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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)
Thank you very much, Mr Dobbin—from one subject to another.
I commend my hon. Friend the Member for Witham (Priti Patel) for securing this debate on such an important issue, albeit one that is not raised as often in the House as the subject of the previous debate. I am present to address my hon. Friend’s concerns as the Minister with responsibility for competition, but I will ensure that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who has responsibility for retail and small shops—indeed, shops of any size—is aware of the debate as well, because it is an important issue.
My hon. Friend rightly pointed out that independent newsagents are an important part of local communities—they can be crucial—and of the UK economy more generally. I was therefore delighted to see figures from the Office for National Statistics—I have said that about five times today—that show that small stores are seeing annual growth of 8%, whereas larger stores are seeing growth of 2.6%. That shows that small stores have an important place in communities, and that their position is quite resilient.
The public’s ability to access a wide range of news, views and information about the world in which we live is absolutely central to the health of our democracy and society. Even in an increasingly digital world, access to a range of newspapers is a critical part of ensuring a healthy and vibrant democracy. It is important, therefore, that the market in the supply and retail of newspapers continues to operate in the best interests of consumers.
Newspaper publishers in the UK operate in a two-sided market, generating income from both advertising and sales. Publishers therefore take into account how circulation affects the revenue generated from both the cover price and advertising. On the other hand, wholesalers and retailers exist in a more traditional, one-sided market, so they are more likely to be interested in how changes to cover prices or delivery charges affect their sales volumes and profit margins. Although different elements of the supply chain clearly have different objectives, it is in their best interests to co-operate to promote effective newspaper sales, particularly in the face of changing consumer behaviour. As part of that, ensuring an efficient, cost-effective method of providing retailers and consumers with newspapers is important.
My hon. Friend raised concerns about competition in the market. Whenever the Government look at competition issues in sectors, they take into account assessments made by the UK’s independent competition authorities. In the case of newspaper supply, the Office of Fair Trading considered the market in a broad and detailed way over several years and, as part of those investigations, consulted widely and collected much evidence. In 2008, the OFT published competition guidance to the newspaper wholesale sector. It did not give the sector a clean bill of health on competition, but said that the industry should assess its distribution agreements against that guidance and make any necessary changes.
In 2012, the OFT looked at whether it needed to carry out a follow-up review, but decided it was unnecessary. As my hon. Friend said, the Association of Convenience Stores and the National Federation of Retail Newsagents appealed that decision to the Competition Appeal Tribunal, but the tribunal supported the OFT’s decision and said that it was right to consider that the likely consumer benefit did not justify undertaking a review.
That does not mean, however, that the UK competition authorities will not consider the issue again in the future. The new Competition and Markets Authority will launch on 1 April and take on the OFT’s and Competition Commission’s competition responsibilities. In the strategic steer to the CMA issued by the Government last October, we asked it to
“consider potential competition concerns in business-to-business markets, including the effects of differences in bargaining power between firms in a supply chain.”
This issue is therefore quite clearly in its remit.
The CMA’s draft annual plan showed that it is aware of the risks posed in particular by the current economic climate. If my hon. Friend has new evidence that anti-competitive practices in newspaper supply are causing detriment either to consumers or to businesses in the supply chain, I encourage her to submit that to the CMA for consideration.
The hon. Member for Strangford (Jim Shannon) raised concerns about contracts being changed without consultation and negotiation. That is clearly wrong: contracts should not be able to be changed unilaterally. If he is aware of evidence of such behaviour, I encourage him to provide that to the CMA because it will have strong powers to take action against anti-competitive behaviour by businesses.
My hon. Friend also raised concerns about the impact on small retailers of supermarket chains offering discounted or free newspapers. I know that that issue has been raised with several Members by their constituents; it is a concern. Large stores can benefit from economies of scale and in this very competitive marketplace they look for inventive ways to increase their market share. That can make it extremely difficult for smaller shops to compete with them; smaller shops simply do not have the same capacity to provide such offers. I have already said this to some Members, but if small retailers believe that local supermarkets are behaving anti-competitively, I encourage them to raise their concerns with the CMA, because it is within its powers to look at this area. The CMA will have wide-ranging powers from 1 April to tackle such behaviour, and I will write to it with a transcript of this debate to highlight the concerns that have been raised today and to make sure that they are on its radar.
Looking more broadly than at the supply of newspapers, the Government are aware of the need to support small retailers, to help to drive sustained growth. My hon. Friend highlighted some of the things that the Government have done. For example, the autumn statement announced the biggest business rate support package for 20 years, to try to support small businesses, with measures including extending the doubling of the small business rate relief; giving a discount of £1,000 for smaller retail premises; and introducing the option to pay bills over 12 months rather than 10. We are keen to support small businesses, particularly as we come out of the difficult financial circumstances that we have been in recently.
Alongside that, in December last year the Government announced the town centre support package, which builds on a range of other measures that have been taken to help high streets. That package could be particularly helpful to independent retailers, many of which are in high streets. They are not out-of-town businesses—I have not seen a small, independent out-of-town newsagent—so that sort of policy can benefit small retailers as well.
In addition, the Government published, “Small business: GREAT ambition”, in December last year, which sets out our commitment to make it easier for small businesses to grow. It was published on small business Saturday, which I know a number of Members across the House took part in. That event gave everyone the opportunity to celebrate small firms and it is important that we do so; often, small firms get crowded out and it is difficult for them to have the opportunity to raise awareness of what they do and the part they play in our communities. One of the businesses that I visited in my constituency on that day is a fabulous newsagent and sweet shop. It is called the Royal sweet shop and it has now been in existence in Cardiff in the same place in the Royal Arcade for—I think—103 years. It has the most amazing display of sweets that I have ever seen—I think people’s teeth practically rot as they walk in. It was very nice to have the opportunity to support the important small businesses that add vibrancy to our town centres and our communities. They have an important role to play, not only at an economic level but in supporting our communities.
I repeat my thanks to my hon. Friend for the opportunity to debate this issue today. I hope that I have managed to make it clear that the Government and the competition authorities are concerned about this issue; it is an important issue that we take seriously. I appreciate the difficulties currently being faced by independent retailers; it is not an easy time for them. I hope that, as the economy slowly starts to return to health, small retailers will be able to take advantage of the opportunities that exist for them, and I encourage hon. Members to raise their concerns with the CMA. As I said, I will write to the CMA myself, to ensure that it takes on board the concerns that have been raised today.
Question put and agreed to.