British Retail

Michael Fallon Excerpts

Wednesday 6th March 2013 Westminster Hall

[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?