Select Committee on Food Standards First Report


MEMORANDUM 3

Submitted by the Association of Convenience Stores

  Thank you very much for inviting the Association of Convenience Stores (ACS) to give both oral and written evidence to the Food Standards Committee. I very much regret that we were unable to field a team to make an oral presentation, but trust that the comments outlined below will be helpful in the Committee's deliberations on this important subject.

  ACS has been engaged in discussions with MAFF on the establishment of a Food Standards Agency for some time. In theory, ACS endorses the proposal to set up such a body and believes that it will go some way towards increasing consumer confidence in food safety. Our comments will therefore focus principally on the funding arrangements for the Agency.

THE ASSOCIATION OF CONVENIENCE STORES

  ACS is the trade body for the convenience store sector. It represents the owners and managers of over 1,500 retail companies, who operate around 20,000 stores, between them employing over 190,000 staff. Members include independent retailers, multiple convenience stores and affinity groups such as symbol and buying groups.

  A convenience store is a small grocer, off-licence or petrol forecourt shop with between 500 to 3,000 square feet of selling space; the majority of outlets fall within the 1,000 to 1,750 square foot bracket. Trading seven days a week, typically from 6 am to 11 pm, ACS members are characterised by the convenience they offer in terms of location, range of goods, opening hours and service. The typical convenience store sells "top up" goods, emergency items and is orientated towards tobacco, confectionery, snacks, soft drinks, alcohol and newspapers. Many stores provide services such as a Post Office counter and National Lottery terminal. Convenience stores trade in a fiercely competitive environment, with tight margins. Overall net profit is low, and typically between 1-2 per cent; in comparison, a supermarket will operate on a 7-9 per cent net profit margin.

FOOD STANDARDS AGENCY FUNDING

  The Government is proposing to fund the additional costs of establishing the Food Standards Agency through a flat-rate levy on all premises retailing or catering food to the general public. A charge of £90 per annum will be imposed on all such businesses regardless of size or ability to pay, the only exception being those outlets whose main business is not the retailing of food.

  ACS is concerned that the proposal to make the food industry fund the Agency will compromise its objectivity and undermine its ability to increase consumer confidence in UK food products and retailers. ACS firmly believes that the work of such a body is of such importance to the nation as a whole that its work should be funded from general taxation.

  Should Government continue with its insistence that industry be responsible for the part-funding of the Agency, then ACS would suggest that the burden be distributed more fairly across the whole of the food industry, to include food producers in particular, and take due account of ability to pay.

  ACS does not believe that the proposals for a levy meet the dual requirements of equity and fairness in respect of small retailers as outlined in the consultation document. It is intrinsically unfair to levy the same charge on a small neighbourhood store as a large superstore, and runs counter to the Government's stated aim of supporting smaller retailers. ACS does not believe the Government's claim that small stores represent the same level of risk as a large superstore and hence should be subject to the same levy. This has been endorsed by Trading Standards Officers, who have pointed out that large superstores are subject to more frequent inspections.

  The suggested £90 levy represents a significant additional cost to small retailers operating on small net profit margins. Small retailers are unable to pass on such additional costs to consumers, as they already charge a slight premium on supermarket prices. The absorption of such costs will further damage the competitiveness of the small store sector. For example, the four leading supermarkets have a turnover of £40 billion a year but will pay only £150,000 under the proposed levy. In contrast, ACS members have a turnover of £10 billion but will contribute £1.8 million.

  ACS would urge the Government to consider an alternative system of funding, in particular a banded levy, with stores being charged a different amount according to their floorspace or the number of inspections it is subject to.

FOOD STANDARDS AGENCYPURPOSE AND REMIT

  ACS welcomes the Agency's role in setting and enforcing national standards of surveillance and inspection by local authorities. The current differences can be a source of frustration to convenience store chains and impinge upon effective business planning.

  ACS is also concerned at the Agency's role in promoting healthy eating and the provision of nutritional information. There is a lack of clarity over the respective roles of the Agency and the Department of Health which must be clarified as soon as possible in order to avoid unnecessary duplication.

  In light of past and recent health scares related to food, ACS would suggest that a duty of proportionality of action according to the level of actual risk be written into the Agency's remit.

March 1999


 
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