Oral statement to Parliament
Retail sector and Government - A new partnership
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Introduction Delighted to be here this evening. Let me start by paying tribute to the work of the BRC. In Opposition, I worked with many…
Delighted to be here this evening. Let me start by paying tribute to the work of the BRC.
In Opposition, I worked with many business organisations, as they lobbied for their members. The strength of the BRC was always that you fought your corner, but understood the realities of government.
In government, I am pleased to hear that your chairman intends to continue that candid, but balanced approach. We won’t always agree, but I want to know what you really think, not what you think I want to hear.
The last couple of years have been especially difficult for the retail sector. Everyone - from the household names to the smallest independents - has had to cope with tough times on the high street. And we are still feeling the after-shocks of the recession that caused them.
So I would like to pay tribute to the businesses and your staff here tonight. We in politics have much to learn from you, about managing risk and adapting to change.
Renewing the economy
Of course, I am well aware that the economy remains challenging. Consumer confidence is fragile and personal debt levels are still high. Yet it’s also important for us to get a balanced view of our economic prospects.
The economy is growing and has been doing so for two quarters; corporate and personal debt is being paid off; interest rates remain at record lows and there has been encouraging growth in manufacturing, ahead of many forecasts. So the doom-mongers in some parts of the media need to strike a better balance in their reporting.
This Coalition Government is determined to tackle the deficit we inherited, but also to grow the economy. As your chairman rightly said, both are vital to our economic future.
And we believe that government has an important role in helping promote growth. It’s not to direct business, but to enable it. It’s not to tinker and meddle, but to create a clear, long term framework which gives business the confidence to plan and invest.
That means a simpler, more predictable tax system that rewards endeavour; better access to finance; less red tape and fewer regulators; a skilled workforce and more apprenticeships and sustainable investment in our infrastructure.
It also means restoring confidence in the UK’s public finances, not least because confidence is the bedrock of economic growth.
That’s why the Chancellor brought forward tough measures in his emergency Budget in June, to cut back waste in this year.
It’s meant we were able to stop much of Labour’s planned rise in employers’ NICs. That’s good for you, and good for jobs.
It has also meant that international investors have retained confidence in UK plc. On Monday, Moody’s credit rating agency gave a very positive report on UK’s finances saying our stable outlook is - and I quote - “largely driven by the government’s commitment to stabilise and eventually reverse the deterioration in its financial strength.”
So by tackling the deficit we are able to drive down government costs and help keep interest rates lower for longer.
Now I appreciate that one measure in the June budget - the rise in VAT - was not welcome news for you. However I hope that the way we are introducing that rise - with plenty of notice and after the Christmas rush - shows that we both listen to business and act on your concerns.
But the Emergency Budget also brought forward powerful new incentives for business to invest and grow. We are cutting the main rate of corporation tax from 28p to 24p over the next four years. Thus by 2014 this country will have one of the best corporate tax rates of any major G20 nation.
We are also reducing the small firms rate to 20p, instead of increasing it to 22p, as planned by the last government. And the Chancellor has set out his plans to simplify the key taxes which affect business, to save you both compliance time and money.
So I hope Mr. Chairman, you will accept that we are making a positive start to freeing enterprise in this country. There is much, much more to do, but the direction is clear. We want to make the UK one of the best places in which to start and grow your business.
That’s why I welcome the news of new jobs in the retailing sector. It’s important because retailing is a significant part of the UK economy.
Too few people really understand just how much retail contributes. That it generates 8% of our GDP, that over a third of all consumer spending goes through retailers. Or that the sector employs 10% of the entire UK workforce.
Nor do enough people understand the importance of a vibrant town centre, for the health of that community. Failing high streets all too often lead to rising vandalism & crime; the flight of those who can afford to move and the inevitable social problems that follow. So strong high streets matter, economically and politically.
I said earlier that consumers are still being cautious as we emerge from recession. Yet at the same time, retailing is facing other challenges.
Consumer habits are changing and becoming less predictable. Shoppers increasingly are going online to search out the best bargains before they buy. But at the same time many are willing to trade up to brands that truly offer premium quality.
All of this adds up to an even more competitive retail environment than usual, and to succeed, retailers will have to keep innovating. To fight for customer loyalty through service, as well as pricing. And, of course, respond to the growing threats and opportunities of internet shopping.
A new partnership
It’s in that context that tonight I want to propose we establish a new partnership between Government and the retail sector.
A partnership that not only recognises the value of this sector, but seeks to increase it. A partnership that focuses on delivering practical action. A partnership that is ambitious both for your businesses and UK plc.
The starting point for this new relationship is the action plan which together we have recently agreed. It’s a plan which spells out what we need to do to help. What barriers to business growth you need us to clear out of the way. What support we need to provide so that you can thrive.
Already we’ve identified five priorities for action.
First, an important part of my job is to ensure that the voice of retail is heard clearly across Government. In that sense I want to ensure that I and the BIS department is voice of business across Whitehall.
But to be an effective champion for retail, I need to know exactly what is on your minds. So I can confirm that I will be holding regular roundtable meetings with representatives across the sector and my top officials, to see what needs to be done and how it can best be achieved.
Second, we need to look closely at the whole business environment for retailers to ensure that it helps, and does not hinder, growth. As I mentioned earlier, we are committed to making this country more business friendly - and need your help to do it.
Different parts of Whitehall impact on your sector. For example, my colleagues in the Communities Department are seeking to simplify the planning system and this significant - potentially beneficial -implications for you.
Its also important we look at broader issues such as transport infrastructure or high street crime, both of which directly affect you and your staff.
Third, I want to work with you to identify and eliminate the red tape and petty rules which waste productive time and add needless costs.
In recent years excessive regulation has become a huge problem, rising under the last administration to the equivalent of fourteen new regulations every working day.
This Coalition Government is determined to reverse that trend. We want to cap the costs and then start to drive them down, and to do that we intend to change not just a few regulations but the very culture of Whitehall.
So, from the beginning of this month, we have adopted a new ‘one in, one out’ system of control. It means that before a Minister can introduce a new regulation, he or she must first demonstrate that they have identified a cut of similar value from the existing burden.
We are also conducting a fundamental review of those regulations we inherited which, if implemented in full, could cost another £5bn. We won’t reverse it all but every £100m we stop is a £100m saved by business.
Together, these measures will begin the process of changing the culture of Whitehall. And it means that instead of regulation being the first option, this Government intends to make it the last resort.
Fourth, the retail sector is a major employer. Your profitability depends on the skills and talents of your people. And a great number of people depend on you, as the largest private sector employer, for jobs and careers.
That’s why we must work together to ensure that retailers’ skills and training needs are better met. So that you have the right people, in the right jobs, with the right skills, keeping UK retail world class.
We have already redeployed £150m of Train to Gain funding that was being wasted under the previous Government to create an extra 50,000 Apprenticeship places this year. We have cut and will continue to cut bureaucracy, freeing colleges and other training organisations to respond to your needs. And we will go further with the new strategy for skills that my colleague John Hayes will publish later this autumn.
Yet it’s when we work with you in partnership that the real opportunities open up.
My Department is hosting a retail skills and employment seminar on November 10. It will bring together retailers and industry bodies, with the sector skills councils and training providers, to sort out some of the practical issues.
What we want is the same as you - a simpler, affordable and flexible adult skills system that responds to the needs of employers and learners - not the whims of politicians and bureaucrats.
Your record on workplace training is a proud one. Your commitment to Apprenticeships - 48,000 so far - is exemplary. So let’s build on that together.
How exciting it would be if an apprenticeship became the norm for everyone joining your sector.
And finally, we are looking at the shift to a low-carbon economy and what it means for retailers. It’s not just an environmental need, it’s also a social imperative.
There is a lot of excellent work going on across the sector and I know that many of you have already made great strides.
And the latest update of the BRCs “A Better Retailing Climate” initiative, also showed impressive progress on retailers’ environmental commitments.
We need to promote best practice so other retailers can learn from the best. And we in government are already learning from you, as we move to cut our own carbon emissions.
And as we roll out new consumer initiatives, like the Green Deal we will want to work with you to ensure our plans succeed.
So, I want this new partnership to mark the beginning of a closer relationship between the retail sector and the Government.
A partnership in which we better understand each other. A partnership that reaches across the whole of Government. And a partnership in which we back you, when you need our help - and we get out of your way, when you don’t.
We still have a way to go before we achieve our ambition of making Britain one of the best places in the world to start and grow a business. But be very clear we are determined to get there.