Jobs: Retail Sector

Oral Answers to Questions — Economy – in the Northern Ireland Assembly at 1:45 pm on 6th December 2016.

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Photo of Declan McAleer Declan McAleer Sinn Féin 1:45 pm, 6th December 2016

1. Mr McAleer asked the Minister for the Economy how his Department is creating jobs in the retail sector. (AQO 846/16-21)

Photo of Simon Hamilton Simon Hamilton DUP

My number one priority is to help create the conditions for Northern Ireland to become a globally competitive economy. A key part of that is to create more and better jobs in Northern Ireland. My Department is developing a new economic strategy that sets out our ambition to grow the size of the economy and create jobs across our country.

Wider policy responsibility for the retail sector is shared by a number of Departments. In job promotion, support from my Department is primarily aimed at assisting companies to trade outside Northern Ireland. That brings money into the economy, which has a multiplier effect and indirectly supports domestic-facing sectors such as retail. My Department and Invest Northern Ireland have worked closely with the full range of businesses across Northern Ireland, including those in the retail sector, and a wide range of initiatives are available that offer support and guidance to local retailers. For example, Invest NI's business support team and the NIBusinessInfo website provide a valuable source of business information and signposting to specialist advice for retailers. Invest NI has supported local councils to develop programmes that are open and accessible to retail businesses, and they can also avail themselves of Invest NI's wide range of workshops and seminars. I am particularly encouraged that some of our town centres are benefiting from recent exchange rate changes that have seen an increase in cross-border shopping, bringing more money into the Northern Ireland economy.

Photo of Declan McAleer Declan McAleer Sinn Féin

I thank the Minister for his answer. Will he advise us as to what additional, specific measures he intends to take to create jobs in the retail sector, particularly in the aftermath of the closure of Austins in Derry, BHS and a number of other high-profile businesses?

Photo of Simon Hamilton Simon Hamilton DUP

As I pointed out to the Member in my initial response, policy has traditionally been, for very good reason, not to financially support businesses in the retail sector. They tend to be, by and large, locally facing and not generally export-focused; and there is concern around issues of "displacement", as it is called. Investment in a retail business, say for example in Omagh, could displace jobs or trade away from one in Strabane. Clearly, whilst that might benefit one business, it would have a knock-on negative effect elsewhere. Those are some of the reasons why we have not, and we will continue not to, support retail business in the way that we do other sectors, such as, say, manufacturing.

I pointed out some of the range of types of support and signposting that Invest NI can offer to retail businesses that are short of actual financial support, or support to create jobs or other areas of their business. An exception, I suppose, is online retail or wholesale distribution to retail. That would only be where they have export opportunities and, if they were genuinely additional in job creation and sales, they could be considered for support by Invest Northern Ireland. That would be on a case-by-case basis. Examples of that do not come up very often but, if they do, they will be assessed on their merits. No matter where they are located in Northern Ireland, if they have an online retail element and they are selling outside the region, genuinely additional and perhaps working in wholesale to retail — and they fit all the various criteria that any application has to go through — they can be considered for support of a financial nature.

Photo of Alan Chambers Alan Chambers UUP

Will the Minister agree with me that it is important to sustain existing retail jobs in current difficult trading circumstances? Are the Minister and the Executive committed to supporting small businesses in relation to rates review and finding ways to ease the bureaucratic burden on small businesses?

Photo of Simon Hamilton Simon Hamilton DUP

I am tempted to ask the Member for his view. He is a retailer of some experience. I used to work in retail myself, but I do not have the experience that the Member has.

The Executive have a proud record of supporting small businesses, which includes many retail businesses. I am personally very proud of the record that my party has in the Department of Finance and the introduction of the small business rate relief scheme, which grew in size over the years from a modest scheme to where it now offers £20 million worth of support, on an annual basis through rates relief, to thousands of businesses across Northern Ireland. I know from experience that many businesses credit the small business rate relief scheme with helping them to keep people in employment and, in some cases, helping them keep their business alive.

Nobody wants to prop up or artificially support any business in any sector but, given the challenges that retail has faced, particularly from the influx or rise in online sales over the last number of years, there is a need to provide some support. We have done that through the small business rate relief scheme and empty premises relief, for example, which I think the current Minister has rebranded. It has allowed over 500 new businesses to open up in what were previously vacant shops across Northern Ireland. So, we have a proud record. I know that the Minister is proposing changes to the rating system. I think that there is a need for an examination and reform of elements of the rating system but, as the current Minister is finding out, when you change one element it has a knock-on effect elsewhere. I think that he needs to carefully consider this, and I am sure he intends to do so. Obviously, the Executive will take a final position in respect of his proposals when the consultation is over.

Photo of Gordon Dunne Gordon Dunne DUP

I, too, thank the Minister for his answers. Can he give his assessment of how important he sees the retail sector to the Northern Ireland economy and how our town centres are facing up to the ever-changing challenges?

Photo of Simon Hamilton Simon Hamilton DUP

I accept and acknowledge — I think we all recognise — the range of challenges that the retail sector has been facing and continues to face. As I mentioned to Mr Chambers, we see a huge increase in the volume of trade being done online. It used to be in just a few small sectors, but it now seems that it is being done in even groceries and convenience goods in some areas. So, there is a huge challenge there.

Retail remains an important part of our economy. We may not be able to support it, for the reasons that I have outlined in the traditional sense of what we do with manufacturing, production or services, but it is a huge part of our economy, and I want to see a growing economy that benefits all sectors, including retail. It remains our largest employer. Around one in six of all jobs in Northern Ireland is in retail. The most recent figures, from 2015, show that the contribution that it makes to our economy through gross value added is down by around £240 million but its contribution in value to our economy still stands at around £4·8 billion, which is around a quarter of the total economy. About 10% of all Northern Ireland businesses are retail businesses and about 37% of the total turnover is in retail. So, it is a big part of our economy. Those figures are comparable with the UK average.

In terms of bearing up, I am very pleased that there has been a boost to many retailers across Northern Ireland, particularly in border regions, as a result of the fall in the value of sterling. InterTradeIreland does some work in analysing car registrations in car parks at shopping centres and supermarkets along the border region. In quarter 3 of 2016, it recorded that 56·8% of cars in border region shopping centres had Republic of Ireland registrations. That has grown from 33% in quarter 1 to 43% in quarter 2 and, as I said, is up to nearly 57% in quarter 3. So, there is a boost from the fall in the value of sterling, which is of much benefit to local retailers.