The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
To answer the question from the hon. Member for Salford and Eccles (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.
Paul Blomfield (Sheffield Central) (Lab)
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?
Greg Clark
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.
Justin Tomlinson
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.
Greg Clark
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.
Helen Goodman (Bishop Auckland) (Lab)
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?
Greg Clark
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.
Siobhain McDonagh (Mitcham and Morden) (Lab)
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.
Greg Clark
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.
Rachel Maclean
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.
Greg Clark
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.
Melanie Onn
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?
Greg Clark
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.
Kevin Foster (Torbay) (Con)
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?
Greg Clark
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 before, 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 of experience that has never happened before; we need to make sure that its dynamism results in positive outcomes and not 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.
Kate Green
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.
Greg Clark
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 the Member for Torbay (Kevin Foster) said, to address the challenges it has faced.
Ben Bradley (Mansfield) (Con)
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?
Greg Clark
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 that 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 the hon. Member for Great Grimsby (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 the Member for Burton (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.
Rachael Maskell
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.
Greg Clark
I do not want to incur the wrath of my fierce hon. Friend, the Member for Stirling (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 of 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 when she portrays it as some sort of backwater of uniform low productivity—it is far from that. 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.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
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. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (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.
Andrew Griffiths
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.
The hon. Member for Ellesmere Port and Neston (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.
The hon. Member for Bishop Auckland (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 the Member for Torbay (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 the Member for Stirling (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.
The hon. Member for Great Grimsby (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 the Member for North East Derbyshire (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 the Member for Mansfield (Ben Bradley) for his campaign for free parking, which is an excellent proposal. He is standing up for his local residents.
My hon. Friend the Member for Redditch (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 the hon. Member for Sefton Central (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.