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
AGENCY—PURPOSE
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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