Lord Kirkhope of Harrogate (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in doing so, I declare my interest as a holder of a number of loyalty club cards with various supermarket chains and also my membership of the Co-op.
The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)
My Lords, the Competition and Markets Authority is currently assessing whether additional retailers should be designated under the controlled land order and brought within its scope. We continue to engage with the CMA and will consider its findings carefully once it has concluded its assessment later this year.
Lord Kirkhope of Harrogate (Con)
I thank the Minister for that incomplete reply. The situation is absolutely unsatisfactory in that the seven main supermarket chains have been obliged to adhere to strict requirements on restrictive covenants in their area, preventing others from opening shops nearby, whereas newcomers such as Aldi and Lidl, which have now grown to an enormous size—a commensurate size—are not required to fulfil those obligations. That surely is wrong. If the Competition and Markets Authority has any role in life, surely it must be to have a level-playing field in retailing.
Lord Stockwood (Lab)
I am assuming from the noble Lord’s question that he does not have Aldi and Lidl advantage cards as well. Just to acknowledge, the CMA is currently doing its work, including on a consultation to get feedback on how Aldi and Lidl should be treated. We acknowledge that the argument for exemption does distort the market, but the independence of the CMA must be respected. I share the noble Lord’s views that it seems right on face value that Aldi and Lidl should be brought into that same regime.
Lord Fox (LD)
My Lords, as well as the issue of Aldi and Lidl, there is also the issue of almost complete non-compliance with the 2010 order system. The CMA has identified multiple repeated breaches across all of the seven majors, as mentioned by the noble Lord. So, in addition to having this system, it is entirely unenforceable because the CMA has no legal powers to fine on this issue. The whole thing is being brought into disrepute by the absence of any real enforcement. Can the Minister confirm that the digital markets Act gives powers that could be taken by the CMA to fine on this issue, and will that be one of the issues that the CMA will be reviewing?
Lord Stockwood (Lab)
The CMA has a broad primary and competition regulatory framework. It is equipped with the powers to investigate and to act against anti-competitive conduct. On the specific question about the digital Bill, I will have to consult with colleagues and come back to the noble Lord; I am not familiar with it.
Lord Sharpe of Epsom (Con)
My Lords, we all recognise the importance of competition, not just for economic growth but for the competitive pressure that keeps prices low for consumers. As the Minister has acknowledged, it is obviously not fair that some large retailers operate under different rules. At the same time, however, the fairness test fails when one considers this Government’s business rate policies. Does the Minister think it is fair that business rates will rise by 115% on hotels over three years but only 4% on supermarkets?
Lord Stockwood (Lab)
Taking a broad perspective on the question, I came into government to support the pro-business agenda. What the Government are trying to enact is the ability to stabilise the economy based on fiscal rules, to create an investment environment that is investable from all parts of the market, and then, importantly, to look at regulation to enforce that fairness and sense of competitive tension. The Government are committed to reforming the business rates regime, and that work has already begun. At the Budget, the Chancellor announced a permanent 5p cut in the business rates multiplier for over 750,000 retail, hospitality and leisure properties, which is also funded by the higher tax rate for the most expensive 1% of properties. We continue to take feedback to try to create the right fiscal conditions for businesses to be able to thrive.
Lord Watts (Lab)
My Lords, like most regulators, this one is failing the general public. Do we not need to review all our regulators to make sure that they are doing the job that they are supposed to do? If the legislation needs strengthening, then strengthen it—but also hold the regulators to account for the work that they do.
Lord Stockwood (Lab)
I share some of the views that the noble Lord put over. As I have learned from my 20-plus years in business, the role of government is to set the regulatory conditions so that business can do the work in growing the economy. What we are seeing from the Government is a commitment to reduce the regulatory burden overall. Our Regulation Action Plan commits to reducing the £22 billion annual burden by 25%. There are reforms in place, and the unlocking business consultation means that we will take direct feedback from the market. It is beholden on us to ensure we set the conditions for businesses to thrive, while also ensuring that we have the right regulation in place so that we do not see the abuses of power that have been suggested by these particularly restrictive covenants.
Baroness McIntosh of Pickering (Con)
My Lords, does the Minister agree that the CMA also has a role to play in looking at the work of the Groceries Code Adjudicator? There is a great imbalance of power between the big supermarkets and the very small horticultural businesses and fruit growers in this country. Does he agree that it would be better if the Groceries Code Adjudicator could take an own-initiative inquiry off its own bat, rather than waiting for a producer to come forward with a complaint? That producer could so easily be identified and possibly lose their contract with the supermarket.
Lord Stockwood (Lab)
In my relative newness to government, I thank the noble Baroness for her questions. Overall, it is correct that the CMA’s regulatory framework should have independence. I would love to pick up that discussion outside the Chamber; I do not know the detail of that, but it sounds like an important thing that we should follow up on.
Lord Evans of Rainow (Con)
My Lords, I will pick up from my noble friend’s question comparing hospitality and retail on the high street. Recently, a pub closed on a high street that was paying £67,000 in business rates. It was taken over by a supermarket, which now pays £16,000 in business rates—and, of course, supermarkets sell alcohol at cost price. Can the Minister look into this and provide much-needed help for hospitality on our high streets? Without hospitality, our high streets will become deserts.
Lord Stockwood (Lab)
Again, the noble Lord raises an important issue about our high streets. While it is not within the range of this Question, I am willing to follow it up. The Government announced a £150 million package for supporting our high streets, but I agree that we should go further on this.
Baroness Wheatcroft (CB)
My Lords, in considering the use of land by supermarkets, does the Minister agree with me that there is huge acreage sitting unused on top of supermarkets throughout the country? Given the housing shortage, would it not make sense to put pressure on supermarkets to use that space to provide housing, perhaps in a prefab state so that it is made easily, quickly and accessibly? After all, the shops are nearby.
Lord Stockwood (Lab)
It is important to state that the reason for some of these restrictive covenants in business is that they are commercially negotiated and should be mutually agreed in the bounds of setting up a contract. This is quite a normal course of action, so I want to make sure that I am not stood here in any way demonising the large retailers entirely. However, particularly pertinent to the point of the homes target, the Government, through the Planning and Infrastructure Act, are looking at how we streamline all our planning for homes and critical infrastructure, and I suggest that land usage by the major retailers would come within that review as well.
Lord Hunt of Wirral (Con)
Following on from the question of the noble Lord, Lord Watts, does the Minister share my concern that, over recent months, there is increasing evidence that delays from the Competition and Markets Authority are having a serious effect on a number of key areas? The noble Lord, Lord Fox, mentioned the digital markets regulation side, but there are also outstanding decisions on veterinary services, cloud computing and legal services. The Minister may be aware that the authority is now looking at what it calls the four Ps project—pace, predictability, proportionality and process. Is he happy with its progress?
Lord Stockwood (Lab)
In preparation for this Question, I spent a bit more time than I should have done learning about the CMA’s role. I agree that, as we look to create a regulatory framework that is both agile and appropriate, it is only right that we ask the same questions of the CMA. There is a strong strategic steer from this Government about making sure that we have the right regulation and application for growth and pace. On price, product, place and promotion, I suggest that we have to reverse that and apply it to the CMA, so I will be asking that question and will come back to the noble Lord on that.