Memorandum submitted by the British Retail
Consortium
SUMMARY
1. The British Retail Consortium (BRC) welcomes
the opportunity to comment on themes and trends in regulatory
reform. Proportionate, evidence-based and cost effective regulation
has always been essential, however the current economic downturn
has compounded this necessity.
2. Retail is in the front line of the economic
downturn, with closures of up to 15% of high street stores and
200,000 job losses this year forecast by some observers.
With this in mind, the BRC believes any new regulatory measures
must be stringently examined for their true benefit to the interests
of the UK.
3. Business planning is a key component
of the viability of small and large retail operations. Therefore
clear regulatory commencement dates and proper lead in times that
take notice of the realities of running a business are essential
if regulation is not going to add onerous burdens on the staff
that are responsible for implementation.
4. Government needs to be aware that further
regulatory burden is usually combined with additional costs, whether
this is due to additional staff training, operational modifications
or the introduction of new policies. Whilst retailers do their
utmost to minimise the costs that are passed on to consumers,
inevitably these costs do have to be paid somehow and price rises
can be a consequence of this. Government needs to therefore ensure
any regulatory changes are essential.
5. Government needs to improve its capability
to regulate in a proportionate and effective manner. A first step
to achieving this would be to examine carefully the existing regulation
and ensure future proposals do not repeat, overlap or contradict
the current framework.
6. More targeted regulation is also necessary
that tackles the particular problem rather than that which affects
the whole sector or industry. Rogue traders will always seek to
avoid regulation whereas responsible businesses will strive to
comply. More effective regulation aimed at those for which it
is required would be of significant benefit to all business sectors.
INTRODUCTION
7. The British Retail Consortium is the
lead trade association representing the whole range of retailers,
from the large multiples and department stores through to independents,
selling a wide selection of products through centre of town, out
of town, rural and virtual stores. Our membership comprises approximately
80% of the retail industry.
8. Retail is a heavily regulated industry.
Due to the wide ranging nature of the sector, we are affected
by every kind of regulation, from health and safety, food hygiene
and alcohol licensing to environmental requirements, planning
and employment laws. As such, the BRC is keen that all regulation
complies with the Hampton principles of regulation—transparent,
accountable, proportionate, consistent and targeted.
CURRENT CLIMATE
9. Regulation should always be mindful of
its impact on the overall economy and never more so than in the
current climate. Whilst the need to regulate against risk is clear,
this in turn should not translate into short term, knee jerk regulatory
reaction.
10. The outlook for retail is the toughest
for decades. Low consumer confidence, restricted credit and a
faltering labour market have all taken their toll on sales but
stumbling sterling rates, soaring property costs and regulation
are eroding the scope to trade profitably. Retail is an incredibly
competitive sector with customers demanding value at all times
and the current climate is making this increasingly more difficult.
11. Retailers are at the heart of the community
and clearly wish to continue to trade, remain viable and continue
to provide an essential service to those they serve. At the current
time, we would call on Government to halt further regulation unless
absolutely necessary and undertake full and thorough impact assessments
that truly understand the pressures businesses are under.
PROPORTIONATE AND
EFFECTIVE REGULATION
12. Proportionate and effective regulation
is of paramount importance. The BRC believes Government can be
more aware of the implications of regulation by making full use
of the consultation process and ensuring those affected by proposed
regulation, or their representatives are given an appropriate
amount of time and opportunity to contribute.
13. Likewise, proper regulatory impact assessments
need to be carried out that take into consideration the true,
full costs of any changes, including those costs that are easily
overlooked.
14. We are concerned that the consultation
process in some instances has failed to engage small businesses
and that the regulatory impact assessment has been made on the
basis of a series of assumptions we believe to be flawed.
15. For example, the Better Regulation Executive
has been concerned about the extent of consultation with small
businesses with regards one particular piece of legislation emanating
from a government office. In response, the office ran a stakeholder
event designed to test the assumptions in their RIA, however none
of the attendees were from micro-businesses, they were all sole
traders. This meant that a key business model and the impacts
upon them were not considered. In addition, this event took place
prior to the publication of the bill and no details of the costs
were known.
16. In the same example, the RIA has been
costed with a focus on the simplification measures within the
Bill but failed to take into account the fact that, while perhaps
more complicated, many businesses are at least familiar with the
current law and any change will incur time and resource to re-familiarise.
Further, the power of media reports (often inaccurate) will push
many businesses to seek expensive help as they over-comply in
order to avoid the risks associated with getting the law wrong.
These are key issues for responsible businesses keen to work within
the law.
17. In addition, the BRC has questions with
regards the accuracy of some RIAs. There have been instances of
considerable differences in the possible costings of changes and
these can mean that the overall RIA covers a huge variety in possible
costs. This minimises its use and effectiveness.
PROPER AND
EFFECTIVE SCRUTINY
18. Another key way Government could improve
its capability to regulate in a proportionate and effective manner
would be to enable full parliamentary and public consideration
of regulation. It seems to be an increasing trend of enabling
powers being contained within primary legislation, with regulations
tabled at a later date. Whilst this is sensible for minor alterations
to regulatory regimes, it is not helpful when hugely significant
changes are being made that require thorough debate and discussion.
19. One example of this was the Regulatory
Enforcement and Sanctions Bill. The Primary Authority scheme under
this Bill is due to commence on April 6 but we still (5 March)
do not have the Regulations under which it is to operate. Another
is the forthcoming Mandatory Code for Alcohol Retail. The Policing
and Crime Bill is going through Parliament which will allow for
this code, however the shape and scope of the code is not included
within it. Neither parliamentarians nor the public have been able
to engage fully in discussing the code during the parliamentary
process. This we fear may lead to bad regulation as it has not
been given this opportunity to be fully debated. The same can
be said of the enabling powers to allow the regulation of tobacco
displays in shops. Many possible regulatory issues would come
to light during an effective parliamentary scrutiny process which
are, currently, in real danger of being missed.
EVIDENCE-BASED
AND JOINED-UP
GOVERNMENT
20. Effective regulation has to be based
on sound and compelling evidence and this has to be the starting
point for any proposed changes to any regulatory regime, including
those in the public health arena. A sound evidence base is clearly
of value to Government as it means proposed changes will have
more chance of fulfilling their objectives. Evidence-based regulation
is also a necessity for business in all circumstances and we would
urge all government departments to invest the time in undertaking
proper, impartial research, in the United Kingdom, before embarking
on regulatory measures that will have a huge impact on costs and
retail operations.
21. The BRC believes that some regulation
is properly thought out and does take into account both competition
and small businesses.
22. However, this is patchy across Government
and, as highlighted above, small businesses can be overlooked.
Equally, so can large businesses, especially when commencement
times are short or the regulations involve significant operational
changes. Retail employs close to three million people and is hugely
property intensive, Should we have to make changes to stores to
comply with regulations, or train staff on new compliance requirements,
this takes a serious amount of time to get right. The BRC feels
that Government often overlooks this.
23. Moreover, the BRC is supportive of the
common commencement date principle due to the certainty it affords
industry. However, we are disappointed that not all government
departments make proper use of the common commencement dates which
can cause confusion and problems with business planning. The full
use of common commencement dates would be a helpful change that
we would welcome.
24. Competition is currently not being considered
with reference to the mandatory code for alcohol retail. The proposed
regulations will hugely impact on local competition and, with
customers regularly "voting with their feet" it is important
for both small and large retailers that the Government understands
the impact of footfall, or lack of it, on towns, high streets
and villages.
IMPLEMENTATION
25. The Government's record of the consideration
of compliance and enforcement is inconsistent. Proportionate enforcement
and good regulation go hand in hand. Without proportionate enforcement
even the best regulation can become a real burden on business—hence
the importance of the Hampton Compliance Reviews. Recently the
BRC has found a lack of knowledge of forthcoming changes to the
enforcement regime, such as the LBRO, the Primary Authority principle
and other measures contained within the Regulatory Enforcement
and Sanctions Act, amongst legislators enacting changes to the
regulatory environment. This is a serious issue and we would urge
Government and BERR particularly to ensure that all levels of
Government are aware of the details of how the regulations they
are proposing will be enforced on the ground.
CUMULATIVE REGULATION
26. The BRC believes there is a temptation
in Government to over-regulate in areas of policy by introducing
new regulations based on new initiatives before an assessment
of the effectiveness of existing regulation is known. For example,
before the impact of the increase in the age restriction applied
to tobacco products could be assessed, new sanctions on retailers
selling tobacco to underage persons were introduced. Subsequently,
before these sanctions have even commenced, legislation has been
introduced to restrict the display of tobacco products. Retailers
support controls on tobacco sales and support the health objectives
underpinning them but we question why these were not introduced
in one package or why time has not been taken to assess the effectiveness
of regulation before more is introduced.
February 2009
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