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Mr. Tony McNulty (Harrow, East): I beg to ask leave to withdraw the motion.
Retailing
Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]
1.12 pm
Mr. David Heath (Somerton and Frome): It is a great privilege to be able to address the House on this important issue although I confess that some of the subject matter may resemble that of the previous debate, as I shall concentrate on some of the smaller businesses in the retail sector. I hope that that does not mean that we shall have too much of a good thing. There is rather more time available for the debate than I had anticipated, but I do not expect to over-stay my welcome and hope that we shall finish at a reasonable time.
It is impossible to overstate the importance of the retailing sector in the British economy. Hon. Members know the details. The sector represented 23 per cent. of the gross domestic product last year. It employs 3 million people. Indeed, it employs almost 9 per cent. of the work force in my constituency. We are dealing with an important sector.
I have a little experience in the sector, having run a high street business—albeit not a standard retailing operation—in my former profession as an optician. I am extremely aware of the importance placed on a thriving retail sector not only by business people in my constituency but also by ordinary constituents. They want shops in their towns and villages. They want the convenience of obtaining products locally without necessarily having to travel to what are nowadays rather quaintly described as sub-regional or regional shopping centres. Such places can seem a long way away from people in rural Somerset.
Because of the importance of the local retail sector, I want to concentrate not so much on the larger retailers and supermarkets, or the high street multiple stores, which are found across most of the country, as on something that we talk about rather less—the independent retailer and the smaller shops that are trying to survive in our villages, smaller towns and market towns, as well as on the periphery of urban centres.
Too often, we concentrate on the retailing centres in the middle of towns and completely ignore the fact that many people and many shops are trying to subsist on housing estates, on the edge of town and in some of the old shopping plazas, which seem redolent of the 1930s and have often not improved a great deal since then. It is time to pay more attention to those retailers.
Most people who are trying to run small independent shops would identify three main enemies, the first of which is the monopolies or oligopolies, or the would-be monopolies or oligopolies, that threaten them, either by competition or through their direct dealings with them. The second enemy is the activities of criminals. That is becoming an ever-increasing problem for many people who run retail businesses. The third enemy—I use the term advisedly—are the Government, although I wish it were otherwise. Local and central Government can place impositions on retailers' business.
Added to those three principal groups of enemies is the vulnerability of so many small businesses, whether in the manufacturing or the retail sector, to events that are entirely beyond their control. The classic example, which
is very current in my constituency, is foot and mouth disease and its aftermath—a very serious issue. If a company is big enough, it probably has the reserves, capability and ability to weather the storm, but those trying to run a one or two-person business probably do not, and they will go under unless adequate support is provided.I shall deal with each of those sectors in turn, beginning with the monopolies or large businesses. Competition is a good thing; it is a motor of retail business. We should not be afraid of competition or of saying that consumers vote with their feet. It is very easy to say that the big supermarket chains, for example, are always the enemies of the piece, without realising that most people in most towns clamour to have one of the large supermarkets in their towns. At the moment, many people want Asda to relocate to Frome, and they are looking forward to that happening. It is absolutely right that the local community considers planning and other issues.
People should consider whether large retailers should move into the town centre to reinvigorate it, or whether they should be allowed to build on a greenfield site on the edge of the town, so destroying the town centre. The argument about such things has gone on for many years now, and it is a key part of public policy. While recognising the effectiveness and efficiency of large retailers, we should also recognise that they sometimes have advantages that are not entirely fair over smaller independent retailers. Some of those advantages are to do with the management of the supply chains.
Large retailers obviously have enormous buying power, which squeezes out competition and has an effect on their relationship with primary producers. As a representative of a constituency that is still largely agricultural, I notice that effect in the dairy sector, in which there is a very unequal balance of power between the retailers, and even the processors, and the primary producers. The Government should examine the relationships in the food chain.
Before the election, the Minister of Agriculture promised me that he would study the milk chain. From an answer to a question that I asked about a week ago, I now understand that the new Department for Environment, Food and Rural Affairs is not considering such a study. I do not know whether that means that the matter has been hived off to the Department of Trade and Industry, which deals with competition policy, but I would be grateful if the Minister could tell me whether a study of vertical relationships in supply chains will go ahead, and if so, when we can expect results. I hope that the study will be more adequate than the report by the Competition Commission, which asked the wrong questions of the supermarkets and therefore came up with the wrong answers.
Advantages for large retailers are built into the regulatory framework, and the biggest of them is the uniform business rate. I make no apologies for returning to this key subject, which was mentioned in the earlier debate, because many small retailers simply cannot understand why they are penalised in the proportion of their turnover that they have to devote to paying that unavoidable overhead compared with large retailers, with huge floor space, on the edge of town. I have repeatedly pointed out that the uniform business rate needs fundamental reform to make it fair.
If we cannot have such reform, let us at least make an arrangement to mitigate the effects of the uniform business rate on small firms. My hon. Friend the Member for Weston-super-Mare (Brian Cotter) has already outlined a mechanism, using the equivalent of the personal tax allowance, that would allow a given amount of a small firm's turnover to escape the business rate. That would benefit many small retailers, freeing them from an overhead that they cannot afford. Some arrangements for exemptions from the uniform business rate were introduced before the foot and mouth outbreak, and others were made in response to foot and mouth. They are all welcome, but they are complicated, and they are strangled by unrealistic turnover thresholds and definitions of qualifying businesses. A wider system of exemption or mitigation would be much more beneficial.
Finally, on monopolies, I want to deal with retailers' relationships with the banks. The banks, too, virtually have a monopoly. There is competition in the sector, but all the banks operate in a similar way. There is an urgent need to implement some of the recommendations in the Cruickshank report, particularly to establish a payments regulator. That could be an additional function of the Office of Fair Trading. Will the Minister tell the House whether that proposal will be included in the enterprise Bill to be introduced later in this Session?
Criminality is a problem for small retailers throughout the country. Town centres are increasingly lawless, and small retailers are experiencing more and more problems in maintaining the security of their premises and stock. The Government need to address that more adequately. They must deal with town centre crime and support retail crime-fighting partnerships, where they exist, but they must go further.
We want to see a police presence in our town centres, but many police forces are unable to maintain that presence. There is a need for town centre premises, or cop shops, for patrolling constables, instead of police stations on the outskirts of towns which were built for a previous era and have very few officers who are visible to retailers or customers. The Government could usefully provide tax relief for the security measures that businesses increasingly have to apply and local government planning authorities should be more tolerant of the measures that are necessary to make premises secure.
No one wins from shop crime. Costs are passed on to the consumer and insurance premiums increase sometimes to the point that a business in a town centre is not insurable. We need to tackle that problem.
The smuggling of products that carry excise duty makes a significant difference to the small businesses that sell them legitimately. More attention needs to be given to that problem.
We should also pay more attention to the impositions placed on small businesses as a result of policing the present system. Small business representatives often point to the proof of age regulations. Depending on the purpose of the item bought, the age of a consumer—be he 12, 15, 16 or 18—has to be established. However, there is no formalised system for the identification of minors and shopkeepers must bear the brunt of the consequences of that.
As I have said, the changes that the Government could make to the uniform business rate are crucial. Regulation, however, is another problem. Businesses are over- regulated and it is a truism or a platitude to say so. We are all against greater regulation, but we produce more and more of them. I therefore make a heartfelt plea to Ministers to curb that practice.
This place produces regulations as if they were coming out of sausage factory and we sometimes gold plate European regulations. That is a ridiculous habit of the British civil service even though the European authorities should not produce many of those regulations in the first place. I am a great believer in subsidiarity and one of the arguments for it is that regulations should not be produced to ensure compliance and uniformity when variety and diversity benefit the consumers and the businesses involved. That point should be taken seriously.
The Government can reduce the regulations and the impositions that they put on business people. Small businesses often say that they spend so long working for the Government—I do not just mean producing the money to pay taxes, but literally working for the Government by engaging in self-assessment and dealing with inspection and requests for information—that they have little time left to devote to running the business effectively. We must bear down on that crucial problem.
One suggestion is to have a single inspectorate—I call it an inspectorate because it has an inspectorate's role but I prefer to think of it as assisting compliance—that can form a relationship with small businesses. It should tell them everything that they should do but should place a burden on them only when they do not comply with those requirements. That would be a much more healthy relationship. We could also introduce automatic sunset clauses into regulations so that they do not continue to apply when they no longer have a function.
There is much positive action that we could take to support small businesses, particularly those in market towns, because many of those towns are dying on their feet. There are still too many boarded-up premises and too many businesses that cannot survive in the market-town environment. The regional centres are thriving, and there must be a better balance between the two. Not everyone can drive 50 miles to buy basic clothes. We need to revitalise our smaller towns. Convenience stores must receive our support. Their advantage is that they are convenient, so we should not put obstacles in the way of people using them.
Niche businesses also need our support. They are often the motors for trade. We cannot have a town that is entirely full of people selling ceramics, but a few shops in the niche markets will bring people in who will do other shopping. Mechanisms should be in place to encourage the establishment of such shops. In that context, what has happened to policy action team 13, which was mentioned last week in the Evening Standard? It seems to have died a death, but perhaps the Minister will disabuse us of that by confirming that it is involved in many good schemes.
Finally, foot and mouth has had an almost incalculable effect on businesses in my constituency. Although we have had no cases, many different businesses have been affected by the disease, which has had extraordinary ramifications. The support that the Government have stated and advertised is not reaching businesses,
which are struggling to survive. Once the epidemic ends among livestock, it will continue as an epidemic among businesses. It will take us a decade to recover from the unacceptable series of business casualties that will occur in rural areas this autumn and winter unless action is taken now. It is in everyone's interest that that action is taken. If it is difficult for a firm to get through a fallow period in the winter and there are cashflow problems, we need to ensure that it survives to make a profit next year. We cannot allow it to go under because that puts people out of work and creates holes in the economy that are difficult to fill.I am not sure whether the taskforce that was established in the dying days of the last Parliament understood the scale or complexity of the problem, or the fact that Ministers' good intentions were not being translated into activity on the ground. Many more shops will be lost unless aid is supported with cash, and we need to get that to businesses now. We cannot allow it to end up in a quango's sinking fund. We must get it to the people who can make it work so that they maintain their businesses.
I am grateful for the opportunity to raise such important issues of support for small businesses. I am not prejudging what the Minister will say, but the subject seems to breed platitudes: we all support small businesses; we are all against regulation; and we all want those businesses to get a new deal. However, year after year, under successive Governments, it becomes more difficult to maintain, create and develop a retailing business in this country. It is important that the sector thrives, and I hope the Minister will tell us what he intends to do to make that a reality.
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