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1.34 pm

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): First, may I pay tribute to the hon. Member for Somerton and Frome (Mr. Heath) for securing the debate? He spoke forcefully—indeed, movingly—and from the basis of a real knowledge of his constituents' concerns about the importance of small retailers. He raised several matters that I hope to address.

I assure the hon. Gentleman that the Government fully understand the vital role that retailing plays in the United Kingdom's economy. It contributes more than 5 per cent. to the nation's gross domestic product and employs nearly 2.5 million people, which is 11 per cent. of the work force. Some 58,400 new jobs were created in the sector last year, providing flexible job opportunities for women, part-timers, young people and returners to work among others.

More than any other sector, retailing affects our daily lives, as the hon. Gentleman made clear. Not only does every household spend £144 a week on average in retail outlets, but the availability of suitable shopping facilities influences where people choose to live, the value of their houses and their environment.

At one end of the scale, the vibrancy and diversity of retailing in Britain attracts huge revenues from tourists, while at the other, access to the local shop is far more than just a convenience. It is an essential local amenity, and one that can help in the regeneration of our high streets and market towns, to which the hon. Gentleman referred, and in the rejuvenation of urban and rural communities in general.

Just as shops are an important part of any community, so is the local post office, a subject on which I had the pleasure of reading some of the hon. Gentleman's

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contributions to debates in this House. The local post office is more than just a retail outlet, especially in many rural areas. It represents vital human contact for many of its customers. This Government are committed to ensuring that the network is a viable business and that running a sub-post office is and remains an attractive business proposition. We are therefore introducing a range of measures to help post offices. One, which I had the opportunity to put before a Committee this week, is the establishment of a £2 million fund to make available subsidies in respect of the costs of establishing a sub-post office in settlements of fewer than 10,000 inhabitants.

The Government are also committed to assisting shops in rural areas such as the hon. Gentleman's constituency. The White Paper "Our Countryside: the future, a fair deal for rural England", published in November, announced a range of new measures to help rural services, including village shops.

Those measures include a £15 million community services grants scheme, administered by the Countryside Agency, which awards grants of between £500 and £25,000 to locally identified, innovative projects to improve access to services that may be declining or under threat; increased funding for market-town regeneration, which is expected to entail a £100 million programme for 100 towns to strengthen their role as service providers and growth points and to create a national beacon towns best-practice network; and new legislation providing 50 per cent. rate relief to all village food shops and new non-agricultural enterprises on farms.

I noted the hon. Gentleman's comments on uniform business rates. It was one of the pleasures of preparing for today's debate to read his speech in the debate on 30 April on that very subject. In last year's Green Paper, "Modernising Local Government Finance", the Government proposed a scheme to provide mandatory rate relief of up to 50 per cent. for all small businesses. We are currently considering the details of that scheme, in consultation with representatives of business, including small business bodies. We shall publish a White Paper on the next steps later this year. As the hon. Gentleman acknowledged, we have already implemented the Green Paper proposals to provide additional help to small retailers in isolated rural communities. Mandatory rate relief of 50 per cent. was extended to certain pubs and petrol stations in designated rural villages with effect from 5 April.

I turn next to retail crime, which the hon. Gentleman raised. The Government are particularly concerned about the level of crime, as described in the policy action team or PAT 13 report to which he referred, that small retailers are suffering in deprived areas. Indeed, the Home Office is working closely with the retail sector through a ministerial advisory group on retail crime and the retail crime action team to develop initiatives to combat such crime. That has led to the development of active retail crime partnerships, the best of which are delivering some impressive results in reducing crime and antisocial behaviour in city and town centres. My right hon. Friend the Home Secretary announced on 27 June a £15 million investment to improve the immediate environment of shops and enhance their security.

On the specific issue raised by the hon. Gentleman of proof of age, the Government do not believe that there is a case for introducing a national card. There are

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already some good voluntary schemes—notably Prove It, CitizenCard and Validate—which have the Government's support.

The hon. Gentleman spoke forcefully about the regulatory burden on our retailing sector. In creating a dynamic and competitive economy including the retail sector, it is of course important that we pursue the objective of light-touch and proportionate regulation—regulation only where it is justified and to the extent that it is justified.

One of the primary functions of my Department's Small Business Service is to find ways of reducing regulatory and administrative burdens on small businesses. The SBS will work to ensure that the "think small first" philosophy is applied across Whitehall in respect of new regulations. It will seek to reduce the impact of regulations by eliminating them where possible, by simplifying forms and procedures and by encouraging higher standards of enforcement. The SBS also encourages Departments to make information on regulations comprehensive and accessible, including through the SBS information and advice service.

Following a request from my right hon. Friend the Secretary of State for Trade and Industry to Lord Haskins, the better regulation task force agreed to report on the regulatory burden faced by small and medium-sized enterprises, including small retailers as a case study. The report has recently been published and my Department is now considering the recommendations and how to implement them.

On the specific issue of supermarkets, concerns have been voiced that the Competition Commission inquiry into supermarkets might not have gone far enough and that small shops are at a disadvantage. However, the success of the supermarkets cannot be attributed solely to the prices that they charge: consumer buying patterns and habits are changing and we are witnessing the growth of the desire for one-stop shopping, as the hon. Member for Somerton and Frome recognises.

In completing its report, the commission considered carefully the impact of supermarkets on rural shops. It identified a number of practices engaged in by the larger supermarkets that it felt were against the public interest because they adversely affected the competitiveness of some of their suppliers and other smaller retailers. The commission's report recommended that the most effective way of addressing those adverse effects was a code of practice. My right hon. Friend the Secretary of State for Trade and Industry has recently received advice on the code from the Director General of Fair Trading; that advice is now being considered.

Another major concern was that supermarkets might be involved in the practice of below-cost selling, which could have an adverse impact on small retailers. The Competition Commission examined the practice of below-cost selling in detail. It found that persistent below-cost selling took place only in relation to a small number of products, most commonly economy lines and a few other high-profile items. It was impossible directly to isolate and quantify any adverse impacts.

The commission accepted that persistent selling below cost could be damaging, but considered that there were good grounds for not taking action against it: for example,

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there were difficulties identifying legitimate exceptions to a prohibition, and there was a possibility that supermarkets would circumvent a prohibition by forcing down supplier prices to allow them to set lower retail prices. A prohibition might also lead to higher prices for consumers. The former Secretary of State for Trade and Industry, my right hon. Friend the Member for Tyneside, North (Mr. Byers), therefore accepted the commission's recommendation that no action should be taken in respect of persistent below-cost selling.

The location of large out-of-town supermarkets is the result of commercial decisions by retailers, albeit operating within the constraints of local planning regulations that are designed to encourage new growth within towns. The Government are committed to sustainable development that ensures the viability of town centres, and planning proposals are scrutinised against guidelines that strongly promote town centres as the focus for future retail development.

When drawing up their development plans and determining planning applications, and after giving consideration to the need for new development, we expect local planning authorities to adopt a sequential approach to the selection of a site: first preference should be given to town-centre sites, followed by edge-of-centre sites, and only then to out-of-town sites. The onus is on developers opting for out-of-town sites to demonstrate that all potential town-centre and edge-of-centre options have been thoroughly assessed.

I shall write to the hon. Gentleman on issues relating to the supply chain and the Cruickshank report. He specifically directed many of his remarks to the issue of small retailers. It is clear that retail delivers tangible economic benefits not only to the country as a whole, but to individual communities. The broader welfare advantages that it can bring were recognised by PAT 13, which confirmed that good neighbourhood retailing plays a vital role in improving community self-esteem, community engagement, skills development and training and social life. The maintenance of local retailing is vital to the lifeblood of a community, so I am extremely pleased to be undertaking that work in the Government. I acknowledge the progress already made in departmental implementation of PAT 13's recommendations.

For example, at our request, the better regulation task force examined the impact of the regulatory burden on small shops. Its report has been published and we shall give careful consideration to its recommendations on how to advance the issues. The SBS, through its franchises, is supporting initiatives to provide direct help to small retailers. For example, pilot projects are being supported in Surrey, where 800 small retailers are utilising e-commerce to achieve supply chain efficiencies, and in Birmingham, where inner-city retailers are receiving help in improving store standards and performance through advice on merchandising, training, customer service, health and hygiene, promotional projects and group purchasing. If successful, we hope that those projects and similar ones can be rolled out across the country.

Funding is available through the SBS Phoenix development fund, which is designed to encourage innovative ideas to promote and support enterprises in disadvantaged areas among groups of people currently under-represented in business ownership. Its purpose is to encourage experimentation, the evaluation of new ideas and the identification and spread of best practice in an

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area where there is currently too little knowledge. The second round, which has just closed, specifically identified retailing as a sector in which applications would be considered.

The report also stressed the need for locally developed strategies, with the local community playing a full part in the process and working together with local retailers. Through the establishment of the PAT 13 movers' group, consisting of people who are actively involved with promoting the sustainability of retailing in local communities, we are identifying examples of best practice. They will be disseminated in a conference in January next year with the aim of encouraging local people to set up or sustain retail businesses in difficult areas by highlighting support mechanisms that are available. A signposting guide to both local and national support mechanisms will be launched at the conference, and will be available via a DTI-supported website. I hope that the hon. Gentleman agrees that measures such as those sequential approaches help to provide small retailers with a more level playing field.

I turn to foot and mouth, which the hon. Gentleman raised in his conclusion. The Government continue their work in that area. We are already helping badly affected non-farming businesses to cope by deferring tax, VAT and national insurance contribution payments; we are providing extra funding for hardship rate relief payments; and are establishing a new regional development agency business recovery fund to provide grants to help businesses adjust and cope with the crisis. Already, more than 11,000 businesses have had tax, VAT and national

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insurance payments deferred without interest charges worth £71 million. However, I concede that work must go on across Departments to continue to cope with a serious crisis that has affected a large number of constituencies the length and breadth of the country.

I thank the hon. Gentleman for raising the issue, and I assure him that we recognise the difficulties that small retailers currently face in adapting to changing patterns of competition and consumers' buying habits. Our goal is the sustainability of a vibrant and diverse retail sector, both physical and virtual, which can serve the needs of all social groups in all parts of the country. It is not, however, our role artificially to keep businesses afloat through subsidies, but to help them become more sustainable through innovation and the adoption of new technologies and best practice. Much excellent work is being developed and undertaken in communities across Britain; we want to encapsulate that and encourage a wider spread of take-up across the country. I therefore warmly welcome the opportunity to demonstrate our commitment as a Government to the retail sector, to working closely with it in future, and to any initiatives aimed at promoting social inclusion and enhanced sustainability of social enterprises, in both of which retailing has played an important part. In conclusion, I pay tribute to the hon. Gentleman's success in initiating this debate in the House.

Question put and agreed to.

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