Appendix: Government Response
Introduction
The Government would like to thank the
BIS Select Committee for its inquiry on the UK retail sector,
and welcomes its recommendations. We are pleased that the report
reflects the importance of the retail sector's significant contribution
to local, regional and national economies.
The Government is committed to enabling
continued, focused investment in the long-term drivers for growth
to ensure that British businesses can thrive and compete on a
global scale.
The Government response to the Select
Committee highlights what is happening and what is being planned
in the areas focussed on by the committee. Our response groups
together recommendations, outlined on page 54 of the Select Committee's
report, into the following sections:
1. Business rates and other rate
reliefs
2. High Street and Portas Pilots
3. BIS retail strategy and cross
departmental working
4. Local Enterprise Partnerships
(LEPs)
5. Skills
On business rates, the Select Committee
recognised the importance of considering how the burden of business
rates could be reduced and how the business rates system as a
whole could be improved. In Autumn Statement 2013, the Government
committed to do both, as part of the biggest package of business
rates support for twenty years. The government has also consulted
on improving the appeals process and has committed to clear 95
per cent of outstanding cases as at September 2013 by July 2015.
The Government published a discussion
paper on 10 April[1] on
longer term reform of the administration of business rates. This
directly responds to many of the issues raised by the Select Committee's
report and to concerns raised with Government.
The Government wants to hear from businesses,
representative bodies, local authorities and ratepayers about
how the system can be made simpler, more transparent and more
responsive to economic circumstances. We wish to encourage organisations
that provided evidence to the Select Committee to contribute to
this discussion and help inform the Government's work on the future
of business rates.
Business rates support the long term
stability of the economy by providing sustainable tax revenues
to fund public services, and by raising revenue in a way that
creates less distortion than many other taxes.[2]
The business rates retention scheme introduced in April 2013—
under which councils retain a proportion of the business rates
that they collect—can play a fundamental part in promoting
local growth.
The business rates announcement in Autumn
Statement 2013 built on the £11 billion per annum cuts the
Government has announced to help business since 2010: to corporation
tax; employer National Insurance Contributions; and fuel duty—helping
businesses to invest and expand. As recognised by the Select Committee,
this business rates announcement provided particular support for
the smallest businesses.
Our high streets are going through considerable
change, evolving with changing customer habits and changing business
models. The Select Committee recognised that high streets are
no longer just about retail and retail is not all about high streets.
This presents both challenges and opportunities for businesses
and consumers. BIS's 'Strategy for Future Retail'[3]
highlighted the many opportunities for UK retailers who are already
investing heavily in omnichannel approaches to reach consumers
far and wide.
The relationship between retailers and
the world's consumers is changing permanently, and the opportunities
have never been greater for UK retailers who want to internationalise,
to grow their businesses, and to secure their long term prosperity.
UK Trade and Investment (UKTI) are helping retailers to exploit
overseas opportunities through exporting, e-commerce and physical
investment.
Cross-government working on retail issues
was raised by the Select Committee. BIS, as the Department for
economic growth and also the lead Department for the retail sector,
works across government to help ensure that retail continues to
thrive and to grow, thereby contributing to the national and local
economies and providing extensive employment opportunities.
BIS is taking steps to further improve
collaboration with other teams in Whitehall Departments. Retail
interests are diverse and wide ranging, spanning across policies
on business rates, high streets, food supply competitiveness and
retail engagement in Local Enterprise Partnerships to name but
a few. Strong sector partnerships provide support for all industry
sectors to help increase global competitiveness, support innovation
and maximise export potential. We will continue to monitor with
industry the effectiveness of government-industry collaborations
in identifying key challenges to growth across the UK economy.
Local Economic Partnerships (LEPs) provide
clear vision and strategic leadership to drive sustainable private
sector-led growth and job creation in their areas. Partnership
working is key to an integrated approach to growth and economic
regeneration. The government cannot prescribe what LEPs should
or should not do to enhance expertise (for example in appointing
their boards), or to deliver their strategic economic plans. Nor
can government force retailers to work with LEPs. We can however
encourage LEPs and retailers to work more closely together where
there are mutual interests and potential benefits, such as town
centre regeneration.
On skills, the government invests in
skills and education to help businesses in all sectors to succeed—to
promote trade, boost innovation, and help people to start and
grow businesses. The retail sector in the UK employs around 3
million people and offers a breadth of career paths and flexible
working opportunities to people of all ages. The Government is
engaging with retailers in the design and piloting of new or evolving
skills and qualification initiatives and processes—for example
apprenticeships at all levels and traineeships. We recognise that
digital and data analysis skills are vital for retailers. People
1st, the Sector Skills Council for retail, has developed apprenticeship
frameworks to include the skills needed for multichannel retailing—these
will also be included in the Apprenticeship Trailblazer for retail.
1. Business Rates and Other Rate Reliefs
Responses to specific recommendations
1.1 The delay in the planned
2015 Revaluation of Business Rates until 2017 has been severely
criticised by many in the retail sector. The Government based
its decision to delay the Revaluation on a 'high level estimate
paper' written by Valuation Office Agency, which many organisations
have criticised for its lack of firm evidence. Indeed the VOA
itself littered the paper with caveats. The delay in the 2015
Revaluation of Business Rates means that, until April 2017, Business
Rates will continue to be calculated on property rents set in
2008, before the recession took hold. In justifying the delay
in revaluation, the Government referred to the fact that the retail
sector represents only around a quarter of the businesses covered
by Business Rates. This may be so, but it is a key quarter for
driving the recovery. We urge the Government to ensure that during
the time before the next revaluation, it works towards the complete
reform of the revaluation system, one of the ambitions of which
should be the annual review of Business Rates. (Paragraph 74)
The Government recognises that the business
rates system could be made more responsive to economic circumstances.
This is why we are considering the frequency of revaluations as
part of our review of business rates administration. The Government
has published a discussion paper which invites views from ratepayers
on how to improve the system in the longer term.
We have asked business ratepayers how
often, in their view, revaluations should take place. Some have
suggested annual, 2-yearly, 3-yearly or 5-yearly revaluations.
We are particularly interested to hear from ratepayers about how
they view the trade-offs presented by more frequent revaluations,
for example, a more up-to-date rateable value against the relative
level of certainty and stability that the current revaluation
cycle provides.
The Government will consider responses
to the discussion paper alongside conducting our own analysis
of possible options for reform and their impact. As part of this,
we will also look at the practicalities of implementation.
Due to the lead-in times required under
the current system and to the time taken to change the relevant
primary legislation, it is not possible to implement any changes
to the way the 2017 revaluation will be carried out. In 2012,
the government postponed the 2015 revaluation until 1 April 2017
in order to provide greater stability for businesses during a
period of economic downturn. The government's review of business
rates administration is looking at options for reform that would
come into force after the next revaluation, including possible
changes to valuation approaches and the frequency of revaluations.
1.2 We welcome the Government's
capping of the inflationary limit of Business Rates to 2% for
2014-15. However, because of the small business multiplier, those
businesses in the retail sector that do not qualify for small
business relief will see their business rates bills rise
by 2.3% next financial year. Furthermore, this cap will apply
for one year only. We urge the Government to reconsider this limited
timeframe, and to stop permanently the linking of Business Rates
to a single month snapshot of the Retail Price Index (RPI). Furthermore,
the Government should carry out a review to ascertain whether
RPI or CPI is the more appropriate index to which Business Rates
should be linked. The 12-month average of the CPI or the RPI in
the previous year, with a cap at 2%, is a far more appropriate
level at which to set the annual Business Rate increase. This
would be consistent with the recent limits on council tax increases,
and in line with the Bank of England inflation target. (Paragraph
78)
In the Autumn Statement 2013, the Government
took decisive action to reduce the burden of business rates for
all ratepayers in England, announcing the largest package of support
in 20 years. This included a commitment to cap the annual inflation
increase in business rates in 2014-15 at 2 per cent, at a cost
of £1.3 billion to the Exchequer over the next 5 years.[4]
All 1.8 million properties subject to business rates will benefit.
Any decision to extend this measure would need to be considered
as part of the normal Budget process and within the context of
the Government's fiscal consolidation plans.
From 1 April businesses will feel other
benefits from the Autumn Statement:
· 540,000 small businesses
will benefit from small business rates relief, with 360,000 paying
no rates at all
· 300,000 retail premises with
rateable values of less than 50,000 will receive a £1000
discount off their business rates bill in 2014-15 and 2015-16
· 50 per cent discount on business
rates bills for 18 months for businesses re-occupying retail property
that has been empty for at least a year
· 3,000 small businesses will
retain Small Business Rate Relief when they take on a second property
Business rates bills are generally adjusted
in line with the increase in the Retail Price Index (RPI) measure
of inflation. The RPI link provides protection for businesses
because, during times of economic growth, tax increases are held
to inflationary increases only. The government has committed to
look at the RPI link once fiscal consolidation is complete.
1.3 While we welcome the measures
introduced in the Autumn Statement 2013 to help small businesses
further in relation to Business Rates, the Government is not addressing
fundamental flaws in the way in which Business Rates are calculated.
The short-term tweaking of the Business Rates system is building
up problems for the future and, instead, the Business Rates system
needs fundamental reform. (Paragraph 85)
The Government's review of the administration
of business rates after 2017 will consider reforms to the system
to make business rates work better in the 21st century.
The Government wants to strengthen business
rates' responsiveness to changes in economic circumstances and
the system's simplicity and transparency for business ratepayers
in England.
As part of our review of longer-term
administrative reform, the Government is considering the frequency
of revaluations and looking at whether taking a different valuation
approach —which maintains business rates as a tax on rental
property values—could make the system simpler and more efficient.
Outside of this review, the Government
continues to welcome views from business ratepayers and other
interested parties about how the tax system can be improved. Business
rates, as all other taxes, will be kept under review.
1.4 Government must study
the level of taxation placed on small and medium retail businesses
compared with the level of taxation placed on large retail companies.
It should also provide clear guidance that Councils are able to,
and should be encouraged to, exempt ATM cash machines, in line
with arrangements for small business rate relief. (Paragraph 86)
The £1 billion business rates package
announced in the Autumn Statement 2013 provided targeted support
for small businesses and retailers.
While business rates exemptions are
set out in primary legislation, in 2012, the government gave local
authorities the power to grant discounts to any business ratepayer,
including in relation to ATMs, which they wish to support in their
local area. Councils know their local areas and are best placed
to make such decisions. Where they grant discounts central government
automatically funds 50 per cent of the costs.
Since 2010, the Government has spent
up to £500 million a year on doubling small business rate
relief; helping the very smallest businesses. From April 2014,
540,000 small businesses will continue to receive Small Business
Rate Relief; 360,000 of those will pay no rates at all this year.
In addition, the Government has relaxed the criteria for small
business rate relief to encourage small businesses to take on
a second property. We expect 3,000 growing businesses to benefit
from this support this year.
The Government recognises that the retail
sector is changing and high streets are experiencing challenges
as they adapt to changing consumer preferences in how people shop.
That is why the Government has provided particular support to
retailers through the business rates system, including taking
steps to help reduce the number of boarded up shops on English
high streets.
Half of the £1 billion package
of business rates support that came into force in April 2014 is
supporting the retail sector.
From April 2014, 300,000 shops, pubs
and cafes with rateable values of less than £50,000 will
receive a £1,000 discount on their business rates bill up
to State Aid limits. This is support coming direct from Government
to high street retailers for the next two years. Further details
are in 'Business Rates: Retail relief guidance'.[5]
These measures demonstrate the Government's
commitment to supporting businesses, particularly small businesses,
to grow and invest. The Government has announced major cuts to
the other main business taxes (corporation tax and NICs) for the
benefit of all businesses in the UK.
1.5 The high costs of Business
Rates are preventing new entrepreneurial businesses from appearing
on the High Street. We welcome the Autumn Statement's announcement
that businesses moving into high street properties that have been
vacant for a year or more will have their rates cut by 50% for
18 months. However, we believe that the Government must go further.
We recommend a six months' Business Rates amnesty on businesses
occupying empty properties. This support would be an economically
viable model for the Government, as it would not only support
those small businesses, but could also regenerate the High Street
by occupying empty shops, and by giving local areas renewed vibrancy
as community hubs. (Paragraph 92)
The Government agrees with the Select
Committee's view that business rates relief can be used to incentivise
more productive use of long-term empty retail property.
In December 2013, the government announced
a new Reoccupation Relief which came into force in April. New
occupiers of property formerly used for retail purposes which
has been empty for a year or more will receive a 50 per cent discount
on their business rates bill for 18 months up to State Aid limits.
The Government carefully considered the design of this relief,
including the eligibility criteria, the level of relief and the
timescale for implementation. We believe that a relief granted
over a period of 18 months will encourage sustainable use of empty
property.
Further details are available online.[6]
In addition, any new occupier of an
empty premise will benefit from the wider package of £1 billion
business rates support, half of which is supporting the retail
sector.
All ratepayers benefit from the 2 per
cent capped increase to rates. If they occupy properties with
rateable values of less than £12,000, they may be eligible
for Small Business Rate Relief. Retail businesses in premises
with a rateable value of less than £50,000 are eligible for
a £1,000 discount on their business rates bill for two years
up to State Aid limits. Councils can also use their local discounts
powers to provide further targeted relief. Central government
automatically funds 50 per cent of the costs where councils do
so.
1.6 We support the emergence
of PopUp shops; they are an excellent example of innovation in
the retail sector, but are adversely affected by an inflexible
Business Rates structure. In any review of Business Rates, specific
attention should be given to PopUp shops, and ways in which more
can be encouraged to participate in the High Street. (Paragraph
93)
The Government wants to see thriving
and diverse high streets at the heart of local communities. That
is why we have provided targeted support for small businesses
and retailers, including PopUp shops, through the business rates
system. On top of this support, councils have the power to grant
discounts to any business ratepayer which they wish to support
in their local area. The government automatically funds 50 per
cent of the costs in councils that do this.
The Government notes that there are
progressive local councils who are using this power to encourage
local growth and investment in innovative ways and in conjunction
with local businesses. We would urge more councils to consider
doing the same—they know their local area best and can target
business rates relief where it is most needed.
1.7 The pace of change in
the Retail Sector means that the Business Rate system, in its
current form, is not fit for purpose. The Government must act
by carrying out a wholesale review of the current Business Rate
system, which is urgently needed not only for the Retail Sector,
but for other business sectors that are also being affected. The
Department for Business, Innovation and Skills needs to initiate
urgent discussions with the Treasury and DCLG, to prepare the
ground for a full scale review and reform of Business Rates, which
will allow retail businesses, especially small and medium-sized
businesses, not only to survive, but to flourish in the current
economic climate. The Government has widely praised the Portas
Review, yet has not acted on what we believe is a vital recommendation—a
review of the basis of the calculation of Business Rates. The
Government must review the whole system—involving local
government and retail sector organisations—and not simply
tinker around edges by reviewing the administrative details of
collecting Business Rates. Indeed, the Prime Minister has agreed
that a longer-term reform of Business Rates needs to be looked
at. The Government's review must include: whether retail taxes
should be based on sales, rather than property; whether the retail
sector should have its own form of taxation, calculated in a different
way from other businesses; and how frequently the revaluation
of Business Rates should take place. (Paragraph 113)
The government has committed to review
the business rates system to make it work better in the long-term.
This review is being run jointly by the Treasury, the Department
for Communities and Local Government (DCLG) and the Valuation
Office Agency (VOA) who involve BIS officials and officials from
other Departments as necessary.
The Government's review will consider
frequency of valuations and changes to valuation methods, as well
as other aspects of the administration of business rates, as confirmed
in the terms of reference on 13 February. A discussion paper on
the administration of business rates in England was published
on 10 April 2014.
The Government notes that the Select
Committee suggests considering replacing business rates with a
tax on sales. The UK has a sales tax in the form of VAT. Introducing
a new sales tax alongside VAT would be double taxation which the
Government wishes to avoid. Reforming the basis of business rates
would be a significant undertaking. Creating a new tax based on
sales is likely to be much more administratively complex and to
have higher costs than the current system. Furthermore the Government
believes that taxes on property are less distortive and less harmful
for growth than other taxes. However the Government keeps all
taxes, including business rates, under review. The Government
has committed to look at the RPI link once fiscal consolidation
is complete.
1.8 Charity shops play an
important part in our High Streets, by raising much-needed revenue
for good causes and by providing a community space for local shoppers
and volunteers. However, charity shops benefit from 80% relief
on business rates, and this blanket reduction has loopholes which
can be abused by businesses purporting to be charities. It also
has the potential for charities to threaten other shops, especially
bookshops, which have to pay the full amount of business rates.
The Government needs to outline tighter definitions on what constitutes
a charity shop, and to report on its findings by the autumn of
2014. (Paragraph 97)
The government agrees with the Select
Committee that charitable organisations play an important role
in our local communities. That is why we fund business rate relief
for charitable organisations which occupy non-domestic property.
The government notes that there are a range of views represented
in the Select Committee's report about the role played by charities
and charity shops. We understand that some groups support greater
use of charitable rate relief to encourage more charitable activities
in local communities, while others propose policy changes to address
what they describe as a 'threat' to other businesses and organisations.
The Government has no plans to change the rules regarding charitable
rate relief. Our £1 billion business rates package demonstrates
our commitment to support all businesses on the high street.
2. High Street and Portas Pilots
Response to specific recommendations
2.1 The Government allocated
£2.3 million to fund the Portas Pilots, yet has not been
able to provide evidence of how or indeed whether that money has
been spent by local authorities. In its response to this Report,
the Government should include how much of that money has been
spent, as was promised to us by the DCLG Minister in October 2013.
There is no readily-available data on the allocation of the funds,
and, as far as we are aware, no organisation is auditing the funds.
While we appreciate the fact that the Department for Communities
and Local Government is responsible for this funding, the Department
for Business, Innovation and Skills has the policy lead for retail
and must ensure that data is made available on whether and how
the Portas Pilot funding has been spent. These are public funds
and, therefore, the use of this money needs to be assessed for
value for money, and effectiveness. Together, the BIS and CLG
Departments must decide how this assessment is carried out. (Paragraph
14)
In the application process for the competition
to become a Portas pilot and in line with the localist approach,
all applicants had to supply the name of their respective local
authority to which the funds would be paid if they were successful
in their bid. Each local authority has agreed with the towns running
Portas pilots on how funds will be allocated. Some pilots have
formed themselves into Community Interest Companies while some
submit individual invoices to the council. It is up to the respective
local authority or the Greater London Authority (GLA) for the
London pilots to ensure that the monies are spent appropriately
and transparently.
While BIS are responsible for the retail
strategy, DCLG are leading on taking forward the implementation
of the recommendations of the Portas Review including the management
of the Portas pilots and their spend. DCLG has a grant funding
agreement in place with the Association of Town and City Management
(ATCM) to offer support, guidance and practical tools to support
all 27 Portas pilots, and the 333 additional town teams in England
who received the £10,000 of funding. The pilots have a nominated
town team advisor who visits and works with the pilot on their
business plans, advices on events and marketing strategies, proof
reads terms of reference and offers solutions for issues town
centre managers have been dealing with for over twenty years.
This support from ATCM runs until the end of March 2015.
ATCM also provides DCLG with information
on progress on spend of the allocated funds by the Portas pilots.
Government wrote to the Chair of the Select Committee in February
with the latest spending position for the pilots before the report
was published. As at March 2014, the Portas pilots have spent
54 per cent of their grant funding, with a further 29 per cent
of funding committed to spend. Many pilots are still delivering
their work programmes; there was no formal limit to the time in
which the pilots had to spend their funding. The Government would
rather that the pilots spent the money in the most effective way,
than rush spending to meet an arbitrary deadline.
2.2 The United States has
a different tax structure, but lessons could be learned from its
approach to local taxation and rent. We appreciate that this is
complex, but it is something that the Government should explore
as an alternative to the current system. The Government should
look into encouraging a more flexible approach from landlords,
and discouraging upward-only rent revisions. This would result
in a fairer and more sustainable system. (Paragraph 35)
The Government supports the Code for
leasing business premises[7]
which encourages landlords to consider a range of rent review
approaches. We continue to support the commercial property industry
in making commercial leases simpler and more flexible. The Small
Business Retail Lease is an example of a freely available Code
compliant model lease agreement, led by Royal Institution of Chartered
Surveyors and industry owned. Since its launch the Code has been
downloaded over 2,500 times.
3. BIS Retail Strategy and Cross Departmental
Issues
Response to specific recommendations
3.1 We are not convinced
that the success of the Retail Sector should be given as a reason
for it not needing an industrial strategy. As with other sectors
where Industrial Strategies are proposed to build on areas of
strength, there is an opportunity to use policy to support even
greater success in the future. The Government should include the
retail sector in its industrial strategy programme, and we recommend
that the Government rectifies this omission at the earliest opportunity.
(Paragraph 24)
The government welcomes the Select Committee's
views on the importance of effective collaboration with major
industry sectors. We agree with the Committee that the perceived
success of a sector should not determine whether or not it is
suited for a strategic partnership.
Industrial strategy is about the whole
of Government working in partnership with industry to set out
and deliver long-term plans to secure jobs and growth. Sectors
were selected on the basis of where Government intervention could
have the greatest impact on jobs and growth.
For other sectors, getting the most
value from government intervention means no more than setting
the business environment, removing barriers to growth, and leaving
businesses to get on with what they do best. Where specific issues
arise we can then work with the sector to address them.
Retail is a large and diverse sector
with businesses of all sizes in fierce competition. Government
therefore must avoid interventions that could have adverse consequences.
'A Strategy for Future Retail', published in October 2013 agreed
actions with the British Retail Consortium and the Association
of Convenience Stores which, between them, represent a broad range
of retail interests. The strategy sets out the direction of travel
on many opportunities for the sector in coming years—particularly
in omnichannel models of retail, and growing consumer demand from
overseas. UKTI is implementing the Retail International Action
Plan, which aims to deliver £500 million of value to the
UK economy over two years (to summer 2015) from retail exports.
BIS has a highly effective partnership
with the retail sector in areas where BIS can most add value.
BIS hosts the Retail Policy Forum (RPF) which meets three times
a year. Membership includes a broad spectrum of retail businesses
and representative bodies. Retailers and trade bodies have supported
the work of the RPF in their evidence to the Select Committee.
BIS will keep reviewing the sectors within industrial strategy,
and is committed to ensuring effective implementation and ongoing
development of 'A Strategy for Future Retail'.
3. 2 The BIS Minister, Michael
Fallon, was keen to tell us of the regular meetings he attends
in relation to the Retail Sector. The BIS Department employs just
over 4% of its staff to work on the Retail Sector, and does not
consider that retail should be included in an Industrial Strategy.
BIS should be leading co-ordinated work with other relevant Departments,
in order to facilitate a more practical and direct approach to
the issues facing the retail sector, the most urgent and important
of which is Business Rates. While the Department for Communities
and Local Government has an important role to play in guiding
local authorities on parking, pavement furniture, planning, and
so on, which all have an impact on retail, the Department of BIS
must take the lead in the strategic overview of the Retail Sector.
(Paragraph 118)
BIS is the lead Government Department
on the retail sector. BIS's retail team, like other sector teams,
works strategically across many different areas of BIS and several
Government Departments.
Ownership of particular policies rest
with the relevant policy leads in the responsible Department—this
is the case whether a policy is sector-specific, has an impact
on certain sectors, or is a wider business landscape issue. The
retail team interacts with government policy leads during policy
development and implementation, advocating the retail perspective
on issues such as regulatory inspection and enforcement, National
Minimum Wage, business rates, planning, skills funding, and LEPS.
As the Department for Business we also add value by assessing
any potential impacts or unintended consequences on business success
and growth. It should be noted that not all issues that impact
on retail are captured in the retail strategy—there are
many policy areas in which BIS works on an ongoing basis with
retailers and with other Government departments.
Our joint working with other Departments
has resulted in many successes, which recently include:
· a new industry-led "Digital
High Streets Advisory Board" is in place, helping to provide
greater collaboration and coordination between retail, the technology
industry, government and place management bodies on Digital High
Street initiatives. This is alongside a new £8 million Technology
Strategy Board competition for reimagining the high street. BIS,
DCLG and the Technology Strategy Board all serve on this board;
· setting up the 'Cities and
Local Growth Unit' within the Government Local Growth Team—a
partnership between Cabinet Office, BIS and DCLG to provide coordinated
support for local economic growth;
· successful extension of the
Primary Authority scheme to cover more areas of restricted sales,
which has been strongly welcomed by the retail sector.
BIS works in close partnership with
DCLG on high streets issues. DCLG is the lead Government Department
on high streets because it holds most of the policy levers that
impact significantly on high streets such as planning (including
the Town Centre First policy), use classes, business rates, local
authority powers and business rates. Although retail plays an
important role in the high street, it is only one of a range of
primary interests—as demonstrated by the broad membership
of the Future High Streets Forum. Also, whilst high street retailing
remains an important part of the sector it does not represent
the whole picture. This is reflected in 'A Strategy for Future
Retail' where the primary focus is on opportunities for retail
growth at home and overseas.
4. Local Enterprise Partnerships (LEPs)
Response to specific recommendations
4.1 The Government should call
on LEPs to develop a strategy for retail, in order to demonstrate
their commitment to the Retail Sector. (Paragraph 41)
The Government strongly supports all
LEPs in their aim to drive local economic growth and performance.
Although we do not determine the policies individual LEPs should
pursue, we have asked LEPs to develop ambitious, multi-year Strategic
Economic Plans (SEPs). These Plans will vary from place to place,
and priorities will differ across the country. LEPs are identifying
the growth sectors, opportunities to create new jobs, and to help
business to develop and grow. In their Plans LEPs need to prioritise
interventions, be clear about what they will deliver, and demonstrate
effective relationships with the business community and relevant
local partners.
Government will negotiate a Growth Deal
with each individual LEP on the basis of its SEP. These Growth
Deals will enable LEPs to access funding from the £2 billion
Local Growth Fund. However Growth Deals are not just about securing
money, but will also include greater influence, freedom and flexibilities
over key levers affecting local growth. It should be noted however
that a LEP's activity will not be limited to only what is in its
SEP.
The 39 LEPs published their Strategic
Economic Plans on 31 March, and several of those have recognised
the contribution of the retail sector and town centres to
their economies. Many include related issues such as improving
sense of place, and supporting activities such as leisure and
tourism (in which retail plays a significant underpinning role).
But we recognise that there is more to do.
BIS is working in partnership with DCLG,
the Association of Town & City Management, People 1st/The
National Skills Academy for Retail and GFirst LEP to encourage
LEPs and other local economic partners to be more engaged with
retail and town centre issues, and to engage with other relevant
organisations and businesses.
With our partners we are collaborating
on a number of work streams to achieve this, some of which have
already been published in "A Strategy for Future Retail";
others are under development. There are also several research
projects coming to fruition over the coming months which should
provide a stronger economic case for the importance of retail
and town centres.
4.2 Given the substantial contribution
of retail to employment, we recommend that all LEPs consider appointing
a retail representative on their board. For independent traders,
this may not be feasible. However, national retail businesses
should do more to encourage their local or regional management
to participate in LEPs. (Paragraph 42)
The Government notes the recommendation
that LEPs should consider appointing retail representatives on
their boards. Business people across the country are actively
engaging with their local LEPs, and at least 50 per cent of LEP
board members are from the private sector. We support and encourage
LEPs to effectively work with the wide range of businesses in
their localities to help them shape priorities for growth.
It is for LEPs to determine board membership,
and for retailers to determine the degree of engagement they wish
to have with LEPs. LEPs need to strike a balance between establishing
a board that represents the diversity of the private sector locally,
and a board that is of the right size to be an effective and strategic
decision making body. The Government is clear however that LEPs
should ensure that their boards have the necessary skills and
expertise to deliver their growth plans.
We are discussing with retailers how
best to maximise their engagement with and contribution to the
39 LEPs; this would however remain a commercial decision for the
individual retailers.
5. Skills
Response to specific recommendations
5.1 The changing nature of
how people shop needs to be mirrored in the way in which staff
are trained, to enable them to provide a more tailored service.
The BIS Retail Strategy document published in 2012 made passing
reference to skills needed for the retail sector, referring only
to the need for a science, technology, engineering and mathematics
(STEM) skills gap analysis. In its follow-up document a year later,
A Strategy for Future Retail stated that an analysis of skills
needed for high level mathematics, data analysis, and general
digital skills to be completed by the Spring of 2014. In its response
to this Report, the Government must outline the results of BIS's
latest STEM skills analysis, and the timeline for the action that
it will take. (Paragraph 55)
The Government agrees with the Select
Committee that the evolution of multi-channel retail and advanced
consumer engagement techniques means that it is vital for retailers
to ensure that their staff have the right technical skills.
However, the arena of digital and mathematical
skills is a fast-moving target—for example in only recent
months a number of retailers have launched their own digital innovation
hubs, others are rolling out cloud-based virtual networks across
their organisations. The numbers and types of jobs that require
these skills are changing all the time, and increasing as more
retailers of different sizes and sub-sectors adopt these technologies
and techniques.
As ATCM said to the Select Committee,
"these top-level digital skills are only part of the story—there
is a significant digital divide between SMEs and larger businesses,
and if small businesses are to remain a powerhouse of our economy
then it is absolutely essentially that digital up-skilling at
all levels is a key priority for the country".
The Government is committed to work
with the retail sector to ensure greater collaboration and coordination
of digital skills initiatives and activities, and to gain a robust
understanding of the skills needs for a range of occupations in
the sector, as set out in 'A Strategy for Future Retail'. However
the overarching—and most important—issue is to ensure
that the right mechanisms are in place so that the needs articulated
by employers can appropriately be met. We have a steering group
in place comprising several major stakeholders, and together we
are exploring these issues over the course of 2014.
There are a number of current and forthcoming
activities that have a bearing on this ongoing work. These include:
· ATCM and the National Skills
Academy for Retail are currently rolling the Digital High Street
Skills Project,[8] which
has the aim of training 3000 SMEs in basic digital skills by the
end of 2014.
· On 14 April the Government
launched the Digital Inclusion Strategy, which includes actions
to help SMEs get online.
· People 1st have developed
National Occupational Standards in digital skills which will be
incorporated in the new Apprenticeship standards under the Trailblazer.
WIDER SCIENCE TECHNOLOGY ENGINEERING AND MATHEMATICS
(STEM) ISSUES:
The Government has undertaken consultation
and research on STEM skills needs in industry. On 31 March 2013
BIS published a report on supply and demand for technical apprenticeships
in STEM discipline:[9]
In November 2013 the UK Commission for Employment & Skills
published a report on supply of and demand for higher level STEM
skills[10] and in the
same month BIS published the results of the Perkins review into
engineering skills.[11]
However it should be noted that the
retail sector—whilst recognised as a user of STEM—has
a low density of STEM occupations, so has not been a focus for
this work.
5.2 Apprenticeships are being
used more frequently in the Retail Sector. They allow retail staff,
who often leave school with few qualifications, to gain transferable,
interpersonal skills. However, retailing is becoming a much more
sophisticated industry, and those who work in the sector need
to be more comprehensively trained. We support the work that employers
do in training their workforce. The retail sector should be more
ambitious about skills training, encouraging more staff to be
trained at Level 3 and above. Furthermore, given the importance
of tourism to the United Kingdom, consideration should be given
to developing language skills to enhance the international consumers'
retail experience. (Paragraph 51)
The Government agrees with the Select
Committee that higher level skills are important, and we are supporting
the retail sector to provide these skills in several ways.
Most significantly, in March the Government
announced a Phase 2 Retail Trailblazer, which is developing new
apprenticeship standards for the sector. This is employer-led,
and includes many retailers.
'The Future of Apprenticeships in England—the
Reform Implementation Plan'[12]
published 28 October 2013 set out how the Government will deliver
radical changes to Apprenticeships to make them more rigorous
and responsive to the needs of employers. Apprenticeships reforms
will improve the quality of Apprenticeships at all levels, put
employers in the driving seat, and simplify the system. Apprenticeship
Trailblazer projects led by both large and small employers and
professional bodies, are developing the new Apprenticeship standards
for a number of occupations.
Higher Apprenticeships now provide a
clear work-based progression pathway into Higher Education and
professional careers. Higher Apprenticeships have the potential
to deliver high level skills tailored specifically to individual
business requirements. There is currently a Level 4 Higher Apprenticeship
in Retail Management.
The Government will provide £40
million to deliver an additional 20,000 Higher Apprenticeship
starts in England over the academic years 2013/14 and 2014/15.
5.3 We recognise the important
work that employers, unions, and the Government do in supporting
people already in the workforce to continue to work and develop
their skills. We were therefore disappointed that the Department
did not highlight this work in its Retail Strategy. We recommend
that the Department commits to continued financial support for
the Union Learning Fund, which enables unions and employers to
work together, providing employee training and support. LEPs could
provide valuable assistance in this work. (Paragraph 47)
The Government values the work of unionlearn—the
Trades Union Congress's (TUC) learning and skills organisation.
It has an important role to play in supporting the rigour and
responsiveness of the Government's skills strategy. The primary
focus of Union Learning Funding (ULF) projects are workers, many
of whom have low skills or have literacy and numeracy needs—people
who may be reluctant or may not know how to take advantage of
the various development opportunities available to them.
BIS recognises the value of unionlearn;
the Department awarded unionlearn a grant funding of £15.3
million in 2014-2015. The majority of this grant will fund 34
unionlearn projects with individual trade unions.
In line with all partner bodies BIS
has moved unionlearn from a reliance on core grant funding to
a contestable funding model. As a result unionlearn is going through
a period of transition. The challenge for unionlearn is to present
BIS with a sustainable business model that will secure funding
in 2015 and beyond.
1 https://www.gov.uk/government/publications/business-rates-administration-review-discussion-paper Back
2
http://www.oecd.org/tax/tax-policy/41000592.pdf
http://www.oecd-ilibrary.org/taxation/tax-policy-reform-and-economic-growth_9789264091085-en Back
3
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/252383/bis-13-1204-a-strategy-for-future-retail-industry-and-government-delivering-in-partnership.pdf Back
4
The cost of the capped increase in 2014-15 will not be made up
in future years and will continue to be funded by the Exchequer. Back
5
Business Rates: Retail relief guidance https://www.gov.uk/government/publications/business-rates-retail-relief Back
6
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/297995/210314_Business_Rates_
Reoccupation_Relief__Guidance1.pdf Back
7
http://www.leasingbusinesspremises.co.uk/downloads/code_comm_lease090805.pdf Back
8
https://www.atcm.org/programmes/digital_high_street/dhs_skills Back
9
https://www.gov.uk/government/publications/technical-apprenticeships-research-into-supply-and-demand Back
10
http://www.ukces.org.uk/publications/er77-high-level-stem-skills-supply-and-demand Back
11
https://www.gov.uk/government/publications/engineering-skills-perkins-review Back
12
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/253073/bis-13-1175-future-of-apprenticeships-in-england-implementation-plan.pdf Back
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