Retail Trade: Online Suppliers

Wednesday 28th February 2018 Lords Chamber

Question

15:07

Asked by

[Lord Naseby]

To ask Her Majesty’s Government what discussions they have had with the Competition and Markets Authority about the impact on the United Kingdom retail trade of online suppliers, such as Amazon.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, Her Majesty’s Government want all parts of the retail sector to thrive. As such, we engage regularly with a range of retailers’ associations and the Competition and Markets Authority. If competition is not working effectively, the CMA has powers to investigate and to take action.

[Lord Naseby (Con)]

Is my noble friend aware of the extent of the dominance of Amazon and the threat that it poses to the retail trade in general and, soon, the grocery trade and pharmaceutical trade? Amazon already controls, in the £1 billion market, 39% of the UK and 57% of the States. Against that background, will the Government level the playing field and consider what France, Germany and so on are looking at in terms of digital taxation, a special sales tax like the USA or indeed a higher rate of VAT, which is possible under our legislation? At the very least, bearing in mind that figure of 39% of today’s £1 billion market in our country, will they set up a monopolies commission inquiry? If they do not, our retail trade as we know it will disappear.

[Lord Henley]

My Lords, It is a matter for the CMA to look at these matters. As I said in my original Answer, it has the power to look at that. With regard to some of the aspects of taxation, I believe that Her Majesty’s Government have led the way on this issue internationally. HMRC continues to work with the online marketplaces to ensure effective action against sellers who are, for example, breaking United Kingdom VAT rules and to prevent new non-compliant sellers joining the market. We believe all those multinationals in that world ought to be paying the taxes due and we will not settle for anything less. Other than that, I think my noble friend should accept that many of the changes that are happening in the marketplace are being driven by what the consumer wants, and our job is to ensure that the marketplace can adapt to that.

[Lord Carlile of Berriew (CB)]

Does the Minister consider it acceptable that a company that delivers its goods from a warehouse in the UK to a customer in the UK but has its headquarters in, for example, the Channel Islands should pay less VAT than a company that delivers its goods from the UK to the UK and has its headquarters in the UK? That is what is happening.

[Lord Henley]

I do not think I can take the noble Lord much further than I have at the moment. Colleagues in the Treasury and in Revenue & Customs are aware of some of these problems and are looking at them, and he will be aware of commitments that were made in our manifesto. I cannot take it much farther than that.

[Lord Fox (LD)]

My Lords, the Minister is very sanguine about what is going on in our high streets, but today, Toys “R” Us went into administration, putting about 3,000 jobs at risk and Maplin has called in the administrators. There is a crisis on the high street. What are the Government doing to recognise the pressure that the digital economy is putting on the physical shops on our high street?

[Lord Henley]

We recognise this. As the noble Lord will be aware, we have made changes to the rates system to provide some help to the high street and will continue to do so. We have also established the Future High Streets Forum, which is chaired by my honourable friend the Minister for the Northern Powerhouse and Local Growth, Jake Berry. That will look at what we can do with retailers, but it is obviously up to retailers, as I said, to adapt to a marketplace changing as a result of consumer demand.

[Lord Deben (Con)]

Is my noble friend aware that this is a dangerous situation and requires urgent action? I refer noble Lords to my entry in the register of interests. Retailers have to pay business rates, which means that they start off at a significant disadvantage. They have to contribute to the producer responsibility levies—another disadvantage. They have to pay the proper apprenticeship levy—another disadvantage. We cannot wait for a general statement; we must act now. The latest proposition is that retail trading may decline by 22% in the next year. It is time for the Government to move urgently.

[Lord Henley]

I made it clear that we have made changes in the Autumn Budget, with measures worth £2.3 billion by cutting business rates and trying to bring a degree of fairness to the system. There are limits to how far one can go and one must accept that a lot of what is happening is a result of what consumers want. It is obviously up to the retail sector itself to adapt and change in the face of changing consumer and social trends. The Government are doing what we can. That is why I mentioned the Future High Streets Forum, chaired by my honourable friend and why we have announced changes to rates. Thereafter, it must be for the retail sector itself to see what it can do to change.

[Lord Whitty (Lab)]

My Lords, is the noble Lord aware that a couple of years ago, a sub-committee of your Lordships’ EU Select Committee—under my chairmanship, as it happens—produced a report on online platforms? We found that the apparent consumer advantage was taken advantage of by the big online platforms, and the competition authorities at the European level were finding that difficult to come to terms with—witness the ongoing problem with Google. Is it not now important, post Brexit, that the competition authorities here tackle the domination and abuse of competition by the online platform giants?

[Lord Henley]

My Lords, that is why we set up the CMA in 2013. That is why it has the powers it has and the ability to investigate abuse when it sees it.

[Baroness Gardner of Parkes (Con)]

My Lords, has the Minister seen the story in the paper about Airbnb wanting to become as big as, or bigger than, Amazon? If that happens it will obviously threaten all the high street tourist agencies, which have said that it would take over tourism completely. Will the answers he has given today apply equally to Airbnb, if it becomes half as big as Amazon?

[Lord Henley]

My Lords, again it is a matter for the CMA to look at that, but the Government will obviously keep these matters under review as well. These are social changes happening in the marketplace, and very often because that is what consumers want.

[The Earl of Lytton (CB)]

My Lords, I declare my professional and LGA interests. Does the Minister agree that, in addition to the challenge of online retailing, rental levels, underinvestment in retail streets and the business rate system, which imposes one of the highest recurring taxes of its kind anywhere in Europe, conspire collectively to damage profits prospects and the public experience of many traditional shopping environments? Furthermore, does he agree that trying to shift the burden of reliefs for business rates on to hard-pressed billing authorities is not the right answer?

[Lord Henley]

The noble Earl makes some valid points. These are matters that can and will be looked at. The important point is that we have done what we can to help with rates, and we hope that that significant help will make it easier for the retail sector.