News Industry Supply Chain

Oral Answers to Questions — Trade and Industry – in the House of Commons at 11:30 am on 27th January 2005.

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Photo of Angela Watkinson Angela Watkinson Shadow Minister (Education) 11:30 am, 27th January 2005

What plans she has to reform the news industry supply chain.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

In August last year, the Secretary of State for Trade and Industry approved recommendations from the Office of Fair Trading to revise the newspaper wholesalers code of practice so as to remove current restrictions on retailers selling on newspaper titles to other retailers within the same wholesaler territory. We hope that removal of those restrictions will help promote the practice of selling on and give retailers increased choice and flexibility of supplier.

Photo of Angela Watkinson Angela Watkinson Shadow Minister (Education)

Mr. Ashia, Mr. Patel and Mr. O'Connor, three independent newsagents in my constituency, have expressed concern about the wholesale monopoly that gives them no choice of supplier. They are backed up by the National Federation of Retail Newsagents, which says that publishers and wholesalers suggest

"that thousands of small newsagents could be threatened, if current agreements are not given a Block Exemption from scrutiny under the Competition Act 1998" whereas, in reality,

"this is no more than a ruse to allow publishers and wholesalers to maintain their stranglehold over the news industry."

What would the Minister say to the three newsagents who contacted me?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

The hon. Lady and other hon. Members have been approached by a large number of organisations including the National Federation of Retail Newsagents, the Newspaper Society and wholesalers. The issue is complicated but we want to preserve maximum choice for retailers, particularly local newsagents. In the repeal of vertical exclusions, we undertook to ask the Office of Fair Trading to discuss the matter with the various sectors involved and to report back to us. We are expecting that report in the very near future and we hope that it will address many of these issues.

Photo of Mr Peter Pike Mr Peter Pike Labour, Burnley

My hon. Friend will recognise that local newsagents are an important community service. They are increasingly squeezed by superstores selling newspapers and they are not getting a fair deal from the wholesalers. It is important that we get the report as soon as possible so that they get a fair deal, stay in business and continue to provide a local community service.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

My hon. Friend has championed that cause at Question Time and in debates in the House about the balance between wholesalers and small newsagents. It is important that small newsagents are protected, because of the service that they offer to our communities. We must wait for the OFT report, which I expect to be available soon because the extension of the repeal ends on 1 May. I acknowledge the point that is being made and hope that we will reach the right decisions quickly.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I am grateful for what the Minister has said so far, but is he aware that, over the past decade, the combined effect of margin squeezes, spiralling carriage costs and poor wholesaler service has forced thousands of small newsagents into bankruptcy and closure? The result is that there are already 1,000 postcode sectors in the UK serving more than 4 million people that have no access to a newsagent. Does the Minister agree that, along with the closure of sub-post offices and small garages, that is bad news for the small firms sector and for communities, which is why it is so important that he acts?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I acknowledge the points that the hon. Gentleman raised. He will be aware of the process that we have to undertake under the competition regime. We also have to ensure maximum consumer choice, so that people can buy a paper or magazine from a local newsagent, supermarket, garage or wherever. I recognise the significant role that local newsagents play in our communities and their wider social role. I hope that the OFT recommendations will give us an opportunity to make sure that local newsagents are protected, but we must wait for the process to take its course.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

May I declare an interest to the extent that generations of my family ran village post offices and newsagents? Does the Minister agree that it is important that the views of independent newsagents are not misrepresented? There appears to be a risk of that today. They have said that the solution to the supply and distribution problems faced by the industry will not be found by simply enacting a wide-ranging UK block exemption that prevents scrutiny of a market that is already highly concentrated and restricted, so they are in favour of reform of the kind that is anticipated. That is the case, is it not?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

My hon. Friend takes a great interest in newspapers. I enjoy our early morning Tea Room meetings reading them. He is right that, when the Secretary of State took the decision last year, 12 months were given before implementation to allow the industry an opportunity to come together and work out a good relationship. That is why the Office of Fair Trading was involved. I am aware that some people feel that the block exemption needs to be continued, but I know that the OFT is taking all these matters into consideration, and when it produces its report, we will make a judgment on it.