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13 May 2008 : Column 354WH—continued

13 May 2008 : Column 355WH

I appreciate that absolute territorial protection would normally be banned under competition law, and it is generally against my instincts to support such monopolies. However, I fear that dismantling that almost miraculous distribution system, which means that all our papers and magazines are sent to every corner of the UK and arrive the next morning, could curtail freedom of choice and seriously damage independent newsagents. I live in central London, so it is easy for me never to buy my newspaper from a supermarket, and to use only small, independent shops, as I do.

The breaking-up of the current distribution system will allow supermarkets to broker their own distribution deals. I suspect that distributors will then be tempted to abandon unprofitable arrangements with newsagents and if the supermarkets become the main outlet for buying newspapers and magazines, they are likely to drop a vast proportion of less well known publications in favour of a few big newspaper and magazine names. That would be a retrograde step, and I hope that supermarkets will play their part voluntarily in ensuring that the widespread choice to all consumers in the United Kingdom is maintained.

I return to grocery retail. The popularity of farmers’ markets in my constituency, notably in Marylebone high street and Pimlico green, has proved that smaller suppliers and stores can prosper if they are adaptable and tap into consumer demand. Howard de Walden Estates, which is a large local landowner, has done a tremendously good and well documented job in ensuring that Marylebone residents have access to the widest range of stores, from specialist food shops to delicatessens, and there is both a Waitrose and a Tesco on Marylebone high street. Smaller branches of the more high profile supermarkets could fit into that mix without damaging the prospering local shops that also serve my constituents so well.

Some small store holders in my constituency are anxious about the possibility of smaller, convenience-store-sized outlets being opened by supermarkets in the area. I know that the possibility of another small Tesco store in the Pimlico area has caused concern and it is only fair to say that I have received representations, not least from Mr. Waheed Ali of Standard Foods on Lupus street, who has expressed the worries of small business people in the area that such stores could have a serious impact on their livelihoods. Mr. Ali’s convenience store has served the needs of the local community for 25 years.

I acknowledge the fact that the possibility of large out-of-town developments ruining high streets is not something that central London’s small retailers have to worry about, given that so few large sites are available, and that congestion and less frequent car use mean that many constituents walk or use public transport to do their weekly shop. However, I appreciate that people in other constituencies have such problems, even though they do not necessarily apply in the sort of constituency that I represent.

There are real concerns, for which I have a great deal of sympathy. However, I contend that if the Government have a real desire to help smaller retailers, such as my
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constituent Mr. Ali, penalising successful, thriving larger businesses and their shareholders is not the way to go about it.

David Taylor: Will the hon. Gentleman give way?

Mr. Field: If the hon. Gentleman will excuse me, I will not give way because I know that other hon. Members want to contribute.

I suggest that reforming business rates to allow more small enterprises to set up shop and remain active would be a far better route to intensifying competition and diversifying the high street than heavy-handed restrictions on the bigger players. Smaller employers could perhaps be released from some of the bureaucratic shackles of the employment market if we made way for deregulation. If the Government provided an incentive, local councils could do their bit—I appreciate that they must do their bit—by keeping down the cost to the shopper of town centre parking, in contrast with free out-of-town supermarkets, and regenerating town centres.

Land banking, supplier relationships and competition with small businesses are of course important, and it is right that they are properly addressed. The Government should examine the tax system, employment laws and town planning to give smaller businesses a helping hand. However, despite those who believe that all problems require greater regulation and interference, the grocery issue will always boil down ultimately to consumer choice. Shoppers will vote with their feet and spend their money at the stores that cater for their needs.

On that principle, supermarkets will continue to be rewarded while they offer value, choice, quality and, increasingly, an ethically and environmentally sound approach to their practice. If smaller retailers similarly provide consumers with an array of choice and quality, independent local businesses can be assured and confident of survival.

9.54 am

Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to take part in this debate, Mrs. Humble, and I congratulate the hon. Member for Cities of London and Westminster (Mr. Field) on bringing it forward. I shall try not to reprise the ground we covered in our previous debate on supermarkets when we successfully captured topical debate from discussion of plastic bags and environmental practice to move at least into the area of the then recently published Competition Commission report. We have had time since then to reflect on what the report says.

I have no reason to say anything other than that I was disappointed with what the report came up with, and I do not believe that competition alone will ever sort out the grocery market, let alone wider retailing. There were, nevertheless, some interesting facets to the report, and if what has been reported to me is true—that at least one chief executive officer of a supermarket chain was livid at what the report stated—some small improvements can and should be made to bring back some fairness to such a major area of our lives. With the globalisation of the food chain, we can see some of the political aspects as well as the economic and social aspects.

As always, I am indebted to the Association of Convenience Stores, which briefs us widely. Like the Minister, I am a Co-operative Member of Parliament,
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and I want to put on record the support that we receive from the Co-operative movement, which remains interested in retailing and wholesaling. With other organisations, such as the New Economics Foundation and the Rural Shops Alliance, we have tried to introduce genuine debate on the way forward.

The context of this debate should be not just the Competition Commission report, but the Government’s proposals to change the planning system. I, for one, will not agree with anything that dilutes the current arrangements to bolster planning policy statement 6, to ensure that we have a proper context for the high street and do not water down our allowance for out-of-town shopping, that the needs test remains in place, and that there is a realisation that the high street is so important that we should always be biased towards it rather than the alternatives.

David Taylor: I thank my hon. Friend and fellow Co-operative MP for giving way. Does he agree that the Competition Commission’s suggested competition test is set too high? At 1,000 sq m, it would be easy for the big four to circumvent such a regulation. For example, Tesco would be able to carpet the area with varying formats of stores—local, metro, express and one-stop. Would not the impact be minimal if a competition test of 1,000 sq m were applied?

Mr. Drew: Yes, and I shall talk about that. One weakness of the report is that it concentrated on the large store end in terms of anti-competitiveness, and more or less ignored the fact that Tesco and Sainsbury in particular, and supermarkets in general, have assimilated many smaller stores and moved into the convenience end of shopping. For some reason, the Competition Commission did not seem to think that was important. However, it is crucial because one should measure not just the effect of large stores, but the overall impact. If my hon. Friend does not mind, I shall say more about that later.

Philip Davies: Does the hon. Gentleman agree that supermarkets find themselves in an impossible position? When they try to open an out-of-town supermarket, people complain that they are destroying town centres and high streets. When they then open stores on the high street, they are criticised for creating unfair competition for other shops on the high street. Will he say where he is happy for supermarkets to open, because they seem to be in a no-win situation?

Mr. Drew: It would be nice to have a level playing field, but we do not. The fact is that supermarkets are so important in our lives that they must be prepared to take such criticism, respond to it and, if they behave as we want them to behave in a moral sense, they may be able to persuade at least some of us that they are more rational in the way in which they respond to such accusations. [Interruption.] The hon. Member for Castle Point (Bob Spink) is shouting at me from a sedentary position.

As the hon. Member for Cities of London and Westminster, who initiated the debate, said, it is about time that we had a proper debate on the issue because things are often not said. It is important that we at least have the opportunity to help.

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Bob Spink rose—

Mr. Drew: I will give way one last time, otherwise no one else will get in.

Bob Spink: I am grateful to the hon. Gentleman. I will be brief. Will he mention the 15 per cent. buying advantage that supermarkets have over traditional high street shops?

Mr. Drew: That is by nature anti-competitive because none of the independents can compete, so it is an important point. I was just about to say that in the original report from 2000, the Competition Commission found some 27 anti-competitive practices. A number of them have been reaffirmed in this report and in other things that the Competition Commission has said. It is interesting that it is possible to find those practices. Accusations are made that such things go on behind closed doors and below the radar, so the fact that those practices have been identified is good in the sense that we can do something about it.

The hon. Member for Cities of London and Westminster referred to land banking. I do not want to say much about that. The emphasis of the report was supposed to be on land banking, and it is significant that it moved from that to considering the wider aspects of the way in which supermarkets behave. The issue of the ombudsman will get most of the publicity, which is not necessarily a bad thing. When the Select Committee on Environment, Food and Rural Affairs looked at the milk industry, some farmer organisations argued strongly for a regulator body—an “Ofmilk”—to be set up in relation to that particular trade. Some of us had misgivings about that because we did not think it would be powerful enough or willing to do the real groundwork. However, the matter is at least worth considering and if regulation is the way forward in dealing with anti-competitive practices, why not have it in that area? Energy and water are regulated so why not have a regulator for something that makes up an even more important part of people’s everyday life—their consumer purchases.

I have misgivings about some of the outcomes of the report because they rely on voluntarism. The idea that a stronger groceries supply code of practice—that phrase slips off the tongue easily—will make a lot of difference is somewhat na├»ve, although the fact that we now have such a code shows that supermarkets are not completely immune to the wider world and the political process.

I have a number of points that I hope my hon. Friend the Minister will comment on. The fundamental problem with what the Competition Commission has done—and what the Office of Fair Trading did previously—is that it looked at the evidence that it already had or was given. As I said in the earlier debate, there are questions in relation to who gave evidence, the evidence they gave and, more specifically, who did not give evidence and why. Behind the scenes, a lot of evidence shows that even the strongest suppliers are wary of saying anything critical about supermarkets—even in the confidential opportunity they were given as part of the process, and that must be borne in mind. Much of the opposition—somewhat inevitably—was led by the Association of Convenience Stores. However, the association could never match the ability of some of the larger suppliers
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to dish the dirt if they had wanted to. They chose not to and that is a weakness in what we have been presented with.

We do not have to look far to find accusations of price fixing. The last edition of The Sunday Times considered the effectiveness of the mark-up on some products across the board in supermarkets. Not surprisingly, the accusation is that when discounting takes place, it happens across the board. As I said in our previous debate on the subject, the argument regarding larger suppliers is not that their main brands would be removed from the supermarket shelves—supermarkets would not be stupid enough to do that—but that they put pressure on suppliers with any new or less popular brand. That is something that has been largely ignored and it needs to be examined.

The idea that the high street has not suffered—I know that is a paraphrase of the report—is somewhat tendentious. I heavily criticise the commission for the belief that competition per se compensates for the fact that the high street may have been weakened. I come back to an argument I have made before: it would be useful if the definition of a supermarket’s power was redefined. It is crucial to look at a supermarket’s impact on the smaller convenience market as well as on larger stores. The Competition Commission will have to keep looking at this matter and the next time it does so it should make that redefinition and carry out a more complicated analysis of the real impact. As the hon. Member for Castle Point said, the 15 per cent. advantage and the way in which supermarkets can use the supply chain to get value into their operations are clearly of immense value and put independent operators at a strong disadvantage.

If one good thing has emerged, it is in respect of the power of the ombudsman. If we are to have an ombudsman, he must have teeth. The ombudsman must have sufficient resources to investigate and deal with any anti-competitive practice. He must also be able to report on such practices and do something about them. Since we have been through this process, the OFT has become much more aggressive. I do not know whether that has happened by accident or whether it is a good result, but there is some evidence of the OFT beginning to put the boot into practices that are clearly unacceptable.

I would like to think that this place also has a role to play because too often Parliament is an afterthought in the way in which such reports are considered. We could have an annual debate on the role of supermarkets and their practices. One of the things we could consider is the morality that we expect supermarkets to display. For example, we have had various debates about the selling of cheap alcohol—my hon. Friend the Member for Barnsley, Central (Mr. Illsley) mentioned it on a previous occasion. There ought to be a careful examination of the alcohol policies to which supermarkets adhere. That is worthy of proper investigation if we are genuinely trying to tackle law and order because we all know where the root of such problems lies. Likewise, we need to consider obesity, and what foods should or should not be sold.

Mr. Mark Field: Surely the hon. Gentleman will appreciate, as I hope all hon. Members would, that
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ultimately the customer—the consumer—must be king in relation to many of these matters. However, I entirely agree with his view that Parliament is the right forum to raise consciousness about these issues, although I hope we will not have more and more regulation as I do not think having an ombudsman is an effective way forward. Does he agree that over the past year raising issues such as obesity and alcohol deals has led to supermarkets changing their practice and being aware of those broader concerns? In many ways, Parliament having its say through an informal system is working quite well to the benefit of consumers, suppliers and the supermarkets themselves.

Mr. Drew: Yes, I agree. In this place, we underestimate our ability to use our authority carefully and purposefully. That is something we should do.

Mr. John Grogan (Selby) (Lab): On alcohol pricing, does my hon. Friend agree that it is significant that earlier this year Tesco admitted there would be low-cost selling for the first time? It called on the Government to consider legislation that would allow minimum pricing for alcohol. Does he agree that once the Department of Health study on the effects of low alcohol pricing is published in July it is incumbent on the Government to respond to that call from Tesco?

Mr. Drew: The answer to that is yes. We look forward to that, and my hon. Friend is right to raise the issue.

A further issue relates to gangmasters. My hon. Friend the Member for North-West Leicestershire (David Taylor) and I are members of the Select Committee on Environment, Food and Rural Affairs, which considered that issue some years ago. It was interesting that the supermarkets’ attitude was basically not to ask questions about how they source their materials. They have since learned that they need to be careful.

Before I conclude, I shall make a point that I mentioned in our previous debate on the subject. How do we use the Sustainable Communities Act 2007 to allow communities to begin to re-empower themselves to deal with the problems of clone towns and ghost towns? I would like us to debate that point properly in this place once the Act is fully in force, later this year. I hope that it will be another way for us to examine the operation of supermarkets and how we may need to curtail some of their market power.

I welcome what the hon. Member for Cities of London and Westminster has done, because it is right to have the debate at this time. Some of us will do more. I know that the hon. Member for St. Ives (Andrew George)—the witchfinder-general, as I lovingly refer to him—will have even more to say than me. I hope that we will begin to move in the direction that I have described and make people realise that there is at least a need for a debate and to hold the supermarkets to account. I hope that this is just one of many debates in which we can all take part.

Several hon. Members rose

Mrs. Joan Humble (in the Chair): Order. I notice that three hon. Members wish to speak. I intend to call Front-Bench spokespersons at 10.30 am, so if hon. Members show some discipline, everyone will be able to speak.

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