MEMORANDUM 29
Submitted by the National Federation of
Retail Newsagents
BACKGROUND: THE NFRN AND THE FOOD STANDARDS
AGENCY PROPOSALS
The National Federation of Retail Newsagents
(NFRN) represents approximately 25,000 independent small businesses
in all parts of the United Kingdom. Many of our members operate
on the edge of viability. Profit margins are low—net margins
of 1 per cent are not atypical, and small increases in cost or
losses in income can make all the difference between survival
and bankruptcy.
A recent combination of falling retail margins
and increasing carriage charges (the transport charges imposed
by magazine wholesalers) has led to a revenue squeeze for the
smaller retailer in particular. The result has been an increase
in the rate of bankruptcy from 1.5 per cent to 3.6 per cent in
the years 1994 to 1998. Work by London Economics shows that 10,000
outlets could be at risk over the next five years.
This means that we are particularly sensitive
to government action which might increase our costs. This submission
is therefore intended to highlight the implications of the proposed
levy for the purposes of funding the Food Standards Agency. We
will also be responding to the joint MAFF/DoH consultation on
the proposals.
CLAUSE 23 OF
THE DRAFT
FOOD STANDARDS
BILL—LEVY
ON FOOD
PREMISES:
This clause gives the Secretary of State for
Health a general enabling power to impose a levy on food premises
and specifies the broad categories of work for which funding may
be met through the levy.
The NFRN has noted that the powers provided
under this clause do not deal with the detail of the actual rate
of the levy or which premises will be liable to pay and that this
will be covered in secondary legislation. As mentioned above,
we will also be responding to the joint MAFF/DoH consultation
on the levy itself.
However, it is the draft Bill which introduces
the concept of the levy, and the Food Standards Committee must
acknowledge the implications of this. It is clause 23 which gives
the Government the power to raise more of the costs of food safety
work by means of a levy on the food industry. it is, therefore,
clause 23 with which the NFRN are most concerned.
We can not emphasise enough the potentially
damaging impact of any increased costs on our members' livelihoods.
With UK supermarket rates of return being amongst the highest
in Europe, the larger stores and supermarkets may be able to absorb
the costs of funding the Food Standards Agency without discomfort—but
this is certainly not the case for our members.
Many newsagents stock a variety of grocery products
in their shops. It is no coincidence that these types of stores
are also known as "convenience stores" and that the
distinctions between convenience stores and newsagents are blurred.
They provide a valuable service to the customer,
who can choose to cycle, walk or even stroll to the shop, without
having to use his/her car or public transport. Much as supermarkets
are now an integral feature of contemporary life, so are environmental
concerns. For day-to-day essentials, the local newsagent can save
on car-borne trips to the supermarket and thus save on carbon
monoxide emissions, helping to build a healthier nation.
The government must recognise that these
local shopkeepers, who provide an essential service to the community,
simply can not afford to be financially penalised in the same
way as the major stores.
There is only one fair way of imposing the associated
costs of setting up the Food Agency and that is by graduating
the levy. And the means of calculating this should be included
in the draft Bill, to be considered along with the appointment
of chief executives and directors and the delegation of powers
to make emergency orders. After all, you wouldn't expect anyone
to deliberate over choosing a new car before they knew where the
funds were coming from.
The Government must acknowledge that many small
retailers operate with profit margins on the edge of viability.
It is absurd to treat superstores and corner shops equally in
this respect. It is just not good enough to use administration
costs as an excuse to justify the flat rate levy. And it is not
good enough to omit any of the details of recovering costs from
the Bill itself.
This is a matter which needs to be examined
by the Food Standards Committee whilst, and not after, the draft
Food Standards Bill is scrutinised. The National Federation of
Retail Newsagents urges the Committee not to overlook this crucial
aspect of the proposed legislation.
March 1999
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