lender. Does the hon. Gentleman agree that what is crucial to this debate and to what our high streets look like is growth in the economy, not in payday loan companies?
Richard Harrington
I do not think that point is relevant in this particular case. As far as retailing is concerned, a payday loan company, provided that it is legal and proper in all that it carries out—I accept that there is a different issue—employs people in much the same way as a shop with the same number of staff. That is not to take away from the hon. Lady’s point, but from a retail perspective, it is important to realise that like traditional retailers, all those companies employ a lot of people and in that respect contribute a lot to the local economy, which is the subject of the debate.
Rates are an important issue to which the Government must turn their thoughts. The planning side of things is also important. The national planning framework, which I thought was absolutely excellent, gives a lot of emphasis to town centres and their development, but there seems to be no compliance mechanism. It must be remembered that more than 80% of planning applications for retail currently being considered are for out of town rather than in town centres. Given that it is generally agreed that the regeneration of town centres is a good thing, it would be good to have some form of compliance for ensuring that local authorities emphasise it.
We must accept that because there are now fewer functions for retail premises, local parades do not have the “get out of jail free” card that they used to have when new industries and uses would by and large appear. However one looks at high street retailing, there is less demand because of the internet, which has also brought many benefits. The Government’s current policies on relaxing planning rules to allow some units to return to residential use are a good thing and an acceptance of reality. Although one would hope that it was not the case and that some units could be live/work—for residential use at the same time as retail—the fact is that there are a lot of places where, if there is a convenience store, it is very good. I commend the convenience store sector for how it has adapted, notwithstanding the point made by the hon. Member for Chesterfield (Toby Perkins) about the big supermarkets in all their guises, from hypermarkets to convenience stores, doing their best to dominate the market.
There is still a strong and good independent sector in this country, and long may it continue, but that sector will not fill up all the parades of shops and tertiary units, which were built with very good reason. In the case of many of our parents or grandparents—for some hon. Members, their great-grandparents—the husband would be at work and the wife would walk to the shops every day with the baby in the pram and the shopping trolley. The shops had to be nearby, because there was often no public transport and people certainly did not have a car. Most of us accept that has changed, and that planning laws have to change in respect of empty properties; we need both private and social accommodation and some of it could come from surplus retail space.
Paul Uppal (Wolverhampton South West) (Con)
I declare an interest. Like my hon. Friend, I worked in the sector for about 20 years, either as a landlord or a tenant, and I echo his sentiments. The vital issue with retail space, in particular in city centres, is utilising the upper parts: residential conversion is crucial. For far too long, we have been obsessed with the ground-floor unit, almost dismissing the upper part. In continental Europe or other areas, people utilise the upstairs, which provides an alternative use.
Richard Harrington
I wholly endorse what my hon. Friend said.
I finish with two suggestions that might be unpopular with the large commercial sector, the shopping centre providers and commercial landlords. I mentioned many good points about companies such as Westfield and the strong regeneration sector; retail happens to be their product, but they are really redeveloping important parts of our landscape. However, it is almost impossible for independent retailers to get into such units. I am not talking about community efforts, an area for a market with local craftsmen and that type of thing; I am talking about people who are running proper businesses, be they start-ups or just one unit. They cannot get into the shopping centres because of the commercial value of a rent paid by an individual operator to the shareholders, many of which, ultimately, are the pension funds that look after all our pensions; those capital values are very much dependent on having big names in the units. As part of planning, the Government should look at the possibility of allocating to independent retailers a small number of units paying market rent; I am not arguing for any form of subsidy, except the sort that people get to move in, such as fitting out or a rent holiday. A number of shops should be allocated to companies with only one or two stores. That is the only way. It could be part of a general planning permission. I am not specifying half the units, or a quarter, but somehow it has to be realised in the retail sector that small companies and start-ups with capital—properly capitalised, I am not talking about ones that cannot compete from a capital point of view—should be allowed into those main retail centres.
My second suggestion will probably make me extremely unpopular, in particular with my hon. Friend the Member for Wolverhampton South West (Paul Uppal). Although the Government cannot do much about the role of small commercial landlords, those landlords are absolutely deluded about their ability to get the rents they ask. Their mentality is to ask for yesterday’s rent; because a shop was rented out 10 years ago at £40,000, they will keep it empty for three, four or five years under the delusion that they will get the same rent, and notwithstanding the fact that they are paying empty property rates, which I point out to the Minister it is right for them to be doing. If the vast array of small commercial landlords are listening to the debate or reading Hansard tomorrow, which I accept is completely unlikely, I have a suggestion that might help, although it is not the panacea for everything. As MPs, local councillors and people involved in the community, we could persuade small operators to come into some of those empty shops, but landlords asking for a rent that they once got 10 years ago makes it almost impossible.
In summary, retail should be recognised as a modern, vibrant sector, something that this country is good at and which contributes a lot to our national economy. It has to be accepted by Government that retail is up there with manufacturing and all the other businesses that the Government are promoting to help the country, and not, as used to be thought, something that just sucks in imports and is part of the distribution sector.
Sir Alan Meale (in the Chair)
Order. I thank the hon. Gentleman for being short with his time and generous to his colleagues who have made a number of interventions; I think we have had six. Six Members have written to me and I hope they will be called, but there are the two Front-Benchers and seven other people are indicating that they wish to speak, so I need your help to call everyone during the debate. Bearing in mind that most of those who have written in are sitting on the Government side of the Chamber, as are most of the Members attending, I hope that they will help their colleagues.
Ann Coffey (Stockport) (Lab)
I congratulate the hon. Member for Watford (Richard Harrington) on securing this important debate. I agree absolutely with many of his excellent points, which are based on huge experience of the sector.
The retail sector provides jobs for 3 million people nationally and is the UK’s largest private sector employer, accounting for about 10% of all jobs. More than half the people in the retail sector work part time, compared with about a third in other sectors, making it an important source of jobs for people seeking non-standard hours, such as pensioners or those combining work with study, child care or caring responsibilities. Retail is a diverse sector, ranging from market traders to high street giants, or from self-employed start-ups to global companies; they are the face of our high streets. Those high streets, however, are changing, not least because of the impact of the enormous growth in internet sales which, according to figures released this week, have seen a 10.9% increase since February 2012.
The UK is now the global leader for online shopping, and there has also been a dramatic growth in m-commerce —sales over mobile phones—of more than 500% in the past two years. Verdict, the retail analyst, has forecast that almost £1 in every £4 spent online will be through a mobile in 2017. A staggering 73% of smartphone users now use their phones when out shopping. Successful town centres in the future will be those that understand that, and where traditional retailing and leisure converge seamlessly with new technology.
Recent figures show that retail sales are up but that footfall is down, perhaps reflecting changing shopping habits that have led to many empty retail units nationally. It is not entirely helpful to produce a league table of empty shops as a reflection of what may be happening in a particular town, because high streets are going through transition and many councils are looking to use some of the surplus units for other uses, such as residential use. A couple of hon. Members have made that point. That is why a key principle of the Portas pilots was understanding that high streets are not simply collections of shops but public spaces where people can socialise, eat out, access other services and enjoy leisure, arts and cultural activities. I am pleased that Stockport is one of the Portas pilot areas. Our pilot is being led by the creative industries bringing together local people to think up new and innovative ideas.
Stockport is facing the challenge of revitalising a traditional shopping arcade squeezed by competition from nearby centres in Manchester and Trafford Park, and the historic Market place and Underbanks with their empty retail units. We have attracted new retailers, in particular young entrepreneurs, into historic parts of our town. We have a “Vintage Village” market, which takes place every month in the market hall, attracting traders and visitors from throughout the UK. It recently won a prestigious magazine award and has been so successful that the organisers now have a permanent shop in which they rent space to other traders. The fair contributes to the efforts to regenerate the beautifully restored and redeveloped market hall and Market place into the thriving trade hub it has been for 750 years.
We also have the innovative teenage market, which Mary Portas has described as “unique and inspiring”. It was created in 2012 by teenage brothers Joe and Tom Barratt as an event where young people could have a free stall in Stockport market to sell their creative products. It is not only an event but an online television show and an initiative dedicated to supporting young creative talent. It provides a free platform for young painters, fashion designers, jewellery makers, graffiti artists, photographers, graphic designers, bakers, poets, comedians, musicians, singers, dancers and other performers.
Stockport’s famous Plaza, which is a splendid vintage cinema and theatre, has been awarded £20,000 from the Portas pilot initiative towards the cost of installing digital projection equipment. That has enabled the Plaza to start satellite screenings of the National Theatre, the Bolshoi ballet and, later this season, the Glyndebourne opera, alongside community usage for events and film screenings, including old and much-loved classics.
One of Stockport’s difficulties is that it shuts at 5 pm. It needs to develop a night-time economy to compete with nearby towns. Stockport market has a major role to play in enabling the change to a night-time economy. Traditional street markets like that in Stockport must provide better food offers, with specialist stalls, and offer cultural events. It must be seen as not so much a shopping experience but an entertainment experience—a sort of retail theatre.
On market day 750 years ago, families would come with goods to sell and see and experience the sights, smells and sounds of the market, which offered not only fresh produce but entertainment, food and drink and the chance to catch up with fellow townspeople. I believe that such an environment is still hugely attractive, particularly to families, and can provide early-evening entertainment that could kick-start a night-time economy in Stockport.
As chair of the all-party markets group and co-chair of the all-party retail group, I am looking forward to “love your markets week” in April, which will celebrate our historic markets and showcase new and vibrant markets. At the same time, it will offer training opportunities for new traders through the “First Pitch” initiative by the National Federation of Market Traders.
Like other parts of the country, Stockport has many empty shops, and the reality is that many will never again be retail units, but might start a new life as artist’s studios, outlets for council services or residential accommodation. Despite the closure of some retail chains, the issue is clearly not as simple as shoppers deserting the high street for their computer or mobile devices. Recent research has shown that frustration with online shopping is driving some customers back to shops. The market is complex and it is changing fast.
In Stockport, 5,700 people are employed in retail. The jobs are popular and sought-after. During a visit to a local Stockport store last week, I met many long-term staff, including people who had worked there for up to 35 years. They had a lot of commitment, local contacts and knowledge about their products, which all contributed to a friendly and successful store. The company had invested in them and they in turn had an investment in the company.
I was interested that one of the main themes at the British Retail Consortium’s annual reception recently was how to help people to build a career in retail. In a 24/7 environment, there is obviously tremendous pressure to have maximum flexibility from the work force, and many companies are introducing zero or eight-hour contracts to keep costs competitive. I acknowledge that some people may find that attractive, but others will have little alternative.
The problem with short-term contracts is that they are unpredictable, and people have no pension, sick pay or tax credit entitlement. That is clearly difficult for the work force, and I believe that in the long term it will be a problem for employers who will not get in return the sort of commitment they need from staff. In future, because of changes in how people shop, customers will want more service from staff in the information that they provide about goods, as the hon. Member for Watford said. That means that increased investment in skills and training for retail staff will be required, and that is not totally compatible with zero or eight-hour contracts.
Retail is a vibrant and exciting industry with much scope for future success. From market stalls to superstores, whether a trolley-shop in a supermarket or using the latest technology to buy online, the nature of shopping is changing. People no longer want just a shopping experience, and towns such as Stockport will have to be a mix of traditional retail, independent and specialist shops, special markets and cultural events. The challenge is to create a high street that is attractive to 21st-century mobile phone shoppers and also meets the social needs of the community. Combining retail with a place to meet has always been the challenge of the high street through changing times, but I am confident that with proper support the high street will survive, albeit in a new and exciting form.
Mr Marcus Jones (Nuneaton) (Con)
Thank you, Sir Alan, for calling me to speak in this extremely important and pertinent debate. I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing it. It is a pleasure to follow the hon. Member for Stockport (Ann Coffey), who has immense knowledge of the subject, and has made a good pitch for what she thinks should be the future of our town centres.
There is no doubt that our retail sector is undergoing a fundamental and lasting structural change, and that the full force of the internet is being felt. In the past few months, HMV, Jessops and Blockbuster, to name a few companies that once had a successful business model, have succumbed quickly as their business model, overtaken by the pace of change in technology, has become obsolete. Traditional retailing is being eroded and is likely to give way to e-retailing.
Destination retailing is joining e-retailing as the focus for many of our multiple chains. It is said in retail that the customer is king, and it is impossible to stem the tide of what is happening. I am chairman of the all-party town centres group, and I think it is important to manage that fundamental change in our town centres and high streets. That is what I want to speak about today. We must look carefully in many areas at how we manage the change because many things need to be done. I want to focus on three issues.
The first issue is business taxation. Rents are falling in many small and medium town centres, but business rates, which are one of the greatest costs for retail businesses, are not following that pattern. I understand why the Government may not want a business rate revaluation at the moment, but the Minister and my right hon. and hon. Friends in the Treasury should consider freezing business rates in the forthcoming Budget, to give a fighting chance to small businesses in our town centres that might not benefit from small business rate relief.
Toby Perkins
I commend the hon. Gentleman for his comments about business rates. There is no question but that the issue is significant. He seems to be calling for the Government to forgo expected income to invest in the future, which is the Labour party’s economic strategy, so is the hon. Gentleman coming on board?
Mr Jones
I thank the hon. Gentleman for his comments. If my right hon. Friend the Chancellor sought to freeze business rates, I would expect him to do so in a way that balances the books. It is certainly not the Conservative-led Government’s policy to do things that impact further on the deficit. The hon. Gentleman and the Labour party are advocating an increase in the deficit instead of reducing it as the Government are doing.
Mr Robin Walker
My hon. Friend is making an excellent point. Before he moves on from business rates, does he agree that we inherited with the terrible deficit from the last Government a huge backlog of appeals against business rate decisions in the Valuation Office Agency? That continues to be a problem. Will he join me in urging the Treasury to do everything it can to clear that backlog, and to recognise that that shows that there is a real issue with the valuation and revaluation process?
Mr Jones
I thank my hon. Friend for that comment. I would certainly join him in calling for that. Many businesses in my constituency have contacted me on that very point.
Let me move quickly on, because other Members want to speak. The second issue that is vital to managing the transition in our town centres is car parking and particularly short-stay car parking charges. Car parking charges are a tax on our town centres; they very much detract from them and lead people to look for alternative shopping destinations. There are a number of things we could do about that. First, the Government could work more with local authorities and even incentivise them to reduce car parking charges. Secondly, I would like them, perhaps through the Department for Communities and Local Government or town teams, to work with local businesses, local authorities and private car parking firms to see how we can develop systems to incentivise shoppers. For example, we could, in partnership with retailers, put in place systems that took a certain amount off the customer’s car parking charge for every purchase they made. Utilising such a system could help some of our small and medium-sized town centres.
The third issue is regulation. I would like the Minister to advocate to every Department the idea that any unnecessary regulation that has an impact on our town centres and high streets should be completely resisted. A classic example is the proposed EU harmonisation of permitted vitamin and mineral levels in food supplements. My right hon. Friend the Health Secretary is alive to this issue, and he is trying to resist the EU’s directive, which could impact on our town centres and high streets. The industry thinks that 4,000 jobs could be lost if the directive is implemented, and many of them would be in small health food shops and in health food chains across the country.
To sum up, we cannot ignore structural change, and the Government are hard-pressed in terms of what they can do, but they can make a difference in the three areas I have identified. There are ways in which they can help to manage structural change, and I look forward to hearing what the Minister has to tell us about how the Government can help at this difficult time for our retailers.
Gavin Barwell (Croydon Central) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I join hon. Members in congratulating my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. I want to focus on high street retail. I beg Members’ forgiveness because I want to be fairly parochial and to talk about the challenges and opportunities facing my home town.
Croydon used to be one of the top 10 retail centres in the country, but it has been in relative decline for 20 to 30 years. It might help colleagues if I examine the things that led to that decline. The first is the mismanagement of parking policy. I do not wish to make a particularly strong party political point, but the previous Labour-controlled council sold the multi-storey car parks to NCP. I am not arguing about whether there is a problem with their being in private ownership, but the council took no control over subsequent parking prices. Prices have gone through the roof, so many people no longer come to Croydon to shop.
In the 1980s, the previous Conservative Government made a mistake on out-of-town planning policy. In Croydon, there have been major developments along the Purley Way, which drew people away from the town centre.
There are also issues about how the council has managed the public space in our town centre over a number of years. We have two covered shopping centres, and the main pedestrianised road—North End—goes between them. There are issues about people feeling safe when they come into the centre. There are issues about aggressive charity collections. The area is meant to be pedestrianised, but there is fairly regular vehicle access so that things can be delivered to shops. There are lots of people playing music, but that is poorly controlled, not well structured or organised. There are therefore issues about the quality of the public realm. There is also the general problem Croydon faces with its overall reputation and brand.
However, Croydon has just had the most incredible news. Westfield and Hammerson—two of the top retail developers in the country—have formed a joint venture, with a plan to invest £1 billion in our town over the next three years. That is game changing for my home town; it is the best news we have had in my adult life. The aim is to make Croydon one of five retail destinations in London. We have the west end, Westfield London to the west, Westfield Stratford to the east and Brent Cross to the north, and Croydon will become the destination for south London. That will, I hope, bring some of the big brands, such as John Lewis and Apple, which we are missing at the moment. That is the key to then having the independent shops that everybody wants. Those independents will exist only if we get sufficient footfall to support them, and that comes from the big brands.
The scheme will create thousands of jobs. One thing I hope the council will do as part of the planning permission is try to ensure that as many construction and subsequent retail jobs as possible go to local people. I hope that Westfield and Hammerson take control of parking provision so that we can have sensible parking prices. I am a great believer in public transport, and I want improved public transport access so that those who can come by public transport do. However, the reality is that when some people go shopping—particularly if they buy a lot—they want to take their car. If our parking policy penalises them for doing that, we will be shooting ourselves in the foot.
I also want to make a point about mixed use. The development scheme is not just a retail transformation; it will provide hundreds of new homes and leisure opportunities. We want Croydon’s major town centre to be an active destination not just during shopping hours but pretty much around the clock.
The scheme will not just be good on its own terms, but catalyse other development around the town centre. A number of schemes have been consented, but they are not being developed, because of the current economic climate. The new scheme will clearly bring them closer to fruition.
The scheme will be an important first step in transforming Croydon’s reputation, along with the Mayor’s policing plan, which will address the long-term under-resourcing of policing in Croydon, giving us 117 extra officers by 2015. There is also the money the Government and the Mayor generously gave us in response to the riots, which will be used to transform the public realm in the town centre. That really is great news.
I am conscious that others want to speak, and I do not want to talk for too long about my own parochial concerns, so I will mention just three other things. First, I would like the Minister to pass on to his colleagues the idea that, if we are to realise the full potential of the extra jobs that are created, we will require some transport infrastructure improvements. We need to ensure that we have better connectivity between Croydon town centre and the motorway network through the A23. We also need to improve capacity on the trams at East Croydon station. The Mayor will have to foot the bill for a significant chunk of that, and so will the developers as part of the planning process. We may well want to talk to the Chancellor about the jobs that could be created with a relatively small additional investment.
I also want to talk about the Portas pilots. The centre of Croydon is too big for the Portas pilots, but we have one connected with our historic market in Surrey street. One real issue is how we connect the new retail destination with that market so that it reinvigorates that great destination.
Let me emphasise that the residents of Croydon want this scheme to be an urban regeneration scheme, not a box full of all the big brand names that is plonked down on them. They want a scheme that better connects our town centre and that ensures that Surrey street and London road, in the constituency of the hon. Member for Croydon North (Steve Reed), which took such a hammering in the riots, benefit from being adjacent to the area that is redeveloped. They want much better connectivity with our key gateways at East Croydon and West Croydon.
Finally, I want to plug the idea of business improvement districts. We had a vote in Croydon a few years ago. There was strong support from all the major business rate payers for paying a bit more in business rates, as long as they had control over how the money was spent. They have invested in additional policing, improved cleaning and some really great events, which have drawn people back into the town centre.
My constituents are passionate about their home town. They have been put off going there by its image, concerns about safety and parking prices that are too high. On the horizon, we now have a potentially transformative scheme, and I wanted to put on record my strong support for it. There are some real lessons to be learned from what has happened to Croydon and what will be done to put that right, and those lessons are relevant to many other town centres around the country.
Sir Alan Meale (in the Chair)
Order. Thank you very much, Mr Barwell. I am going to call the Front-Bench spokesmen at 3.40 pm. That leaves about 20 minutes, and four people have indicated that they wish to speak, three of whom wrote in. I also need to leave a couple of minutes at the end for the hon. Member for Watford, who introduced the debate, to summarise what he thinks of it. It is down to Members on the Government side of the Chamber whether they help each other out.
David Rutley (Macclesfield) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I join other hon. Members in congratulating my hon. Friend the Member for Watford (Richard Harrington) on obtaining the debate, which is important.
I must declare an interest. My first job, when I was at school, was at the local greengrocer’s. I can make a fantastic stack of oranges and apples if given the opportunity, but time is probably too pressing. I also spent many years as a senior executive for major retailers—Safeway and Asda. While I was at Asda I was fortunate enough to move the business on, in its involvement with financial services, and to run its e-commerce and home shopping business.
It was incredible to see the degree of trust that people put into big retail brands, which was such that when the tsunami struck in December 2004 our website was almost crashed by the number of people who wanted to come to the retailer to work out how to respond to the challenge on the other side of the world. The retailers need to support that trust fully, and each needs to build a relationship with its customers. To do that, retailers must be better at adapting and more flexible in how they tackle the challenges and conditions around them. Let us not forget that Tesco started as a market stall, and is now taking on great media companies and trying to deliver movies and a cinema experience for people in their front room, at a click of a button, on their smart TV.
Retailers must be more responsible and more responsive to conditions in the marketplace. That means that they must embrace all the channels that are available to them. Too many have been too focused on bricks and mortar and have not thought about the opportunity that comes through the click of a mouse or, perhaps more importantly, about the integration of channels and how to appeal to changing customer needs across those channels. For example, the British Museum has a small physical retail presence, but a multi-million pound website with appeal across the world. In Macclesfield there is a fantastic business called musicMagpie, which some hon. Members will be familiar with. It engages not only in e-commerce, but in re-commerce. It recycles DVDs, CDs and computer games, selling them on through multiple channels including the high street. That recycling fits the need for greater sustainability and suits our times of challenging economics. We need to help retailers to realise that they must be more responsive.
Several hon. Members have highlighted the need for more flexible use of physical space by traditional retailers. That means that planning authorities need to think more creatively. A space that has had a certain use in the past need not in the future be linked to retail, but could be linked to residential or other uses, as my near neighbour the hon. Member for Stockport (Ann Coffey) said. That process—making the use of space more flexible—is vital, and it is something for landlords, not just councils and planning authorities, to engage in. Too often their expectations are far too high, as my hon. Friend the Member for Watford said.
It is easy to try to get rates lowered, but it is also vital for retailers to think more effectively about how they engage the community. We were not able to become a Portas pilot—we wish Stockport well—but despite that we moved on to work out what else we could do. We created a forum called “Make it Macclesfield”, which is the town’s new brand identity, and there is a town team. We have brought life back to the historic Barnaby festival, celebrating the fact that we used to be the world’s leading producer of finished silk. Each month there is the Treacle market, which brings more people to the marketplace on a Sunday afternoon than we normally see on a Saturday morning. Winterfest and other events and community programmes bring countless more people in. We have created a plan for the whole town: we must consider the whole town, and not just retail. There is a plan for the silk quarter, to celebrate our silk heritage, for the heritage quarter, to celebrate our independent retailers, and for the marketplace, to bring everything together and enable the town to thrive and flourish flexibly.
There are challenges on the horizon, but the future may be brighter than the cynics believe if we can help retailers to be more responsive, use space more flexibly and get communities to engage better in the task of bringing town centres to life.
Peter Aldous (Waveney) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. Like other hon. Members I am grateful to my hon. Friend the Member for Watford (Richard Harrington) for securing the debate, which comes at an opportune time, two weeks before the Chancellor is to deliver the Budget.
The retail sector, as we have heard, is a vital component of the UK economy. At present, the sector faces challenges, which it is important for us to address. I shall concentrate my remarks on the high street, which some pundits have written off, but which I passionately believe still has an important role, not just as an engine of economic growth but as a focus for communities and leisure activities. I shall comment particularly on business rates and the unfair burden that retailers must carry, paying 28% of all business rates despite accounting for only 5% of the economy.
Lowestoft, in my constituency, is a Portas pilot town. The town team is putting in place a range of initiatives to create the sense of place that we need to get back to. They include mentoring small businesses, the introduction of town rangers, the hosting of musical and cultural events and the creation of a voucher discount scheme for those who shop in the town centre. Such initiatives provide high streets and towns with an opportunity, but it is important for traders and retailers to be able to compete on a level playing field with out-of-town stores and internet operators. Sadly, at present, the business rates burden means that they cannot do that. In the past two years business rates have increased in line with the retail prices index, by 4.6% and 5.6%. The increase in 2012 meant that retailers had to find a further £350 million in taxes when trading conditions were particularly challenging. At a time of falling disposable income and low levels of bank lending to small businesses, business rates are unsustainable.
I urge the Government to consider various measures, and I will be interested in the comments of my right hon. Friend the Minister. First, the Government should review the mechanism for increasing business rates annually. Instead of making increases in line with RPI based on a particular month, in which there may be a spike in inflation, they should use an annual average consumer prices index rate, subject to a 2% cap, in line with the Government’s inflation target.
Secondly, the Government have decided, as we know, to defer the revaluation that was due in April, with the new list that was due to come into operation in 2015. I question the merit of keeping a rating list based on rental values from April 2008, when the property market was at an artificially unsustainable level. The Government have said that the reason for the delay is that the result of a revaluation would be more losers than winners, and that the centre of London would benefit to the tune of £440 million, which might not be palatable to the rest of the country. However, the evidence that I have seen shows that retailers in many provincial towns will be penalised by the delaying of the review. I urge the Government to introduce measures to reduce that burden.
My third point is that there is a need to address the inherent unfairness of the current system, which favours out of town development at the expense of town centre shops. Out of town car parks are not subject to business rates, as long as they are free for customers’ use. As those locations compete with the town centre, where shoppers must invariably pay for their parking, the financial incentives are effectively the wrong way round. Consideration should be given to raising business rates on out-of-town developments and investing the money in town centre regeneration schemes.
Fourthly, the Localism Act 2011 introduced welcome new powers for local authorities to provide discretionary rate relief, which can be used to incentivise new investment in the high street and in shopping parades. However, to ensure widespread take-up of the relief, more funding is needed for councils to deliver it. It is important that the Government develop a mechanism for local authorities to fund discretionary rate relief through those new powers.
Finally, I urge the Government to conduct a full review of the means by which business rates are set. The rise of the internet means that retailers who trade from high street and mall shops are unfairly penalised when competing against rivals that sell exclusively online. Let me provide the example of a book retailer. A national bookshop company may have a chain of shops for which it is paying rents in excess of £100 to £150 per square foot, on which its rates are based. In contrast, their internet competitor will have one—albeit very large—warehouse in the middle of the country, where the rent may be to the order of £4 to £5 per square foot. It is important that business taxation properly reflects the underlying profitability of a business.
I know that the Treasury—whatever parties may be in power—rather likes business rates. They are easy to collect, difficult to avoid and highly productive, generating 5% of the UK’s tax bill. However, I submit that the system is no longer fit for purpose. If we carry on as we are, the future of British retailers is at best uncertain, and I urge the Minister and the Government to carry out a full root-and-branch reform.
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I, too, congratulate my hon. Friend the hon. Member for Watford (Richard Harrington) on securing the debate. I will try and curtail my remarks to allow other speakers in.
Prior to arriving in the House, I spent 15 years as a Conservative party agent but before that, I spent 15 years in the retail trade. I worked, as it happens, for a small, family-run business that is still trading—successfully trading, I would add—so it is important to note that small, independent, family businesses can survive the onslaught of the big multiples. The retailer that I worked for was in the electrical retail trade, so it could say, in relation to Comet, for example, that it has seen off its competitor.
I do not want to dwell too much on statistics, but in preparing for the debate, I came across research by PricewaterhouseCoopers and the Local Data Company, indicating that retailers with more than six stores are closing shops at a rate of 28 a day, and that there are 35,500 empty shop units in the UK—a national vacancy rate of just over 14%. Clearly, the financial situation is not favourable at the moment and retailers are finding it exceptionally difficult. The Government have done a great deal over the past couple of years on changing planning procedures. In that respect, they have helped by making change of use easier, and I am sure that some provisions in the Growth and Infrastructure Bill will also be beneficial.
However, the high street does not only require planning laws and deregulation. As has been mentioned by previous speakers—in particular my hon. Friend the Member for Waveney (Peter Aldous)—we must have a level playing field for high streets, out-of-town stores and online retailers, if the high street is to survive in anything like its current state. I would be reluctant to add additional burdens to existing businesses. I would rather look at reducing them, but we must look at evening up the difficulties. Business rates, as has been mentioned, are a particular burden on small shops. We have to acknowledge that, and I sincerely hope that the Government are looking at possible changes to taxation, business rates, and so on, which will level the playing field.
In my constituency, there are three major towns. Barton-upon-Humber, which is a relatively small market town, has a very good retail mix, with thriving local shops that seem to be able to co-exist with the local Tesco. In Immingham, they are desperate for Tesco to arrive, because that will switch the engine on for local regeneration schemes. Planning permission has been given, and that highlights the fact that out-of-town stores or incoming supermarkets can regenerate existing towns. Immingham is particularly unfortunate in that it has a very run-down shopping centre, and people are desperate for the arrival of the supermarket. In Cleethorpes, St Peter’s avenue and Sea View street are littered, as it were, with independent retailers. People can get everything from a cup of coffee and a sandwich to furniture, jewellery, and so on, and there are all the usual stores that used to make up every high street, such as the butcher, the baker and the fishmonger. There are models across the country of thriving high streets where, occasionally, some of the larger chains are mixed in.
The Portas pilots have been mentioned, and although I welcome the aims and objectives of the Portas review, I have reservations about some proposals. Obviously, I welcome the fact that the Government have taken on board the celebrity status of Mary Portas and used her to promote schemes that will help to regenerate high streets. Going back to the time when I was a Conservative party agent, our office was in Market Rasen on the high street, which is now a Portas pilot, but the fact that that office has closed and become a tattoo parlour may not help the Mary Portas scheme.
Some of the proposals are a little too simplistic. As a local councillor in north-east Lincolnshire, I was a member of the town team, which was mainly concerned with the Grimsby town centre, which serves Cleethorpes, Immingham and Grimsby, and we worked tremendously hard. We had a local businessman who had a lot of energy and enthusiasm, but we must recognise that the local council is a key element of any successful high street. It deals with traffic regulations, parking pricing regimes, and so on. North East Lincolnshire council, when I was the portfolio holder, had an income of £1.25 million from its parking charges. We cannot cast that out of the council’s budget and assume that it will provide the same services. Last week my hon. Friend the Minister was in Scunthorpe, which is part of North Lincolnshire council and has a very successful parking scheme that benefits local shopkeepers. It can be done, but I urge Members not to think that it is as easy as can be.
Finally, as has been mentioned, every town in the country has far too many empty retail shop units. We need urgent Government help to regenerate those and bring them into residential use.
Sir Alan Meale (in the Chair)
I have one Back-Bench speaker left to fit in. I hope you will be able to confine your remarks to three or four minutes—I call Caroline Dinenage.
Caroline Dinenage (Gosport) (Con)
Thank you, Sir Alan. I will speak really fast, and I apologise to anybody who cannot keep up with me. I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. I also have a background in retail; my first job was at Marks and Spencer when I was 16, and I am still very good at packing groceries.
The debate takes place against a backdrop of record profits for some retailers such as John Lewis and Primark, while we have seen others disappearing over the past few years. On one hand, the growth of internet shopping does not help high-street retailers, because it results in redundancies, and it does not even always result in the same levels of corporation or income tax being paid, as we have seen with some high-profile online retailers. In the modern world, however, we have to realise that online shopping is here to stay, because people will not want to give up the luxury of shopping from their armchairs. It is important that we look at the pros and cons of the move online, including the fact that Britain is at the forefront of e-retailing and provides unique opportunities for kitchen-table entrepreneurs. There is no doubt, however, that it is changing the face of our high streets and threatening jobs in an industry that employs 4 million people.
However, we see success where things have come full circle and people are getting on our high streets things that the internet did not provide for them. I am talking about opportunities to see and touch things and to try on clothes and accessories that they might previously have bought on eBay, and without the hassle of waiting for delivery. That is what a shop in my constituency is providing, and as a result it has smashed its first-year growth targets.
There is also an increasing trend of retailers who started on the internet and now want to dip their toes in the waters of shop trading. Markets offer a great opportunity for them to do that, as do pop-up shops— small spaces that people can use for a couple of weeks and with low overheads—which the Department for Communities and Local Government has been trying and testing.
Given that retail represents about 11 % of the economy but accounts for 32% of business rates, the burden of taxation on the sector is a major issue. The overheads of retail outlets are a huge disincentive, so reform of business rates is desperately needed, and I hope that there will be good news on that in the Budget.
The importance of regenerating the retail sector cannot be overstated. The industry is responsible for nearly 15% of total employment and is crucial to the resurgence of our local economies. It is just as vital to our national economy, generating almost 11% of GDP if we include wholesale. Business, like life, is not plain sailing, but the fact that retailers are continuing to do well is testament to the hard work and support of communities and shopkeepers. I hope that they will be supported by the Government as well.
Sir Alan Meale (in the Chair)
I thank the hon. Lady for an extremely full and helpful speech.
Toby Perkins (Chesterfield) (Lab)
As colleagues have said, it is a tremendous pleasure to serve under your chairmanship, Sir Alan. This is one of those rare occasions when Chesterfield is under Mansfield. That has not happened in the football leagues for many years. None the less, it is a tremendous pleasure.
I congratulate the hon. Member for Watford (Richard Harrington) not only on securing the debate, but on the contribution that he made to it. It was very important that we got this debate, as the contributions that we have heard and the interest that we have seen from so many colleagues have shown.
I would like to reflect particularly on the point that the hon. Member for Watford made about the importance of the retail sector as an employer of apprentices. He reflected on his own background as a graduate trainee at John Lewis and how that may have given him skills that he subsequently took forward in order to set up his own business. That is one of the things that can happen and it is vital for the UK economy. He also argued that consumer choice is wide, albeit different from how it looked previously. That is a question to which I shall return.
My hon. Friend the Member for Stockport (Ann Coffey) reflected on the significance of retail’s contribution to UK GDP and employment, and on the measures taken in Stockport to make alternative use of retail units. That was a very important point.
The hon. Member for Nuneaton (Mr Jones) tantalised us by suggesting that he might be able to come up with a freeze on business rates, which he and many other hon. Members were calling for in different ways, on a cost-neutral basis. I am sure that if there is a way in which that can be done, he will have huge support on both sides of the House. He also reflected on the potential for Government to incentivise councils, which we all know are incredibly hard-pressed at the moment, to reduce the level of parking costs. We all recognise that parking is a barrier in town centres. Again, it sounded slightly like a spending commitment, but perhaps it was not. If something could be done in that respect, that would be very important.
The hon. Member for Croydon Central (Gavin Barwell) reflected on great news for Croydon—the big development that is happening there—and on the success of business improvement districts. The hon. Member for Waveney (Peter Aldous) was critical of the disproportionate level of business rates and called for reform of the whole system.
The hon. Member for Cleethorpes (Martin Vickers) reflected on how, after 15 years on the straight and narrow in retail, he wasted the next 15 years of his life in the service of the Conservative party, but he did hold out a glimmer of hope that Conservative offices are now being closed down and turned into tattoo parlours. As a growth policy, that is not the worst I have heard.
Martin Vickers
I must intervene just to inform the hon. Gentleman that the Conservative office moved to make way for the tattoo parlour.
Toby Perkins
Like so much that we have heard from those on the Government Benches, it was not quite as good as it originally sounded. None the less, it is an idea to consider. More seriously, the hon. Member for Cleethorpes also revealed statistics that graphically exposed the challenges facing our retail sector.
The hon. Member for Gosport (Caroline Dinenage) reflected, at amazing speed, on her own background in retail and the importance of the retail sector in her constituency and more broadly.
We are all conscious of the pressure on the retail sector at this time. We have seen some very high-profile failures on the high street in the past few months. The lesson from those failures is that businesses that do not modernise—that do not harness the power of the internet and take the opportunities that are available out there—simply will not continue to succeed.
We all want to see a diverse offering on the high street. We need to consider how the power of Government can be used to support small businesses to strengthen their internet presence. With regard to the reduction in business support that is out there, anything that we can do to support small businesses to harness that power would be tremendously important. With that principle in mind, my hon. Friend the Member for Streatham (Mr Umunna) has launched Small Business Saturday, copying an idea that is already successful in America. Many Labour local authorities are involved, and I hope that local authorities of all political persuasions will sign up to have a Small Business Saturday identified every year on which local authorities and the local small business sector can work together to encourage people to shop locally. Local authorities are coming up with very innovative ideas to promote their local small businesses.
In Chesterfield, where I am the Member of Parliament, we have a tremendous retail offer. We have a huge market. We have a market festival, which has brought a lot of publicity. It supports not only our retail offer, but our tourism offer. However, an issue that we have had in Chesterfield and that I touched on earlier is the massive emergence of the big supermarkets and particularly Tesco in the convenience store sector. We already have a huge Tesco Extra store. We have a Tesco petrol station and convenience store on Newbold road. We have a supermarket in the town centre. We have a Tesco that has moved into the former Angel pub on Derby road. There is a Tesco moving into the White Horse at Old Whittington, and there are now plans for a Tesco at the site of the Crispin Inn on Ashgate road. That will be six in one town. People in Chesterfield have been calling it Tesco Town and are very concerned that the offer available is far too limited.
I recently met with Tesco. When I asked whether it felt that six stores was going to be enough, I was told, “No, not nearly. We think there’s going to be loads more growth in Chesterfield and we see a lot more opportunities right across the country for many more of these Tesco stores in the convenience sector.”
I am not anti-Tesco, but I do think that something radical is happening that has the power to change dramatically our communities and the diversity of food on offer. I do not think that we have really stopped to think about whether we want that to happen. It is important that we have a debate about what we want the convenience sector to look like. Are we happy for all food shopping to be in the hands of three or four major retailers, or do we want to say something about that? Are there things that we can do through the planning system to ensure that local authorities have the opportunity to say, “No, this is not what we want in our area”? This is not just about Tesco. Sainsbury’s, Morrisons and Asda are also moving into the convenience store sector. Those stores provide very good value and are popular among consumers, and we do not want to stop people having the right to shop where they want, but it is a debate that we need to have and an area that we need to think about.
This debate is incredibly important. The Portas review was a tremendously useful piece of work. What Mary Portas identified in her work was that planning and regulation, if they are done correctly, can boost and support the diversity of the retail offer, rather than necessarily always being a barrier. We need to get the right balance between planning controls that give local authorities and communities the opportunity to say what they want, and giving businesses the freedom to operate in the way they want. There is a fine balance. It is not always true that less regulation is good and more regulation is bad, but good regulation is important and ill-thought-out regulation is problematic. I congratulate the hon. Member for Watford on securing the debate and I congratulate everyone who has spoken on contributing so well to it. I look forward to hearing the Minister’s contribution.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
Thank you, Sir Alan, for enabling at least nine other Members to contribute to this important debate. All the points made today will be digested, and I will ensure that I reply to particular points later if I cannot do so directly in the remaining minutes of the debate.
I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. He almost apologised for being parochial, but there is nothing parochial about the retail sector. It is our largest private sector employer, employing one in nine of the workforce. It is a £300 billion industry and the end point of many supply chains. As we have heard, retail plays a vital role in the national economy, local economies and communities, and the Government fully recognise that.
I also congratulate my hon. Friend on what he has done to ensure a healthy future for the heart of Watford. I hope the senior management at John Lewis fully appreciate that their loss is Watford’s, and indeed Westminster’s, gain. I know how important retail is to his constituency. Watford was one of 100 towns sharing the £10 million high street innovation fund, which is contributing to the widespread regeneration and revitalisation projects that are under way.
As we have heard, retail is a diverse sector in the size and structure of businesses, what retailers sell and to whom, and where and how retailers operate. From micro-businesses to international players and from high-end luxury to providing for our daily needs, it is a lively, competitive and innovative industry. There are some outstanding success stories of competitive retailers operating here and in international markets. Conversely, many smaller retailers are battling to survive—we have all seen the reports.
A high street or town centre needs a thriving and diverse retail sector, and retail needs thriving town centres, but as we have heard today, the town centre is no longer just about shopping—it is about eating and drinking, entertainment, services and culture. Successful towns know that and nurture it. Because retail is so important, it was chosen as one of the first sectors to be the subject of a growth review and was the first theme chosen for the red tape challenge. The initiatives identified several barriers to retail performance and growth, which we are addressing. We are delivering measures to support retail, including doubling small business rate relief for three and a half years to help small shops and making it easier for small firms to claim. More than 500,000 businesses in England are expected to benefit, with about 300,000 paying no rates at all.
We are focusing retail development in town centres through the “town centre first” planning policy; changing planning rules to allow councils to provide more parking spaces in town centres; and issuing guidance encouraging councils to set competitive parking charges. We are also working with the retail sector to develop the retail strategy, published last September, which focuses on what we can do at national, local and European level while avoiding market distortions. That includes reducing the burdens of regulatory compliance through better inspection and performance and helping to understand and analyse town centre performance.
As we have heard today, we cannot discuss retail without talking about help for high streets and town centres, especially where there are empty shops. Many hon. Members have spoken about empty shops in their high streets and town centres and will know the impact that closures have had on retail employees and their families. To alleviate some of the problems that causes, new planning measures introduced in January will ensure that empty shops and offices can be swiftly converted into much-needed housing. That will help town centres by increasing footfall and providing badly needed homes for local people.
The Government have always recognised that high streets are important for communities and growth, which is why we commissioned Mary Portas to carry out her review of the high street. We published our response to the review last year, accepting nearly all the recommendations, and we are going further with the Portas-plus package, designed to revive ailing high streets. We have doubled the number of Portas pilots—there are now 27—and announced a £10 million high street innovation fund, which is benefiting Watford. We received 55 nominations for the £1 million future high street X-fund, which will make awards to locations delivering the most creative and effective schemes for revitalising their high streets. Winners will be announced in March.
In October, we announced support for over 300 towns that had come forward to be town team partners. They are receiving funding, plus a package of support through the Association of Town and City Management. We will publish a further response to the Portas review later this year, building on what has been learned across the country and the progress we have made on the other recommendations.
The debate is not about high street versus out of town or the internet. A feature of today’s debate has been that every speaker has accepted that high streets must change and evolve to compete, and in some cases to survive. The Government are committed to supporting high streets, but we cannot dictate what should and should not be done; the vision and innovation has to come from places and communities, with the public and private sectors playing their part.
I turn briefly to two particular questions that my hon. Friend asked about business rates. The estimate from the valuation office was that the revaluation would have increased bills for about 800,000 properties and decreased them for only about 300,000. We would have seen significant tax increases for food, retail and convenience stores. We think it better to give businesses more certainty, which is why we postponed the revaluation. He also asked why we could not index the annual rise to the consumer prices index rather than the retail prices index. He will know that RPI is much lower for the year beginning in April than it was for the year beginning the previous April, but we are continuing to review the situation.
I turn to the main feature of the debate: the future of retail. Analysts at Verdict research have predicted that UK retail will grow by about £4.9 billion in 2013—the highest increase since 2008. Online sales are increasingly important. They accounted for 5% of all retail sales back in 2008 and more than 9% in 2012. Verdict predicts that they will account for 12% of all retail spending this year and 17% of all non-food spending.
Those numbers do not really tell us what is happening and why. What are the drivers of change? UK retail faces challenging trading conditions, but it is simultaneously having to adapt to massive structural challenges driven by changes in consumer lifestyles and preferences, the impact of new and emerging technologies and the constant evolution of how technology is used. Technology is driving change. Tablets and smartphones are making it easier for consumers to buy online in any location, and new delivery options such as click and collect are reducing the problems customers face with home deliveries.
I shall conclude, because I want to allow my hon. Friend a few minutes to sum up at the end. Retail is an important barometer of our economic and cultural well-being. It is going through a period of rapid change, but Britain has the companies, the brands and the entrepreneurial spirit to ensure that we will always have successful retailers. It is part of the Government’s job to ensure that we have the right environment for them to thrive, prosper locally and compete globally. There are no easy answers or quick fixes for either the retail sector or the high street. We all have to play our part—central and local government, businesses, communities and local partnerships—in helping the adaptation of the future of retail and helping to shape that future.