My Lords, I beg to move that this Bill be now read a second time.
Are we to wait to see our communities, our villages and our local neighbourhoods wither and die or can something be done about it? I do not think it is overstating the case to say that we are in danger of losing the heart and soul of this nation—a fact drawn attention to by reports produced in the past few years on Clone Town Britain and Ghost Town Britain.
Parts of the United States very much deserve the title "ghost town". Where the US goes, do we follow? Noble Lords may like to know that there is a very interesting book on the US experience called Big-box Swindle: The True Cost of Mega-retailers and the Fight for America's Independent Businesses by Stacy Mitchell. We can, through inertia, stand by and see the erosion of choice, diversity and, yes, competition. I refer of course to the decline in our small shops.
In the other place on
Therefore, a key aspect of the Bill is the creation of retail development plans by the local authority, specific to each part of the country, taking into account local wishes and ensuring choice, diversity and convenience for local people and ensuring also that retail developments suit the character of an area. This should prevent the over-expansion of supermarkets where they are not needed or wanted and allow the local community to become involved in the future development of an area. When a supermarket has applied for planning permission, an impact assessment should be carried out to analyse the impact on the local community's services.
In this connection, there is a need to assess the effect on the economic aspect of the local community. It is said that £10 spent in small shops is worth £25 to the local economy, compared with just £14 for supermarkets. In addition, 59 per cent of turnover from local retailers is returned to the local economy, compared with just 5 per cent from the large retailers. The New Economics Foundation has strong views and evidence on this. Indeed, it is also not true to say that supermarkets create jobs; in fact, small shops create many more. Therefore, emphasis is placed in the Bill on assistance being granted to initiatives taken by local people where, especially in villages, the local shop is forced to close. Local residents who want to form a co-operative to keep the business going, or who want to do so by other means, should receive advice and help. Another aspect of the Bill is an overseeing regulator to ensure that these plans are formulated and carried forward, and the Bill also allows for such a regulator to investigate any restrictive land covenants or land banks.
For many years now, there has been great concern over the business rates bill that small shops have to face, meaning that they pay a disproportionate amount. It is suggested that small shops can pay anything from 15 to 30 per cent or more of their turnover to meet the business rate cost, whereas it is said that supermarkets pay only 4 or 5 per cent. For the first time through this Bill, there will be the creation of three classes of shops. It will then be possible to examine this situation, and the Bill calls for a business rates review. Effectively, small shops will be class 1 and supermarkets class 3. The review will take into account how rates impact on the profitability of a business and its ability to support its owners and employees and whether the burden is disproportionate. Without anticipating a review, it seems fairly clear that at the moment it is disproportionate.
There are many other concerns, such as frequently expressed views on the unfair pressure placed on suppliers and farmers by the big four. Much has come out recently on that, and much work has been done by Friends of the Earth, producer groups, trade associations and many others. So there is a great deal of support for the Bill. The Federation of Small Businesses, the FSB, says that it supports the Bill because of the strong message that it sends to the Government. The Forum of Private Business, the FPB, said in support of the Bill that,
"this is a fantastic opportunity for the Government to lessen the impact that business rates have on small shops".
We have an urgent situation which needs addressing. It is estimated that 2,000 local shops are going out of business every year, while the grocery market is being saturated by the big four supermarkets. They dominate 75 per cent of the market. A recent survey by the Association of Convenience Stores found that 69 per cent of people supported the idea of the local community becoming more involved with local planning decisions, a key ingredient of this Bill.
In this day and age, with crucial concerns about the impact of activity on the environment, it is relevant to question the distance that food travels to reach the public. That has been talked about elsewhere and is very relevant to our concerns. Whether food needs to travel the distance that it does and the impact on the environment of that needs to be looked into. A similar recent statistic indicates that the average person now travels 893 miles per year to shop for their food. Those are all relevant aspects of shopping today.
We have a great need for these issues to be addressed. In that connection, I shall refer to the fact that we have just had a preliminary report and recommendations from the Competition Commission, regrettably concentrating on competition between supermarkets—the big four—which is an issue, but they are still neglecting the small shops sector. A recent report produced by the FSB draws attention to the fact that France is the best example in Europe of getting the balance right between small shops and large retailers, with a balance of planning laws that allows fair competition and healthy communities. I would recommend those interested to study the detail and I hope that the Minister and the Government will want to study it also.
I speak briefly to the Bill because the case is there. There is much evidence, published in papers and elsewhere, and I know that many colleagues will have things to say. It is undeniable that we need to address the issue of small shops and communities. I think all would agree that there is an issue of great concern here. I am sure that other noble Lords will add their experiences to what I have said. I thank the Minister for attending today and I hope that the Government will take the matter seriously. It is easy to sidestep, but if firm policies are not followed, inertia will rule and we will see a continuing decline in our local shops at great cost to our communities. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Cotter.)
My Lords, I thank my noble friend Lord Cotter for introducing this extremely important Bill and giving us the opportunity to take part in this debate. I support the Bill because I believe it is very important that small retailers and shopkeepers are given a fair chance to flourish. At present, most of them struggle to survive. In our rural market towns and among the vast sprawl of suburbia surrounding the larger cities, local shops are not just a convenience for local people but an important part of the community's social life. Yet the corner shop, the newsagent, the butcher, the baker, the greengrocer, the chemist and the haberdasher are all under serious threat. As my noble friend has already said, about 2,000 of them go out of business every year. In most cases, the reason is that they cannot compete with the supermarket or the powerful chain store that has opened up in the neighbourhood.
We all tend to be a little ambivalent towards supermarkets. A recent poll showed that 70 per cent of us dislike them and yet nearly all of us use them. Why? Because on the whole the food is cheaper there and, like cars, they are extraordinarily convenient. All our shopping can be completed in 20 minutes instead of two hours going up and down the high street, doing what Margaret Thatcher used to call "shopping around", and there is also the relief of not having to worry about parking.
As supermarkets provide 80 per cent of our food at very reasonable prices—that percentage is still rising—it is not surprising that so many small food retailers find it almost impossible to compete. But, why, we must ask ourselves, should we care if these small shopkeepers go out of business? Perhaps we should face the inevitable and move with the times. It is not because we mind, necessarily, about any individual shopkeeper going under, but because the small retail shop, by its very existence, provides an essential service to the local community. It is the retail outlet for dozens of other small local businesses: farmers, market gardeners, beekeepers, local potters and other craftsmen, even electricians, plumbers and signwriters, who rely to a large extent on the local shops for their livelihood. Local shops are the most important links in the chain that enables a local community to survive and thrive. If a local shop dies, the livelihood of so many small local suppliers will die with it.
By contrast, supermarkets and chain stores have their own suppliers that can be hundreds of miles away and their produce arrives in vast lorries that can barely negotiate the narrow streets of some of our market towns. Also, in many cases supermarkets do not even employ local people to work in their stores. Perhaps the most important contribution that small local shops make is that they enrich the quality of life in the community that they inhabit. Local shops are personal and more human places. People know each other, people chat there and they keep each other aware of the well-being of members of the community. Okay, they gossip, but they also get to know that Mrs Jones, or whoever, is unwell, and make certain that someone goes around to see that she is all right. Small shops are an integral part of small communities. Supermarkets are not. In fact, there is nothing more irritating than the checkout girl chatting to her friend and holding you up in the queue.
However, the Bill as I see it is not anti-supermarket. It is trying to ensure that supermarkets do not do serious damage to local traders in future and that their empire-building is more rigorously controlled. In the centre of towns, they can be a boon to small businesses. They can provide free parking to locals who will shop there, but also visit other shops in the high street. Sometimes, when fruit and vegetables come into season, for example, the local greengrocer can produce fresher fruit and vegetables at a cheaper price than the supermarket, whose produce is still coming from Spain or somewhere.
However, those supermarkets situated out of town inevitably drain the lifeblood of local shopkeepers in smaller towns within 20 miles of them. The local shops in nearby towns tend to lose business and close down. Their premises in the high street are taken up by the chain stores and a once-pretty market town begins to lose its character. Its high street begins to resemble that of hundreds of other towns: the same chain stores, the same coffee houses, the same fast-food eating places and the same brand names on the shop fronts. So many of our once-distinctive country towns have already been transformed into these clone towns, not unlike those in the United States. We must hurry to ensure that they do not all go that way.
Worst of all are the great out-of-town shopping centres, which not only are made up of supermarkets and chain stores but also provide entertainment and sporting facilities. There is one monster outside Glasgow on the M8, called Braehead. It is close to my idea of hell, yet people flock to it from miles around and I can only conclude that it is a popular success. Three or four specially scheduled coach-loads of shoppers leave for Braehead every day from my home town of Largs, nearly 30 miles away. Parts of the city of Paisley, an old cathedral town lying only four miles away—already depressed after the demise of its once-famous cloth-manufacturing industries—are now beginning to look like a ghost town. Do not, for goodness' sake, take the M8 past Braehead between 4.30 and 6 pm, because the volume of traffic leaving Braehead at that time causes ghastly congestion and, usually, a 10 to 20-minute tailback on the motorway.
The trouble with supermarkets is that they do not care about the damage they do to local communities and will actively try to put a successful local trader out of business. Of course, their main competitors are their rival supermarkets, but this healthy competition hardly benefits the small shopkeeper. The trouble is that, despite internal competition with each other, they have all become too powerful. In several cases, when local authorities stand up to them and refuse planning permission, they take the local authority to appeal and, as in the cases of Ruthin in north Wales, Talbot Green in south Wales and Huntly in Scotland, Asda and Tesco won their appeals and the supermarkets went ahead against the wishes of the council and the local community. The Federation of Small Businesses—which, incidentally, supports the Bill—is now talking about "Tescopolies" and "Tesco towns", in which one supermarket company has double the market of its nearest rival.
We all have reservations about establishing yet another regulatory body and all the bureaucracy that goes with it. However, if we want at least some of our small shopkeepers to survive against this ruthless competition, we need a regulatory body with teeth and enough power to stand up to these powerful supermarket chains: in this case, the proposed Office for Retail Planning. This will not mean that there will be no more supermarkets, although I hope that there will be a ban on more large supermarkets outside towns. Like David Cameron until he lost his nerve, I think that existing out-of-town supermarkets should be made to make their customers pay a parking fee. We need the Office for Retail Planning to make certain that future supermarkets are sited inside towns and never in places where they are likely to do irreparable damage to small, local communities.
My Lords, the underlying aims of the noble Lord, Lord Cotter, in introducing this Bill as he explained it to the House just now and as supported by the noble Earl, Lord Glasgow, are admirable and I support them. Indeed, I have supported the preservation and encouragement of small businesses all my political life.
However, I have been reading the Bill, and I am afraid that I must tell the noble Lord, Lord Cotter, that I do not think that the actual methods it proposes to help small businesses stand up to scrutiny. They leave a lot to be desired. To begin with, I would not like even one more semi-government body to nanny and bully us all. I do not like local authorities being given ever more orders from the Government and their agencies. The Bill provides for the new agency to bully and overrule local authorities. The Secretary of State can already do that, as I shall say in a moment.
There are also far too many order-making powers in Bills these days about matters which are important to the working of legislation; this Bill is simply littered with them. Those drafting government Bills too often leave difficult matters to be dealt with in regulations and the noble Lord, Lord Cotter, has followed their bad example. There are at least 10 new order-making powers, one of which has 11 objectives, sprinkled throughout the Bill. The Bill tries first to define small, medium and large retail businesses. It does not actually define "retail", but I take it that that means businesses selling goods and services to the general public rather than others in their trade. That leaves antique shops in a grey area, because they do a lot of the latter. Nor is there any definition of small, medium and large retail premises, which are to be singled out for different treatment.
Part of the definition is to be how many square metres of "retail sales floor" a shop has. Now, I know what the noble Lord means by "retail sales floor", but a legal definition is not so easy. Is it where the customers go? In that case, is the area behind the counter part of the retail shop? It is certainly part of the display area in many cases, with the cigarette shelves and that sort of thing, so presumably it is. What about the stock room behind it? That is presumably not part of the retail sales area, although it is, incidentally, included in the definition of small shops for Sunday trading. In a café, the obvious bit of the retail sales floor is the counter for takeaway sales, but it probably also includes the bit where people sit to eat the meals they have bought. If it can include somewhere where customers sit down, what about a solicitor? Is the room where he sees his clients part of a retail sales floor for this purpose? Presumably the reception area is as well. Service businesses often have no retail sales floor at all. A plumber does not have a retail sales floor, because he goes out and does the plumbing in people's houses and other premises. All this is to be left to regulations. It will not be clear to anyone who looks at the Bill what is or is not included.
The other half of the definition is to be based on annual turnover. Turnover is a valid method of comparing the respective sizes of two similar businesses, but not of dissimilar businesses. The relationship between turnover and profit varies wildly between different types of business and so does the number of employees, the size of premises and so on. Some businesses these days have a large part of their turnover in distant sales, via the web; that does not involve any sales floor at all.
I recognise the problem of arriving at a general definition of a small business in order to give small businesses advantages over larger businesses. I have long been concerned about it, and I do not think that the noble Lord, any more than other people, has solved it.
The new body that is to be created—the Office for Retail Planning—and the independent examiners who will back it up are additions to the overheads of the nation. We should be sure that they are of benefit. The Office for Retail Planning will sit somewhere between the Competition Commission and the Office of Fair Trading, both of which have the duty to "improve the market", in shorthand terms. The Office for Retail Planning has the duty to further the interests of consumers in relevant markets, but its first duty is to further the interests of citizens in relation to retail planning matters. I find it a bit difficult to understand exactly what is the difference between us as consumers and as citizens in this respect. Our relationship with shops is really as consumers rather than as citizens.
The primary purpose of the new Office for Retail Planning is to take decisions away from local authorities and to hedge them about with extra guidelines. At the moment, the Secretary of State does that. He has the power to call in decisions and he gives pages and pages of planning guidance. There are books full of planning guidance that has to be to be followed by inspectors if something comes to appeal, and hence it has to be followed by local authorities. That guidance can be altered, and it probably needs to be altered because of the sort of decisions that we have just heard about where supermarkets are allowed even though local authorities do not want them. However, I do not think we need a new body and a different set of guidelines to add to the existing ones to stop local authorities deciding what they think is best for their towns. We should leave more decisions to local authorities, not take them away.
As the noble Lord said, the Competition Commission has just reviewed groceries. Its proposal for a new ombudsman and extra powers relating to supermarkets' relationships with their suppliers has merit and provides benefits not only to suppliers but also to small firms that compete with the supermarkets. The commission's headline proposal in the planning field aims at the competition between the big supermarket chains, not at the competition between supermarkets and small, local shops or convenience stores. That is the aspect that worries me and the noble Lord, Lord Cotter, not so much the competition between the supermarkets. I want the Secretary of State's planning guidance to give more protection to smaller shops than it does at present. That is the way forward as far as planning is concerned. I do not want a new body to complicate everything further and add to the nation's overheads.
The noble Lord, Lord Cotter, has taken up from the Competition Commission and others the question of landbanks. The Bill suggests a mechanism for the compulsory purchase of supermarket landbanks. I do not support that, but it is a slightly different matter.
Another part of the Bill concerns rates. It hints at the idea of lower rates for small businesses but, as the noble Lord said, it does not provide a solution, only a review. At present, the mechanism for deciding business rates is the rateable value. If small businesses in a town are struggling, rents, and hence rateable values, should eventually go down. That is the mechanism at the moment. I am not sure it is working as well as it should, but that is no reason for inventing a new mechanism, although it may be a reason for improving the mechanism that we have. As far as local retail plans are concerned, I would encourage local authorities to have an eye on local retail development in their own plans, which many of them do.
Overall, the noble Lord, Lord Cotter, is right to draw attention to the problems. I support the message that he wants to send to the Government, as he explained a moment or two ago, but I do not think that the Bill proposes the right solutions. I thought that Liberals were supposed to support Mr Gladstone's principles of free trade and that sort of thing, but the noble Earl, Lord Glasgow, did not seem to support them outside Glasgow, where the public seem to be voting one way and consumers a different way from him. The noble Lord, Lord Cotter, has taken his cue not from Gladstone but from new Labour: ever more nannies and a case of, "A word means what I want it to mean—see the statutory instrument".
My Lords, even if parliamentarians have an enthusiastic business background—as I do, mainly in the financial sector in the City—it is their job to legislate on a coherent basis to establish a balance between different factors in our economic society. For people on the Conservative Benches to say that competition is the primordial matter and nothing else matters at all is wrong. It is the same as saying that British society is just concerned with making money, as many people conceive that it is. If that view is correct, society gradually disintegrates. I hope that the new Labour Government do not subscribe to it; there are other things in society as well.
There is a real crisis here. I was glad that the noble Lord, Lord Cope, said at the beginning of his speech that he supports the Bill, although he was nitpicking and curmudgeonly in his subsequent remarks. I congratulate my noble friend Lord Cotter on introducing the Bill; I am quite proud of the fact that 50 per cent of the speakers in this debate are from the Liberal Democrat Benches. I entirely agree with all the wise remarks made by my noble friend Lord Glasgow, particularly his reference to the ghastly super-shed near his home town.
There is a real crisis, which the Government have to face. The Competition Commission has totally failed the normative shopkeeper sector, which includes small shops, medium-sized shops and even some small supermarkets—the little local ones that have developed in towns, which have an interesting future and are much more attractive than the giants. The Government have to address this. People can easily say that the Office for Retail Planning is yet another bureaucratic addition to the panoply and that they do not want it because it will cause a lot of extra cost and so on. I am not so sure. It needs to be seriously examined as a concept.
We remember the demise of rent controls and the effect that that had on hapless tenants in the old days when the market in this country became completely free. Some far more successful European economies, such as those of Germany, France and Italy—we boast in Britain that we are the primordial economy in Europe, but we take our statistics rather selectively—still retain some of those controls because they know that the reality is that the average power of the average landlord is higher than the average power of the average tenant. It is as simple as that.
In Britain, under the complacent laziness and obduracy of the Competition Commission, the supermarkets have now reached 75 per cent penetration. I declare two interests: I am an officer of the All-Party Group on Retail Industry—at least, at the most recent AGM I was—and I live in France for a considerable amount of time and study the development of the retail sector there. I entirely agree with what the Federation of Small Businesses said about the situation in France. Seventy-five per cent is too much. It represents a breach of the Competition Commission's duties. Thousands of small shops often offer cheaper prices than supermarkets, particularly after the latter stages of a supermarket being installed when, as we know, they do loss-leading.
By the way, what about the deliberate sale of alcohol at very low prices? That is a scandal that the supermarkets have allowed to develop. Tesco is now trying hurriedly to restore the balance by making proposals to the Government, but why did it sell cheap alcohol at the entrance display units of its supermarkets? That is disgraceful, irresponsible conduct, just to make money, profits and turnover. These things are unacceptable in a civilised society.
Of course, we believe in the healthy effects of competition between different entities of all sizes and, indeed, competition between the supermarkets has been a great benefit, to hard-pressed housewives particularly, but also to househusbands nowadays, who rush around doing the shopping quickly. But it is not all that. Small shops have an enormous amount to offer. They are social and human centres as well. That is also important. If only money, cheap prices and nothing else matter, new Labour is letting down the public.
I support most of the Bill, although it needs meticulous study in Committee to make sure that the arguments are sound. The Bill is not fundamentally against supermarkets; it is against their excessive, overweening power and their ability strongly and stridently to bully local authorities and even to intimidate inspectors—the inspector appeal system is lamentable and pathetic. As an MP in Harrow, I saw the first stages of that. Appeals were hopeless because the inspector rightly based his conclusions just on legalistic, commercial and other judicial matters; they had nothing to do with the intrinsic interests of the local community. Time and again, the supermarket representatives went out with a smile on their faces after the inspector had upheld their appeal. The local authorities were completely undermined by this process.
We wait to hear the Minister's views. He is the only Labour speaker today—I notice that there are no Back-Benchers. We hope that he will not demolish the idea of an Office for Retail Planning, because we need a specific, new entity—one hopes that its overheads will be minimal and modest if it is created—to hold the balance between hard-pressed local authorities, which need increasing revenue from businesses as well as council tax payers, and the local community, which comprises a broad range of interests.
Living in France and seeing retail development there, I can say how different the situation is. This country needs to learn some lessons from European countries. It is no good our saying, "We know best. We have nothing to learn from these countries". I say as an aside that Europe has the most successful currency in the world; we ought to join it; we should have joined it years ago, but we have not—but that is another matter. France has control mechanisms between applications from supermarkets and the legitimate interests of local shopkeepers. Napoleon was wrong when he said that only Britain was a nation of shopkeepers, because France is, too. There are thousands of shops there, as we know.
The noble Lord, Lord Graham of Edmonton, looks as though he is about to rise, but I would prefer not to give way to him for reasons of time; I do not want to speak for too long. However, I give way.
My Lords, I thank the noble Lord for giving way. Given my association with the retail trade, I take an interest in the subject. Obliquely, I declare that which is registered. What mechanism will be applied so that the consumer is free to shop where they wish? The car-borne shopper is a phenomenon of the past 30 or 40 years. They exercise their right of choice and go to the large hypermarket or out-of-town supermarket, running away from what was in my boyhood the corner shop. Whether it was a Co-op or any other shop, the corner shop was the primary source of goods. What economic mechanism will provide the small shop with the additional revenue that it will require? I understand what the noble Lord, Lord Cope of Berkeley, said about running away from regulation and interference. What does the noble Lord, Lord Dykes, believe can be done to sustain a shop in an area where the local populace, by its own choice, has gone elsewhere and brought about its downfall?
My Lords, I do not like to say it, but the noble Lord went slightly beyond the privilege of an intervention, which rapidly became a speech. He could have put his name down for the debate and made his own speech. When the Bill goes into Committee, many of those points can be gone into in great depth. There is a need to create a specific mechanism of control that prevents the local authority from being undermined by the existing mechanisms, which are stupid and unfair on the public. It is an illusion that they help just the large numbers of people who visit supermarkets regularly and do not go near small shops. That is an illusion for the present which turns into a disaster for the future.
France has more of those mechanisms, yet they do not penalise the supermarkets—there is healthy competition between them. They are now the equivalent of the big-shed groups that we have in this country, making up something like 45 per cent of the retail total. I speak to many officials in local authorities and central government in France, where there are strong trade unions to defend members' interests, which is regarded as a sin in Britain. There are other mechanisms, too, and price controls in certain areas. The European Commission always looks closely at France to make sure that it does not breach European rules. However, irrespective of party—apart from on the extreme fringes—its attitude is to provide the necessary economic and social balance through these mechanisms. That is why the noble Lord needs to make his own speech. He could then provide his own suggestions for an appropriate mechanism.
I shall say one more thing about the need for local interests to be better represented. If local councillors could do that properly within our system, that would be fine. I make no criticism of them; they are noble and heroic people, in many ways struggling with a very difficult and unpopular job. Most people do not want to be local councillors in most local authority areas—it is very sad—because central government has demoralised them so much. It started with the Conservative Government under the noble Baroness, Lady Thatcher, in the old days. The morale, ethos and élan of local government were destroyed by the Conservative Government's attack not only on the Greater London Council, which I publicly opposed at the time, but also on other local authority mechanisms. One therefore needs the additional control system that is suggested in the Bill, or something along its lines.
I am sure that my noble friend Lord Cotter will be the first to suggest improvements and modifications to the central ideas in the text. I commend him for many other aspects of the Bill. Few Peers are able to introduce a Bill that is so well drafted—I may embarrass him by saying so—and so full of persuasive content. It is on that note, therefore, that I plead with the Government to restore the morale of local councils by introducing some kind of support system and by giving a clear signal to the supermarkets that the days of wild, super-normal profits and bonanzas are over. Supermarkets must be responsible, rein back their enthusiasm and not destroy local communities.
My Lords, I have given notice of my intention to speak in the gap. I also declare a very old interest as a director of Tesco for 15 years, but that is seven and a half years old. When I rapidly read the Bill this morning, I was deeply concerned. I ally with my noble friend Lord Cope of Berkeley about the setting-up of an Office for Retail Planning. Clause 18(2)(a) states that the authority,
"must comply with the direction", of the ORP. What costs will be put on the customer? The powers of the regulator, if it is called that, are far too wide. Where is the real customer research? No speaker so far has mentioned the fact that if local shops provide the goods and the services, people will flock to them and buy there instead of at the local supermarkets. There is a mass of research about that; I can provide noble Lords with a lot of it if they want to talk about it. The customer's wants and needs have been totally ignored. The noble Earl, Lord Glasgow, said that he could not understand why 70 per cent of people shop in a supermarket. They want to. I hope that we will not take the quixotic approach of trying to regulate something without any customer input whatever.
My Lords, surely the noble Lord, Lord Cope, with his experience, can see the difference between a Glasgow Liberal and a Manchester Liberal. I welcome the Bill and congratulate the noble Lord, Lord Cotter, who has been a long-standing champion of small business, on providing the basis for such a useful debate on such an important topic. We are talking about an important part of the British economy. The retail sector accounts for some 20 per cent of the UK economy, so we need to get the balance right in a number of ways. We need to provide a structure that encourages the small retailer while not increasing the burdens on both business and local authorities. The habit of government in recent years of adding responsibilities to local authorities without providing resources and then bemoaning rate rises has already been referred to. We need to get that balance right. We also need to get the balance right between the large retailer and the small. The noble Lord, Lord Cotter, and the noble Earl, Lord Glasgow, emphasised the community benefit of small retailers, which cannot be overstated.
We must not be too nostalgic, however. I declare an interest as director-general of the Retail Consortium in the mid-1980s, when my standard speech was to say that you cannot make water flow uphill and you cannot make shoppers shop where they do not want to shop. I still think that that is true. I also had a wonderful speech about the new shopping leisure experience, which used to amuse my wife, since wild horses could not drag me out shopping. I was the "wham bam thank you mam" type of shopper, but I was assured that shopping had moved into a new era of the leisure experience, and I think that that is true.
Although the noble Earl, Lord Glasgow, may be right that people often think of big supermarkets and out-of-town supermarkets as baddies, there is no doubt that in my lifetime we have seen a shopping revolution for the better. You can see the impact for consumers from the poorest to the richest. You only have to look at pre-war photographs, in which you can tell who were working people and who were wealthier, simply by their dress. That is not so today: people can go to the big supermarkets and retail outlets and get their suits—the same applies to food. If you go to any of the poorer boroughs of London and go into a supermarket, you can see what a range of food is available.
So let us acknowledge, as the noble Earl, Lord Glasgow, and the noble Lord, Lord Dykes, did, that our retail industry is a success story. We have one of the most efficient and competitive retail industries in the world. However, no one can rest on their laurels. In the mid-1980s, when shopping centres were being developed, the main task of the developer was to try to attract a Boots, a Marks & Spencer and a Sainsbury's. Those were the three flagships, but all three of them have in the past 20 years gone through some very choppy waters. At the time, Tesco was still in its "pile it high and sell it cheap" stage. So retailers are in a very competitive business and they are only as good as their reputation today and tomorrow—they cannot rest on their laurels.
There is no doubt that shopping malls and out-of-town and edge-of-town centres respond to real demand, but we know, too, that such expansion has its downsides. The noble Lord, Lord Cotter, referred to what in the United States is called "doughnutting"—drawing and sucking out all retail activities from the centres of towns, so that town centres become dead. You can drive through them and see them boarded up and dead, which is not good for any community. I was pleased that the noble Lord, Lord Graham, intervened and I wish that he had put his name down to speak, because the co-operative movement has a role to play in some of the problems that he raised. There should be an opportunity for rate variation and there should be initiatives. As the noble Baroness, Lady O'Cathain, said, there is no doubt that town centres can fight back, with easier parking or park and ride, clearer and better security, niche marketing and quality marketing, pedestrianisation and good signage and street furniture. All together, they can make a town make a good offer.
Where the Bill is right is in saying that market forces alone will not provide the answer. The noble Lord, Lord Cope, said that the market will deal with the problem because, if businesses are failing, rents and rateable value will go down. In the town where I live, St Albans, we have recently lost from the town centre an excellent toyshop, an excellent art materials shop and an excellent bookshop. However, we have gained three bookmakers in the High Street. Sometimes it is not simply a matter of rents being forced down; the fact is that others come in who may not necessarily add to the total offer of a town centre. As travel writers often bemoan, one problem with our high streets now is that you can close your eyes and without looking you can say which hamburger chain, building society and bookmaker will be there. That distorts the noble Lord's market.
My Lords, the point that I was trying to make was that the mechanism for deciding rates is the rateable value, which is supposed to be self-correcting. I accept that it is not—the noble Lord makes a fair point in that sense—with regard to bookmakers, grocers and art shops or bookshops. But that is what we should look at; we should not try to do it through planning, although the Secretary of State's guidance needs changing to improve the situation for small shops.
My Lords, I welcome that intervention. We can see how we would develop that idea in relation to competition. Another thing that struck me during the noble Lord's speech was that it might be necessary to broaden the duties of the Office of Fair Trading and the Competition Commission to give them more of a social and community view when making their decisions. If we leave it to a mud-wrestling competition between the big four, we will not deal with the parallel problem that has been raised in the debate about how we keep quality and diversity in our town centres. That may have to do with some flexibility on rating, but it may also have to do with planning.
I share the concerns expressed by the noble Lord, Lord Dykes, and others. We all know about the power of the big companies in securing planning permission and the fact that every local authority has to consider how far it is going to take a fight on planning permission against a big company with deep pockets. Supermarkets have a reputation both for bullying and for hoarding, which they should be wary about if they do not want to provoke the kind of interventionist response that has been warned against, particularly from the Conservative Benches.
Finally, I was glad that the noble Lord, Lord Graham, was present for the debate and that he contributed. I have often thought that, particularly at the village level, there is a need for a chemist, a food store and a post office, which might be combined in a co-operative effort.
I share many of the views that have been expressed. As with many Private Members' Bills, this will not necessarily solve all the problems, but the problems that it raises are real. We need to get the balance right between the benefit of a super-efficient and effective large retail sector and the community and social benefits that come from having vibrant local town centres.
My Lords, I am very grateful to the noble Lord, Lord Cotter, for explaining his Bill to us this morning and, more importantly, giving us an opportunity to debate the whole subject of town centres, retail and community, which is of fundamental interest to all of us. It is a very complex matter, to which there are no simple solutions. I am also grateful to his noble friend Lord McNally for introducing an element of reality into what I would call the noises on my right. We have to deal with society as it is and not, however much we wish to do so, as we would like it to be.
The whole matter is of fundamental importance to medium and small communities as you move further away from metropolitan areas. The presence of supermarkets is universal throughout the south-east and they are things that we all live with and use. Historically, we have all watched this development. There is nothing new in the problem. In my early days as an elected member in county hall, it was a regular problem when I met people who asked, "What are we going to do about the shops that are closing down?". When I suggested that they might start using them, what happened? They went to a supermarket eight miles away, because sadly but realistically, as the local grocer said—he ran a very attractive business with a very good delicatessen—"They can go there and buy goods at the price that I have to buy them at from my wholesaler".
We have to face that reality. There was another problem then, which is also still around—the closure of rural schools. I shall not tell the House what I suggested as the solution to that, but noble Lords can imagine. It would have worked, but people were not prepared to take it up. The truth is that society moves on. We may be able to regulate planning, and we may be able to regulate retail development but, as the noble Lord, Lord Graham, said, we cannot, must not and should not regulate customers. That is one of the realities of this situation.
We have to live in the world as it is. We in this country benefit and have benefited enormously from the change that has taken place over the past 30 years. The average household spending on food is a lower proportion of income than it has ever been. That may change in the future, but it is very good and it is very much in everyone's interests. The way in which we organise our lives, with a far higher proportion of housewives working today, is enormously beneficial as well. They have less time to shop. I cannot remember who talked about spending two hours wandering up and down the high street from shop to shop, whereas now you can go and do the whole shop in 30 minutes in one place and load it into the boot of your car. Those are the realities of modern life.
I do not share the adulation of the noble Lord, Lord Dykes, for France, although I also have a house there. There are wonderful things about French society, and I would not have a house there if there were not. The reality in France is that the unemployment rate is well beyond double the unemployment rate here. There are huge social problems, and there is huge concern among thinking French people about the way in which French society is developing. They have considerable problems. Although they have been very successful as a semi-regulated society, one of the reasons that the system works is that they have four times as much land per head of population as we do in this country. Although I am an admirer of France, that does not go to the point that the noble Lord, Lord Dykes, was suggesting.
With my long experience in local government, I have considerable concerns about the proposed Office for Retail Planning. It seems to be suggested that we can regulate this problem away and stop the supermarkets going out of town, and local authorities will have to have retail development plans and so on. Life is not like that. Local authorities and district planning authorities already do everything that they can to try to preserve their town centres and to try to keep the competition levels as they see it in their communities at a reasonable base. They are as frustrated as the tone of this debate is about the reality that, all too often, the supermarkets can go to planning appeal and get what they were asking for via that route.
The solution is not further regulation and more and more dense and expensive regulation. It would be expensive; if we were to have this system in place it would be horrendously expensive. The solution would be a change of approach from the Minister and the relevant government department to planning appeals of this nature. There may be a good legal reason why that has not arisen so far, but I have never particularly heard one. In matters such as this, colleagues who serve with me in local government and colleagues who have long since left local government all too often are not masters in their own house. There are good reasons for that too. One of the problems with this Bill is that it does nothing to change that situation anyway. The powers of the Minister and the powers of planning appeals are written into the system for very good reason, and there would be great difficulty in trying to change that.
Much as I sympathise with the ambition that the noble Lord, Lord Cotter, has expressed, on balance, my conclusion is that, great and good though his intentions are, what he is proposing would not achieve the results that he hopes. On that basis, I do not support the Bill, but none the less I am very grateful to him for enabling us to have this debate on an important subject that involves all of us. Even I have to go shopping occasionally for my dear wife, and it was quite a shock to the system when I began having to do so. As she said, "It will teach you the facts of life, dear". The facts of life are what this extremely useful debate is really about.
My Lords, I congratulate the noble Lord, Lord Cotter, on introducing the Bill this morning. It has certainly stimulated a valuable debate on a subject that clearly exercises many noble Lords. I have listened to a number of noble Lords this morning talking with great wisdom about the retail sector, and they all seem to have said the same thing in the end; that they do not go shopping with their wives. I warn noble Lords about this. There is a danger in setting those words out in Hansard. People do read them.
I listened carefully to what the noble Lord, Lord Cotter, said, and I thought that he was overly gloomy in his analysis when he talked about the danger of us moving towards clone towns and ghost towns. I thought that was too dismal a general approach in introduction. Of course, I understand the principles behind the Bill, and the objective of attempting to revitalise our towns and city centres through retail is noble and one which, from listening to the contributions this morning, I think we all share. Of course, we need to do much more to revitalise our high street by encouraging more small retailers to open shops there and for those shops to be sustained. Clearly, the nervousness expressed by the noble Lord, Lord Cotter, has touched a raw nerve.
Although the noble Lord was well supported on the Liberal Democrat Benches, the debate was fairly wide-ranging and well balanced. For me, the noble Lord, Lord Cope, was right; he said that he supported the Bill until he read it. When he did so, he could not find a great deal to support. That in the end is the way that I will approach the issue. The noble Lord, Lord McNally, in his thoughtful reflections on the Bill, expressed great support for it and, again, as he went though his story, he, too, was concerned that we get the balance right. While he welcomed the Bill as a valuable tool for discussion, I suspect that he could see some of its flaws.
We had our "Ooh la la" moment, with the noble Lord, Lord Dykes, who told us about the wonders of French shopping and community life. Like him, I love France and its shops; but I live in a part of the world where booze cruising became a great thing for a short while, when friends of mine went over the water from Newhaven to Dieppe, hit the local hypermarket, cleaned it out and brought back all their drink and goodies. That of course did not do much for the small shops around Dieppe, but it probably did quite a lot for local trade in terms of bringing stuff back to their home town and having a good time with it—and perhaps selling it on sometimes.
We need a broader and more corrective view. I am grateful to the noble Lord, Lord Dixon-Smith, for his contribution because he made the important observation that we live in the world as it is and we have to deal with the world as it is. He reminded us, too, that local authorities have an important role to play and I shall say more about that. Perhaps I should make one comment about the contribution of the noble Baroness, Lady O'Cathain. She owned up to being a Tesco director in a past life and warned us about the dangers of undermining local authorities. I well understand that, but it is strange that in Hove, which is now part of the city of Brighton and Hove, you cannot avoid going into a Tesco shop. Tesco has some six stores in an area with a population of some 100,000. Although I am sure that Tesco is a fine purveyor of foods, wines, spirits and other goods that we all enjoy, I must say that I have some concerns about the way that it dominates that town's retail market.
Let us come to the Bill. As the noble Earl, Lord Glasgow, said, we must give smaller shops a fair chance to survive. Is this Bill the right way to do it? In the end, I shall conclude that it is not. Our local high streets and town centres are crucial to creating sustainable communities and as a Government we recognise the importance that small shops can make to the vitality, viability and character of our high streets, to communities and, more critically, to the national economy.
However, as I said, the Government do not consider that introducing additional legislation to promote small businesses, as is the intention of the Bill, is necessary or desirable. We have taken significant steps to strengthen the powers and incentives available to local authorities—which have a critical role—to promote their local areas. The main problem of the Bill is that in introducing a new central body such as the Office for Retail Planning, it will restrict and further undermine local decision-making processes and is contrary to the flavour, intent and general drift of our local government White Paper proposals to strengthen local leadership. The introduction of new-style retail development plans will not help further to streamline the planning system, which is contrary to the reforms that we set out in our White Paper, Planning for a Sustainable Future.
As I see it, there is no reason why local authorities cannot already develop local retail plans. I urge local authorities to get on and do it, because the good local authorities—those with strong and effective leadership—are doing exactly that through their planning processes. Do not undermine that planning process by imposing on top of that a centralising Office for Retail Planning. That would take powers away from the locality and put them in the wrong place. It is for local people to determine issues and to take a lead in shaping the local commercial environment. Of course the planning process has a part to play in that. It needs good leadership and effective local governance.
Small businesses already receive wide-ranging support from Business Link and financial sector small business advisers. We have also introduced small business relief for sole occupiers and the rural rate relief scheme enables local authorities to provide critical support for important institutions such as village shops. The level of small business relief given in 2006-07 was some £252 million. By the end of December 2006, some 392,000 hereditaments were reported by local authorities as claiming small business rate relief. That is a significant figure. We are helping those small businesses with rate relief in a profound way, and that relief is being claimed. It is worth drawing attention also to the success of the rural rate relief scheme; in 2006-07 we provided that relief to the tune of some £7.9 million. Small businesses in rural communities are beginning to benefit from that government scheme, and we are delighted that the relief is being taken up and used as it shows that people are much more aware of it.
The Local Authority Business Growth Incentives scheme further incentivises the promotion of local business growth. We have enabled the creation of Business Improvement Districts, BIDs, which enable partnerships between local authorities and the local business communities to be set up and which provide a means to improve local high streets. I live in a city where one of those schemes has been adopted in the North Laine area; on the evidence in the past year or so, the extra improvement to the street scene and the extra security that has been provided through the buying in of street stewards, security staff and so on seem to be making a commendable difference to the feel of that area, which has very many small businesses in it. The rate of business reformation is very healthy in an area that is benefiting from the operation of BIDs.
We are making other reforms. Under our review of subnational economic development and regeneration we are looking further to strengthen the local authority role in economic development by introducing a statutory economic assessment duty on which we will be consulting further. We are also consulting on a draft new planning policy statement on sustainable economic development, PPS4, which, when finalised, will ask local authorities to plan more proactively for the needs of businesses, large and small. It is also important to recognise that the Local Government Act 2000 gives local authorities in England and Wales a wide-ranging power to promote the economic, social and environmental well-being of their areas. Ultimately, however, the structure of local businesses has to be a commercial decision for the proprietors, and central or local government do not have a remit to influence their ownership.
Our policy is to simplify publicly funded support for business, not complicate it further. We do not support a review of business rates as proposed in Part 1. We do not, therefore, believe that further legislation to support small retail premises, as envisaged in the Bill, should be introduced. We already have a well established planning system that provides a positive framework in which local authorities are required to plan for the needs of small and large businesses. Under the Planning and Compulsory Purchase Act 2004 and the related regulations, local authorities are required to prepare statutory development plans for their areas. That includes plans to guide retail and town centre development.
Our policy in Planning Policy Statement 6: Planning for Town Centres asks local authorities to plan proactively for high streets and retail development by assessing the impact of development proposals and having proactive local policies that take account of the needs of all types of shops and town centre facilities. Our policy gives local authorities wide-ranging tools with which to promote the needs of business, and many local authorities are using them effectively. Those tools include the ability to control changes of use; to impose planning conditions on new proposals to restrict the size of shops and the goods sold in them; and, where justified, to seek financial contributions to help regenerate secondary shopping areas.
The policy also requires local authorities to assess the impact of their planning policies and to test the impact of unplanned proposals on town centres and retail premises, especially larger proposals such as superstores on the edge of or outside town centres. The noble Earl, Lord Glasgow, referred to one horror story in the Glasgow area; we could all come up with an example. Those things are probably more in the past than in the future, because the success of our policy over the past 10 years—a policy that has been carried on across government—has led to a rebalancing in favour of city and town centres as opposed to out-of-town development.
Such impact assessments, where required, need to be prepared by a developer and submitted with a planning application. We therefore see no need for separate legislation which requires retail development plans to take into account the impact of different types and classes of development, as proposed in Part 3.
Perhaps here I should say a little more about our proposals to improve the effectiveness of PPS6, which we announced in the planning White Paper and on which we will shortly be consulting. It provides an opportunity further to strengthen the policy framework through three mechanisms. First, we propose a new impact test that allows local authorities more effectively to assess the impact of retail proposals outside town centres. Secondly, we will strengthen our policy which asks local authorities to plan proactively for their town centres—in other words, to get a grip on what is going on and to think very carefully about what they do, so that they meet the needs of whole communities in partnership with retailers and other stakeholders. Finally, that policy approach will produce new guidance to assist local authorities and developers in the implementation of the town centre policy.
We also have a well established planning inspectorate whose experienced independent inspectors, who are appointed by the Secretary of State, routinely examine the soundness of emerging development plans and determine contentious planning applications in the context of our policies and the local circumstances. There is therefore no need for an Office for Retail Planning to oversee the preparation of local retail development plans, as set out in the Bill, or to intervene in planning applications for certain classes of retail development, as proposed. We do not see the need for the creation of an additional layer of regulation and bureaucracy in the form of an independent Office for Retail Planning to oversee the preparation of new retail development plans.
It is also important to recognise that there are limitations on the scope of the planning system to consider issues such as competition, as proposed under Clause 5, which is the responsibility of the competition authorities. The planning system cannot, for example, routinely control the occupier of a building, so the proposals in the Bill would simply not be workable.
However, as we said in the planning White Paper, we will look to ensure that our policy improvements to PPS6 will promote competition and consumer choice and that we do not unduly or disproportionately constrain the market. In addressing those issues, we have said that we will take into account the final conclusions of the Competition Commission grocery inquiry, to which several noble Lords, including the noble Lord, Lord Cope, referred. The Competition Commission has just published its provisional remedies, which we generally welcome, but we need to bear in mind that its proposals are not yet final. We will need to think very carefully about what the proposed introduction of a competition test into the planning system would mean for businesses, local authorities, consumers and communities before we finalise our consideration on those issues, but it is a welcome proposition and one which should stimulate further debate.
In closing, although we recognise the need to support small retail premises, it is important to recognise that we already have a well established legislative and policy framework to enable the needs of the retail sector and small businesses to be addressed. We are also bringing forward further initiatives to help in planning for and offering support to retail development. Therefore, ultimately, we argue that the introduction of further legislation, as set out in the Bill, would not be in the interests of further devolving powers to a local level and incentivising local authorities to take the firm action we believe that they need to take, to reflect on local needs and to stimulate local business. It would put additional burdens on local authorities and would not help further to streamline what is sometimes an overly bureaucratic planning system. For those reasons, we cannot support the Bill.
I think that I have covered most of the points that noble Lords have raised. I am conscious that there is the important and heady business of considering Lords reform to come. For those reasons, much as I have enjoyed and welcome this debate, it is probably only right that I leave it there and thank the noble Lord, Lord Cotter, for the precise and courteous way in which he introduced his thoughtful Bill.
My Lords, I thank the Minister for attending. Of course there is important business to follow—reform of the House of Lords—although I submit that a lot of people out there are also very concerned about the issue that I have raised today. I appreciate seeing the noble Lord, Lord Brennan, here, who I know has a great interest in the retail field. I certainly hope to use some of his experience in future when we proceed on this issue.
I guess that if I had produced a Bill of warm words and hopeful aspirations today, it would have been fantastic. Everyone would have stood up and said this is great, wonderful, excellently good, or whatever and we would all have gone away with a glow and been very happy about ourselves. Instead, I have introduced a Bill trying to address the issue. By the very fact of trying to do so in some detail, you come up against objections and concerns—I realise that there are concerns. I say to the Minister and others that without some tangible proposals, we risk the continuing demise of our small shops in this country. The noble Earl, Lord Glasgow, in particular, drew into focus the issue of local shops, their social impact on people and the fact that outlets that are local shops foster other businesses of all natures, be it plumbers or whoever. Those are the key issues: fostering and keeping local communities going is the important issue. I urge the Minister again to consider this debate and the points made not just by me but by people outside, including the trade organisations, which almost all support the Bill—with concerns that have rightly been raised.
I was very pleased when the noble Lord, Lord Cope, started to speak. I welcomed his support, with his distinguished experience in the business field. Then, of course, my heart dropped. I could probably do without that sort of support. He went on to a detailed discussion of all aspects of the Bill, trying to destroy many of my implementation measures. I take, for example, his talk about the Bill bullying local councils. For God's sake, it is the big four and the powerful people who bully local councils. The Bill's intention is not to bully local councils; it is to give them power to ensure that they are not bullied in future. If local councils mean anything—and they certainly do on these Benches—they are there to represent the people of this country and they must be strengthened in that representation. In that respect, I would say that people are right to raise those concerns, but the fact is that if you have a detailed Bill of this nature, there will be issues that people will take up. Without detail and some muscle, nothing will change.
I also refer the Minister and others to Clause 13, in Part 2, which is a whole page on the duties to review regulatory burdens. We have written this into the Bill. It is quite a lengthy part of the Bill, but it is important that there is at the very basis of the Bill a duty to review and to ensure that no burden is put on to other people. The noble Lord, Lord Cope, in particular talked about the points that needed to be addressed and about the need not to place burdens.
It was much appreciated that the Minister spoke in detail about what I propose, but I take issue with him about rates. It is very easy, as we all know, to come up with statistics, total them all up and say that so many millions are spent here, there and everywhere. I ask the Minister to say, "I agree that small shops appreciate what is being done, but not enough is being done", because the issue is the proportionate amount that small shops pay against the very big businesses. I am sorry, am I running over time? In that case, I shall try to speed up so that I save something for Committee. I thank my noble friend Lord McNally and others for what they have said, and I thank my noble friend Lord Dykes, who supported my view that we should look elsewhere and should be concerned not simply to talk about competition but to address the detailed issues.
Given the time left, noble Lords will be denied the slightly light hearted comment that I was going to make. In fact, may I have a moment to say that I have a great task in front of me in promoting this Bill? This morning before I came to the Chamber, I had my Force wheat flakes. For those who do not know, Force wheat flakes were the first manufactured breakfast cereal, introduced into the UK in 1902. I have not exactly been eating them ever since, but I have been eating them ever since my childhood. Some will know of the iconic Sunny Jim, who was probably one of the first marketing characters. He is still going strong, and his slogan is:
"High o'er the fence leaps Sunny Jim; Force is the food that raises him!".
Clearly by having only one bowl of Force cereal this morning, I have not quite overcome the fence, but I hope that, by taking a few in the future, I can renew my efforts and go forward with the urgent need to address this issue.
On Question, Bill read a second time, and committed to a Committee of the Whole House.