David Lepper

Labour Party | Brighton Pavilion

Brighton MPs ‘protect small shops call’

David Lepper, Labour and Co-operative MP for Brighton Pavilion, is one of the team from the All Party Small Shops Group which published a report ‘High Street Britain 2015’ on Wednesday 15 February calling for a moratorium on any new mergers in the supermarket sector pending the appointment of a new retail regulator to oversee the retail industry generally to help ensure a level playing field for small independent traders faced with competition from the majors.

David Lepper says:

"From my discussion with traders, especially in the Lanes and North Laines, I know how difficult it is for many of them to survive, especially when major multiples moving into an area can force up rents.

"Supermarkets have their place, but now they are also moving into the non-food and the convenience store sector we are seeing their dominance increase. The success of Brighton and Hove as a shopping centre depends on the continuing vitality of its independent traders as well as having the big stores here.

"Those of us in the inquiry team welcome the interest already shown by ministers in the Office of the Deputy Prime Minister, the DTI and the Department of the Environment, Food and Rural Affairs in the recommendations we are putting forward after extensive evidence gathering last autumn."

David Lepper is a life member of the Association of Town Centre Management and chaired the steering group for the pilot schemes for Business Improvement Districts.

Below is a summary of the report’s recommendations.

All-Party Parliamentary Small Shops Group
High Street Britain: 2015

SUMMARY

The All-Party Parliamentary Small Shops Group was set up by a cross party group of MPs to raise awareness among Parliamentarians of a broad range of issues of concern to small shopkeepers, including retail crime, excessive insurance premiums, planning reform, red tape and environmental legislation. The group also looks at the vital social and economic role played by independent retailers in community stores.

Wafer thin margins, combined with the constant threat of unfair competition from supermarket behemoths, mean that small shops, once an essential part of the fabric of rural and urban life, are disappearing in their thousands each year. The group provides a forum for informed discussion of the obstacles faced by small shopkeepers. It aims to promote better and fairer laws to help preserve and foster retail diversity.

This report provides the analysis of the evidence, both written and oral, submitted to the Inquiry held by the All-Party Parliamentary Small Shops Group, entitled ‘High Street Britain: 2015’, concerning the long term prospects of the United Kingdom’s small retail sector. Concern for the future of traditional shopping areas arose amidst recognition from many in, and associated with, the retail industry: ‘traditional’ local small shops or independent convenience stores are disappearing rapidly. Once a ‘tipping point’ is reached many small shops could be lost instantly as wholesalers no longer find it profitable to supply them, resulting in the urgent need for a review of the market.

The vast majority of contributors agreed that all small shops are important to, and influenced by, economic, social and political trends. The small retail sector is a key driver of: entrepreneurship, employment, skills, local economies, innovation, and sophisticated business networks, as well as accessibility to vital goods and services, diversity, social inclusion and community activities.

However, contributors are concerned by the intense pressure small shops face, from both market-led forces and external (macro-environmental) forces. Witnesses cite the aggression of larger competitors, distortion of the supply chain, the cost of property, crime, poor planning decisions, a lack of appropriate business support and disproportional regulatory burdens as problematic.

There is widespread belief therefore, that many small shops across the UK will have ceased trading by 2015 with few independent businesses taking their place. Their loss, largely the result of a heavily unbalanced trading environment, will damage the UK socially, economically and environmentally. People (as consumers and members of communities) stand to be disadvantaged the most with restricted choice, entrenched social exclusion and a vulnerable supply chain caused by consolidation.

What is required is a range of progressive policies and measures: locally, regionally and nationally over the: short, medium and long term that will redress the balance and, therefore, help to sustain a healthy and competitive market, and protect people and local economies. We therefore, believe that it is in the UK’s best interest that the following recommendations are strongly considered by the Secretary of State for Trade and Industry, the Director General of the Office of Fair Trading and other relevant Ministers and officials.

RECOMMENDATIONS

• IMPLEMENT A MORATORIUM ON FURTHER MERGERS AND TAKEOVERS UNTIL THE GOVERNMENT HAS BROUGHT FORWARD PROPOSALS TO SECURE DIVERSITY AND VITALITY OF THE RETAIL SECTOR
There should be a moratorium on any further mergers and takeovers until there has been sufficient structural change regarding the regulation of the retail sector for a market study to commence.

• ESTABLISH A RETAIL REGULATOR
We have found that the responsibility of maintaining a vibrant, diverse and sustainable retail sector falls outside the remit of the OFT who are principally bound to consider competition concerns to the exclusion of the other social and non commercial benefits generated by independent retailers. The new regulator would:

1. Undertake full investigation of grocer sector and non-food retail;
   
2. Oversee the moratorium;
   
3. Bring forward proposals for the maintenance of a vibrant, diverse and sustainable retail sector; and
   
4. Provide support to local authorities developing retail strategies

• REVISE THE TWO MARKET RULING
The lines between ‘top up’ shopping and ‘one stop’ shopping have become increasingly blurred with the presence of large retailers in both markets taking advantage of central buying. The ruling in 2000 of the two market definition as such is believed to be out-dated and therefore needs to be revised.

• INTRODUCE COMPREHENSIVE CODES OF PRACTICE ACROSS THE RETAIL SECTOR
To address many of the natural power imbalances that exist within the retail sector, there must be revisions to existing and the implementation of new codes of practice. This includes a revised code of practice between suppliers and retailers in the grocery sector, a comprehensive code of practice encompassing retailers of all sizes across the UK regarding the supply of newspapers and magazines and a code of practice that extends to all other nonfood sectors.

The Government must provide whistleblower protection under the supermarket code for all those who highlight abuses. Evidence shows that a simple anonymity clause fails to address the concerns of those unwilling to bring forward complaints.

• REVIEW THE TAX SYSTEM AND CLOSE THE JERSEY VAT LOOPHOLE
The UK Government should immediately apply the lowest threshold applicable for the relief of low value consignments and permissible in the directive, which is currently 10 euros, (approximately £7) – this would eliminate the vast majority of exploiting trade almost immediately. The enforcement, by government bodies like Customs and Excise, of VAT should be reviewed to ensure a level playing field.

• REVIEW APPLICATION OF RATE RELIEF SYSTEM AS APPLIED TO INDEPENDENTS TRADING ON THE
THRESHOLD OF VIABILITY
The Government should extend the rate relief system to support retailers, especially those operating on the high street or community locations. Consideration should be given to alternative measures of support. Small retailers operate on very tight profit margins but are recognised as being an integral part of a local economy/community. More options should be available to local authorities to achieve targets established under local retail strategy.

• INTRODUCE NEW REQUIREMENT FOR ALL LOCAL AUTHORITIES TO ADOPT A RETAIL STRATEGY WITHIN THE UNITARY DEVELOPMENT PLAN
This include a Drive from government to achieve objectives regarding mixed use development and a better utilisation of use class orders considering the impact or prevalence of low footfall premises, such as estate agent proliferation, on viability of high street as retail destination.

• DEVELOP REGENERATION UNITS IN ALL LOCAL AUTHORITIES WITHIN THE UK
Regeneration units, tasked with strategically and positively managing town centre growth, should be developed. These units need to develop a long term strategy for local retailing, researching the local business environment and taking into account related trends such as housing and employment. These units should then form an important part of the consultation process, in particular providing a link between the business community and local planning decisions such as traffic flow measures, car parking, assessing the cost and benefits of Section 106 etc.

• DEVELOP RETAIL FOCUSED REGENERATION UNITS IN ALL RDAS WITHIN THE UK
All RDA’s, similar to councils, should develop regeneration units which recognise the importance of retail. Each unit should be tasked with co-ordinating with local councils to develop regional long term retail strategies building up a picture how many of its objectives can be met through the existence of a healthy small retail sector. This should further provide knowledge on how best to direct resources for local business support.

• DELEGATE GREATER POWER TO PEOPLE LOCALLY
There needs to be a revision of the financial and planning powers of local authorities with more explicit consideration given to protect diversity and vitality of local retailing. There needs to be a review regarding alleged abuse of resources by large businesses. This should be compounded with greater consultation between the council and local communities regarding the developments within the area.

• RAPIDLY IMPLEMENT THE RECOMMENDATIONS OF THE HAMPTON REVIEW
More work needs to be done to promote greater synergy between planning authorities, Town Centre Managers, community workers, market officials, Environmental Health and Trading Standards Officers and national departments and agencies such as RDAs, LSCs, SSCs, Business Links, the SBS etc. The importance of training provision needs to be better promoted to the retail sector.

• REVISIONS TO THE RETAIL PROPERTY MARKET
Examine use of upward-only rent-review clauses and length of commercial leases. Local councils could also extend the use of Section 106 to secure affordable premises for start-ups in their area to offset the possible damage to local communities anticipated by large retailers thus creating highly competitive local markets.

• ENCOURAGE THE TRANSFORMATION AND INNOVATION OF THE POST OFFICE NETWORK
The Government should directly support and expand the specific services offered by the sub post office network.

• IMPLEMENT MEASURES TO RESTRICT THE ENVIRONMENTAL IMPACT OF SHIFTS IN THE RETAIL SECTOR
Research, initiated by DEFRA, into the full impact of food miles on the retail sector needs to be extended to create a better understanding and bridge any knowledge gaps. All businesses should be made accountable for their respective damage to the environment with the clear view that, as a deterrent, they must provide some reparation to maintain the environment.