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13 May 2008 : Column 366WH—continued

There is no doubt that supermarkets have changed how we shop. Most of us, including me, use them, and I am quite willing to admit that I enjoy using supermarkets. I like the convenience and the fact that I can turn up and get everything that I need in limited time, put it in my car and drive off. I confess to that, as most other Members of Parliament would if they were honest about it. However, I also like the convenience of using my local shop. I can pop out to the shop at the end of my road, which is open late at night, to buy things that I need, and I like the diversity of the high road. Like most other people, I have a kind of schizophrenic attitude to supermarkets. We perhaps need to begin by admitting that we want diversity in the high street, but that we
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enjoy using supermarkets. There is no point in pretending anything else. That is particularly the case for people with families who find it much easier to strap two kids into a trolley than to negotiate several shops with a couple of toddlers in tow.

The British public spend £130 billion a year on groceries, and the top four supermarkets share 75 per cent. of that market between them—independents are now at less than 3 per cent., and the Co-op at about 4.5 per cent. of the market. That dominance has both negative and positive consequences, which have been discussed in the debate. The negative effects are based on price and the perception of price caused by the ability of supermarkets to drive down the cost of supplies; the undoubted impact that they have on town centres; and the ability to wield huge power over suppliers, which has led to abuse—my hon. Friend the Member for St. Ives (Andrew George) discussed that in some detail. However, as the hon. Member for Shipley (Philip Davies) said, supermarkets can be major employers in an area and they often take flexible approaches to employing people with disabilities and older people, who might find it difficult to gain employment elsewhere. Some supermarkets are involved with their communities, and others are not. We heard examples of bad practice from my hon. Friend the Member for Southport (Dr. Pugh), but I have seen good and bad examples in my constituency.

The relationship between supermarkets and small independent shops is complex. The advent of a new supermarket may drive out local shops, depending on whether free parking in the high street is provided. Like my hon. Friend the Member for Southport, I believe that abolishing all restrictions on parking in town centres is probably a little silly and that it would not, in fact, solve the problem that the hon. Member for Shipley said he was trying to solve.

Huge market dominance also provides opportunities for supermarkets. Their brand recognition and trust would allow them to take a lead on things such as environmental policy, packaging, antisocial behaviour and alcohol, and to incentivise consumers to change their behaviour, but whether they choose to do so is another matter.

The Competition Commission looked at two issues: the impact on suppliers and the impact on consumers where there is a local monopoly. I was extremely disappointed that the commission did not look at competition between supermarkets and local shops, and that it focused exclusively on competition between supermarkets. I feel, as the hon. Member for Cities of London and Westminster said, that the report consequently missed the point. He mentioned the Evening Standard, which has a long-running campaign to protect local shops and high streets, for which I applaud it. The commission missed an opportunity by examining whether there was adequate competition between Tesco and Sainsbury’s, not whether people wanted diversity of shops on their high street.

There is no doubt that there has been an enormous loss of small shops. That is not a new problem and I do not want to say that it arrived in 1997: from 1991 to 1997, 4,000 food shops closed in rural areas; between 1997 and 2002, 50 specialised shops—butchers, fishmongers,
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newsagents and so on—closed in the UK every week; 25 corner stores close every week now; and almost one in six independent convenience stores has gone in the past three years. They are often the shops that sell local produce. We have seen examples of supermarkets trying to corner the market on farmers’ markets, ensuring that they sell more local produce, but in truth, if local shops go, there is not much chance of sourcing produce locally and following a regime of fewer food miles. Since 2000, a further 4,000 convenience stores have closed down and a further 5,500 have been bought out by major chains, which the hon. Member for Stroud (Mr. Drew) alluded to.

What can be done? I do not have much time left, so I will raise just a few points, to which I hope the Minister will respond. For some time, the Government have been promising to publish their new planning guidance—PPS6. The Competition Commission recommended maintaining the needs test, but other hon. Members and I believe that it is vital that it is not just a competition test and that it allows for some examination of diversity on the high street. I recognise the commission’s point about a supermarket having a monopoly in an area and therefore being able to raise prices, but it is also vital to take diversity into account.

We must also consider the flexibility of local councils with respect to planning issues. I want councils to be able to develop their own use class orders, so that they could, if they wanted to, require a change of use when a local independent shop was replaced by a multiple retailer. Moreover, there is the issue of the cost of appeals, to which my hon. Friend the Member for Southport referred. Making firms pay for their own planning appeals would make a huge difference in that respect.

This is a question of balance. Consumers want choice and like using supermarkets, but they also enjoy using their local shops. It is for central and local government to ensure that that balance is maintained.

10.41 am

Mr. Brian Binley (Northampton, South) (Con): Let me say what a pleasure it is to serve under your chairmanship yet again, Mrs. Humble. My only reservation is that I often do so in the morning, and my eyes are sometimes rather blearier than they should be. None the less, it is a particular pleasure to serve under you this morning.

I congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Field) on gaining the debate and on his balanced view of this situation, whose importance is growing considerably throughout the country. I was particularly delighted when he intimated that attacking one section of the market as against another would do us all a disservice. We need to create a balanced view. I took some exception, however, to his remarks about melon-bellied traders. I noticed that he glanced particularly in my direction when he said that, but I shall take that up with him privately later.

I speak as the chairman of the Conservative party’s commission into small shops in the high street, which has been looking into a number of issues that impact on the problems of our small shops. Increasingly, our conclusion is that balance is the word that we need to keep in our minds when discussing this problem and reaching conclusions. When my commission was gathering evidence, I met representatives of all the major
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supermarkets, and it is true that there appears to be a real problem of balance between the large supermarkets and independent retailers and between out-of-town and edge-of-town development over 30 years, which is a sizeable period. During that time, there has also been a commensurate decline in many of our community hubs, town centres and edge-of-city centres. It is a very complicated situation, but we must recognise that there is a connection. We must do something about that, not least because our communities’ hearts are just as important to them as our hearts are to our individual bodies—when they function properly, they are the essence of our communities and give them their robustness. It would therefore be silly to ignore the importance of those hubs.

Andrew George: The commission looked at the uneven playing field with regard to out-of-town supermarket car parking and in-town car parking, but many of us are not necessarily sure that the business rating system properly reflects the big business advantage that supermarkets have. Has the commission reached any conclusion on that? It considered the possibility of charging for car parking at supermarkets, but has any other conclusion come from that?

Mr. Binley: If the hon. Gentleman is talking about my commission, I am happy to tell him that all will be revealed in about four weeks. We certainly looked at the issue in some depth, and I hope that he will find our report favourable.

Bob Spink: Does the hon. Gentleman accept that Government policy plays a part in preserving our high streets, so that they can serve vulnerable groups and give them access? Does he accept that the move towards centralising GP services and introducing big pharmacies on Canvey Island, for instance, is threatening six pharmacies that serve people there and that that will reduce access for vulnerable groups on Canvey Island, as elsewhere?

Mr. Binley: The hon. Gentleman raises an important point, which my commission is considering at this very moment. There is a real issue about the availability of pharmacies, particularly in rural areas, and we need to consider that in greater depth. I therefore thank him for his remarks.

Hon. Members will be familiar with the key facts about the growth of supermarkets, so I do not need to rehearse them. I am sure that hon. Members know that the acquisition of land has become a sizeable problem and that the number of big stores owned by the supermarkets has doubled since 2000, which is a major concern. Hon. Members will also know that 2.4 million sq m of additional retail space—it is not all grocery space—will be added to the market between 2008 and 2012, bringing the total to 28.3 million sq m by 2012. However, only 40 per cent. of the new retail space that is planned over the next 10 years is for our town centres. When I say that it will be retail space as opposed to grocery space, hon. Members will see what a hit that will be for small shop provision in our town centres. We need to be very aware of that movement. As I said, this is a question of balance. Let me say to my hon. Friend the Member for Shipley (Philip Davies), who made a vigorous defence of supermarkets, that that balance is important.

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We have talked about the other matters that the Competition Commission attempted to address, including the role of the competition test in larger planning decisions; the new strengthened code to extend groceries; a supply code governing supermarkets’ conduct with regard to groceries; action to prevent land agreements, which can restrict competitors’ entry into the market; and an independent ombudsman to enforce the code. I welcome those proposals in part, but we need to look at the issue of ombudsmen very seriously, because they often add to problems by lengthening the time that it takes to arrive at solutions. We must take that into account.

My right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said that the needs test has the most direct relevance to the retail sector and the commercial balance of large and small retailers in any given town or village, and the Competition Commission noted the importance of that in its investigation. The test gives some protection to smaller businesses, particularly in town centres. We need to recognise that, and I ask the Minister about the issue when I conclude.

Small shops are the lifeblood of local economies in many of our small communities and provide a lifeline to local residents, and their survival is vital to the well-being of the community hubs that I mentioned. We must ensure that out-of-town developments work with the needs of local communities, not against them. In the light of the Competition Commission’s recent and final report, will the Government therefore review their position on the needs test? Does the Minister now agree that it should be retained?

The commission also recommended introducing a stronger groceries supply code of practice, which would be enforced by an independent ombudsman. Will the Minister furnish us with further details about that, bearing in mind the concerns that I have expressed?

Given that the burden of regulation that the Government have created over the past 10 years has seriously increased and tends disproportionately to affect small and medium-sized businesses, what do the Government intend to do to support those businesses, which operate mainly in our town centres?

The issue before us is about balance, but it is also about the health of our communities. We are discussing a wider social issue, which is important to many of our constituents, so I look forward to the Minister’s response.

10.49 am

The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): I, too, congratulate the hon. Member for Cities of London and Westminster (Mr. Field) on securing the debate. I welcome the contributions that we have heard from both sides of the Chamber, not least the contribution of my hon. Friend the Member for Stroud (Mr. Drew). Among other things, he praised the continuing, excellent contribution of the Co-op retail sector and the benefits that it brings to consumers and to the strength of the high streets in which it operates.

The hon. Members for Shipley (Philip Davies) and for Southport (Dr. Pugh) made the most robust contributions to the debate, even though from slightly different perspectives. I listened with considerable interest to the concerns of the hon. Member for Shipley about town centre parking and found myself almost agreeing
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with him. Perhaps that reflects my experience and the experience of businesses in my constituency at the hands of the Conservative-controlled Harrow council, which has consistently failed to listen to the representations of businesses in south Harrow and Rayners Lane about the cost of parking there. That lack of listening might explain why the Audit Commission recently rated it as the worst-run authority in London.

The hon. Member for St. Ives (Andrew George) talked about development and highlighted the important contribution that supermarkets can make to encourage trade from developing countries into UK and European Union markets. I hesitate to provoke disagreement between him and the hon. Member for Brent, East (Sarah Teather), but she raised the debate about food miles—a debate that I find entirely erroneous. Many of those who highlight the need to reduce the number of food miles do not recognise that goods made in many developing countries are produced using fewer carbon dioxide emissions than goods produced elsewhere.

It is a pleasure to follow the hon. Member for Northampton, South (Mr. Binley), whom I congratulate on his elevation to the Front Bench.

Mr. Binley: It is just for one day.

Mr. Thomas: I look forward to it being permanent, as that could only improve the quality of the Conservative Front-Bench team.

Notwithstanding her comments about food miles, the hon. Member for Brent, East struck the right note regarding British consumers. We want supermarkets to continue to function effectively, but we also want to benefit from the contribution that small shops make to our high streets. As the hon. Member for Cities of London and Westminster made clear in his opening remarks, supermarkets generate considerable passion in that context. We must separate the behaviour, or not, of supermarkets from the changes that have occurred in the past 10, 15 or 20 years to the way in which we live our lives and the way that we shop as consumers. As the hon. Lady said, as we lead busier lives, we want to do more of our shopping in one place. That has undoubtedly had an impact on markets.

We must recognise a truism that the hon. Member for Shipley discussed and that all hon. Members have picked up in various ways—supermarkets are a thriving and dynamic part of the economy, and their success benefits not only their shareholders, but local communities, their employees, their customers and our regional and national economies. In 2007, an estimated £110 billion-worth of grocery sales were made through nearly 100,000 grocery stores across the UK. It is true that the eight largest grocery retailers accounted for about 85 per cent. of total grocery sales, with the largest four accounting for just over 65 per cent., but it is important to recognise that some supermarkets play a vital, anchoring role in a number of town centres. Occasionally, they also play a crucial role in regenerating town centres. In the community of north Harrow, where I live, businesses and local people are desperate to have a supermarket back on the site of the old Safeway store, to help to generate new business and to create opportunities for vulnerable consumers in the area. Supermarkets provide much-needed
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employment and help to attract other, smaller retailers to set up shop in their shadow.

We should also acknowledge the contribution that British supermarkets have made in improving their ethical sourcing and environmental performance, whether on climate change or waste. I think it was my hon. Friend the Member for Stroud who talked about plastic bags. We look forward to supermarkets doing further work in that area.

We welcomed the Competition Commission’s thorough report, which was published on 30 April. The commission found that, in general, the groceries market is delivering a good deal for consumers, but it identified two key concerns. First, several grocery retailers have strong positions in a number of local markets, and that could lead to a poorer retail offer to the consumer. Secondly, the commission believes that the transfer of excessive risk and unexpected costs to suppliers has an adverse impact on investment and innovation.

To address those concerns, the commission proposed several remedies, mainly concerning the use of restrictive covenants and exclusivity arrangements on land sites, which it has the power to implement. Large grocery retailers will be required to notify the Office of Fair Trading of all acquisitions of large grocery stores. In addition, the commission has recommended to the Government that a competition test should be adopted and that the OFT should act as a statutory consultee in that process.

The hon. Member for Brent, East asked about the review of planning law, which is due for consultation. I am afraid that, at this stage, I can say only that we will soon publish our proposals for revisions to planning policy statement 6. When we bring our proposals forward, we will take full account of the commission’s recommendation on the competition test.

The commission also proposed that there should be a grocery supply chain code of practice. Such a code would expand the number of supermarkets that are covered by the existing supermarkets code of practice, and certain alleged practices by supermarkets would be prohibited as a result of the code. The commission is seeking voluntary undertakings from grocery retailers to establish an ombudsman to monitor and enforce compliance with the code. The ombudsman would gather information and could proactively investigate retailers’ records in areas in which there had been complaints. Guidance on the provisions of the code would be published, as would an annual report on its operation. I hope that gives my hon. Friend the Member for Stroud some reassurance regarding his worries about whether evidence would be produced to the ombudsman.

Andrew George: Will the Minister give way?

Mr. Thomas: Given the time, I am afraid that I will not.

If the commission fails to obtain satisfactory undertakings from retailers within a reasonable period, the Government will be asked to step in and legislate. We are considering the commission’s report in detail, and we anticipate publishing our formal response, with a full plan of action, before the summer recess. I hope that I have dealt with the majority of hon. Members’ concerns on this issue. This has been a useful debate, and I look forward to returning to those concerns in due course.

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