Employment and the High Street

Kevin Hollinrake Excerpts

Wednesday 7th December 2022 Westminster Hall

[Catherine West]

I believe that the free parking that is on offer from the Welsh Government is not necessarily replicated in England, so there are swings and roundabouts with different regions. I am sure the Minister will know every detail about where free parking is available and where it is not, but that may well be something that my constituents now ask me for, because parking is quite a contentious issue in my local authority area.

Going back to the essay question—that of high streets—2.8 million people are employed in retail across the UK, and in London, our high streets are home to 41% of all businesses in the city. Small businesses employ 16 million people in the UK and account for two thirds of UK private sector employment, yet so many high streets are on their knees after 12 years of staggeringly low growth, and independent and small businesses have been hit very hard. The BBC reported this week that there were 9,300 fewer retail outlets in March 2022 than in March 2020, and a recent London Business 1000 survey showed that three quarters of London businesses are feeling less confident about the UK economy over the next 12 months. That is why today’s debate is so important. We need to act now if we want to secure the future of our town centres and the 5.6 million small businesses across the country that are vital to our economy.

Developments in digital technology and the growth in online retail have completely transformed how people shop. Between 2006 and 2019, as we are all aware, online retail increased from around 7% to 19% of the market, while physical shops lost 13% of their market. The pandemic rapidly accelerated that trend and, sadly, many high streets have never recovered. In the week to 2 July 2022, overall retail footfall in the UK was 19% lower than the equivalent week in 2019. We saw how agile and innovative the retail sector can be when many shops moved online; however, that has not been enough to keep stores open, and businesses are begging for more support.

In 2014, the Centre for Retail Research predicted that the growth in online retailing and change in consumer demand would result in one in five UK stores closing within five years. Sadly, its predictions were correct, yet nearly a decade after they were made, the Government have failed to undertake any meaningful action to keep our high streets alive. One respondent, Trevor, described his local high street as follows:

“Depressing beyond belief. The life and vibrancy have completely disappeared”.

Shops are not the only businesses leaving the high street. Post offices, such as the branch inside WHSmith on Wood Green High Road, and bank branches have also been closing at an alarming rate over the past decade. We must consider the damaging effect of losing these other high street services on small businesses and the welfare of our senior citizens.

At least 50 bank branches have closed each month in the UK since 2015. I look forward to hearing what the Minister has to say about that; he used to mention it quite a lot when he was on the Back Benches, so I hope he will have some solutions now he is in that powerful position. As colleagues will be aware, HSBC announced another raft of closures this week. Some 8 million adults struggle to cope in a cashless society, with 1.9 million reliant on cash for nearly every transaction they make. Small businesses dependent on local bank branches to safely deposit cash will be forced to go cashless if more branches close, further isolating those who only use cash.

Banks are closing disproportionately in lower-income areas, taking their ATMs with them, shutting off free access to cash and quality financial services from those who need them most. At Prime Minister’s questions today, I was pleased to hear my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) ask eloquently what the Prime Minister would do about the closure of banks and the lack of access to cash. I hope the Minister will address that burning question.

Shop closures are also costing jobs. Some 1,001 shops closed between January and July this year, resulting in more than 13,000 job losses. Those closures will be among the 43% increase in insolvencies in the last 12 months alone. Retail employees are facing huge instability at a time when so many people are struggling to pay their bills and put food on the table.

As the Union of Shop, Distributive and Allied Workers —USDAW—has pointed out, retail is one of the few sectors that offers employees the flexibility to balance their work alongside caring commitments, yet many small businesses report that they cannot afford to pay their staff a wage that reflects the increasing cost of living. That is true for one small hair care business in my constituency, Afrocenchix, which told me that, although it would like to pay its staff more, that would mean increasing the cost of its products at a time when customers are tightening their belts. Many small business owners told me that although they struggle to pay themselves, they would go out of business if they put their prices up.

Another matter of acute concern for small businesses is the effect of soaring energy costs. The Government claim to have recognised that, but they have failed to offer a sustainable long-term solution to provide businesses with the assurance they need. For food-producing businesses, which use a lot of energy, skyrocketing energy bills are extremely worrying. The chair of the Crouch End traders group, who owns a bakery in my constituency, told me that increases in product prices are a likely outcome of soaring energy bills. At a time when customers are tightening their purse strings, he believes that this is a perfect storm threatening many traders. The owner of the oldest family-run artisan bakery in Manchester replied to the House of Commons survey to say that their biggest fear was the totally unsustainable increase in energy costs. I hope that the Minister will address this issue when he speaks.

Where is the sustainable support for businesses terrified about their energy bills? Where is the support for businesses to become more energy efficient, to reduce bills and help the planet? One trader told me that

“offering grants for solar panels would help a lot of businesses,”

adding that

“a lot of us want to be greener but can’t afford the initial capital outlay.”

Labour would keep energy bills down by establishing a publicly owned generator, GB Energy, to guarantee energy security and a stable supply of affordable power. We would make Britain a clean energy superpower by 2030, making sky-high energy bills under the Conservatives a thing of the past. There would be an exciting role for small businesses to play, with so many of them wanting to be part of the solution.

The most pressing issue threatening disaster for our high street shops, which was mentioned by every trader I spoke to, is the major burden of business rates. I am sure that the shadow Minister, my hon. Friend the Member for Feltham and Heston (Seema Malhotra), will outline Labour’s position on business rates, which I think is quite an exciting offer that would even out the disproportionate impact on small businesses compared with huge online retailers.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)]

Will the hon. Lady set out what Labour’s policy is? So far, I have heard only that it will scrap business rates; I have not heard what it will put in their place to raise the £22.5 billion a year that we raise in England.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)]

It is a pleasure to serve with you in the Chair, Mrs Cummins. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing this important debate. As I knew she would, she spoke passionately on behalf of her constituents and our high streets.

We all agree about the importance of high streets. As the hon. Lady pointed out, this is not just about our local economy: high streets are crucial to our local communities. On a national scale, the retail sector alone contributes around 4% of UK gross value added and almost 3 million jobs. She referenced the impact of e-commerce, and I agree with the shadow Minister about the need for us to establish and maintain a fair and level playing field—something I have often spoken about in Parliament. I join the hon. Member for Stockport (Navendu Mishra), who called for more action on ensuring a fair and level playing field on taxation.

With 26% of retail sales taking place online, it is important to note that small high street businesses also trade online. That is about innovation but, as my hon. Friend the Member for Keighley (Robbie Moore) pointed out, it is consumers and consumer choice that are driving transactions online. We should not dictate to consumers where they shop, but that is nevertheless causing difficulties for our high street. I share the concerns of the hon. Member for Coventry North West (Taiwo Owatemi) about ensuring that we protect our high streets through this revolution—and it is a revolution—but we should not forget that it is consumers driving the revolution, rather than rates or any other issue. These are additional issues for retailers, but the primary issue is the customers in the first place and the footfall through different stores.

[Jim Shannon]

A shop in my high street moved from being just a shop front—an excellent and massive shop it is as well; probably four times the size of this room—to going online. It proved that by going online it could also maintain its presence on the high street. Can we do something to encourage businesses to do both—to have a shop on the high street and to be online?

[Kevin Hollinrake]

The hon. Member makes a good point. I was just going to come to his experiences shopping with his family in the physical high street. My family does that too. On Saturday, I was in Malton—one of the towns in my constituency—for Small Business Saturday. I too enjoy the experience of physically going shopping, and Malton is a wonderful example, as it created a new identity for itself as Yorkshire’s food capital. This is the future of high streets: a mixture of hospitality, leisure and retail. Malton has successfully done that, and there are lots of lessons to be learned from it.

The hon. Member for Strangford (Jim Shannon) rightly pointed out that there is an opportunity for businesses to be not just a physical or an online retainer, but both or either. It is about the creativity of businesses in meeting their customers’ needs, and that is what we have to facilitate. Of course, there is a multitude of opportunities for employment, from flexibility to the development of new and portable skills. We also need to recognise retail as a rewarding career—something that the Retail Sector Council, which I co-chair, is keen to do.

The high street has struggled with the pandemic, which has caused difficulties. We should pay tribute to the creativity and resilience of businesses and their ability to respond to those challenges; we have all seen examples on our high streets. It is right that part of our mission is to ensure that our high streets and the communities that depend on them receive the investment they need to properly plan and grow for the long term.

The hon. Member for Hornsey and Wood Green talked about the lack of meaningful action from the Government, which is one thing I do not accept. At a local level, we have to ensure that our local authorities have the right plans for infrastructure to drive footfall, and ensure that goods and services flow easily, and businesses and consumers benefit from decent roads, affordable parking and a clean and well-cared for mixed environment. At a national level, the Government are doing much, including through initiatives such as our £4.8 billion levelling-up fund and the future high streets fund. Last year, we published our build back better high streets strategy, which identified many changes we need, and we have already gone a long way towards delivering on that.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

My hon. Friend is right to highlight the potential benefits of wisely spending the levelling-up fund or the towns fund money that is available to local authorities. He may want to note that this has been done very successfully in Ipswich, where I helped to devise a scheme to support local shopping parades, which will see improved parking and many other enhancements. Might we be able to use that as an exemplar of what can be done to support the local high street and improve footfall?

[Kevin Hollinrake]

That is a great example. Through the different councils, we are determined to develop different best practice examples. My hon. Friend points to the leadership in his context, and I urge all colleagues to do the same and be leaders in their communities.

The Government have created a new commercial business and service use class, giving businesses the freedom and flexibility, through class E, to change use without needing planning permission. We are working to make permanent many of the regulatory easements we introduced during the pandemic that not only allowed cafes and restaurants to move the indoors to the outdoors but helped to create vibrant, bustling outdoor spaces. In the Levelling-up and Regeneration Bill, we are committed to going further to support places to tackle blight and revive our high streets, by giving new powers to local authorities to require landlords to rent out long-term vacant commercial premises to prospective tenants.

The hon. Member for York Central (Rachael Maskell) raised the important redevelopment of the Guildhall, which is a fantastic facility. I am sure she knows that the £22 million for that came from His Majesty’s Government’s growth deal and the getting building fund. The Government are doing much in these areas, including in the hospitality strategy and much more.

I will touch on one or two of the points made. The hon. Member for Ellesmere Port and Neston (Justin Madders) was understandably concerned about the closure of bank branches, which we have all experienced in our areas. Banking hubs are part of the solution, which we are supporting, as are post offices. There is a banking agreement that helps our post offices to maintain their profitability.

The hon. Member for Stockport talked about his local post office. Post offices are vital to local communities. The Government provide around £50 million a year in subsidies to ensure post offices are still with us. He also raised the matter of access to cash. Clause 47 of the Financial Services and Markets Bill deals with that, and gives the Financial Conduct Authority new powers to require provision of access to cash where it is disappearing from our high streets.

I will touch on business support thus far. The autumn statement’s £13.6 billion of business rates support has been welcomed right across the sector. It would be irresponsible and undeliverable to commit to simply scrap a tax completely, when it raises £22 billion in England alone, and not to say what it will be replaced with. That tax money has to be replaced by something, and we need to understand exactly what the replacement will be. Our approach is more realistic, reasonable and deliverable, as is the energy bill relief scheme, which is hugely important, as it provides vital support for businesses through to the end of March. We have been clear that there will be further support for some vulnerable sectors. The details of that support will be announced by the end of the year. For retail, I am sure there is a very good case for many of our smaller businesses on our high streets to get extended support.

I want to give the hon. Member for Hornsey and Wood Green time to respond. I thank all Members for their contributions. It is encouraging to see that all sides of the House share a common cause to look after our high streets, and make sure they are still focal points for our local communities.