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10.35 am

Lord Dykes: My Lords, even if parliamentarians have an enthusiastic business background—as I do, mainly in the financial sector in the City—it is their job to legislate on a coherent basis to establish a balance between different factors in our economic society. For people on the Conservative Benches to say that competition is the primordial matter and nothing else matters at all is wrong. It is the same as saying that British society is just concerned with making money, as many people conceive that it is. If that view is correct, society gradually disintegrates. I hope that the new Labour Government do not subscribe to it; there are other things in society as well.

There is a real crisis here. I was glad that the noble Lord, Lord Cope, said at the beginning of his speech that he supports the Bill, although he was nitpicking and curmudgeonly in his subsequent remarks. I congratulate my noble friend Lord Cotter on introducing the Bill; I am quite proud of the fact that 50 per cent of the speakers in this debate are from the Liberal Democrat Benches. I entirely agree with all the wise remarks made by my noble friend Lord Glasgow, particularly his reference to the ghastly super-shed near his home town.

There is a real crisis, which the Government have to face. The Competition Commission has totally failed the normative shopkeeper sector, which includes small shops, medium-sized shops and even some small supermarkets—the little local ones that have developed in towns, which have an interesting future and are much more attractive than the giants. The Government have to address this. People can easily say that the Office for Retail Planning is yet another bureaucratic addition to the panoply and that they do not want it because it will cause a lot of extra cost and so on. I am not so sure. It needs to be seriously examined as a concept.

We remember the demise of rent controls and the effect that that had on hapless tenants in the old days when the market in this country became completely free. Some far more successful European economies, such as those of Germany, France and Italy—we boast in Britain that we are the primordial economy in Europe, but we take our statistics rather selectively—still retain some of those controls because they know that the reality is that the average power of the average landlord is higher than the average power of the average tenant. It is as simple as that.

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In Britain, under the complacent laziness and obduracy of the Competition Commission, the supermarkets have now reached 75 per cent penetration. I declare two interests: I am an officer of the All-Party Group on Retail Industry—at least, at the most recent AGM I was—and I live in France for a considerable amount of time and study the development of the retail sector there. I entirely agree with what the Federation of Small Businesses said about the situation in France. Seventy-five per cent is too much. It represents a breach of the Competition Commission’s duties. Thousands of small shops often offer cheaper prices than supermarkets, particularly after the latter stages of a supermarket being installed when, as we know, they do loss-leading.

By the way, what about the deliberate sale of alcohol at very low prices? That is a scandal that the supermarkets have allowed to develop. Tesco is now trying hurriedly to restore the balance by making proposals to the Government, but why did it sell cheap alcohol at the entrance display units of its supermarkets? That is disgraceful, irresponsible conduct, just to make money, profits and turnover. These things are unacceptable in a civilised society.

Of course, we believe in the healthy effects of competition between different entities of all sizes and, indeed, competition between the supermarkets has been a great benefit, to hard-pressed housewives particularly, but also to househusbands nowadays, who rush around doing the shopping quickly. But it is not all that. Small shops have an enormous amount to offer. They are social and human centres as well. That is also important. If only money, cheap prices and nothing else matter, new Labour is letting down the public.

I support most of the Bill, although it needs meticulous study in Committee to make sure that the arguments are sound. The Bill is not fundamentally against supermarkets; it is against their excessive, overweening power and their ability strongly and stridently to bully local authorities and even to intimidate inspectors—the inspector appeal system is lamentable and pathetic. As an MP in Harrow, I saw the first stages of that. Appeals were hopeless because the inspector rightly based his conclusions just on legalistic, commercial and other judicial matters; they had nothing to do with the intrinsic interests of the local community. Time and again, the supermarket representatives went out with a smile on their faces after the inspector had upheld their appeal. The local authorities were completely undermined by this process.

We wait to hear the Minister’s views. He is the only Labour speaker today—I notice that there are no Back-Benchers. We hope that he will not demolish the idea of an Office for Retail Planning, because we need a specific, new entity—one hopes that its overheads will be minimal and modest if it is created—to hold the balance between hard-pressed local authorities, which need increasing revenue from businesses as well as council tax payers, and the local community, which comprises a broad range of interests.

Living in France and seeing retail development there, I can say how different the situation is. This country needs to learn some lessons from European

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countries. It is no good our saying, “We know best. We have nothing to learn from these countries”. I say as an aside that Europe has the most successful currency in the world; we ought to join it; we should have joined it years ago, but we have not—but that is another matter. France has control mechanisms between applications from supermarkets and the legitimate interests of local shopkeepers. Napoleon was wrong when he said that only Britain was a nation of shopkeepers, because France is, too. There are thousands of shops there, as we know.

The noble Lord, Lord Graham of Edmonton, looks as though he is about to rise, but I would prefer not to give way to him for reasons of time; I do not want to speak for too long. However, I give way.

Lord Graham of Edmonton: My Lords, I thank the noble Lord for giving way. Given my association with the retail trade, I take an interest in the subject. Obliquely, I declare that which is registered. What mechanism will be applied so that the consumer is free to shop where they wish? The car-borne shopper is a phenomenon of the past 30 or 40 years. They exercise their right of choice and go to the large hypermarket or out-of-town supermarket, running away from what was in my boyhood the corner shop. Whether it was a Co-op or any other shop, the corner shop was the primary source of goods. What economic mechanism will provide the small shop with the additional revenue that it will require? I understand what the noble Lord, Lord Cope of Berkeley, said about running away from regulation and interference. What does the noble Lord, Lord Dykes, believe can be done to sustain a shop in an area where the local populace, by its own choice, has gone elsewhere and brought about its downfall?

Lord Dykes: My Lords, I do not like to say it, but the noble Lord went slightly beyond the privilege of an intervention, which rapidly became a speech. He could have put his name down for the debate and made his own speech. When the Bill goes into Committee, many of those points can be gone into in great depth. There is a need to create a specific mechanism of control that prevents the local authority from being undermined by the existing mechanisms, which are stupid and unfair on the public. It is an illusion that they help just the large numbers of people who visit supermarkets regularly and do not go near small shops. That is an illusion for the present which turns into a disaster for the future.

France has more of those mechanisms, yet they do not penalise the supermarkets—there is healthy competition between them. They are now the equivalent of the big-shed groups that we have in this country, making up something like 45 per cent of the retail total. I speak to many officials in local authorities and central government in France, where there are strong trade unions to defend members’ interests, which is regarded as a sin in Britain. There are other mechanisms, too, and price controls in certain areas. The European Commission always looks closely at France to make sure that it does not breach European rules. However, irrespective of party—apart from on the extreme fringes—its attitude is to provide the necessary economic

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and social balance through these mechanisms. That is why the noble Lord needs to make his own speech. He could then provide his own suggestions for an appropriate mechanism.

I shall say one more thing about the need for local interests to be better represented. If local councillors could do that properly within our system, that would be fine. I make no criticism of them; they are noble and heroic people, in many ways struggling with a very difficult and unpopular job. Most people do not want to be local councillors in most local authority areas—it is very sad—because central government has demoralised them so much. It started with the Conservative Government under the noble Baroness, Lady Thatcher, in the old days. The morale, ethos and élan of local government were destroyed by the Conservative Government’s attack not only on the Greater London Council, which I publicly opposed at the time, but also on other local authority mechanisms. One therefore needs the additional control system that is suggested in the Bill, or something along its lines.

I am sure that my noble friend Lord Cotter will be the first to suggest improvements and modifications to the central ideas in the text. I commend him for many other aspects of the Bill. Few Peers are able to introduce a Bill that is so well drafted—I may embarrass him by saying so—and so full of persuasive content. It is on that note, therefore, that I plead with the Government to restore the morale of local councils by introducing some kind of support system and by giving a clear signal to the supermarkets that the days of wild, super-normal profits and bonanzas are over. Supermarkets must be responsible, rein back their enthusiasm and not destroy local communities.

10.46 am

Baroness O'Cathain: My Lords, I have given notice of my intention to speak in the gap. I also declare a very old interest as a director of Tesco for 15 years, but that is seven and a half years old. When I rapidly read the Bill this morning, I was deeply concerned. I ally with my noble friend Lord Cope of Berkeley about the setting-up of an Office for Retail Planning. Clause 18(2)(a) states that the authority,

“must comply with the direction”,

of the ORP. What costs will be put on the customer? The powers of the regulator, if it is called that, are far too wide. Where is the real customer research? No speaker so far has mentioned the fact that if local shops provide the goods and the services, people will flock to them and buy there instead of at the local supermarkets. There is a mass of research about that; I can provide noble Lords with a lot of it if they want to talk about it. The customer’s wants and needs have been totally ignored. The noble Earl, Lord Glasgow, said that he could not understand why 70 per cent of people shop in a supermarket. They want to. I hope that we will not take the quixotic approach of trying to regulate something without any customer input whatever.

10.48 am

Lord McNally: My Lords, surely the noble Lord, Lord Cope, with his experience, can see the difference between a Glasgow Liberal and a Manchester Liberal.

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I welcome the Bill and congratulate the noble Lord, Lord Cotter, who has been a long-standing champion of small business, on providing the basis for such a useful debate on such an important topic. We are talking about an important part of the British economy. The retail sector accounts for some 20 per cent of the UK economy, so we need to get the balance right in a number of ways. We need to provide a structure that encourages the small retailer while not increasing the burdens on both business and local authorities. The habit of government in recent years of adding responsibilities to local authorities without providing resources and then bemoaning rate rises has already been referred to. We need to get that balance right. We also need to get the balance right between the large retailer and the small. The noble Lord, Lord Cotter, and the noble Earl, Lord Glasgow, emphasised the community benefit of small retailers, which cannot be overstated.

We must not be too nostalgic, however. I declare an interest as director-general of the Retail Consortium in the mid-1980s, when my standard speech was to say that you cannot make water flow uphill and you cannot make shoppers shop where they do not want to shop. I still think that that is true. I also had a wonderful speech about the new shopping leisure experience, which used to amuse my wife, since wild horses could not drag me out shopping. I was the “wham bam thank you mam” type of shopper, but I was assured that shopping had moved into a new era of the leisure experience, and I think that that is true.

Although the noble Earl, Lord Glasgow, may be right that people often think of big supermarkets and out-of-town supermarkets as baddies, there is no doubt that in my lifetime we have seen a shopping revolution for the better. You can see the impact for consumers from the poorest to the richest. You only have to look at pre-war photographs, in which you can tell who were working people and who were wealthier, simply by their dress. That is not so today: people can go to the big supermarkets and retail outlets and get their suits—the same applies to food. If you go to any of the poorer boroughs of London and go into a supermarket, you can see what a range of food is available.

So let us acknowledge, as the noble Earl, Lord Glasgow, and the noble Lord, Lord Dykes, did, that our retail industry is a success story. We have one of the most efficient and competitive retail industries in the world. However, no one can rest on their laurels. In the mid-1980s, when shopping centres were being developed, the main task of the developer was to try to attract a Boots, a Marks & Spencer and a Sainsbury’s. Those were the three flagships, but all three of them have in the past 20 years gone through some very choppy waters. At the time, Tesco was still in its “pile it high and sell it cheap” stage. So retailers are in a very competitive business and they are only as good as their reputation today and tomorrow—they cannot rest on their laurels.

There is no doubt that shopping malls and out-of-town and edge-of-town centres respond to real demand, but we know, too, that such expansion has its downsides. The noble Lord, Lord Cotter, referred to what in the

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United States is called “doughnutting”—drawing and sucking out all retail activities from the centres of towns, so that town centres become dead. You can drive through them and see them boarded up and dead, which is not good for any community. I was pleased that the noble Lord, Lord Graham, intervened and I wish that he had put his name down to speak, because the co-operative movement has a role to play in some of the problems that he raised. There should be an opportunity for rate variation and there should be initiatives. As the noble Baroness, Lady O’Cathain, said, there is no doubt that town centres can fight back, with easier parking or park and ride, clearer and better security, niche marketing and quality marketing, pedestrianisation and good signage and street furniture. All together, they can make a town make a good offer.

Where the Bill is right is in saying that market forces alone will not provide the answer. The noble Lord, Lord Cope, said that the market will deal with the problem because, if businesses are failing, rents and rateable value will go down. In the town where I live, St Albans, we have recently lost from the town centre an excellent toyshop, an excellent art materials shop and an excellent bookshop. However, we have gained three bookmakers in the High Street. Sometimes it is not simply a matter of rents being forced down; the fact is that others come in who may not necessarily add to the total offer of a town centre. As travel writers often bemoan, one problem with our high streets now is that you can close your eyes and without looking you can say which hamburger chain, building society and bookmaker will be there. That distorts the noble Lord’s market.

Lord Cope of Berkeley: My Lords, the point that I was trying to make was that the mechanism for deciding rates is the rateable value, which is supposed to be self-correcting. I accept that it is not—the noble Lord makes a fair point in that sense—with regard to bookmakers, grocers and art shops or bookshops. But that is what we should look at; we should not try to do it through planning, although the Secretary of State’s guidance needs changing to improve the situation for small shops.

Lord McNally: My Lords, I welcome that intervention. We can see how we would develop that idea in relation to competition. Another thing that struck me during the noble Lord’s speech was that it might be necessary to broaden the duties of the Office of Fair Trading and the Competition Commission to give them more of a social and community view when making their decisions. If we leave it to a mud-wrestling competition between the big four, we will not deal with the parallel problem that has been raised in the debate about how we keep quality and diversity in our town centres. That may have to do with some flexibility on rating, but it may also have to do with planning.

I share the concerns expressed by the noble Lord, Lord Dykes, and others. We all know about the power of the big companies in securing planning permission and the fact that every local authority has to consider how far it is going to take a fight on planning permission against a big company with deep pockets. Supermarkets

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have a reputation both for bullying and for hoarding, which they should be wary about if they do not want to provoke the kind of interventionist response that has been warned against, particularly from the Conservative Benches.

Finally, I was glad that the noble Lord, Lord Graham, was present for the debate and that he contributed. I have often thought that, particularly at the village level, there is a need for a chemist, a food store and a post office, which might be combined in a co-operative effort.

I share many of the views that have been expressed. As with many Private Members’ Bills, this will not necessarily solve all the problems, but the problems that it raises are real. We need to get the balance right between the benefit of a super-efficient and effective large retail sector and the community and social benefits that come from having vibrant local town centres.

10.59 pm

Lord Dixon-Smith: My Lords, I am very grateful to the noble Lord, Lord Cotter, for explaining his Bill to us this morning and, more importantly, giving us an opportunity to debate the whole subject of town centres, retail and community, which is of fundamental interest to all of us. It is a very complex matter, to which there are no simple solutions. I am also grateful to his noble friend Lord McNally for introducing an element of reality into what I would call the noises on my right. We have to deal with society as it is and not, however much we wish to do so, as we would like it to be.

The whole matter is of fundamental importance to medium and small communities as you move further away from metropolitan areas. The presence of supermarkets is universal throughout the south-east and they are things that we all live with and use. Historically, we have all watched this development. There is nothing new in the problem. In my early days as an elected member in county hall, it was a regular problem when I met people who asked, “What are we going to do about the shops that are closing down?”. When I suggested that they might start using them, what happened? They went to a supermarket eight miles away, because sadly but realistically, as the local grocer said—he ran a very attractive business with a very good delicatessen—“They can go there and buy goods at the price that I have to buy them at from my wholesaler”.

We have to face that reality. There was another problem then, which is also still around—the closure of rural schools. I shall not tell the House what I suggested as the solution to that, but noble Lords can imagine. It would have worked, but people were not prepared to take it up. The truth is that society moves on. We may be able to regulate planning, and we may be able to regulate retail development but, as the noble Lord, Lord Graham, said, we cannot, must not and should not regulate customers. That is one of the realities of this situation.

We have to live in the world as it is. We in this country benefit and have benefited enormously from the change that has taken place over the past 30 years. The average household spending on food is a lower

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proportion of income than it has ever been. That may change in the future, but it is very good and it is very much in everyone’s interests. The way in which we organise our lives, with a far higher proportion of housewives working today, is enormously beneficial as well. They have less time to shop. I cannot remember who talked about spending two hours wandering up and down the high street from shop to shop, whereas now you can go and do the whole shop in 30 minutes in one place and load it into the boot of your car. Those are the realities of modern life.

I do not share the adulation of the noble Lord, Lord Dykes, for France, although I also have a house there. There are wonderful things about French society, and I would not have a house there if there were not. The reality in France is that the unemployment rate is well beyond double the unemployment rate here. There are huge social problems, and there is huge concern among thinking French people about the way in which French society is developing. They have considerable problems. Although they have been very successful as a semi-regulated society, one of the reasons that the system works is that they have four times as much land per head of population as we do in this country. Although I am an admirer of France, that does not go to the point that the noble Lord, Lord Dykes, was suggesting.

With my long experience in local government, I have considerable concerns about the proposed Office for Retail Planning. It seems to be suggested that we can regulate this problem away and stop the supermarkets going out of town, and local authorities will have to have retail development plans and so on. Life is not like that. Local authorities and district planning authorities already do everything that they can to try to preserve their town centres and to try to keep the competition levels as they see it in their communities at a reasonable base. They are as frustrated as the tone of this debate is about the reality that, all too often, the supermarkets can go to planning appeal and get what they were asking for via that route.

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