Q
9 Mr.
Raynsford: I hear that message. However, you made the
point that you expected your members to meet 25 per cent. of business
rate supplement contributions. That does not seem likely if you cannot
quantify the percentage of total business rates accounted for by your
members with rateable values over £50,000. I find that figure
unconvincing without back-up evidence.
Tom
Ironside: The important issue, from our point of
view, is whether, relatively speaking, retailers have a larger
proportion of businesses under the £50,000 threshold than other
sectors of the business community. I have not seen any evidence in that
area which would lead me to make a conclusion about
that.
Q
10 Mr.
Raynsford: You must have some idea, because we know all
about the make-up of the retail sector. There are some very large
businesses, but there are vast numbers of small corner shops. In other
sectors of industry—the pharmaceutical industry, or the
construction industry, for example—you will not have quite the
same diversity, will
you? Tom
Ironside: At the same time, as I think Jane observed
earlier, retailers often find themselves in high rateable-value areas
of town centres, or in out-of-town retail parks, which will lift them
into a higher bracket in many cases.
Q
11 Mr.
Raynsford: I hear that, but you are putting forward an
argument on a rather flimsy basis if you cannot quantify the proportion
of anticipated business rate supplement that your members—the
retail sector—will pay. The figure of 25 per cent. is clearly
not convincing.
Tom
Ironside: We would be interested to see any figures
which cast into doubt that 25 per cent.
Q
12 Mr.
Raynsford: But you have cast it into doubt by accepting
that a significant proportion of your members have rateable values
below £50,000.
Tom
Ironside: We would also argue that a significant
proportion of other businesses would also find themselves below that
£50,000 threshold, because they have an opportunity to locate in
areas which are not necessarily quite as high-value as the areas in
which retailers find
themselves. Jane
Milne: It applies equally if you are a small
accountant, a solicitor or
whatever.
Mr.
Raynsford: I understand that entirely, but you are making
a strong case on the basis of what I regard as quite flimsy
evidence.
Q
13 Mr.
Philip Dunne (Ludlow) (Con): How many retail businesses
have gone into administration or liquidation in the past
year? Jane
Milne: It is an ever-mounting figure. We can
certainly provide that data although I do not have them to hand at the
moment.
Q
14 Mr.
Dunne: Do you have a feel for how many jobs in retail have
been lost in the past
year? Jane
Milne: Certainly, over the past month, and looking
forward a couple of months, we expect about 40,000 jobs to go in the
big chains, where figures are publicly available. Our problem is
understanding the number of individual people who have been let go from
many small and independent retailers, as those jobs disappear without
anybody being able to count them.
Q
15 Mr.
Dunne: Have your economists come up with a forecast for
2009? You mentioned 40,000 over the next two months. Do you have a
full- year forecast at this stage?
Jane
Milne: We would expect that number to grow, probably
quite significantly. There is a mixture of fortunes, with different
parts of the sector doing better than others. A number of the
supermarkets, for example, have announced that they will recruit staff,
so there is some good news in the sector. Certainly among the non-food
retailers, formal redundancies have been announced but, given that
there is always a certain amount of movement through
retailing—it is an entry-level employment sector for a lot of
people, who then try to move off into other things—a lot of jobs
will just disappear without anybody being made redundant, but with no
opportunities for others to move into those
jobs.
Q
16 Mr.
Dunne: How many people are employed in retail in the
UK? Jane
Milne: About 3 million. It is about 11 per cent. of
the work force altogether.
Q
17 Mr.
Dunne: With forecasts of unemployment on a national level
on the rise, do you anticipate that any additional taxation on your
members would accelerate the rate of loss of jobs over the coming year
or
two? Jane
Milne: Retailers are facing a crunch of a different
nature from the credit crunch that we often hear about. They have a
number of rising costs, including the rising costs of the goods that
they put on their shelves, because the falling exchange rates make
imports more expensive. There are a number of business rate increases
coming through the pipeline too, in terms of the annual uplift and the
2010 review, and when you tot them all up it comes to an increase of as
much as £1.6 billion, which is a 30 per cent. increase in the
rates bill. In addition, with the national minimum wage and so on there
are a number of other cost pressures coming through while, at the same
time, customers are looking for reduced prices. We are helping to
deliver the reduction in inflation that is coming through very rapidly
at the moment through discounting and the like. We are therefore
getting to the point at which there are such thin margins that pushing
up the rates bill inevitably puts jobs at risk. The total cost coming
through with business rates equates to about 100,000 retail
jobs.
Q
18 Mr.
Dunne: Could you break down that £1.6
billion a little? How much of it is associated with revaluation
arrangements that are already in train, and how much with the impact of
the
Bill? Jane
Milne: About 90 per cent. of that figure is
associated with both the annual revaluation and the quinquennial review
that takes effect in 2010, and about £160 million would be
associated with the BRS if it were taken forward by all of those who
are entitled to do
so.
Q
19 Derek
Twigg (Halton) (Lab): What evidence do you have that a
local authority would impose this increase on business on the basis of
wanting greater economic development, when the fact is that business
does not like it, it will cause it a problem and jobs will be lost?
What local authority would do that? What evidence do you have that
local authorities, in wanting to promote economic development, would
cause job losses in doing
so? Jane
Milne: We would hope that local authorities would not
do that. However, good legislation includes safeguards that ensure that
that is not the
case.
Q
20 Derek
Twigg: So you are not opposed to the legislation per se.
The issue is the safeguards that it
includes. Jane
Milne: Yes, the safeguards are extremely important to
us and that is why we referred to the BIDs process as the model that we
would like to follow more
closely.
Q
21 Derek
Twigg: But you can see the logic. Economic development for
local authorities has, certainly in the past ten to 15 years, been a
focus, and it most probably was 20 or 30 years ago. You say that you
hope that local authorities would not impose the increase. I ask the
question again: what evidence do you have? Do you have any evidence at
all that local authorities would impose an increase on business that
would be contrary to their economic development? Which local authority
would do that, when doing so would cause many jobs to be
lost?
Jane
Milne: Perhaps one issue concerns cases in which the
local authority has a different view of what would be beneficial to the
community from the business community. We would not suggest that local
authorities were deliberately setting out to cause business
problems—of course not—but they might not fully
appreciate all the issues involved. The BIDs process enables all of
that to be worked through and a very high-quality proposal to come
forward. The fact that about 85 per cent. of BIDs have been supported
by the local business community demonstrates that that process
genuinely gives rise to projects that are seen to be beneficial to the
community and, therefore, attract the business community’s
support.
Q
22 Derek
Twigg: So, it is more of a fear than a fact.
Jane
Milne: I think that good legislation puts a framework
in place that ensures the right outcomes and does not simply rely on
chance.
Q
23 Dan
Rogerson (North Cornwall) (LD): I, too, welcome you to the
Committee. I am pleased that we have the benefit of your experience at
this stage and as we move towards more detailed scrutiny of the Bill. I
would like to explore the interaction between BIDs and the potential
for the supplementary business rate for financial change. Why do you
think that the BIDs model is so successful? What works about that
model, both in terms of putting together the BID and of its
operation?
Jane
Milne: At the outset of a project, people in the
local authority, in retail, and in other business sectors, as well as
key community players, sit down and come up with a proposal that meets
the specific issues that that community faces. Retail has a good track
record of working with local authorities and of involvement in
regeneration projects through BIDs and other means. That very close
arrangement ensures that the issues that must be addressed and the best
ways to address them are worked out.
Q
24 Dan
Rogerson: Clearly, one of the Bill’s main concerns
is Crossrail in London, so we are talking about very big infrastructure
projects. Would you agree that BIDs would not be not the right model
for funding similar projects, which may be on a smaller scale, but
still fairly large for those regions, counties or
boroughs? Jane
Milne: I think that the procedure set out in BIDs
provide the model for the engagement that enables the examination of
those projects, makes the right assessments and ensures that a
genuinely robust business case is developed within the initial
prospectus. We are supportive of Crossrail—our problem is the
way that it is being funded.
Q
25 Dan
Rogerson: I hesitate to paraphrase, but you said in answer
to earlier questions that the principle of some form of supplementary
business rate to fund a project that the business community in that
area thought would be beneficial to the whole community, including its
ability to trade, prosper and play a part in economic development, is
not the problem. If it signs up to a project, the problem is how it is
arrived at and delivered. Is that
fair? Jane
Milne: The principle of making a contribution is not
the problem, but the issue of whether it is a property-based
contribution is more questionable.
Q
26 Dan
Rogerson: There is also the issue of areas where a BID may
already be operating, but which sit within a wider area that might be
subject to the measure. What do you think that the interaction between
those ought to be? What safeguards should be in place for existing BIDs
sitting within areas subject to an SBR?
Jane
Milne: We would like to see an automatic offset. If
that is not there, we risk losing BIDs as a process to put in place
regeneration projects beneficial to the community. Inevitably,
retailers have to look at their overall cost base, and while many of
them are enthusiastic supporters of BIDs, if they think that they are
going to have a BRS imposed on them, they simply have to look at the
budget and work out what costs they need to avoid to meet this
statutory
requirement.
Q
27 Dan
Rogerson: Would a ballot for the BRS as well, which many
are arguing for, be sufficient? Where a BID is operating, people would
have the chance to say whether they thought that two projects were
incompatible at that time and that one needed to be completed before
moving on to another. Is that enough of a safeguard? Do you think that
there should be automatic offsetting in that area, or do you think that
businesses should decide whether they could cope with both, given that
they are delivering different sorts of scheme and that there may be two
sets of
benefits? Jane
Milne: If the case is made for the project being
looked at under the BRS, you must look at overall funding and the
extent to which you are going to rub up against the 2p ceiling. If
there is scope within that, there are ways of arriving at the funding,
while still giving the offset to the BID.
Q
28 Dan
Rogerson: I am just trying to establish whether the offset
is sacrosanct or whether—if business is involved in arriving at
the BRS decision—there will be enough and one could be flexible
about the
offset. Jane
Milne: If the benefits are sufficient from both
schemes, retailers would find it much easier to deal with both,
particularly if the BID proposal came forward subsequently. In the
current trading environment, it is all about driving down
costs.
Q
29 Paul
Farrelly (Newcastle-under-Lyme) (Lab): I want to explore a
little how the British Retail Consortium has come to a view on behalf
of its members that can be fairly characterised as strongly opposed to
the Bill. How many members do you
have? Jane
Milne: We count our members in a variety of
ways.
Paul
Farrelly: I wish that we could as a political
party. Jane
Milne: If you look at them in terms of the proportion
of retailing value that they represent, it is about 80 per cent. of
total retail
value.
Q
30Paul
Farrelly: Just by number, by way of
background? Jane
Milne: We have about 65 of the major brands, but we
also have 30,000 small and independent retailers via their specialist
trade
associations.
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