Retail Sector

– in the House of Commons at 1:06 pm on 6th June 2018.

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Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee 1:06 pm, 6th June 2018

I beg to move,

That this House
notes that 21,000 jobs were lost in the retail sector in the first three months of 2018 due to store closures and company administrations, with more announced since;
further notes that the retail sector is one of the largest employers in the UK and contributed £94.6 billion to the UK economy in 2016;
regrets that the Government’s industrial strategy contains only three references to the retail sector;
further regrets that the Government has presided over the biggest squeeze in wage growth in a generation, is failing to provide certainty around future trading arrangements after Brexit and has failed to ensure a fair business rates system;
and calls on the Government to urgently publish a strategy for the retail sector.

Photo of Melanie Onn Melanie Onn Shadow Minister (Housing, Communities and Local Government) (Housing)

I thank the shadow Minister. The point on business rates is one that small businesses in my constituency regularly raise with me as something that not only curtails their opportunity to grow, but impedes their security for the immediate future. Does she think that the Government should do something about this immediately?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I thank my hon. Friend for her intervention and I completely agree. I will come on to business rates and the action that I would suggest that the Government take shortly.

Photo of Kate Green Kate Green Labour, Stretford and Urmston

I welcome this debate. My hon. Friend may be aware of research by Revo and intu shopping centres that looked at the UK’s appeal to international investors in the retail sector. They highlighted that business rates were the single biggest inhibitor of new international inward investment. Does she agree that that is a further reason why, in a post-Brexit environment, it will be all the more important that we review our business rate regime?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

Yes, and I thank my hon. Friend for her intervention—I completely agree. Before I start the substantive part of my comments, it is important to note that the commercial retail sector has faced significant strain over recent years, affecting landlords and tenants alike. That is not least due to the business rates system. A lot of major property investors—for example, St Modwen—have devolved themselves of their retail arms, because they are simply not profitable anymore, not only for tenants but for landlords, so it is critical that the business rates question is addressed urgently.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

I really appreciate my hon. Friend giving way on such an important issue as business rates. Can she fathom why the Government, when they announced 15 months ago that they were going to review business rates, have not done anything to progress this issue?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I completely agree, and now I will begin the substantive part of my comments, if I may.

The retail sector is undergoing a period of transformative change that will impact millions of workers across the UK. As has been played out in the press over the last few months, the sector is experiencing huge challenges, with almost silence from the Government, sadly. We have seen an onslaught of store changes; big-name chains that have been the stalwart of our town centres and high streets for years have collapsed and gone into administration.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

My home town of Stockton won the rising star award in the British high street awards, sponsored, ironically, by Marks & Spencer, which is now abandoning our town after taking profits from our people for over a century. We believe however that our town has got a future, but does my hon. Friend agree that firms like Marks & Spencer should consider the future prospects of towns properly, and show a bit of loyalty to their loyal customers instead of taking their profits and running off to out-of-town shopping centres?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I agree with my hon. Friend, but the issue is twofold. It is not simply about imposing obligations on businesses; the Government have a duty to provide a fertile business environment in which large and small businesses can grow and provide a positive contribution to their communities.

Toys R Us and Maplin collapsed on the same day in February, putting 5,500 jobs at risk in one day. Card Factory, Moss Bros, Laura Ashley, Carpetright and Mothercare have all issued profit warnings this year, and some have entered into company voluntary arrangements, with hundreds of store closures expected. In April we heard news of a possible merger between Asda and Sainsbury’s; a couple of weeks ago the one and only Marks & Spencer announced it will be closing 14 branches this year and 100 stores by 2022; and just this week there were reports that House of Fraser is on the brink of collapse and attempting to negotiate a CVA. That list is not exhaustive but it clearly demonstrates the scale of the challenge faced by the industry.

I am sure many Members across the House will at one point or another have worked in the retail sector; it is many people’s first experience of the working world, as it was for me. My first job was as an assistant at a pawn shop. I must clarify that it was a pawn, not a porn, shop—at a meeting a few years ago I said I had worked in a pawn shop and one lady in the audience, thinking it was a porn shop, was horrified. That first job was important because it taught me valuable skills and allowed me to gain some financial independence, but for millions of people retail is not just a Saturday job; it is their livelihood. It is therefore vital that the Government take the challenges facing the sector seriously and provide support to it.

The industry is one of the largest sectors in the UK, contributing £94.6 billion to the UK economy in 2016. However, staggeringly, its productivity is less than four-fifths that of the national average, and this low productivity drags down the productivity of the UK, a point made recently by the Institute for Public Policy Research. And, sadly, with low productivity comes low pay. We should not fall into the trap of thinking that all people in retail are low paid and in economic hardship—the student doing a summer job would certainly not be in that position—but there is a widespread problem in the retail sector, and according to the Joseph Rowntree Foundation there are around 1.5 million people in low pay in retail, with a higher proportion of households facing economic hardship than in working households generally.

Because retail is such a large sector, the industry now accounts for just under one third of the total number of people in low pay in the UK. The economic importance of the sector should therefore not be understated, and the Government should be doing more to support it. I am sure the Secretary of State will listen to my suggestions today, but I hope that when he speaks later he staggers me with a comprehensive plan to support the sector.

I will start my kind suggestions to the Secretary of State by saying that one of the most glaring omissions from the industrial strategy White Paper was an appreciation that an industrial strategy is not just about labs or hard-hats, but is also about low productivity service sectors, where the majority of people work. Investing in and talking about headline-grabbing hi-tech industries is of course critical, but this alone does not constitute an industrial strategy. Despite the Government’s intention to improve productivity, sadly the industrial strategy Green Paper mentioned retail only twice in 132 pages, and the White Paper only three times in 256 pages, with vague references to working

“closely with sectors such as hospitality, retail and tourism on each of the foundations of productivity”, but with very little detail to match.

Many challenges are facing the sector, and I will touch on just a few key areas today. Retail firms have since the economic crisis come under increasing pressure. Things have got so bad that in the first three months of 2018 some 21,000 jobs in the retail sector were at risk. The drive towards online retailing, and indeed bad weather, have of course had a significant impact on our spending habits, but one reason for this that is rarely mentioned is a clear failure to sustain wage growth. Wages are not expected to return to pre-crash levels until at least 2022, and household debt has spiralled to unprecedented levels. This clearly has a significant impact on what people spend their money on, with many, sadly, relying on credit cards just to get by each week, never mind to buy luxury items.

The Office for National Statistics has stated that consumer spending is worth around 60% of GDP, and it has been one of the driving forces behind the recovery of the UK economy. Interestingly, however, trends are showing that British consumers have stopped taking on more debt, and Credit Suisse recently told clients that it believes this trend will continue, which would damage one of the key drivers of GDP growth.

Another issue is the increasingly hostile business environment many retailers are now facing. But it is not just businesses that will lose out: communities are having their hearts ripped out and high street after high street is becoming littered with empty shops, charity shops and bookmakers.

Photo of Gerard Killen Gerard Killen Labour/Co-operative, Rutherglen and Hamilton West

Does my hon. Friend agree that another issue for high streets is that the banks have been leaving? Many retailers tell me that having an ATM beside their business makes all the difference to their takings. Does my hon. Friend think that the Government, as the majority shareholder in RBS, should step up to the mark and take action on branch closures?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I completely agree, and interestingly historically RBS had a last-man-standing agreement to be the last bank on many high streets, and that does not seem to have been enforced by the Government, so I call on the Secretary of State to look at this. My hon. Friend makes a pertinent point, and it is not just bank closures that are damaging the high street infrastructure; the closure of post offices is also a significant issue.

These issues are exacerbated even further by years of under-investment in many of our regions and nations. If the Government are not prepared to provide the tools businesses and communities need to provide a fertile environment for local businesses, how can we expect these fortunes to change? A worrying report by David Jinks called “The Death of the High Street” argues that, unless we see radical change within 13 years, the impact of online shopping and home deliveries will “destroy” over half of today’s town centre stores. His report also argues that between 2020 and 2030 half of the UK’s existing shop premises will disappear; 100,000 stores will close, leaving just 120,000 shops on our high streets.

Britain’s high streets are fading away because new shops are not opening fast enough to replace those that close. The Government attempted to deal with this issue through the Portas review, which advised that town teams be created to assist towns undergoing significant strain, but official funding for town teams ended on 1 April 2015.

The Government’s recent announcement to develop local industrial strategies was a welcome step forward. However, think-tank Localis stated last month that there was a capacity gap in Whitehall for developing these, leading to concern that a pipeline of local industrial strategies will face significant delays. I will be grateful if the Secretary of State provides clarity on this and confirms what resources are available to local enterprise partnerships and local authorities in taking these strategies forward.

EU funding has also been a significant supporting factor to many areas in decline; it has always been strongly targeted at less prosperous regions. The Government are currently failing to provide any certainty to business over the UK’s future trading relationship with the EU, the extent of regulatory alignment, or access to labour, but they have also failed to provide clarity on one key tool that previously helped spur the regeneration of many towns and high streets that had been starved of investment: EU structural funds. We know that the Government are planning a new fund to replace them when we leave the EU, but so far there has been no commitment on the scale of that fund, on how it will be administered or on which investment it will be directed at. Will the Secretary of State give us more information on that today?

When we add to this massive uncertainty the significant cuts that local authorities have faced in recent years, we have a recipe for complete high street annihilation. That environment, and the lack of support that many businesses face, was made very clear in the shambolic handling of last year’s business rates revaluation, in which many businesses faced an unmanageable overnight hike in their rates. I am pleased that the Government have brought forward CPI indexation, but I urge them to go further by immediately introducing statutory annual revaluations, guaranteeing a fair and transparent appeals process and excluding new investment in plant and machinery from future business rates valuations. They must urgently evaluate and reform the whole system to make it fit for purpose and capable of addressing the changes that we are seeing in the sector.

Businesses were failed not only in regard to business rates; we also saw a failure to handle the scourge of late payments, which can lead to businesses struggling to cover costs or to invest, and sometimes going bust. We saw the effects of this recently in the collapse of Carillion, when huge swathes of supply chain companies faced a cliff edge due to late payments, often of up to 120 days. Many of those businesses will never see their money again. I urge the Government to adopt Labour’s position by ensuring that anyone bidding for a Government contract is mandated to pay their own suppliers within 30 days and by developing a robust system of binding arbitration and fines for persistent late payers.

As the retail sector struggles, how to boost productivity remains a major challenge. There are at least two schools of thought on this. The first concentrates on improving technology and ultimately automating many jobs. That involves automating warehousing, sales, deliveries and so on, and job losses could result. That was the view of Deloitte, which suggested that 60% of jobs could be lost. The jobs that would remain would require a range of skills such as operating advanced machinery, software and robotics. They are likely to be higher paid and involve higher skills.

The second model involves redesigning how business operates to boost productivity growth. Research from the Joseph Rowntree Foundation has shown that many capable employees in the retail sector are reluctant to move up the rungs of the management ladder, as that involves greater responsibilities without much of an increase in pay. Jobs need to be redesigned so that an individual performs a range of different tasks that straddle the staff-management boundary and pay is increased. In that way, talented individuals could be engaged in the management side, raising performance and productivity. Either of those models—or a hybrid of the two, whichever the Government chose to take forward—would require dedicated Government investment in skills training for employees, to enable them to navigate the changes.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

I agree with a lot of the challenges that the hon. Lady is outlining. My son works in the retail sector, and he has recently had a promotion to management level. He is only 18, so I give full credit to Zara for encouraging his talents. Does she agree, however, that the Government’s approach in bringing in T-levels has played an important part in tackling those challenges and that they are working with industrial partners to bring those changes forward?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I thank the hon. Lady for her intervention. Please will she congratulate her son on his recent promotion? Some of the Government’s commitments are welcome, including the national retraining scheme and the T-levels that she has just mentioned, but sadly they are meaningless in the context of the cuts that we have faced over recent years. For example, £64 million was announced for the national retraining scheme, but £1.15 billion was cut from the adult skills budget between 2010 and 2015. I hope that the Secretary of State will put forward proposals today to increase investment in skills, because if we do not invest in skills, we will not be able to take our employees on the journey that they need to make.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

The hon. Lady has been speaking for some time now, giving her analysis and talking about what the Government should do, but in her position as the shadow Secretary of State for Business, does she have any pearls of wisdom to give to retailers on what they should do to attract people into their retail outlets?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I thank the hon. Gentleman for his comments, and I do apologise for speaking for some time. If he listens, perhaps he will get some of those pearls of wisdom in due course. The point I am making is that the Government need to recognise that businesses need support. Businesses themselves need to innovate and to ensure that they drive productivity increases in-house, but the Government need to show dedication to providing the tools required to increase fertility in the business environment. Frankly, that is not happening at the moment.

An essential element in improving retail productivity is innovation, which is the best means of raising wages and boosting the competitiveness of British industry. Innovation is required by businesses themselves, as I have just pointed out to the hon. Gentleman, but the Government must commit more money to research and development spending. They referred in their White Paper to increasing that spending to 2.4% of GDP, which is welcome, but if they are really going to support low productivity sectors such as retail, to ensure that we can compete on the world stage, they need to increase it to at least 3%, as other world leaders such as South Korea and Japan have done.

I also welcome the Government’s recent establishment of a Retail Sector Council, but I have heard very little information about it since its establishment. Will the Secretary of State update the House on how often the council has met so far and whether there have been any discussions with the Government about what role the Government can play in boosting innovation in the sector? Labour has pledged to establish a catapult centre in relation to retail, to lead on technological, managerial and employee innovation. This is important because the Fabian Society recently reported that increasing managerial innovation and sharing best practice in retail can drive productivity by improving quality, as well as sale and business growth, and I call on the Government to examine Labour’s catapult centre proposals.

Infrastructure investment is also a critical part of boosting productivity in the sector. We must recognise that the future of our high streets depends on quality infrastructure, transport links, parking amenities and high-speed broadband, as well as on the local anchor institutions that draw people in, such as entertainment and leisure facilities and libraries. The sums announced in the White Paper are sadly negligible, and the TUC has stated that public investment will be increased to just 2.9% of GDP, while the average invested by other leading industrial nations in the OECD is 3.5%. Again, I hope that the Secretary of State has some earth-shattering updates for me today, to restore our faith in what the Economic Justice Commission recently dubbed

“the most regionally unequal country in the whole of Europe” in terms of investment in our regions.

This brings me to the subject of retail workers, who are vital to the success of the sector. They provide positive customer experiences, and a lack of staff can have an adverse impact on customer service levels. The impact of job losses in retail should therefore not be understated. They have a profound impact on families and communities right across Britain. Retail has traditionally provided entry-level, part-time and flexible jobs for millions across the UK, and it has often provided livelihoods for people who have had to leave declining industries in particular regions.

Photo of Anna McMorrin Anna McMorrin Labour, Cardiff North

One of my constituents who is directly affected by this has written to me. Her husband works in retail, and she is appalled by the contract changes being forced on people working in the sector, particularly in Sainsbury’s, where 9,000 long- standing and loyal staff will suffer a significant pay cut of up to £3,000 and see their paid breaks and premium pay scrapped.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

My hon. Friend makes a vital point, and I shall come on to that shortly.

For some people, working in retail may be their only viable employment option. If a chain goes under and the local store closes or relocates out of the area, they will either have to travel further afield to find work or decide that the journey is simply not cost-effective and be forced to give up work altogether. According to a recent report by the Fabian Society, forecasts for the reduction in employment in the industry suggest that women, who make up the majority of the retail workforce, will sadly be the hardest hit. Workers in the retail sector are vulnerable, as my hon. Friend has just said. When costs need to be cut, workers are usually the first to face the squeeze. Only recently, Sainsbury’s announced sweeping changes to contracts for up to 130,000 staff in stores across the UK.

Photo of Mike Amesbury Mike Amesbury Labour, Weaver Vale

Does my hon. Friend agree that the likes of Lidl, which has its senior management at Manor Park in Runcorn, should allow access to the trade union USDAW, because a healthy workforce is a productive workforce?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

My hon. Friend makes an important point about another key factor in improving productivity. This is about not just improving skill levels, but engaging with the workforce proactively and collaboratively. That is best done through trade union membership and allowing trade unions access to workplaces, so issues on the shop floor can be identified and dealt with quickly, increasing productivity overall.

Photo of Kate Green Kate Green Labour, Stretford and Urmston

I am a proud USDAW member, and will my hon. Friend join me in commending its “Freedom From Fear” campaign, which seeks to ensure that shop workers are safe at work, travelling to work and leaving work? Too many of them still risk abuse and unpleasantness from customers in the workplace.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I thank my hon. Friend and support what she says.

Going back to Sainsbury’s, staff will no longer get paid breaks or higher rates of pay for working on a Sunday under the new terms. Premium rates for night-shift work will be restricted to between midnight and 5 am, and shop floor staff will no longer be able to earn bonuses. It is interesting, however, that the freeze on bonuses is allegedly not likely to impact senior managers or the CEO, who will still receive their bumper bonus packages. There are also worrying reports that staff may be forced to resign if they refuse to sign these new contracts.

Sainsbury’s is not alone in this trend towards fluctuating terms and conditions and insecurity. As USDAW recently reported, a number of clear trends within the sector have led to the workforce feeling increased pressure. Many retailers, seeking to maximise flexibility to deal with fluctuations in customer demand, have introduced flexible, short-hours contracts. As a result, two thirds of USDAW members are regularly working additional hours above those that they are contracted to work, yet they have no guarantee that those hours and the associated income will be available to them in the future. The Bakers, Food and Allied Workers Union reports similar trends, with McDonald’s workers recently striking in a dispute over zero-hours contracts and working conditions.

The Government’s recent response to the Taylor review included a right to request more stable hours, which I referred to when the Secretary of State made his statement on the review, but how does that actually differ from the current position? Without an obligation on the employer to accept, it is meaningless and I urge him to reconsider.

Photo of Justin Tomlinson Justin Tomlinson Conservative, North Swindon

Coming from a family of shopkeepers and as a former co-chair of the all-party parliamentary group on retail, I have been listened very carefully, but the shadow Business Secretary has made hardly any mention of Amazon and the onslaught of online trading that has decimated footfall on the high street. The vast majority of her speech has been gibberish to people in retail, with no practical suggestions. I hope that there will be something in her conclusion.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

With the hon. Gentleman’s knowledge of the sector, I am surprised that he says that, given that business rates are one of the critical issues affecting the high street. Retailers often tell me about the unfairness of businesses such as Amazon receiving skewed business rates valuations due to the size of their operations, so I have dealt with that point.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I have listened carefully to the hon. Lady, who has accused British retailers of lacking innovation. However, the UK is the third largest e-commerce market in the world. Digital taxation needs to be done on a cross-border basis, so will she join me in congratulating our Chancellor on getting 100 countries across the world to look at implementing a digital tax to allow us to address the level playing field between online and offline?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I have not in any way, shape or form suggested that any business lacks the capacity or drive to innovate—quite the contrary—but they do lack Government support to drive that innovation. As for making tax digital, I ask the hon. Lady to read some of the Library research. While the sentiment is credible, the implementation has been far from it, with numerous businesses reporting problems from start to finish, and that needs to be addressed urgently.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

Does my hon. Friend recognise that the retail sector suffers from offshore landlords charging exorbitant prices for property, forcing businesses off our high streets?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I referred earlier to the commercial retail property market, and the Government must recognise that they have to work collaboratively across the sector and with landlords to enable tenants to secure fair tenancies. In the current climate, many tenancies are unfair to retailers, forcing many of them over the edge. Offshore landlords are a significant issue that we have discussed at length in this Parliament.

That completes my whistle-stop tour of many of the issues the sector faces, and I hope that my comments have been helpful to the Business Secretary. He knows that retail is our largest industrial sector. It has the power not only to transform our economy, but to transform our communities, providing high streets and towns with the services and consumer choice that Britain deserves.

When I was little, my Uncle Ray was a butcher. He was proud of having his own business and the family were proud of him. However, he was not just proud of being an entrepreneur; he was proud of the services that he provided to his local community and to the people who came into his shop every single day. In all my life, I have never seen such profound change in the retail sector, and the alarm bells are ringing loud and clear. How many more Uncle Raymonds are there who want to start their own business but are frightened to do so in the current climate? How many more Uncle Raymonds are out there who are in business but are frightened of going bust due to the hostile environment they face? Once our high street is gone, it will be gone forever, and the basic lifeblood of an entrepreneurial nation from high street grocers and hairdressers all the way through to department stores will be in tatters. I urge the Business Secretary to act now before it is too late.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy 1:37 pm, 6th June 2018

To answer the question from Rebecca Long Bailey about people emulating her Uncle Ray, 1,100 new businesses are being created in this country every day of the year —record levels. We are seeing a resurgence of entrepreneurship right across the country, which she will welcome.

I am delighted that we have the chance to talk about the retail sector, which, as the hon. Lady recognised, is vital to every one of our constituencies. The character and identity of all the towns, villages and cities that we represent are defined by the shops, stores, cafés, restaurants and pubs, which make up the most important places in our settlements. Whether independently owned or part of a chain, and whether large or small, they play a vital role. As constituency MPs, we all do everything we can to promote and boost them. Things such as Small Business Saturday engage all Members on both sides of the House to promote the importance of retail.

More people are employed in retailing than in any other single industry in the country. Britain has long had a deserved reputation for being a retail environment of intense competition and innovation and for outstripping other countries in terms of the keenness of prices, the choice and range of products, and the pace of new offerings to consumers to meet their changing needs.

Any of us who has visited other countries, whether in continental Europe or the US, to take a couple of examples, will have noticed how comparatively advanced and well served our consumers are in this country. Already in this debate we have heard from many people who grew up with a retail background, which is not surprising given the sector’s importance. I make my own disclosure that my father was a retail milkman. My first job was delivering milk in the mornings as part of a small family business. My mother worked at the local Sainsbury’s. Such backgrounds are common among Members on both sides of the House. We all have friends, family and many constituents who owe their life and lifeblood to the retail sector.

The hon. Member for Salford and Eccles accurately describes the period of change the retail sector is experiencing. She is right to do so. As she says, in recent years, several familiar household names have disappeared from our high streets: Woolworths in 2009 and, more recently, Toys R Us and Maplin. Each and every case is a blow to the staff who work in those stores and, of course, to the customers. But we all know this is by no means new in British retailing. Each of the names I have mentioned was a disrupter and an insurgent in its day. Woolworths, for example, came as an American giant offering open shelves for consumers to serve themselves, rather than having to wait behind a counter, which was revolutionary and a major challenge to the prevailing model.

British Home Stores, much in the news in recent years, provided a one-stop shop containing everything under one roof, from light fittings to clothing and food. Again, that was a big disruption to the norm. The hon. Lady mentions Toys R Us. I am old enough to remember the dismay experienced by some traditional high street toy stores when out-of-town warehouses, including Toys R Us, entered the market. Those warehouses became familiar and many of us have bought toys for our children there. There is a story of constant change in the retail sector.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

The retail sector in the centre of Sheffield has been greatly strengthened by the establishment of a business improvement district. The Secretary of State will know that, outside London, the only model for business improvement districts is an occupier or a ratepayer BID, whereas London can have property owner BIDs. After lengthy consultation by the Government, there were proposals in last year’s Local Government Finance Bill to roll out the opportunity of property owner BIDs across the country, which was widely welcomed in the north of England. The Bill was lost in the wash-up. Do the Government have any plans to renew that proposal to enable property owner BIDs across the UK?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree with the hon. Gentleman on the positive effect of BIDs. When I was a local councillor in London, I saw the benefits of the business improvement districts in the capital. The Local Government Finance Bill was a victim of the wash-up and I will raise the point with my colleagues to see where we are on further plans.

We have experienced constant change in the retail sector and, of course, at the moment we are experiencing an online revolution. We previously experienced the supermarket revolution and, again, I remember well my father’s milk rounds shrinking as supermarkets routinely began to sell fresh milk at a fraction of what the roundsmen charged.

There was never a time when the high street did not change and did not see the disappearance of brands that were regarded as anchors at the time. The hon. Member for Salford and Eccles is remiss in not stating the context of constant change. We all remember many examples of presences on the high street, going back many years, that are no longer there.

The evidence shows that British retail is transforming but is still vigorous. Following the hon. Lady’s speech, Members would be forgiven for imagining that retail employment is in a state of meltdown.

Photo of Justin Tomlinson Justin Tomlinson Conservative, North Swindon

I echo my right hon. Friend because the hostility shown by the shadow Minister towards retail does not reflect the reality. Productivity grew by 4% in 2017, as reported by the British Retail Consortium. That is the reality.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend is right. We all want to celebrate the success of retail in Britain and we all want to do what we can to further advantage it. In fact, the number of people employed in retail in the UK has grown substantially over the past 20 years, from around 2.8 million in 1996 to 3.1 million in the last full year for which figures are available, an increase of nearly 300,000 jobs.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

When I went to talk to my local jobcentre, it complained about the way the supermarkets treat their workers. My local jobcentre says it is grossly unfair and unreasonable to give people short 12-hour or eight-hour contracts. Is the Secretary of State confident that the increase in the number of jobs is an increase in full-time equivalent jobs, or is it just chopping up jobs that would previously have had a reasonable number of hours?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Lady raises an interesting question. She will be interested to know that the trend over the period is towards more full-time jobs taking the strain from part-time jobs. The hon. Member for Salford and Eccles mentioned that part-time employment is valued by many people in the retail sector, but a higher proportion of jobs in the retail sector are now full time than in 1996.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Would the Secretary of State care to comment on a practice I see weekly at my advice surgery? Large numbers of my constituents, particularly among the Tamil community, are working 18 hours a week at Tesco precisely so that Tesco does not have to pay employer’s national insurance contributions.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I was not aware of that, and my colleagues and I would be happy to meet the hon. Lady to discuss her example.

It is not the case that in recent years we have experienced a collapse in employment—rather the reverse. The trend has been towards increasing and, more recently, more stable employment. We are seeing more full-time work, rather than part-time work, in the mix. Nor is it the case that more retailers are failing. The hon. Member for Salford and Eccles correctly mentioned some recent examples of retailers that have gone out of business, but it has always been the case that some retailers have failed and been replaced by others.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

Of course I regret that Marks & Spencer is pulling out of Redditch, but is it not the case that the consumer is the ultimate beneficiary when we see change in the sector? Consumers get new products, better prices and different things and new experiences they would not necessarily have had previously. That is what an entrepreneurial economy supported by this Government does.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree. We want to make sure that our retail sector is dynamic and provides value and choice for consumers, as well as good career opportunities for members of staff.

Photo of Melanie Onn Melanie Onn Shadow Minister (Housing, Communities and Local Government) (Housing)

The Secretary of State says that retailers are not failing, but the empty shops in Grimsby town centre tell my constituents something very different. Will he comment on that?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

Across the country, from time to time, businesses will close. I am familiar with Grimsby, as the hon. Lady knows, and one of the actions we are taking, which I know she will support, is to have a town deal with Grimsby to make sure that we maximise the advantages locally. Freeman Street in Grimsby shows this phenomenon has been happening not just over the past 12 or 24 months; there has been a long-term change. Local dedication, based on knowledge of the local environment, is required to have the best prospects for a revival.

Photo of Kevin Foster Kevin Foster Conservative, Torbay

The Secretary of State rightly refers to the fact that towns have to look at change. Does he agree that in many cases it will be for local authorities to examine what the needs of a modern town centre are as a destination, rather than at what its needs were in the 1950s and 1960s, in a very different retail era?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend is exactly right about that. Of course many of our towns acquired shopping centres and shopping malls to make them more attractive at that time, which again was a big change. There is constant change in what the offer and draw of town centres is, and local authorities are very active in thinking about how they can make their places as attractive as they can.

According to the latest market data for the last five years, covering the period from 2013 to the end of 2017, 191 retailers in this country have gone into administration. That compares with the 202 that did so in the five years prior, so we have not had the sudden collapse that the hon. Member for Salford and Eccles was hinting at. During the last five years, the number of stores affected by those failures was 7,429, compared with 19,639 in the previous five years. So it is very important that we do not paint a picture of British retail undergoing some sort experience that has never happened before; we need to make sure that its dynamism results in positive outcomes and not to regard this as completely out of the ordinary.

The hon. Lady cited examples of closures and, as I said, they are hugely hurtful and worrying for everyone caught up in them. However, she conspicuously failed to mention the other side of the equation. If she reads Retail Week in any given week, she will see example after example of stores that are opening and of companies that are expanding. She could have mentioned that just in January the Co-op committed that it will open 100 new stores during 2018, creating 1,600 jobs. Lidl is investing £1.45 billion in expanding its UK presence, and Aldi is now the fifth biggest retailer in the UK and it aims to have 1,000 stores by 2020. Lest anyone think that discount retail means discount wages, Aldi has pledged to become the UK’s highest-paying supermarket by 2020.

Our tastes and habits are changing. Home delivery from stores was once considered a relic of pre-war and immediately post-war times, but now it is increasingly standard for all the big supermarkets; Ocado has recently joined the FTSE 100 on the back of its growth. We have more and better choice through online retail than ever before, as colleagues have said. ASOS is now the UK’s largest clothing retailer by market valuation, and this week the British Retail Consortium showed that total retail sales increased substantially in May. The hon. Lady does the retail sector and the country a disservice by claiming that we are seeing an annihilation of the high street. We need to be much more practical and positive about the prospects.

However, our habits are changing. We are buying more and more each year— retail sales are buoyant—but we are choosing to buy more of that online, which of course provides a challenge. In 2007, 3% of total retail sales were bought online, yet in little more than a decade—by May this year—that had grown to 16.9%. That is a revolution in a short space of time. In the past 12 months alone, online sales rose by 11.9%, and clothing and footwear sales online rose by 24.1%. The consultants Oliver Wyman forecast that 40% of non-food retail sales will be online by 2030. That is how people are choosing to buy so, just as happened when supermarkets challenged individual shops, retail will look very different in the future. If we choose to buy 40% of goods online, not all the shops we have been used to will exist as they do today. As the British Retail Consortium says:

“We have too much retail space…there will be fewer shops and their role will be different”.

It says that they will be based on convenience fulfilment or, most likely, fulfilling a desire for experience and local community concentration. Those are the changes that the sector anticipates and wants to participate in.

Photo of Kate Green Kate Green Labour, Stretford and Urmston

I cannot dispute what the Secretary of State says about the changing patterns of online shopping. He made a comment earlier about the quality of employment in low-cost supermarkets. Does he accept that it is also important that those online retail settings offer excellent employment conditions? Too often we hear of exploitative practices in these warehouses and of the abusive treatment of workers, who are being denied toilet breaks and being asked to do heavy lifting without proper risk assessments having been carried out. They do that for very low wages.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Lady makes an excellent point, and this was one of the reasons we commissioned the Matthew Taylor report, to which the hon. Member for Salford and Eccles referred. Knowing that employment patterns are changing and that different types of businesses are entering the market, it is right to consider what regulatory requirements we need in this new world to maintain the high standards we have insisted on in this country. That is the type of preparation—the strategic anticipation of what is required—that we are engaged in.

I applaud the way in which, in this time of adjustment, to prepare for the future, the retail sector is coming together, with its players working jointly. It has always been a rather fragmented sector, but in recent months we have seen a real sense of purpose in its coming together to work jointly with the Government and with local councils, as my hon. Friend Kevin Foster said, to address the challenges it has faced.

Photo of Ben Bradley Ben Bradley Vice-Chair, Conservative Party

Does my right hon. Friend agree that, as well as working at a national level to recognise the changes needed in our high streets, it is important that local councils work with local businesses to put in place a plan and vision for what the town centre needs to look like in future?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend is right about that. The hon. Member for Salford and Eccles referred to local industrial strategies. The reason they are part of the industrial strategy is because the vision we have set out, informed by local councils, local leaders and retailers, is that that local dimension and knowledge, as I mentioned to Melanie Onn, is vital in ensuring we have prosperity. So the sector was a major contributor to the development of our industrial strategy.

One commitment we made was to establish the Retail Sector Council, so that firms, large and small, can work effectively with each other and policy makers, emulating the successful model that the Automotive Council UK and the Aerospace Growth Partnership have established, with which Members are familiar. The RSC is chaired jointly by the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Andrew Griffiths, and Richard Pennycook, who, as many Members will know, is the former chief executive of the Co-op and one of our most respected retailers.

The RSC is bringing the sector together to work with Government and local councils, making recommendations on the areas of challenge that have come up already in today’s debate. Those include business rates, where the Government have made a clear commitment to make sure that the system is up to date for a world in which people increasingly shop online. Of course, that builds on the commitment we have made to wider business rates reforms and on the relief that has been given following the recent revaluation. That stands in stark contrast with the record of the Labour party, which doubled the average business rates bill during its time in office. We are protecting the small businesses in this country from its increase.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

Will the Secretary of State provide some more detail about how the Government are going to reform business rates, because we know the retail sector is crying out for reform of the system and he has not set out any details? I would really appreciate those now.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I do not want to incur the wrath of my fierce hon. Friend, Stephen Kerr, by speaking for too long, but there will be opportunities to do that. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton, will be responding to the debate. The Retail Sector Council has that as part of its remit and objectives. A review is taking place with the Treasury on precisely those matters. Of course that is so because this is one of the big challenges that stores with a high street presence face. The context of competition from online retailers is fundamental to that.

A major concern of the industry, through the new sector council, and of this Government, through the industrial strategy, is to drive higher levels of productivity and earnings for workers in the sector. There are huge opportunities to do both. The hon. Member for Salford and Eccles does a disservice to this very innovative sector and the people who work in it she portrays it as some sort of backwater of uniform low productivity—it is far from it. In fact, in the past 20 years in the retail sector, output per hour has doubled; it has increased faster than the economy as a whole. Productivity in UK retailing is one of the highest of major European nations and one of the most rapidly growing. Pay in retail is increasing, responding to the recruitment pressures that come from the fact that unemployment is now at its lowest level for 40 years. That has been bolstered by the introduction of the national living wage, which has had a particularly beneficial impact on employees in the retail sector. As I have said, we want to secure improvements in the quality of working life that employees in the sector experience, which is why the Matthew Taylor report with its emphasis on good work is of such vital relevance to this sector.

Retail is already at the cutting edge of much of the innovation and new technology that we see. Our industrial strategy, with its major investment—the biggest increase in investment in research and development that we have seen as a country—is full of opportunities for further innovation. Through our industrial strategy challenge fund and grand challenges such as on artificial intelligence, this is a sector that will play a big part in that. Part of the reason for the creation of the Retail Sector Council is to enable the sector to do so.

The British retail sector is renowned as one of the most competitive and innovative in the world. It employs millions of people, and will continue to do so, in good jobs in every part of the United Kingdom. We recognise and embrace the challenge of responding to the changes that are taking place in retailing not just in this country, but across the world. We are investing in technology, investing in skills, ensuring that people can have satisfying and prosperous careers to look forward to in retail, and responding to the consequences of changing consumer preferences and the implications that that has for the future of the high street.

Those are the areas on which we will work in close partnership with the sector. Together we will ensure that, more than ever, retailing is something that is, in its quality, in the price that it offers to consumers and in the choice and innovation that it brings in, one of our world-leading sectors of the economy.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy) 2:02 pm, 6th June 2018

It is always a genuine pleasure to follow the shadow Secretary of State and, indeed, the Secretary of State in these debates, particularly when they are on very important subjects such as retail that go right to the heart of our towns, cities and communities. As a former retailer myself, I should like to start by paying tribute to those sore-footed legions who go home every night having served us in their shops and stores. They perform an absolutely vital function, and that should not go without being underlined today and I mean to do that during my contribution.

Retailers always try to create the conditions to attract customers. The environment that they work in and that they present to consumers is extremely important for them. They will spend a long time working out whether they should concentrate on high-density product placement, low-density product placement, special offers and the placing of those offers. They know that the environment in which people shop is extraordinarily important to them. They approach that in a range of different ways. I do not want to major on the actual high street itself, but I do want to focus on it, because it is something that was perhaps glossed over by the Secretary of State today.

The success of retail depends on the wider economic environment—or the context, as the Secretary of State called it earlier. That is why the unrelenting situation that we have over austerity causes so much difficulty for high street retailers, and retailers in general. Store closures, such as the ones announced by Marks and Spencer, are just another indictment of what happens when these policies are brought forward, and they drive consumers away from the high streets. If people do not have a disposable income, they are not able to go and spend in the shops.

The Scottish Government continue to support the Scottish retail business, especially the crucial small business retail sector, with initiatives such as the small business bonus, and I will return to that matter shortly.

Photo of Gerard Killen Gerard Killen Labour/Co-operative, Rutherglen and Hamilton West

The hon. Gentleman is talking about the Scottish Government’s assistance for small businesses. In my area, three businesses have had to close as a result of the treatment they have received from landlords, the most recent being The Big Coffee Cup. Does he not think that it is regrettable in Scotland that there is no statutory or common law right for a commercial lease to be renewed? These businesses were told that they had to close because their lease was not going to be renewed.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

I would love to give the hon. Gentleman a direct answer, but I have not come across that situation myself. I will happily look into it. I will not come here and make up something that I do not know anything about, so I will look into the lease issue for him.

I will come back to what the Scottish Government are doing in Scotland later in my speech. In tough times, the last thing that retailers need is for costs to rise. When prices go up, the number of customers goes down. It is a natural cause and effect of that. The biggest current risk to the Scottish economy and the retail sector comes from the hard Brexit that is on the table now from this Tory Government. We still do not know what the Labour position is. [Interruption.] Well, we still do not know what the Labour position is on a hard Brexit. Hopefully, we will find out soon.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

And the hon. Gentleman maintains his record of giving way, so I thank him. He says that the biggest threat to the retail sector in Scotland is a hard Brexit, which is, I am afraid to say, all too predictable from the Scottish National party spokesman. That is not what the director of the Scottish Retail Consortium, David Lonsdale, says. He says that the devolved Administration’s increase in surcharges and business rates inflexibility have served to make it more expensive to operate shops in our town centres. We cannot go to a higher authority than the Scottish Retail Consortium to describe what is wrong with Scottish retail.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Of course, if the hon. Gentleman wants to trade in higher authorities, let us see if we can find one. Let us go to the Governor of the Bank of England, Mark Carney, who says that a hard Brexit will cost each family £900 per year—a reduction in income that people simply cannot afford and that will not aid anyone, especially retailers. Let us go to the Office for Budget Responsibility, which says that lower economic growth is predicted in each of the next five years—lower than the 1.7% in 2017.

The single market and the customs union remain vital for Scotland’s economy. It is a Herculean task to find a business person or a business organisation in Scotland that does not agree with that. Hard Brexit not only threatens the cost outlined by Mark Carney and others, but, according to the SPIE 2 report, means that costs will reach £2,300 per person per year compared with remaining in the EU. Report after report highlights the economic folly of the hard Brexit approach. All of that sucks up disposable income—the lifeblood of the high streets.

Let me return now to austerity and its effect on retail. Austerity is a choice. Dealing with a deficit can be done by encouraging growth, not by austerity. Between now and 2022-23, the Scottish Government modelling suggests that the Chancellor could provide an additional investment in Scotland of around £5 billion while still meeting the UK Government’s targets on structural deficit and debt reduction. These policies disproportionately affect the least well off—the very people who spend more of their income in local shops. On welfare cuts, the Resolution Foundation states:

“The coming year (2018-19) is set to be the second biggest single year of welfare cuts…(after 2012-13) at £2.5bn.”

Having been in a pilot area for universal credit for more than five years now, I can testify to the effects that it has had on the local economy by draining the ability for people to spend in their local shops. The people of Inverness in my constituency are all too aware of these consequences.

Of course, there is another effect that is likely to cause great problems and to be a damaging issue for retail. Retail needs people—to buy and to sell. The unique selling point of being in retail, particularly high street retail, is that customers can speak to staff and staff can show customers products. The Government’s proposed approach to immigration could mean that real-terms GDP in Scotland is 9.3% lower by 2040. That affects tax and employment not just for shops and businesses, but also for public services.

Over the decade to 2019-20, Scottish Government funding has been cut by £2.7 billion, which is 8.4% in real terms. The Scottish Government will only receive 2.5% or £37 million of the £1.5 billion funding for Brexit preparations allocated in 2018 so when we look at support for business, it is against a background of lower funding. The Scottish Government’s recent budget set out how reforms to the business rates, for example, will ensure that Scotland provides the best possible environment for business. Rates relief for small business in Scotland is more competitive than in England. We provide the most competitive reliefs package in the UK, worth a record £720 million—up from £660 million in 2017-18. From 2018, we will introduce a business growth accelerator that will see no bill rise for 12 months as a result of improvements or expansion of existing business property. It will also ensure that no rates are paid on new builds for a year when they are entered into the valuation roll.

Earlier I mentioned the small business bonus scheme, which was protected in the 2018-19 Scottish Government budget and has saved businesses almost £1.5 billion cumulatively since it was introduced in 2008. The scheme has provided record relief to almost 104,000 recipients over the past year. The estimated total relief under the scheme, which removes or reduces rates bills, rose to £230 million—an increase of £43 million from £187 million last year. This amounts to an average saving per property of £2,000. The maximum savings that a business can achieve through the scheme will increase next year from £6,990 to £7,200 a year. That is a record level of small business support. Andy Willox, the Scottish policy convener for the Federation of Small Businesses, said:

“Without this rates help, Scottish firms tell us they would scale back investment, and their plans for growth. This vital scheme forms the centrepiece of the Scottish Government’s package of help for smaller firms.”

The Secretary of State rightly talked about the need to diversify in retail, and we have to ensure that we take that factor into account. As he rightly said, most successful businesses are able to adapt and change with the circumstances they face and the opportunities that arise. Many successful retailers—small and large—have adopted online platforms alongside their traditional face-to-face retail. In fact, they are finding that a double benefit: not only can people find and access their products, but they also know somewhere where they can go and get direct advice about those products. It is of course important to set the environment to ensure that that can work properly.

Although the Scottish Government have committed to extending superfast broadband access of 30 megabits per second to Scotland by the end of 2021, the UK Government really have to up their act and understand that 10 megabits is not good enough for the rural parts of Britain that are not covered by the Scottish Government’s actions. The UK Government appear intent on cutting Scottish consumers out of the broadband universal service obligation completely, despite the fact that they are being asked to pay for it alongside consumers in other parts of the UK. In Scotland, we are investing £600 million through the first phase of our Reaching 100%, or R100, programme to achieve our goal of superfast broadband access for all. Procurement is under way and deployment will begin during 2019. Even though telecoms is reserved to Westminster, the UK Government’s contribution to R100 is just £21 million—only 3% of the total.

Figures provided by thinkbroadband show that the UK Government have met their target of 95% superfast broadband coverage, at the UK definition of 24 megabits and above. But, in fact, using the same data used by the UK Government and our own internal data, we have confirmed that we exceeded our target of 95% fibre broadband coverage across Scotland by the end of 2017. Our Scottish 4G infill programme aims to push 4G coverage beyond commercial roll-out by investing up to £25 million of public funding to deliver future-proofed 4G mobile infrastructure to help selected mobile notspots.

I agree with the Secretary of State that the quality of people’s working lives must be enhanced, and I join him in paying tribute to Aldi for making a commitment to being the highest paying supermarket. For too long retail sector wages have been too low for too many people. As I said in my opening remarks, working in retail is a rewarding job, but it is also challenging at times. Retail’s future workforce and customers are obviously going to come from the ranks of young people, so I will make the kind request that has been made eloquently in this Chamber by many other Members, for the UK Government to start to understand that they need to reward young workers, not punish them.

Research from the Scottish Parliament’s information centre shows that workers under the age of 18 would earn roughly £6,500 less than people who are over 25. The research further highlighted that 18 to 20-year-olds would find themselves £3,705 worse off—and apprentices £7,605 worse off—compared to workers over the age of 25. If the UK Government seriously want to reward hard workers, as they so frequently say they do, will they listen to the SNP’s demand and retract this deeply discriminatory decision that punishes workers solely for being young? It is a missed opportunity to provide economic empowerment to young people from lower socioeconomic demographics.

The SNP would encourage every employer to reward their staff fairly and, where possible, to pay the real living wage. Many of the most successful retailers, such as Aldi, are already committed to doing the best for their staff, and that is the right thing to do. The new national living wage rate of £7.83 an hour for over-25s came into effect on 1 April 2018, but the national living wage refers to average earnings, not living costs, and is therefore not a real living wage. The living wage differs in that it is calculated according to the basic cost of living, and therefore takes account of the adequacy of household incomes for achieving an acceptable minimum living standard. Incidentally, the Scottish Government were the first Government in the UK to become an accredited real living wage employer. Our young workforce and consumers—the very people who need to get into the habit of using retail and finding ways to stimulate the economy, and the people who will be paying taxes to support pensions into the future—must be included in a fair strategy.

To conclude, I ask Ministers—[Interruption.] I am getting some warm applause from the Tory Benches. How delighted I am to always find a few extra words to thank them for their attention during these exchanges! Will Ministers copy what has been working in Scotland with the small business bonus? Will they look at adjusting the rates system in that way? Will they finally listen to the endless stream of businesses and business organisations that have come forward to point out the perils of a hard Brexit direction? Will they listen to the people affected by the universal credit roll-out? This all cumulatively affects the future of retail and the ability of people to operate on the high street. It is time to help the whole of the economy. Listening to these points would definitely hit that mark. It is well past time to ditch the dogmatic approach to austerity.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

I hope that in a good-natured debate of this kind, we can get through the afternoon without a formal time limit. This is always an experiment, but I am going to ask hon. Members please not to exceed seven minutes in their speeches. If they do, then all they are doing is squeezing the time for someone else to take part in the debate. Of course I appreciate that some Members do not want other Members to have a say, but I want everyone to have an equal go at their arguments. Therefore, if seven minutes is exceeded, I will have to put on a formal time limit. I call Derek Thomas.

Photo of Derek Thomas Derek Thomas Conservative, St Ives 2:21 pm, 6th June 2018

Thank you, Madam Deputy Speaker. I will reduce my speech to 40 pages now that you have said that.

In counties such as Cornwall, the retail sector is a significant contributor to the local economy, so I welcome the opportunity to discuss it. I am glad that the Secretary of State is still in his place, as it is really good to be able to speak directly to him. Most employees in Cornwall work in small and medium-sized businesses. A significant number of those are in retail, and many are on our high streets. High streets are the lifeblood of our communities in Cornwall—particularly west Cornwall and the constituency I represent.

The health of the high street is dependent on those small, independent retail outlets. They are made up of entrepreneurs who have often taken a risk in sinking their life savings into them, and who get up day after day to keep up an offer both to residents and visitors. Despite all their hard work and good efforts, they find staying open very difficult. They have had to contend with the living wage. I welcome, and they welcome, the living wage, but it is a significant challenge to them. Many have reduced their opening hours just to keep control of their staff costs. There is also auto-enrolment.

We have seen a significant rise in online shopping and a dramatic growth in out-of-town stores. In Penzance, just before Christmas, a new out-of-town store opened. I have spoken to businesses there who have seen a 40% drop in their business just since Christmas. There have been huge hikes in car-parking charges. Furthermore, I do not want to discourage Members from coming to Cornwall, but the roads are under par at the moment. We are working hard to improve connectivity on the roads. The weather can have an impact on whether people choose to go to the beach or to shop. These entrepreneurs, who are doing all they can, face all sorts of challenges that they have no control over. Those challenges are well documented and well rehearsed. I recognise that many of them, particularly planning and car parking, are matters for the local authority. We are working hard to see it rise to the challenge and to give opportunity rather than restrictions to our local businesses.

However, what the Government can and must do is address the issue of business rates. I recognise that for some time, even before I was elected, various measures have been introduced to address the difficulties that small businesses face with regard to business rates. I believe that nowadays business rates are indefensible. It is an outdated tax that reflects a business building rather than the business itself and causes significant harm, particularly to the high street. In my constituency, for lots of small businesses out of town in rural areas, business rate relief and various exemptions have been fantastic, and that is welcome. However, some businesses in the high street have seen extraordinary increases, particularly since 2016, and that has been extremely painful and uncomfortable for them.

In the three main towns in my constituency—Helston, St Ives and Penzance—I have been working with a number of businesses that tell me they will go out of business if we do not do something quickly. An independent business owner in Helston moved across the road in order to increase the size of her business, but even though her shop is smaller than her next-door neighbour’s and smaller than the shops opposite, which are both multiples, the business rates she pays are significantly higher. In Penzance, we have a new retailer who started his business after Christmas. He had no business rates charged whatsoever and was not expecting a charge, but in April he was stung with a new bill of thousands of pounds a year, unexpected and unplanned for. We are currently trying to discover why this has been the case.

In St Ives, we have seen the rate re-evaluation, high rents often charged by absent landlords, and a quick rotation of businesses that come into town thinking that St Ives is the place to be in business and will pay whatever rent is asked for. For several stores, that has led to year-on-year increases since 2016. Despite the voluntary support available from the local authority, they have not benefited. We have done all we can. We have had meetings with the Valuation Office Agency. We have done the checking challenge. We have met Treasury Ministers several times and raised individual cases. However, while Ministers are still engaged and helpful, at the moment we see no way forward.

For businesses under such pressure, the various things that the Government have done are helpful. However, I compare the situation with that of someone who has their hand in a bench vice. It is not helpful for the Government to say to them, “We will slow down the amount of turns and how quickly we turn the bench vice so that the pain is not so great. We will just do half a turn a day, maybe.” What we actually need the Government to do is to remove the hand from the bench vice altogether.

I have three urgent requests—and they are really urgent. First, we must halt the increases above the consumer prices index that businesses in my constituency are facing. These increases are significant. They are introduced every year because of the re-evaluation. They are harmful and unacceptable, and I would like them to be frozen.

Secondly, I would like a discussion on—with perhaps legislation moved forward quickly—a measure to allow town councils to retain just 1% or 2% of the business rates collected in their area to support the high streets and build healthy and vibrant town centres. People would be able to go into town, park more cheaply and enjoy the public dwelling space, because the town council would have resources to invest in the town. As devolution has come to Cornwall Council, the money has stopped there. Devolution of sorts has gone down to town and parish councils, but money has not followed, and so they are continually strapped for cash and unable to help with the problems on the high streets. We do not have business improvement districts in any of the towns I am talking about. Helston would be a great place for a pilot scheme for the town council to keep 1% or 2% of business rates. That would give it a couple of hundred thousand pounds a year to really turn around the town centre, which has been under pressure for many years. Given the population around Helston—42,000 people—we could turn the town around. I am working with it do what I can.

Finally, I would like the Government—if they did this, they would earn themselves enormous brownie points within small businesses up and down the country—to commit to scrapping business rates altogether. I know that they need to continue to raise the £24 billion they collect from property-based taxes. However, that money could be collected through some form of transaction tax that would be based on the activity of the business rather than the location and size of the building it occupies. It would also be a fair tax, because it would tax equally high street businesses, out-of-town stores and online businesses simply on the business they do, not on the building they occupy.

Photo of Liz Twist Liz Twist Labour, Blaydon 2:29 pm, 6th June 2018

I am really pleased to have the opportunity to speak in this debate on the retail sector because it is hugely important to my constituency, where 23%—nearly a quarter—of jobs are in retail. That is 8,000 jobs and the highest percentage of retail jobs in any constituency across Great Britain. It is vital for my constituency and many others that we have a thriving retail sector, from the small high street traders such as Les Thompson, who sells loose fresh fruit and vegetables—not wrapped in plastic, I note—on the main road in my hometown of Ryton, to major retail centres such as the intu Metrocentre, which is still the largest retail shopping centre and houses national chains as well as smaller retailers.

Blaydon is made up of many small towns such as Birtley in the east, through to Whickham, Winlaton, Dunston Hill, Crawcrook, Chopwell, Rowlands Gill, Ryton and of course the town of Blaydon itself, where the shopping centre has recently been reinvigorated. All those centres provide valuable jobs and facilities and help to make our local communities vibrant places where people want to live and can access the essentials, and sometimes the extras, of life. The challenges that they face vary. Les and many other small shopkeepers like him face the problem of our small towns emptying during the day, as people commute to work and shop elsewhere. They need support to ensure that our small towns retain a vibrant high street and local facilities, especially since many of our banks have closed local branches and there is a reduced footfall. The large retail centres like the Metrocentre, where many of the retail sector jobs are located, face different challenges.

I want to support our retailers right across Blaydon. I am doing what I can locally, working with them and Gateshead Council, but we need a bigger plan and a strategy for supporting the retail sector across the UK. Retail is our largest industrial sector, but the Government’s industrial strategy hardly touches on how we can develop and support that sector in what is currently a very challenging environment for most of them.

Let me turn to those challenges. Many retailers tell me that the business rates system, which has been mentioned, is a massive challenge. All but the smallest, like Les, who are below the small business threshold, are facing big increases in business rates. The revised valuations for many mean a big increase at the same time as they face challenges from online retailers, which do not have the same shop fronts and so face much lower business rates. Of course, the huge growth in internet shopping is one of the other challenges, with many of us even looking at goods in store but then shopping online to find the best price. I am as guilty of that as anyone else, but we need to think about the implications.

Like many other industrial sectors, the uncertainty and fears about Brexit and the impact on trading and bringing in overseas retailers to our towns and shopping centres are having a huge impact on the retail sector. My hon. Friend Kate Green referred to evidence from research conducted on behalf of intu on that very issue.

We know that there have already been many job losses in the retail sector. In April, the Press Association revealed that 21,413 retail staff had already been made redundant or had their role threatened, the bulk of them at established high street chains, in just the first three months of 2018. Many of those retailers are present in my constituency. Last month I visited staff at Toys R Us at the Metro retail park. I met some staff who had been working there for more than 20 years. They felt that they had been left adrift without information about what would happen to them and their entitlements and what they should do as their shop and the business closed down. Their shop was performing well, but as in so many cases, big finance issues and management decisions far away—literally—from the shop floor led to them losing their jobs. I am pleased to say that the local retail community pulled together, and many of them were able to find new jobs, but it did not do away with that sense of uncertainty and neglect.

In the House, we often rightly highlight high-profile manufacturing job losses, but it is just as important for us to note the loss of jobs in the retail sector and to remember that these too are people and our constituents who need our support and help. We need to pay our retail sector much more attention than it currently receives, as it is a vital sector for our economy.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire

I appreciate and understand the point that the hon. Lady is making, but does she also acknowledge that there has been a significant amount of job growth in the last few years, particularly in areas such as logistics, handling and shipping, which should be celebrated?

Photo of Liz Twist Liz Twist Labour, Blaydon

I recognise what the hon. Gentleman says. There are jobs in different areas, but that does not take away from the fact that we need these jobs as well as all those others in the sector.

As I said, the Government’s industrial strategy barely mentions the retail sector, with only three mentions in 256 pages of our largest industrial sector, which provides 15% of our jobs nationally and 23% of jobs in my constituency. The Government need to pay much more attention to this issue. They need to bring forward a sector deal for retail to ensure that it is given the emphasis it needs, and they must look again at the business rates system.

In raising these issues, I do not excuse the parts of the retail sector that have failed to manage their own affairs and businesses well. It is vital that the sector looks to act responsibly and manage its finances in a way that allows businesses to meet the challenges and to avoid more situations such as the recent collapse of BHS, Toys R Us and others, where financial issues seem more important than selling goods well. The sector has a responsibility to its staff and to our constituents who work hard in these stores but pay the price in job losses.

I cannot end this speech without mentioning the staff who work in our shops across the retail sector. Many of the 8,000 retail workers in my constituency face low pay and zero or uncertain hours, and many of them are women. If we want to strengthen productivity in the retail sector, we must address the question of low pay. Frankly, it is no good Ministers patting themselves on the back for jobs created when those jobs still leave people needing support from benefits, especially given all the problems with the universal credit roll-out in my constituency. That is a real problem. Any look at this sector must include a plan to put this situation right and to recognise the work that these people do and their need to live with decent wages and in decent conditions.

Since we are all making disclosures about our involvement in retail, I will put mine forward. My mum worked much of her working life in local shops, and my first involvement in representing people was in referring her and her colleagues’ case to the Wages Council, as it was then, because they were being underpaid. I am glad to say that we reached a satisfactory conclusion. That is my history in retail. Retail deserves our support and needs it now, so I urge the Government to take action immediately to strengthen the retail sector.

Photo of Ben Bradley Ben Bradley Vice-Chair, Conservative Party 2:38 pm, 6th June 2018

It is a pleasure to follow Liz Twist. As we are all sharing our retail experiences, I should declare my interest, as a former store assistant at Aldi—a fine and enjoyable job it was too.

I welcome the opportunity to discuss the retail sector and what the Government are doing to support business. Some interesting points have been raised in the debate. The discussion about the future of business rates when these activities are increasingly online is particularly important. I want to focus on town centres and high streets, as many Members have.

Like most towns across the country, Mansfield’s and Warsop’s marketplaces and high streets have suffered from retail closures. That is happening right across the country, with the structural change in how people are shopping and what our town centres look like. Many people are shopping online or visiting out-of-town retail parks rather than visiting their local town centres. Mansfield has some great shops on the high street, from big names to cafés, bakeries, barbers and hairdressers, clothes shops and a fantastic vinyl record store that drags people in from miles around, but there are many empty units too. On Church Street, where my office is based, and around the corner on to White Hart Street, there are more empty properties than occupied ones, and there is clearly work to be done to deal with that.

Locally, I have been looking at ways to encourage consumers back into the town centre. One example is my recent campaign for two hours’ free parking in the town centre. Last month I submitted a petition signed by more than 2,000 local residents to Mansfield District Council. When parking is both an expense and a hassle, it puts people off visiting their high street, particularly when they can visit nearby retail outlets such McArthurGlen or Meadowhall—they are very close by—where parking is free and things are more convenient. Having handed in the petition, I hope that the council will look at this closely. Whether it is about cost, accessibility, clearer signposting for parking or other aspects, this is an important factor.

It is unfair to criticise the Government for inaction or for not supporting the retail sector. In fact, if any party in this place is the champion of businesses and works hard to support small businesses, it is clearly the Conservative party. As the Secretary of State said, record numbers of new businesses are being created under this Government. We have all talked about the challenges for town centres, but we have talked less about the growth in retail more generally, including the jobs—my hon. Friend Lee Rowley pointed out that there are jobs in logistics—that are linked to online retail and to this sector.

Earlier this year, the Government launched the first industry-led retail sector council, which will meet regularly to discuss the challenges facing this sector. It will review how retailers might adapt to changing consumer behaviour, and look at how we might embrace technology to improve customer service and productivity. Town teams are a great initiative, and as a local MP I am looking at how we might replicate and organise ourselves in such a way to boost our town centre.

In April, the Government switched business rates from RPI to CPI, a change which is worth £2.3 billion over the next five years in reduced business rates, including of course for many retailers. They have also committed to supporting business improvement districts. Locally, the Mansfield BID is working hard to support retail by bringing retailers together and discussing how the town should look, and to encourage people into the town centre. Mansfield BID is ably lead by the fantastic Mr John Sankey and his fantastic team.

There are things that local MPs can do. I have already mentioned the free parking campaign and the locally organised town centre team, which includes local business. I am also working with Lloyds to support small and medium-sized businesses and charities by giving them digital skills to help with online marketing and boosting the customer base of high street shops. SMEs are at the heart of Mansfield’s local economy. Data from the last census shows that over 9,000 people in Mansfield work in wholesale and retail, making it a huge source of employment. It is the largest industrial sector both locally and across the country.

Although there are lots of scare stories about automation and technological change, it is important that we acknowledge the changing face of retail. We need to embrace this technology and look to the future in relation to how it can improve productivity and lead to upskilling jobs. The fourth industrial revolution, as it is often called, can be harnessed as a positive thing for retail. Technology can improve payment systems and provide support for businesses behind the scenes, such as in accountancy and payroll, thereby reducing the costs that are causing some of the challenges. Internet selling and online marketing can of course boost retailers and ensure that they can reach markets right across the UK and even further afield. Post-Brexit, the ability to do so in new and emerging markets around the world will be a real opportunity not just for high streets, but for the retail sector more generally.

As high streets and town centres evolve, it is important that the planning system develops to support the changing face of retail. This needs local councils to step up with a clear vision and plan for their high streets, and to use the tools at their disposal to deliver on it, while bringing retail and business into the discussion in order to drive footfall through our town centre. In the modern age, having a dentist or a solicitor’s office on the high street, along with cafes and restaurants, is as valuable as pure retail in that it drives footfall, fills empty shops and makes our towns into places to which people want to come. Those are businesses whose output cannot be put online—people must always physically visit them—but when we go to the dentist in the town centre, we might stop and have lunch or peruse the shops, boosting the town more generally.

I encourage the Government to consider the ways in which they can further help local councils with such plans to improve town centres. Regeneration is an important factor for the retail sector as a whole, and there are changes that could help, such as a local vision for delivering a change of use for properties. My most regular question in conversations with Mansfield District Council is: “What is your vision for the town centre? Where are we going to be in 10, 15 or 20 years?” I am not sure that we are yet clear about what exactly its plan is. On delivering such a vision, I have some idea of what I want it to look like. One of the challenges we face is adapting the physical space of town centres to fit this new market. We cannot rely on retail to fill every space in the way we once could; we need the flexibility to change things. Along with a local vision and local leadership, such flexibility needs some support.

One particular avenue that might be helpful—I hope this is a useful suggestion—is to consider the ways in which we could support local councils in relation to the compulsory purchase of buildings in town centres, where a positive plan has local approval. In Mansfield, a number of retail units on the edge of town are empty or dilapidated. I mentioned my office on Church Street, which is on the very edge of the town centre, and most of that area is made up of empty shops. The property values of these retail buildings have fallen, so many owners will not sell them or invest in them. They sit empty for years and years, but these sites are often ideal for development. They could be brought into use as new commercial or residential spaces, providing the small and more affordable properties that we need for local residents anyway. This would also move people into the town centre and boost footfall for other shops.

If the council was able to purchase such buildings and change their use, it would regenerate the edges of the town and help to fill units in the town centre. It would also bring properties that are often going to rack and ruin back into use, making the whole place more attractive and vibrant, and making it more of a place where people might be likely to come to and spend time. More and more, town centres should be a destination that we want to visit, as well as places for shopping.

For the many reasons I have laid out, I think the Government are working hard to support business generally and the retail sector, and it is important to note in all our comments that the retail sector is growing. The Conservative party is and always will be the champion for business, which drives our economy and creates jobs for my constituents. I hope Ministers will continue to be innovative and look across the board, including at my suggestion about compulsory purchase, at the ways in which we can continue to support local authorities and our small businesses in order to encourage the regeneration of our town centres.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Gentleman did very well in keeping to his seven minutes, but I am now imposing a formal limit of seven minutes to make sure that everyone’s time is protected.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care) 2:46 pm, 6th June 2018

I will aim not to disappoint, Madam Deputy Speaker.

As the name of my constituency suggests, there are two main towns, Ellesmere Port and Neston, both of which have a retail offer that is dramatically less than it was five years ago. However, we still have over 6,000 people employed in the retail industry in the constituency. The reason for that is the very successful Cheshire Oaks centre within our bounds. It was an answer that the local authority came up with in response to the ravages of the 1980s, when we lost so much manufacturing industry and there was a real recognition that we needed to broaden our employment base. The leaders of the council, Fred Venables and Reg Chrimes, both saw this as an opportunity, and it has transformed our area to the extent that we get 9 million or 10 million visitors a year, many from overseas. It is an expanding area, and it would be remiss of me not to mention that that has created a lot of employment in the constituency.

At the same time, however, we have had real challenges in our towns of Ellesmere Port and Neston. They are different in many ways—they have different demographics, transport links and ownership issues—but both have suffered in recent years from the changes in the retail market that we have heard about today. Neston, in particular, has now lost all its banks. That has undoubtedly had an effect on the high street not just for customers, but for other businesses that use local banks. I must say that the banks that have shut down have paid only lip service to improving services. They have made some very bizarre suggestions about people going to banks in other towns to which there are no public transport connections, and they have since talked about shutting down those branches as well.

We have also had transport issues, with real cuts to public bus services in recent times, which makes it difficult for people to get into the town. One particular example is of a shop owner working in Neston who is really concerned about the future of his business because he will not be able to get there if the bus service running from Ellesmere Port to Neston is stopped.

There have been some positives. In the Brook Street area, virtually all the shops were empty, but an organisation called Brightlife, which is funded through the lottery, managed to get a number of charities and good causes into those shops and brought back a bit of life to the area, which has made a real difference. Particularly innovative was the idea of moving the Little Actors into the jobcentre, which was an impressive way of finding a new use for an old building. That is all temporary, however, because it is all based on lottery funding and is not a permanent solution.

In Ellesmere Port, we have a bigger challenge because it is a bigger area to deal with. A lot more of retail units are in private ownership, and many of them are too large for what retailers are looking for now. A lot of the big names have gone, and they just have not been replaced. As Ben Bradley has said, we need to look at different ways to promote interest in town centre food and leisure and the night-time economy, but the question is: how do we do that? I am concerned that local authorities do not have the capacity they once had to meet those challenges. My local council is looking at the One Public Estate programme, which will bring together different parts of the public sector, which will hopefully consolidate some jobs in the town. However, in terms of ownership, capital and vision, we are some way behind on delivering a new town centre for the future, and the Government’s industrial strategy is lacking in that regard.

If we do not take much more seriously the regeneration of our town centres, the inequalities and imbalance between towns and cities over recent years will continue to accelerate, and the feeling that a lot of people in towns have of not being viewed as important as other parts of the country will continue to solidify.

As has been said, online sales put pressure on the retail sector, and about 21,000 jobs have been lost in the sector already this year. I also think that automation plays a part in that. Personally, I will not use an automated checkout; I think that every time we do that, we push shop people’s jobs a little bit closer to the exit door. I have read that £3 billion a year is being lost to retailers through theft as a result of abuse of those machines, which makes me wonder about the incentive for companies to install them. They cost retailers money, result in job losses and frustrate a lot of consumers. On a number of occasions, I have seen people having to call an assistant to get the machines to work properly. Perhaps it is the fact that the machines cannot join trade unions that makes them so attractive to companies.

Of course, I accept that companies have to do something to streamline their costs, because it is not a level playing field, as we have heard. Online retailers seem to have considerable advantages, not just in the way in which they are able to treat their staff but in how the business rates system works. I agree with the Secretary of State that town centres are an essential part of our character and identity. It is really important that we recognise that and that retail is only a part of it.

Certainly, I have shown my commitment to my town centre in Ellesmere Port by placing my office there. The building had not been used for many years, but we got a grant to regenerate it and it is a signal of intent. That also shows that we have to look beyond the traditional retail offer to get life back into our high street. It has been under threat for many years, for myriad reasons. Retailers need to be given a fighting chance, but we cannot ignore the direction of travel in which online sales are leading us. We certainly cannot place all our eggs in the retail basket, so we have to reimagine and revitalise the town centre by offering something different and new to encourage people into it, not just to buy things but to experience things and to get back that sense of community for which I think most people yearn. In order to do that, we need to give local authorities the capacity, resources and authority to deliver, because austerity has put the skids under what they can do.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire 2:53 pm, 6th June 2018

Thank you for the welcome opportunity to contribute to this important debate, Madam Deputy Speaker. I also welcome the Opposition using their time to discuss these ideas, although obviously I do not agree with a number of things in their motion.

As many Members on both sides of the House have said, the fundamental point is that the high street and the retail sector are changing. Things are being done differently. We have to recognise that that is not something that we in this place can, or should control to the extent suggested by some during the debate. The market is ultimately a market of people. It is a market of our electorate. It is our children, parents, friends and next-door neighbours. When we depersonalise these discussions, suggesting that things are being done to businesses, we miss the point that fundamental changes are taking place on the high street.

Every single job loss is a tragedy. I understand the concerns about, and the challenges created by, people having to do things that they were not previously required to do. Ultimately, however, we have to recognise that big trends and big changes are taking place. Ten years ago, 2% of our purchases were online; that figure is now 18% and it is only going to get bigger. As I said when Liz Twist kindly allowed me to intervene on her, although challenges are created by jobs lost as a result of changes to the high street, many jobs are being created in other industries.

It is a pleasure to follow Justin Madders. He is a doughty campaigner and he made his point loudly and clearly, but there was an inherent, slight conservatism—he will not like me saying that—to some of his comments. I understand his point about automation, but so far it has created many more jobs than it has caused to be lost. I accept that his principles are valid and commend him for them—he said that he does not use the automated checkout—but if we were to resolutely adopt them, some would argue that we should not have come here by tube today or by train last week because they put people who kept horses 300 years ago out of business.

I do not seek to take the argument to the extreme, but the point is that we cannot stop progress. It is the responsibility of places such as this to discuss how we make sure that our constituencies are safeguarded to the best possible extent, but we must also recognise that there are trends happening that we should not stop or want to stop, because this is about how people want to live their lives, shop and interact with their local community, which is more important than we may think.

Like a number of Members who have spoken, I have a retail background. My father, just like the Secretary of State’s father, was a milkman. I spent most of my teenage years helping my parents on that milk round, often doing more early mornings than I particularly wanted as a 15 and 16-year-old. I remember the town centre in my part of the world in Chesterfield when I was growing up. I delivered to shops such as Radio Rentals, which is no longer there because we no longer rent radios or need to do so. High streets have got to change. They have always developed. There is always a requirement to be careful about it, but we have to accept that change is inevitable.

That said, we also have to accept that we have to be cognisant of certain things. I completely agree with the hon. Member for Ellesmere Port and Neston about banks. I formerly worked in a bank. I understand their issues about making branches work, but they are adopting a short-sighted and wrong strategy regarding the removal of banking facilities from vital parts of the country. I have never understood why banks do not come together and share space so that everybody still has that vital link, with a desk for Santander and another for Barclays and any other bank that wants to join. We cannot simply channel everything through the post office, because that ends up with the ridiculous situation whereby it is always massively busy with far too few people to physically man it. We have discussed similar problems elsewhere on the high street as a result of an insufficient number of people.

I commend the Government’s work, particularly on town teams. I have some great town teams in my part of the world. Eckington town team spends an incredible amount of time organising events at Christmas and over summer to bring people into Eckington, where my office is located, and to encourage them to help and to see their local town centre and local village centre. Clay Cross town centre is doing the same thing. Clay Cross is the birthplace of Mr Skinner, who is not in his seat. The area is now represented by a Conservative MP—[Interruption.] I had to get that one in. The town team has introduced initiatives such as “Clay Cross on the beach”. I would never have thought—and I am sure the hon. Gentleman would never have thought—that on a bank holiday weekend a load of sand would be put in the middle of Clay Cross, to encourage people to come. Such initiatives will make people choose that destination and show them the opportunities provided by their towns, including the shops and other possibilities. We in this place have to recognise that great work is going on elsewhere.

I do not want to suggest that there are no challenges. Local authorities in particular have a responsibility to do more. The local authority in my part of the world is completely shirking its responsibility to regenerate our town centre. A number of discussions are taking place, particularly in Dronfield. The town council is doing lots, and businesses want to do lots, but the district council is doing almost nothing and it should be called out for that.

There are challenges and difficulties, but we have to recognise that change is going to happen. We need to guide people through that, but we should not be afraid of those changes. The high street is going to change. It has always changed and it will change in the future.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

I am afraid I must now reduce the time limit to six minutes.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden 2:59 pm, 6th June 2018

Some 21,000 jobs in the retail sector were lost in the first three months of 2018 alone. In that time, we have seen Marks & Spencer announce plans to close 100 stores by 2020 and all 100 Toys R Us stores shut their doors. Just last month, we even heard that Poundworld will lose more than 100 stores, putting 1,500 jobs at risk.

The retailer that I wish to bring to the House’s attention today is Sainsbury’s. Since 1869, Sainsbury’s has been a pillar of the great British high street. Over 148 years, it has established a reputation as a leading retailer that looks after and out for its colleagues and customers. That is why the proposal by Sainsbury’s to force unscrupulous contract changes on its staff is so appalling. The organisation is hiding the scandalous terms of its new contracts under the guise of a supposed increase in basic pay and an artificial investment in its staff workforce, but here is the reality: 9,000 of Sainsbury’s most loyal and long-standing staff are set to lose up to £3,000 a year. How? Because Sainsbury’s is abolishing paid breaks, scrapping the Sunday premium pay, shortening the nightshift and even removing the employee bonus scheme. But that is only for shop-floor staff, of course: the executives will still receive their lucrative end-of-year bonuses. That does not sound like an investment in the staff workforce to me. Against all Sainsbury’s values, it sounds as if it is forcing thousands of dedicated staff to “work well for less”. Worst of all, those staff who refuse to sign the new contracts in September will be forced to resign.

Take Jayne, a night-shift worker at Sainsbury’s for more than 30 years. She is set to lose £2,000 a year. She loves her job and desperately wants to stay, but does not think she can afford to. She describes morale in her store as “at rock bottom” and tells me that she is beyond frustrated that her decades of loyal service appear to count for nothing. Or take Joe and Sam, husband and wife, who have shared three decades of service at Sainsbury’s. They rely on working the night shift and on Sundays, but anticipate that they will lose almost £6,000 a year under the proposals. That is a slap in the face for their loyalty and self-reliance, and for just about managing, as their work will simply no longer pay.

Finally, take Kate, who works in one of 150 branches of Argos that are now located inside Sainsbury’s stores. Unlike Sainsbury’s staff, Kate and her Argos colleagues will not receive an increase in their basic salary, and she can expect her hourly pay to be £1.20 less than that of her Sainsbury’s colleagues, despite working in the same store.

I took those cases, and dozens of others, to two meetings with Simon Roberts, retail and operations director at Sainsbury’s. He confirmed that thousands upon thousands of staff will lose out under the proposals, and described the most extreme cases as “anomalies”. I do not see them as anomalies; I see them as loyal, long-standing and hard-working employees who have dedicated decades of their lives to his organisation. How can a company that made a pre-tax profit of £589 million last year, with a CEO who receives £930,000 before bonuses, think it is right to force a pay cut on its most long-standing members of staff? Can the House imagine how furious those staff must have been to see their CEO, Mike Coupe, singing “We’re in the Money” on “ITV News”? He should be summoned urgently to justify his proposals before the Business, Energy and Industrial Strategy Committee.

I draw the House’s attention to a staff-led petition on change.org, through which 122,000 colleagues and customers have called on Sainsbury’s to show some loyalty. The staff consultation is approaching its latter stages and the voices of discontent are growing and amplifying. It is not too late for Sainsbury’s to rectify its increasingly damaged brand, for which its most loyal staff are made to “work well for less”.

Photo of Kevin Foster Kevin Foster Conservative, Torbay 3:04 pm, 6th June 2018

It is a delight to speak in this debate. Ironically, if I was not here, I would be back in Torbay, helping to present the “Love Your High Street” awards. One recipient was the Kind Grind in Lucius Street in Torquay and another was a bar called Peaky Blinders in Winner Street in Paignton; both areas are famous for independent shops. This is a welcome opportunity to debate retail, particularly given its importance for many communities up and down the country. Given some of the campaign leaflets that I see in my constituency, it is rather odd that no Liberal Democrat Members were present for the first two hours of the debate, but I shall move on.

Let me start with our town centres, and particularly the internet’s impact on them. No one is going to be able to roll back the digital tide. Most of us have in our pockets a phone with which we could order the entire contents of a department store, a do-it-yourself store and a supermarket literally while we are sat here, if we so wished. The internet has also brought services and products into areas that in the past would have found it difficult to access them. That does, though, present a challenge to our high streets. There is no longer a need to go to the town centre out of necessity, and in future people will mostly go there out of choice, particularly as technology becomes more and more simple. We can heckle and make party political points, but that will not affect the change. It is therefore even more important that we look into what we can do not only to make town centres attractive places for those who still depend on them for their goods, but places to which people would go out of choice to go into a local shop and have an experience.

One thing that came out of the Tesco burger scandal was that a lot of people reconnected with the desire to know where their food comes from and what it is. A lot of local butchers had a boost that they had not had for a long time as people realised that there was something about going to a shop and speaking to a local business that could tell them almost from which cow the joint or product they were buying came.

There is a real need to look into what we can do to shape town centres as places. Rates can be a double-edged sword. They clearly have impacts on businesses, and there is a debate for the long run about how sustainable the existing business-rates model is, given that it is based on an era in which that corner on the high street was the best place to be—hence the location of a lot of Victorian buildings that became banks—and a crinkly shed on the edge of town was not very profitable at all—

Photo of Kevin Foster Kevin Foster Conservative, Torbay

No, I will not, because the hon. Lady was not present for almost the first two hours of the debate.

The business rates system is now not all that appropriate, even though it was appropriate for the shopping patterns of the 1950s. Of course, if we look at it the other way around, by retaining business rates and taking the growth in them, councils can fund exactly the kind of regeneration that is needed in our town centres. So there is a double-edged sword for local authorities in respect of how business rates can be used in future. The existing structure is certainly not all there.

I could not agree more with my hon. Friend Ben Bradley about the need to tackle long-term derelict properties in town centres. I think particularly of one in Paignton called Crossways, which is a pretty poor example of a 1960s shopping centre. It keeps going only because of the car park there, the mobile masts on top of it and a lease that was particularly badly negotiated by one retailer, which is still paying even though it shut its shop in the centre some years ago.

The problem with the existing compulsory purchase rules is that yes, in theory a council can get hold of a property like that to push forward regeneration, but the rules are cumbersome. I fully accept that there needs to be protection for people’s private property, particularly their homes, but if commercial properties—no one’s home—have been empty for many years, there comes a point at which it would make sense to make it much simpler for councils to compulsorily purchase properties in order to deal with eyesores. That simplification could be subject to protections based on how long a property has been empty, rather than on values and costs. Some owners almost rely on the fact that their property is such an eyesore that one day someone—I am thinking particularly the taxpayer—might pay a significant amount to have it dealt with.

It is right that local authorities play their part. Torbay Council is starting to look at the future of planning for our town centres, particularly in respect of Torquay, where there is a debate about its size and what we can do to revitalise it by bringing in residences and expanding student accommodation, particularly around the language colleges. That could bring a second wave of life to the town centre. We also need to deal with older, poor-quality office accommodation which, if replaced by new accommodation, could bring jobs and employment back into the town centre and provide the stimulus of people who work in the town centre then shopping, eating and drinking in the town centre after work or on their lunch break.

There is a positive story to be told about the future of our town centres, but they will be very different from what we have seen in the past. People will not use them out of necessity, so they will need to be encouraged to use them out of choice. There will still need to be essential services, such as local post offices and a network of local banks, but we need to be conscious that just standing in the way of technological progress is a strategy that will be as successful as it was for the Luddites who tried to argue against industrialisation 200 years ago. The Government can make a difference through their business rate policy, by giving local authorities more powers and by making it clear that there is still a retail success story in the future.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs) 3:10 pm, 6th June 2018

I am very pleased to be able to speak in this debate, because 4,000 of my constituents work in retail. There are now more shop workers in my constituency than there were miners 50 years ago, although I have some questions about the quality of some of those jobs: the short hours, the low pay, and the constantly changing shifts that are forced on people. I found it very ugly to hear that people were given short shifts to, as their managers said, keep them hungry for extra hours. The problem is that in my constituency people are going to food banks—they are literally being kept hungry.

We need to look at bank holidays. It would be really good if Boxing day was a bank holiday, alongside Christmas day. Christmas day is often ruined for many shop workers, because they have to get up so early on Boxing day to rush in and reorder stores in time for the sales. [Interruption.] It is not a statutory bank holiday for people who work in shops.

High streets are very important and they can have a very significant impact on people’s wellbeing. In my constituency, a large number of people are working in a new out-of-town development in Tindale Crescent. The truth is that Shildon, Bishop Auckland and Spennymoor are all seeing a fading away of their town centres. There are good butchers and good bakers, but the overall picture is one of decline. There were a lot of closures after the post-crash recession, but we thought that things would come back. They have not come back and they continue to decline. If I may say so, I thought the Secretary of State’s opening speech was verging on the complacent. The question is: why are these shops closing and what is to be done about it?

The first issue is the shift to online sales. The Government have failed completely to set a level playing field on tax. John Lewis raised this problem at least three years ago. There should be a turnover tax for Amazon, Google and other big online retailers. I agree with Derek Thomas that we should move to that urgently.

The second problem is the very significant fall in wages across the British economy between 2007 and 2015—a 7% drop in real terms. We are not going to get back to pre-crash levels until 2024 and earnings are down £1,400 per person. That is bound to have an effect on what people can spend. In my constituency in County Durham, cuts to child benefit, tax credits, employment and support allowance, jobseeker’s allowance and disability allowances are all having a very serious impact on my constituents’ incomes. Obviously, they have less money in their pockets to spend. Moreover, the Government keep telling us that employment is rising. In my constituency, the increase in unemployment in the past 12 months has been 29%. We are not being compensated for all those wage cuts with extra jobs.

A third issue affecting the modern high street was raised by Drew Hendry: the unequal roll-out of broadband and the lack of access to wi-fi. This is a problem for the shops themselves and it makes town centres particularly unattractive to young people who like to be able to communicate using social media when they go out and about. The Government’s ineptitude in rolling out broadband equally, without notspots, across the country is a real problem in Shildon, Spennymoor and Bishop Auckland.

The fourth problem is cuts to public services. My constituency has seen the loss of a driving test centre, a magistrates court and a tax office—all from Bishop Auckland town centre. The next thing to go is the registrar where you can get married. The swimming pool in Shildon has gone. A sixth form is going in Spennymoor, which means young people after school will spend their time and money in Durham city instead. We need a conscious strategy for these towns. When public services are always centralised in cities, it denudes small towns of the life that is brought into them and which then has a positive, second-round effect on shops and retail. When the footfall to other public services drops, fewer people are there to go shopping.

The private sector is no better. Many hon. Members have complained about bank closures. We had another depressing meeting yesterday with RBS. Barclays is closing a branch in Spennymoor. HSBC closed the last branch in Shildon. That is bad for shops and bad for small businesses. I would like Ministers to look at changing competition rules, so that banks can share branches in small towns. At the moment, the banks want to be able to run on their current branding. Ministers rely on competition. There is a market failure and we need to put the public interest first. I would like to see a change in the competition rules.

Many hon. Members have spoken about the problem of business rates. Beales in my constituency closed for precisely this reason. Hon. Members have spoken about the importance of compulsory purchase. I agree completely. We could have had a much speedier redevelopment in Spennymoor had the council been able to compulsorily purchase the private Festival Walk in Spennymoor town centre.

I do not want to leave hon. Members with the idea that good things are not going on in the towns in my constituency. Auckland Castle in Bishop will be a fantastic tourist opportunity and the 1825 celebrations in Shildon of the Stockton to Darlington line will enable us to make the most of the heritage action zone. There are pluses as well as minuses.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling 3:18 pm, 6th June 2018

On the high street, there are very few things sadder than a boarded up storefront. It is the sign of a dream denied, a lost opportunity and of course lost jobs. I will not deny that in Stirling city centre we are finding it tough. On Friday afternoon, I spent some time with Lisa Sneddon, the owner of the Bluebell Teashop. I recommend it to all hon. Members—indeed, it is obligatory—when they visit Stirling. She told me of her concerns about the state of Stirling city centre. Those concerns will be all too visible to anyone who visits it.

The pressures on city centre businesses have perhaps been compounded by the temporary closure of the Kerse Road bridge crossing. The bridge is being replaced as part of the electrification of the railway. It has undoubtedly been much quieter in the city centre of late, and there has been a discernible drop in footfall. King Street is a particularly sad sight. This is the street that leads up to the castle. Stirling Castle is one of the most popular tourist attractions in the entire country, and it should be a lively thoroughfare, but since the loss of McAree’s department store, which had been on that site for 123 years, there has been a definite drop in footfall on the street and in the number of businesses taking up the slack. Among its reasons for closing, McAree’s cited the Scottish Government’s rates system and specifically mentioned the large business supplement—not really a large business supplement, but a large property supplement. In one year, its large business tax rose to £27,000, and that was the straw that broke the camel’s back.

In the last two weeks alone, at least six other stores have closed in the city centre, including Toys R Us, which has been mentioned; Maplin; The Boozy Cow; The Fat Cyclist—interesting names betraying the fact that these were individually owned and independent businesses; and Mr. Simm’s Olde Sweet Shoppe. All have closed their doors for good, and I cannot deny that I am concerned. It came to light yesterday in a report entitled, “Retail and Leisure Trends Report”, from the Local Data Company, that 520 units on the high streets in Scotland had closed in the previous year—more than anywhere else in the UK, including Greater London. I have already mentioned what David Lonsdale, director of the Scottish Retail Consortium, had to say about those numbers.

There is undoubtedly a way to save our city centres. They can have a bright future, Stirling city centre can have a bright future, but the city centre needs to be skilful and repurposed. I will work with anyone who can help bring it back to its former glory. The landscape is changing, and bricks and mortar retailers must move with that change. People are buying online, and that is not only about choice; it is also about the convenience of shopping when and where the consumer chooses; it is a simple and relatively hassle-free experience.

Leigh Sparks, professor of retail studies at the University of Stirling, has called on retailers to demonstrate a more imaginative approach to customer experience, to create new concepts of retailing that stimulate consumers and to make their stores must-visit attractions in their own right. He has talked about retailers that have not done a particularly good job, among them Toys R Us. He said that

“when Toys R Us came to Britain, it was innovative and new. Yet the Toys R Us you see today is pretty much…the same as it was when it first opened—it hasn’t grown or offered the consumer anything new. The current pressure on retailing is weeding out the poorer retailers. We will undoubtedly be left with a smaller landscape. If it is smaller and becomes concentrated so it provides spaces that people want to use, then it will be a better landscape.”

I concur.

We need to see our city centres differently. We need to do much more to bring people to them, and that means that businesses need to work together in the business improvement districts already mentioned—we have one in Stirling city centre—to make the city centre a compelling and irresistible proposition, a positive destination. That means creating an experience that supersedes the perceived benefits—convenience and price—of shopping online. The high street needs to be more about retail experiences—entertainment, food, independent stores—that people want to have.

We cannot have more of what the Americans call “cookie cutter” department stores—where someone can close their eyes and spin around and find it difficult to identify which town they are in. We need more variety and to entice people not only to visit city centres, such as Stirling city centre, but to live in them. We need to make that possible. People living in the city centre will bring life and vibrancy to an important civic space, and public policies that create the right conditions for the revival and prosperity of the high street are now overdue.

Photo of Melanie Onn Melanie Onn Shadow Minister (Housing, Communities and Local Government) (Housing) 3:24 pm, 6th June 2018

I confess I had not intended to speak in this debate, but I realised that week in, week out my constituents consistently talk about the state of Grimsby town centre. It is an issue on the doorstep and in my surgery. They all want something done about it. People in Grimsby are incredibly passionate about their town, are filled with pride for it, but they are losing hope that things are on the up. I agree with some of the comments from Stephen Kerr: the impression they get reflects on how they feel not only about their town but about themselves, and seeing things in a state of decline and disrepair has a negative impact on the sense of community.

The town centre is where most people from out of town get dropped off on the bus or the train—obviously, there are car-parking facilities as well—and serves the needs of a much wider population than that of the immediate Grimsby town. Lots of people from lots of neighbouring villages visit for a variety of reasons, whether to meet their health needs, to shop, to use the libraries, or whatever. The first thing they see, however, when they get off their bus or train is boarded-up shops. I intervened on the Secretary of State when he said that retailers were not failing. If closed shops are a sign of success, God only knows what failure looks like! It cannot be right that there are so many vacant properties across town and city centres that seem to have no planned future use.

People understand that their consumer habits have changed—as they wait for their deliveries from online retailers, or in a queue to collect them because they were not at home—and that this has had an impact on the high street. Grimsby has a big shopping centre, Freshney Place, and its manager, Amanda Austin, has done a huge amount to attract new retailers, but it feels like she is fighting a losing battle.

We have lost, not just from Freshney Place but more broadly across the town: Mothercare; Maplin; BHS—of course; GAME; Trade Nation; Starbucks—it came back again, but it left for a while; Radio Humberside—it had a property from which it ran the local radio service, meaning the town felt connected to the BBC and the local news service, and it felt like there was some investment from the outside; and the Co-op bank—interesting that it is opening up new supermarkets, but its banking facility has gone; while the RBS will be closing soon. I wrote to RBS about a continuing service, and it was very regretful, but it does not seem to take seriously the impact it will have more broadly not only on its business but on the whole town and area. We have also lost Homebase, Muffin Break and Cycle Mode—a lovely independent high-end cycle retailer. These shops all seem to have been replaced by vape shops, money lenders, charity shops and hairdressers—Members probably could not tell looking at my roots. [Interruption.] I have not quite managed to find the time yet.

However, we are not doing nothing. There are some brave independents that have set out to establish new businesses, but that tends to happen in the café market. As with supermarkets, we are surely at saturation point. There will come a time when we do not need any more cafés—when we do not need to eat any more cakes or drink any more tea, lovely as that is and excellent as those providers are. The future of our town centres cannot be entirely based on that. I mentioned saturation point. We have two Tesco Extras, a Sainsbury’s, two Lidls, two Aldis, and a Morrisons—whose move to a continental shift pattern is having a huge impact on individual members of staff—but those are not the high street, and relying on them for the future of our town economies seems utterly ludicrous to me.

In Grimsby, 4,500 people are employed in retail: about 11% of the working sector. Let me use my final seconds to say to the Minister—unsurprisingly—that we are trying to pioneer a town deal that will bring together all the elements that were mentioned by the hon. Member for Stirling. We are talking about repurposing the whole town centre: introducing entertainment to create a new night-time economy, adapting buildings for housing, and creating a heritage action zone that will feed into the centre. We are not sitting idly by and hoping that things will get better. We are trying to future- proof our town centre, but we are asking for help from the Government, and we are not being shy about it. We need some money—and can we have it soon, please?

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch 3:30 pm, 6th June 2018

It is a great privilege to follow all the other Members who have spoken.

May I take you, Madam Deputy Speaker, on a journey to Redditch? I do not know whether you have ever been there—

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

Of course she has. It is a marginal. [Laughter.]

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

I am sure that you went there back in 2010, Madam Deputy Speaker. Those were happy days, with former colleagues. You will have seen the wonderful traffic-free roads that lead to Redditch. It is a new town, which was built in a moment of hope to accommodate people who were moving out of Birmingham and from elsewhere in the country. They wanted to come to Redditch to build a home. You will drive smoothly to the town centre, because there is no traffic holding you up: you can go straight past the islands. When you reach the town centre, you will park your car at the Kingfisher shopping centre. You will walk through that wonderful shopping centre, which is privately owned and very well run, and is doing a lot of work to attract new retailers. It is an example of excellence in our town centre.

Unfortunately, however, when you leave the Kingfisher shopping centre, Madam Deputy Speaker, you will go out into the old part of the town, where you will observe a scene almost identical to the one described by Melanie Onn. You will see boarded-up shops and graffiti—not the trendy kind for which people pay good money, but the kind that we really do not want. You will see underpasses leading nowhere, the sort that you do not want to go through. That is a great shame, and it affects people’s impression of the town. They are passionate about Redditch, they love it with all their heart, but they want it to compete on a level playing field with other shopping centres that are only 10 or 15 minutes’ drive away, in Solihull and Birmingham.

At present our town centre is struggling, partly because, unfortunately, the leaders of Redditch Borough Council—sadly run by Labour, until the local elections last month—have not grasped the many opportunities that are at their fingertips to improve things for local residents. The Conservative-run county council went to Redditch and asked its council, “What is your vision for your town?” A number of successful, thriving towns in the rest of Worcestershire are using Government funds to make improvements. One example is Hereford, with its university of technology, its specialist area. Another is Kidderminster, with its incredibly successful ReWyre partnership which is driving investment in the town. Before that, it was haemorrhaging people because no carpets are made there any more.

Redditch used to be a centre of needle manufacturing, but what did the local Labour leadership come up with? I am sorry to say that the best it could come up with was the £800,000 that it spent on paving a yellow brick road on the high street. What good does that do in the face of all the challenges so eloquently outlined by Members in all parts of the House? What does it do to drive investment into our town centre? What does it say to the new business investors, the entrepreneurs who are putting their life savings at risk? There is, for example, Rees Café, which serves the most amazing vegan brownies. There is Heaphys Menswear, one of the oldest independent retailers in Redditch. There is Sew Fab, which purveys wonderful sewing kits—not that I have time to sew. What does that say to them? It does not give them a vision of hope for a town centre. It is just blocks on a road. It is absolutely useless.

That is the tragedy of the Labour council, but now we are turning over a new leaf. People really want to see Redditch thriving. Our whole message to the people of Redditch is that we need to—and can—unlock Redditch. It will take time—we appreciate that, but we need to work together. We need to create an environment where local leadership is welcoming people into the town and encouraging entrepreneurs to thrive. That is what we need in Redditch, and not this approach from Labour with a lack of imagination and no vision for our town.

This has been a great opportunity to have this debate and to make points to the Minister. On business rates, in common with people, I really welcome the work that he has done, which I believe will see £2.3 billion of business rates being saved by our local businesses, but please can we keep that work up? Businesses up and down the country are going to welcome that.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet 3:35 pm, 6th June 2018

The motion before us today is somewhat rambling, dare I say. It has three parts. It is about squeezing wage growth, the condition of the retail sector, and there is a bit of Brexit put in as well—but we will have 12 hours next week to discuss that. Generally, however, what the Opposition are putting forward is that the Government should do more. They should spend more, subvert reality and revert this country to a command and control economy.

Let us look at wage growth, because we have had so much misdirection and ignorance of the truth regarding that. I think that the Opposition hope that if they say it often enough, people might believe it, but I recommend that they look at the facts. Let us look at a hypothetical, lower-paid employee. In 2010, the national minimum wage for those over 21 was just £5.80. Today, in 2018, it is £7.83; that is a 35% rise. Let us look at the income tax personal allowance. When we came into Government in 2010—we were left to pick up a lot of mess by Labour—the tax-free allowance was just £6,475. Today, in 2018-19, it is £11,850; that is an 83% rise in the tax-free band. Let us put those together. A 35-hour-a-week lower-paid employee at minimum wage in 2010 would have had take-home pay, after tax, of just £9,740, but today, the minimum wage and that huge increase in the tax-free allowance means that their take-home pay is £13,768. That is over £4,000 in real cash in the pockets of the lower paid under this Government. That represents a 41.4% increase in take-home pay.

Photo of Wera Hobhouse Wera Hobhouse Liberal Democrat Spokesperson (Housing, Communities and Local Government)

It is, however, about the balance between the two. In relatively successful towns or very successful cities such as Bath, which I represent, shops are still doing fine but life is more expensive, so the balance of what people take home as pay and what they have to spend to live in an expensive city is much higher, too. The balance of the two, even in good, successful town centres such as Bath—and it is not that successful—is not right.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

I thank the hon. Lady. Today’s debate is about the retail sector and wages. I was going to say that 41.4% over eight years is 5% a year, which is greater than any measure of inflation, no matter which one people care to mention, so there has been a real cash increase to all those working. We have the lowest unemployment since the 1970s and more people in work today than we have ever had in the history of this nation. I am afraid that we must stop listening to the misinformation from the Opposition. Their statements are simply not true. Real wages are rising.

In the retail sector, as we have heard, we have had business rates relief and changes from RPI to CPI, which will mean a reduction of over £2 billion to those who have retail stores. During this Parliament over 600,000 businesses will pay no business rates whatsoever, and in the first half of 2017, more retail units were opened than closed. There are 300,000 more in employment in the retail sector than in 2016.

That does not mean that everything is rosy on the high street, but when we consider what the Government did in 2008, when they took this country into probably the worst recession that it has ever known, in the third quarter of 2008 alone, there was a 4.2% decrease compared with the year before. That happened in just one quarter under Labour; that is what they condemned this country to.

The real debate here is the changing face of retail, and the internet is the reason for that. With spending now at £1.2 billion per week, 17% of all spending is now on internet purchases, and that is a 12% year-on-year increase. That is not unique to Britain, but is happening across the entire world.

That is the reality of life, and we are all guilty of fuelling it. If I want a shirt like the one I am wearing but in blue with a 34 inch arm and a 15½ inch collar and I want it delivered tomorrow, ordering that will take me three minutes, and it will be delivered. We are all purchasing in that way now; unfortunately, we are all fuelling the changes to the high street.

We have had debates about banking in the House, and I have taken part. Our banking landscape is changing, sadly, because we are all being encouraged on to mobile apps and mobile banking. Also, when did anyone in this House last book their flights in a high street travel agent?

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

I used a travel agent in the centre of Grimsby in April.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

Well done to my hon. Friend; I am afraid I am not as reliable in buying my travel tickets on the high street as he obviously is.

When did Members last browse property prices on the internet? We do not do that so much in a high street shop any longer; it is likely to be on the internet now. The reality is that in current retail there is a far higher spend per staff member on new internet retailing such as Amazon than on the high street. It is also likely that there are higher costs on high street stores per square foot than on warehouse-style retailing.

Things are changing. We have a 20th-century tax system that looks at bricks and mortar and taxing things. Part of the formula for addressing this issue must be that we tax more appropriately the abstract activities of internet retailers and warehousing. When I go on the high street in Ramsgate the retailers say they do not feel that the big online retailers are paying their fair share.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

No, as we are nearly at the end of the debate.

The high street simply needs to redefine itself. High streets need to create themselves as places to go for a pleasurable afternoon—to do some browsing and shopping, but to enjoy the experience as well. That means there is a duty on councils and the retailers themselves to make the high streets clean, attractive and somewhere good to go.

My answers to this conundrum are that we should revise taxation of retail more towards the internet and warehousing-style operations, focus on making high streets places to go for an experience, and in many cases, such as in Ramsgate, high streets are too spread out and too big, and they need to be smaller to become the vibrant heart of the town. We all need to shop locally, too; that will help.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade) 3:43 pm, 6th June 2018

The retail sector faces a challenging and testing environment. The high cost of business rates alongside the challenge of online retailing for high street shops, the long-term squeeze on household incomes, the squeeze on pay and loss of retail jobs, and the failure to provide clarity to business on the future of our relationships with the outside world: these are all key factors where the Government should have something to say, but also where the Government could and should take action. They are all areas, however, where this Government have been found wanting.

I thank colleagues on the Opposition Benches for their contributions. We heard from my hon. Friend Liz Twist on the high number of her constituents employed in retail—a quarter of the jobs in her constituency. We heard from my hon. Friend Justin Madders on the importance of balancing the high-quality, out-of-town shopping centre at Cheshire Oaks with the high street, and from my hon. Friend Siobhain McDonagh, to whom I pay tribute for the fine work she has done in standing up for workers at Sainsbury’s. We also heard from my hon. Friends the Members for Bishop Auckland (Helen Goodman) and for Great Grimsby (Melanie Onn), who both spoke of the difficult challenges being faced in our high streets. One of the themes that has come out of this debate is the difficulty created by a two-tier economy, not least in retail, between our cities and our towns, particularly the smaller ones.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

Would my hon. Friend accept that one of the problems in market towns is that the ownership is often with distant landowners who are more interested in speculative development than in improving retail opportunities?

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

That is a very good point, and it has also been made by other Members today. Where is the strategy, not only for retail but for our towns, and for our high streets in particular?

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Indeed; as my hon. Friend the Member for Bishop Auckland also said in the debate, there is no such strategy.

In the response to the urgent question on Marks & Spencer on 24 May, the Minister for Energy and Clean Growth, Claire Perry, said that the Government had set up a new Retail Sector Council, but why has that taken so long? Why did it take eight years to create that council? What is needed now is action. Business rates are a huge fixed cost for businesses in our high streets, and that is a disadvantage that their larger online-only rivals do not have to contend with. The Under-Secretary of State for Business, Energy and Industrial Strategy, Andrew Griffiths, will no doubt say that there have been changes to business rates, but those changes have made matters worse for many businesses, particularly smaller ones. Last year’s revaluation resulted in an average rates increase for smaller shops of £3,363 over the next five years.

The Government commissioned Mary Portas—remember her?—to tell them how to re-energise high streets. How is that going? Not so well. Her report recommended cuts to business rates, not the massive hikes that so many are experiencing. Meanwhile, ASOS reports its profits going up 26% while its rates bill fell by £30,000. Rates rises for our brilliant independent retailers alongside rates cuts for the multinational online retailers are hardly the stuff of fair competition or a level playing field. There was very little in the Secretary of State’s opening speech about independent retailers, yet smaller firms in all sectors, including retail, are crucial to the future economic success of this country. The Association of Convenience Stores has stated that

“the cost of business rates remains too high”.

And what about the fact that investors in retail are put off by the high cost of business rates? The Government should be doing so much more to ensure the right balance between high street, online and out-of-town retail, and we need to see that happening in the sector deal when it comes forward.

That brings me to the retail workforce. There are 2.9 million people working in retail and the sector is worth £94.6 billion to the economy. It is where many people develop their first experience of the world of work, and it is often the source of good-quality employment in businesses large and small, but the pressures on retailers are starting to show. We have seen job losses at Toys R Us, Maplin, M&S, Conviviality and maybe now House of Fraser, and CVAs and profit warnings at many others. We have seen 21,000 jobs go in the first three months of this year alone, and cuts in pay and conditions at companies such as Sainsbury’s, which has ended paid breaks and premium pay. Yes, there has been a rise in the hourly rate, but it has been offset by cuts in workers’ rights, adding up to a pay cut for too many people.

Ministers could and should be working closely with campaigning unions such as USDAW, GMB and Unite, which are doing such a good job on behalf of workers’ rights and on campaigns such as Freedom from Fear. It is in the interests of responsible retailers and of the whole economy for the Government to play their part in ensuring that workers are treated fairly. A high-pay economy is good for workers, but it is also good for business because workers are also consumers who buy goods and services from retailers. It makes economic sense to prevent the exploitation of workers, not least in the large distribution centres. It was simple complacency for the Minister for Energy and Clean Growth to imply in her answer to the urgent question on 24 May that M&S staff could just go and work at Amazon, complete with its airport-style security and unpaid toilet breaks.

I am afraid that it was also simple complacency for the Secretary of State to say earlier that retail employment was going up. There are 2,500 fewer retail stores than there were three years ago. According to the Office for National Statistics, 40,000 fewer staff were working in retail in 2016 compared with 2015. The British Retail Consortium says that its figures show from 2015 to 2017 the number of jobs fell by 73,000. Meanwhile, the average hours worked in January to March 2018 were 30.2 a week, which is a fall of 30 minutes on the previous year.

Those figures are a cause for concern, not complacency, and are indicative of an overall decline in retail employment. The Government should be doing so much more to improve productivity. As in other sectors, it is true in retail that skills and investment in infrastructure and new technology are the keys to better productivity, and that needs to lead to better-paid jobs as well as more profitable businesses. My hon. Friend Rebecca Long Bailey set out some ideas for how to boost pay. The British Retail Consortium has its “better jobs” agenda, and I refer the Business Secretary and the Under-Secretary of State for Business, Energy and Industrial Strategy to its excellent report. Productivity gains from cuts to workers’ pay and conditions or to the prices paid to suppliers are short term and characterise the lack of economic progress under the Government, not least in retail.

That brings me to our relationship with the outside world. Frictionless trade is vital for the import of perishable goods. It is vital for the supply chain in the car industry, where components cross the border multiple times. Car retailers need certainty, as do our supermarkets, because 79% of food is imported by retailers. Certainty is needed for retailers to plan for the trading arrangements post Brexit. Arrangements at the Port of Dover, Holyhead, Liverpool and across the country will play a huge role not only in business life, but in daily life, and retail is one of the sectors that most affects daily life.

Warnings of empty shelves need to be heeded. Consumer choice will be badly affected—dramatically so—if border arrangements are adversely affected. The Government’s failure to confirm their preferred negotiating position with our European partners is causing real problems. Many retailers rely on foreign workers. It is not just the highest-qualified EU workers who need assurances that they are welcome in this country. Workers in lower-paid sectors, including retail, need the same assurances and so do businesses. Some 22% of retailers report that foreign workers have left since the referendum. It is time for clarity.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

No.

The Government need to make up their mind, stop negotiating with themselves and start negotiating with the EU for a deal that puts jobs and the economy first and that is not just in the interests of a handful of extreme Brexiteers in the Conservative party. Let us have a proper sector deal that sees action, not just words. Let us see the Government make a proper commitment to retail. Three mentions of the sector in a White Paper do not inspire confidence in the Government’s commitment to retail businesses or workers.

Let us have a deal with thriving town centres, not crippled communities, and one that addresses the concerns of the British Retail Consortium, which describes a sector in stasis, where vacancies are going up. Let us see a deal that reverses the long-term decline. Let us see proper business rate reforms that include the switch to CPI-measured inflation, encouraging innovation and growth, that exempt new investment in machinery from valuations and that ensure businesses can access a proper, comprehensive appeals process. We need a deal that has smaller independent retailers at its heart and one that supports retail by investing in skills, in education and in an immigration system that brings in the skills this country needs. We want a deal that takes on board Labour’s plans for a catapult centre for retail, that listens to the views of employers and unions and that promotes the best outcomes for workers, communities, consumers and businesses.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 3:53 pm, 6th June 2018

It is a delight to get to the Dispatch Box at last, Madam Deputy Speaker, and I hope that you will indulge me and allow me to answer some of the important points that have been made in this excellent debate. I thank the Opposition for bringing it forward. It is clear that there is strong agreement across the House that the retail sector is vital to our economy, our local communities and the many thousands of constituents who rightly rely on the sector for their livelihoods.

I will quickly address some of the points raised by right hon. and hon. Members in this debate. Drew Hendry, in an interesting speech that particularly focused on Brexit for a change, raised the issue of austerity but forgot to remind the House that, as a result of changes to lift the lowest paid in society out of paying tax and as a result of the biggest increase in the national minimum wage and the national living wage for 10 years, those on the lowest pay are now £3,800 a year better off—that is thanks to the policies of this Government.

The hon. Gentleman understandably raised an important point about the pay of the youngest in society. I share his desire to ensure that young people are fairly paid, but he forgot to mention that unemployment among 16 to 24-year-olds is persistently higher than among those aged 25 and over—12.1% compared with 3.1% across the country. The unemployment rate for 16 to 17-year-olds is 26.9%. Increasing pay would make it more difficult for young workers, whose priority is to get their first years on the job ladder, to secure work.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I know the points the hon. Gentleman will make, so I hope he will forgive me if I do not allow him to intervene. Time is pressing.

Justin Madders made an interesting speech in which he talked particularly about the loss of banks. Although I share his concern, he will know the Government have invested some £370 million in the post office network, which now provides both business and retail banking. I am sure he values the contribution that that is making to the important post office network across our communities.

Helen Goodman had a shopping list of questions, which is apt in a debate on retail, but, as with all shopping lists from the Labour party, it had a huge price tag attached. She asked for Boxing day to be a bank holiday for retail workers, but she forgot to mention that that would cost employers an extra £1.2 billion.

The hon. Lady raised the issue of competition policy and the banks being able to share premises. As I understand it, there is no competition policy issue that would prevent banks from sharing premises—they would obviously have to be careful about sharing data and personal information. If she has other concerns, I will be delighted to talk to her. Perhaps she could drop me a little note on her concerns.

My hon. Friend Kevin Foster made an interesting speech, particularly on “Love Your High Street,” which he is championing. I hope he will be getting free beer at the Peaky Blinders bar after he mentioned it. He made a particular point on the need to revitalise our high streets and change the way they are purposed, and I absolutely agree.

My hon. Friend Stephen Kerr raised the sad loss of The Boozy Cow and The Fat Cyclist Café, which are a great loss to us all. He also raised the important issue of the need for innovation in our town and city centres.

Melanie Onn again raised the Grimsby town deal, about which she cares passionately. She also raised the issue of coffee shops and said that surely we cannot eat any more cake—there are hon. Members present who might disagree. My hon. Friend Lee Rowley made some particularly important points, for which I am grateful.

Let us reflect on the recent structural changes in the sector and on the announcements we have had of late. There has been a shift in consumer behaviour, and we need to be aware of that shift. The move towards new technology is a great innovator and it provides great opportunities, but it also provides great challenges. I commend my hon. Friend Ben Bradley for his campaign for free parking, which is an excellent proposal. He is standing up for his local residents.

My hon. Friend Rachel Maclean mentioned Labour’s yellow brick road and, on the folly of the Labour party, I point to the problems of Cannock Chase District Council, which is now trying to charge hard-working independent retailers £85 just for having an A-board to advertise their shops. That is the Labour party getting in the way of private business, as usual.

Many Members mentioned the key issue of business rates. The Government are aware of the wider business rates concerns and are looking to address them. We undertook the last fundamental review of business rates in 2016, announcing reforms worth £9 billion. A further £4.3 billion package was announced at the spring Budget in 2017, including £110 million to support 16,000 small businesses. I hope that Members from across this House will join me in celebrating Small Business Saturday later this year to try to support small high street retailers.

The Secretary of State mentioned the Retail Sector Council, which I am chairing, and Bill Esterson asked whether we were working with USDAW. I should point out to him that USDAW sits on the RSC and is making a great contribution, and we are grateful for its support. The RSC will look at the issue of business rates, as per our manifesto commitment.

We all recognise the importance of retail and the contribution it makes, not just to the UK economy, but to our communities up and down the country, and the people it employs. I reassure the House that we will continue to work with the unions, the retail sector, local government and everyone else concerned to make sure that the retail industry across the UK has a bright future.

Question put and agreed to.

Resolved,

That this House
notes that 21,000 jobs were lost in the retail sector in the first three months of 2018 due to store closures and company administrations, with more announced since;
further notes that the retail sector is one of the largest employers in the UK and contributed £94.6 billion to the UK economy in 2016;
regrets that the Government’s industrial strategy contains only three references to the retail sector;
further regrets that the Government has presided over the biggest squeeze in wage growth in a generation, is failing to provide certainty around future trading arrangements after Brexit and has failed to ensure a fair business rates system;
and calls on the Government to urgently publish a strategy for the retail sector.