Independent Retail

Debate between Bill Esterson and Caroline Dinenage

Tuesday 4th February 2014 Westminster Hall

[Bill Esterson]

A Merseyside pound would be an even better idea.

I was aware of the Bristol pound. We need to look at innovative ideas that support small independent retailers and the local economy, and what happens in Bristol is an active example of that.

In addition to the buying power that I described earlier, the large chains have various other advantages, including the ability to buy or rent property in advantageous locations and access to enormous amounts of data on the behaviour of shoppers, enabling them to tune their offer towards what consumers want. Since the 1980s, out-of-town shopping centres have become more numerous. They offer large retailers more space than is available in traditional town centre locations, but retail units in such centres are often beyond the financial reach of small independent shops.

[Caroline Dinenage (Gosport) (Con)]

I thank the hon. Gentleman for giving way—he has been incredibly generous with all the interventions this afternoon. Does he agree that it takes some imagination from town centres to attract small businesses into empty units? In my constituency, we have a town team that runs an empty unit scheme, which has helped to fund small businesses to occupy such units. So far, the team has two new businesses in place, with another three coming on stream. Will he join me in welcoming the good work of the town teams up and down the country?

[Bill Esterson]

I have two town teams in my constituency, in Crosby and in Maghull. In Maghull, the town team and the town council were instrumental in opening pop-up shops in an empty unit, which is a similar approach to that described by the hon. Lady. What she says is important.

E-commerce is up from around 2% of sales in 2007 to around 10% in 2013. Internet shopping offers independent retailers the opportunity to compete on a more level playing field with larger retailers, because the cost of overheads is massively reduced, but recognised brands still have an advantage in the online environment. In addition, footfall in town centres is reduced by internet shopping, meaning that independent retailers with a physical presence see less through traffic and fewer potential customers.

Down the road from Formby is Crosby, where Tesco now has two convenience stores in addition to a medium-sized Sainsbury in the village centre. Plans are being made for a further convenience store in College road in Crosby, near the existing Tesco and next to an existing Co-op. Plans for a further convenience store from a national supermarket chain have caused concern among local shopkeepers.

The National Federation of Retail Newsagents represents 16,000 independent news and convenience stores. The NFRN tells me:

“One of the biggest threats to independent news and convenience retailers has been the rapid growth of the supermarket sector.”

Tesco has more than 1,500 small stores, while Sainsbury has 594, according to The Daily Telegraph. Such stores are close to independent retailers and a third of NFRN members have seen a local or metro-style shop open near them in the last year alone. Often, little consideration is given to the impact on existing retail outlets.

Crosby village centre is very run down, like many town centres and high streets around the country, and the Sainsbury store in the village centre is the biggest attraction for visitors. I am optimistic that in the coming years a master plan for Crosby will be produced, but Sainsbury has to be part of that plan. The village desperately needs a complete overhaul, but this needs to be in partnership with the independent retailers.

The No. 1 issue raised by independent retailers is business rates. One retailer from Crosby told me that small businesses need help with bigger rate relief, as they find their rates crippling. Business rates date from a time when retailers had to have a premises and when land and property values were easy to predict. It is a system from another time, for another time—a time before out-of-town shopping centres, dominant national chains and the internet. That is why so many people are calling for a reform of the system to reflect the reality of retailing and business in general.

Amazon can sell books online and pay no tax on the profits generated in this country, and large retailers can set up shop on low-rated land. Local shops need to be where people will go, which generally means high street sites that are often expensive in terms of rent and rates. A first step to be requested is a full revaluation of the rates. Big retailers have many advantages, because of economies of scale, however, so a reform of the rating system is one way in which smaller retailers could be given an advantage to balance their lack of economies of scale.

In the autumn statement, the Government announced business rates support for retailers, and my party is committed to a cut followed by a freeze in business rates. The reality, however, is that small retailers need us all to go further; as the NFRN points out, those are all short-term measures. In some countries, business taxes are collected using a local sales tax. That is only one possible option, although no doubt the Treasury has reasons for rejecting such an approach—it usually does.

How many local shop keepers have good advisers and mentors to help them set up and support them over the years? Who is there to advise independent bookshops on how to make the most of the internet? Where is the support for small shops setting up online trading to help them grow and compete with the big players, despite their not having much cash to invest in a website? It can be done, as I discovered when I visited my constituent Helen Flynn at her shop, Gentle Cosmetics. Helen has both a shop and an internet presence. More retailers could do both, but they need advice and support. National Government have a role to play through the taxation and planning systems. The Government claim that they have made life easier by changes in planning, but whether independent retailers have benefited or high streets have been revived is another matter.

Other issues include parking and bank lending. The out-of-town supermarkets can offer free parking, while many town centres have parking charges. Sefton council offers a free half hour in Crosby and two hours in Formby. Meanwhile, in Maghull, town centre parking is free for half an hour in the privately owned car park in the town centre. In the run-up to Christmas, parking in Sefton’s council-run car parks was free on Thursdays to support late-night opening.

A system of local banks that work closely with their business customers would also help, hence Labour’s proposal for a regional banking system. There is already good practice that could be adopted to address some of the challenges I have mentioned in the debate. In the case of relationship business banking, the Cumberland building society already operates in this way. It is the only building society, so far as I know, to offer a full business banking service.

We face a cost-of-living crisis, and it is no different for independent retailers. Fifty-five per cent. of retailers tell the Association of Convenience Stores that they earn less than the national minimum wage. One of my constituents runs the post offices in Formby and in Crosby, but after paying her staff and her other costs she is left with next to nothing to live on. That story is repeated by many retailers I meet.

The experience of many is that being self-employed is a tough way to try to survive—something I can confirm from personal experience, having run my own business for many years. Government can help by making sure that the economy grows and by recognising the importance of the independent retail sector in our cities, towns and villages. Independent retailers are a key part of our economy and are significant local employers as well. Research by the Association of Convenience Stores suggests that 76% of new retail space given planning consent is located outside town centres. Far more planning consents are given to out-of-town developments than to town centre developments.

This debate is about balance. Yes, the big chains are a big part of shopping, and they need to compete with each other, but small, independent retailers are at the heart of our local communities, providing valuable services to local people and an alternative to the standardised approach of the big chains. The issue is about having a level playing field, and about fairness between large and small businesses. If the big chains wipe out the independents, we will all lose as the identity of our communities will suffer. Competition will be reduced if there is no one to challenge the big players.

The question is, who is on the side of the independent retailers? The big chains can and do look after themselves. In Formby, Crosby, Maghull and Aintree, I am supporting the “Shop Local” campaign and encouraging people to support independent retailers. There is room for both large and small retailers. We need both—our town centres and high streets need both, and so do our communities. However, a fair balance between large and small is not going to happen without intervention by Government. The Government say that they want to support our high streets, and, by implication, our local shops. The time has come for them to make sure that their actions speak louder than their words.