Retail Sector

Bill Esterson Excerpts

Wednesday 6th June 2018 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

The retail sector faces a challenging and testing environment. The high cost of business rates alongside the challenge of online retailing for high street shops, the long-term squeeze on household incomes, the squeeze on pay and loss of retail jobs, and the failure to provide clarity to business on the future of our relationships with the outside world: these are all key factors where the Government should have something to say, but also where the Government could and should take action. They are all areas, however, where this Government have been found wanting.

I thank colleagues on the Opposition Benches for their contributions. We heard from my hon. Friend the Member for Blaydon (Liz Twist) on the high number of her constituents employed in retail—a quarter of the jobs in her constituency. We heard from my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) on the importance of balancing the high-quality, out-of-town shopping centre at Cheshire Oaks with the high street, and from my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), to whom I pay tribute for the fine work she has done in standing up for workers at Sainsbury’s. We also heard from my hon. Friends the Members for Bishop Auckland (Helen Goodman) and for Great Grimsby (Melanie Onn), who both spoke of the difficult challenges being faced in our high streets. One of the themes that has come out of this debate is the difficulty created by a two-tier economy, not least in retail, between our cities and our towns, particularly the smaller ones.

[Dr David Drew (Stroud) (Lab/Co-op)]

Would my hon. Friend accept that one of the problems in market towns is that the ownership is often with distant landowners who are more interested in speculative development than in improving retail opportunities?

[Bill Esterson]

That is a very good point, and it has also been made by other Members today. Where is the strategy, not only for retail but for our towns, and for our high streets in particular?

[Helen Goodman]

There isn’t one!

--- Later in debate ---

[Bill Esterson]

Indeed; as my hon. Friend the Member for Bishop Auckland also said in the debate, there is no such strategy.

In the response to the urgent question on Marks & Spencer on 24 May, the Minister for Energy and Clean Growth, the right hon. Member for Devizes (Claire Perry), said that the Government had set up a new Retail Sector Council, but why has that taken so long? Why did it take eight years to create that council? What is needed now is action. Business rates are a huge fixed cost for businesses in our high streets, and that is a disadvantage that their larger online-only rivals do not have to contend with. The Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Burton (Andrew Griffiths), will no doubt say that there have been changes to business rates, but those changes have made matters worse for many businesses, particularly smaller ones. Last year’s revaluation resulted in an average rates increase for smaller shops of £3,363 over the next five years.

The Government commissioned Mary Portas—remember her?—to tell them how to re-energise high streets. How is that going? Not so well. Her report recommended cuts to business rates, not the massive hikes that so many are experiencing. Meanwhile, ASOS reports its profits going up 26% while its rates bill fell by £30,000. Rates rises for our brilliant independent retailers alongside rates cuts for the multinational online retailers are hardly the stuff of fair competition or a level playing field. There was very little in the Secretary of State’s opening speech about independent retailers, yet smaller firms in all sectors, including retail, are crucial to the future economic success of this country. The Association of Convenience Stores has stated that

“the cost of business rates remains too high”.

And what about the fact that investors in retail are put off by the high cost of business rates? The Government should be doing so much more to ensure the right balance between high street, online and out-of-town retail, and we need to see that happening in the sector deal when it comes forward.

That brings me to the retail workforce. There are 2.9 million people working in retail and the sector is worth £94.6 billion to the economy. It is where many people develop their first experience of the world of work, and it is often the source of good-quality employment in businesses large and small, but the pressures on retailers are starting to show. We have seen job losses at Toys R Us, Maplin, M&S, Conviviality and maybe now House of Fraser, and CVAs and profit warnings at many others. We have seen 21,000 jobs go in the first three months of this year alone, and cuts in pay and conditions at companies such as Sainsbury’s, which has ended paid breaks and premium pay. Yes, there has been a rise in the hourly rate, but it has been offset by cuts in workers’ rights, adding up to a pay cut for too many people.

Ministers could and should be working closely with campaigning unions such as USDAW, GMB and Unite, which are doing such a good job on behalf of workers’ rights and on campaigns such as Freedom from Fear. It is in the interests of responsible retailers and of the whole economy for the Government to play their part in ensuring that workers are treated fairly. A high-pay economy is good for workers, but it is also good for business because workers are also consumers who buy goods and services from retailers. It makes economic sense to prevent the exploitation of workers, not least in the large distribution centres. It was simple complacency for the Minister for Energy and Clean Growth to imply in her answer to the urgent question on 24 May that M&S staff could just go and work at Amazon, complete with its airport-style security and unpaid toilet breaks.

I am afraid that it was also simple complacency for the Secretary of State to say earlier that retail employment was going up. There are 2,500 fewer retail stores than there were three years ago. According to the Office for National Statistics, 40,000 fewer staff were working in retail in 2016 compared with 2015. The British Retail Consortium says that its figures show from 2015 to 2017 the number of jobs fell by 73,000. Meanwhile, the average hours worked in January to March 2018 were 30.2 a week, which is a fall of 30 minutes on the previous year.

Those figures are a cause for concern, not complacency, and are indicative of an overall decline in retail employment. The Government should be doing so much more to improve productivity. As in other sectors, it is true in retail that skills and investment in infrastructure and new technology are the keys to better productivity, and that needs to lead to better-paid jobs as well as more profitable businesses. My hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) set out some ideas for how to boost pay. The British Retail Consortium has its “better jobs” agenda, and I refer the Business Secretary and the Under-Secretary of State for Business, Energy and Industrial Strategy to its excellent report. Productivity gains from cuts to workers’ pay and conditions or to the prices paid to suppliers are short term and characterise the lack of economic progress under the Government, not least in retail.

That brings me to our relationship with the outside world. Frictionless trade is vital for the import of perishable goods. It is vital for the supply chain in the car industry, where components cross the border multiple times. Car retailers need certainty, as do our supermarkets, because 79% of food is imported by retailers. Certainty is needed for retailers to plan for the trading arrangements post Brexit. Arrangements at the Port of Dover, Holyhead, Liverpool and across the country will play a huge role not only in business life, but in daily life, and retail is one of the sectors that most affects daily life.

Warnings of empty shelves need to be heeded. Consumer choice will be badly affected—dramatically so—if border arrangements are adversely affected. The Government’s failure to confirm their preferred negotiating position with our European partners is causing real problems. Many retailers rely on foreign workers. It is not just the highest-qualified EU workers who need assurances that they are welcome in this country. Workers in lower-paid sectors, including retail, need the same assurances and so do businesses. Some 22% of retailers report that foreign workers have left since the referendum. It is time for clarity.

[Drew Hendry]

Will the shadow Minister give way?

[Bill Esterson]

No.

The Government need to make up their mind, stop negotiating with themselves and start negotiating with the EU for a deal that puts jobs and the economy first and that is not just in the interests of a handful of extreme Brexiteers in the Conservative party. Let us have a proper sector deal that sees action, not just words. Let us see the Government make a proper commitment to retail. Three mentions of the sector in a White Paper do not inspire confidence in the Government’s commitment to retail businesses or workers.

Let us have a deal with thriving town centres, not crippled communities, and one that addresses the concerns of the British Retail Consortium, which describes a sector in stasis, where vacancies are going up. Let us see a deal that reverses the long-term decline. Let us see proper business rate reforms that include the switch to CPI-measured inflation, encouraging innovation and growth, that exempt new investment in machinery from valuations and that ensure businesses can access a proper, comprehensive appeals process. We need a deal that has smaller independent retailers at its heart and one that supports retail by investing in skills, in education and in an immigration system that brings in the skills this country needs. We want a deal that takes on board Labour’s plans for a catapult centre for retail, that listens to the views of employers and unions and that promotes the best outcomes for workers, communities, consumers and businesses.