British Retail

Alan Meale Excerpts

Wednesday 6th March 2013 Westminster Hall

[Several hon. Members]

rose—

[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.

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[Several hon. Members]

rose—

[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.

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[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.

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[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.

[Sir Alan Meale (in the Chair)]

Mr Harrington, would you like a few seconds?

[Richard Harrington]

No, thank you.

[Sir Alan Meale (in the Chair)]

I am grateful.