Oral statement to Parliament

Retailing: the way ahead

Introduction Good morning. It’s a great pleasure to be here, for what promises to be a fascinating conference. Retailing faces considerable…

Introduction

Good morning. It’s a great pleasure to be here, for what promises to be a fascinating conference.

Retailing faces considerable challenges, in the short and long term. Household incomes are under great pressure, whilst business credit is tight. Meanwhile, the continuing uncertainty about the Eurozone’s debt crisis, casts a dark shadow over the UK’s prospects, undermining both business and consumer confidence.

At the same time, retailers are facing a longer term shift in consumer behaviour, in which the online market is becoming an integral part of every business plan. This has serious consequences both for your bottom line and for the future of the high street.

So I welcome the forward thinking programme for this Conference, which seeks to address both the short and long term issues that are before you as a sector.

Retailing: the way ahead

Since coming to office, we have set out our plan to rebalance the economy. We believe that in the past there’s been an over reliance on a few sectors for growth, including retail.

Our aim is to actively promote a better balance, not least to make the UK more resilient to future economic shocks. This means seeking a better balance between consumption and investment in the economy as a whole. And it also means actively promoting modern design, engineering and manufacture.

However, what it does not mean is that we no longer take an interest in the retail sector, or that we believe that manufacturing can only prosper, if retailing or financial services decline.

So, as with other key sectors, we regard our role as being that an effective partner working with you to help increase your competitiveness here and abroad. Indeed we recognise that we have in this country a world-class retail sector. Worth over £290 billion, or 5% of the entire UK GVA, retailing is also the largest private sector for employment, proving jobs to one in ten workers.

Directly responsible for 14% of all business investment, the efficiency of this sector is also a driving force for many other companies in the supply chain, whether it be farmers or manufacturers. And the investment continues, with several substantial announcements recently for new stores, new infrastructure and facilities, new concepts, and new jobs.

And your success reaches around the globe. Flagship British retailers are establishing their brands in key emerging markets in Asia, and beyond. With rapid growth in the online market worldwide, this strength in global brands will be vital, both for your businesses and for the wider UK economy.

Strategy

Yet if UK retailing is to overcome some of the short and long term challenges I mentioned earlier, there needs to be a business-led sector strategy for the years ahead.

This is where Government has a role to play. To work with you to develop a business-led plan that builds on your strengths, and removes the barriers to growth. That is why my department is already working with the major representative bodies to develop a Retail Growth Strategy, which we expect to have in place in the summer.

Some of the issues are being addressed at this Conference, for example the online market and the growth in demand for high speed broadband. Or the need for us in Government to increase our trade missions with you as a sector, to help open up new opportunities abroad.

But, today, I would like to address three issues where Government can directly help the retail sector: cutting red tape, helping high streets compete and improving your skills base.

Cutting red tape

Of all the barriers to growth the intrusion of needless and bureaucratic regulation is one of the most resented by retailers. Having run my own business, I entirely agree.

That’s why we decided to start to help you by examining the 257 regulations which directly affect retailing. With help from the former director of the British Retail Consortium, Kevin Hawkins, we have now agreed to scrap or substantially simplify 170 regulations, or more than half the total.

Some regulations are plainly silly, like the separate licensing for the sale of liqueur chocolates. They’re going to go. Some regulations are obsolete, like the 98 separate rules governing Trading with the Enemy. They’ve already gone.

But more importantly we have agreed to fundamental changes which will save you considerable time and money.

Take the sale of age related goods. No one disputes the need to prevent the sale of cigarettes, knives or fireworks to young children. But how we test this prevention can be difficult.

So I am delighted that you are working with us, trading standards and the police to agree a new code of practice on test purchasing. And on a broader note, the UK has 12 different sets of consumer legislation, often with different measures, procedures and criteria. So instead we intend to create a simpler, single consumer bill of rights.

But that’s not all. As employers I know how frustrated you have been, about the rise in the number of vexatious claims which end up in employment tribunals.

So we are about to change the rules, so that someone must have worked for you for two years before they can pursue a case. And we will introduce a fee, so that claimants also have something to lose, if they bring a vexatious case. It’s time to get a fairer balance for employees and employers.

At the same time, my Ministerial colleagues are looking at how we can streamline both the Health & Safety and the Planning systems in this country. They have made good progress and will have positive news shortly.

Meanwhile, I know from many of you that it’s often not the regulation, but how it’s enforced which really matters. That’s why we have worked with the sector to expand the number of Primary Authorities, so you can enjoy a clearer, more consistent regulatory environment across your business.

To date some 1,518 Primary Authority partnerships have been formed, covering 48,600 outlets. The benefits of a common procedure for the enforcement of environmental health, trading standards or licensing are clear.

And that is why we have been consulting on how we might now extend the scope of Primary Authorities so that businesses - and retailers especially - can benefit from the clarity and consistency of enforcement. I can tell you today that legislation to help spread Primary Authorities is on its way.

Supporting high streets

The second issue in which Government has a role to play is in helping our high streets to compete, now and in the future. For our towns and cities, a healthy centre is vital, economically and socially. Indeed a vibrant high street underpins a healthy and thriving community. Conversely we all know how a weak town centre contributes to a wider social and economic decline.

So there is a legitimate goal in encouraging our high streets to flourish and compete, in retailing and in other activities such as hospitality and entertainment. Indeed getting the mix right is often the way forward for high streets. But the question is what can government do to help?

To answer part of that question the Prime Minister asked Mary Portas to conduct her High Street Review. She has brought her characteristic candour and flair to the task, and whilst I know that some in the sector won’t agree with all her ideas, she has given us a series of practical proposals, which directly address many of the problems.

We will be publishing our formal response later in the spring, but already my colleague Grant Shapps has accepted one of Mary’s proposals, which is to set up town teams. These teams will bring together all the key players - landlords, developers, retailers, local authorities and local communities - to establish a vision for their local high street and then oversee its implementation.

Last month we launched a competition to find 12 pilot areas to help high streets. I understand there has been a lot of interest but we won’t know the precise numbers until after the closing date of 30 March.

Gloucestershire LEP retail pathfinder

However, if towns and cities are to renew their high streets there needs to be an holistic approach to each local marketplace. Every high street will need its own solution.

That’s where Local Enterprise Partnerships come into play. They are uniquely placed to support retail, as part of a broader strategy to strengthen the local economy and tackle the barriers to growth. This may mean matching skills training with local employers’ needs; improving an area’s transport infrastructure; or enhancing the appearance of the town centre.

In every case LEPs combine a strong voice for business, with democratic accountability. So I would urge those of you not already engaged, to get involved in your local LEP and helping to shape the local business environment.

With that in mind, I am pleased to announce that we have just appointed the first LEP Pathfinder for retail, to get underway in Gloucestershire. Gfirst, as the LEP is called, will develop a strategy that supports the county’s broad retail mix - from affluent town centres to struggling districts, and from luxury outlets to value chains.
Gfirst will develop and pilot a range of initiatives, share expertise with other LEPs and make recommendations to businesses and government.

And it’s a retailer who is taking the lead. I’m pleased to say that Diane Savory, the former Chief Operating Officer of Supergroup, is now the chairwoman of Gfirst and she’s already formed a strong retail sector forum, to establish their plan and to then share best practice with other LEPs.

Skills

The third issue for Government in retailing is about skills and jobs. In fact, it’s an area where the sector excels. Retailers have a record on training and investing in their staff that is second to none.

Not that you would know that from some of the misleading headlines we have seen recently. It’s deeply disappointing to see the criticism being levelled at the work experience programmes offered by some of the biggest names on the high street. Some of it is political, but some of it is motivated by snobbery. By the notion that working in a shop does not count as a proper job.

Nothing could be further from the truth. Retail often gives young people their first taste of paid employment, and the opportunity to begin their working lives. In fact, 42% of all 16 and 17 year olds in work are employed in the sector. It’s also especially good for giving people, without formal qualifications, the first step on the ladder of their career.

But it’s not just about first jobs. The commitment to training in the sector is also good. According to the British Retail Consortium, employers in the rest sector invest on average £1,275 per staff member each year. That compares for example with £800 in the financial sector.

And now in Government we are expanding the opportunity for training. Apprenticeship numbers are growing strongly, from just over 2000 ten years ago to nearly 13,000 places in 2010/11, and 8,000 already in the first six months of 2011/12.

And from the retail businesses I know, this is a genuine meritocracy in which someone with talent and determination can start literally on the shop floor and work their way up to the very top - just as Asda’s CEO, Andy Clarke, did.

So in Government we want to continue to work with you, to provide people with the work experience and the training they need and you want to provide. That’s how we’re going to tackle unemployment and the longer term challenge of re-skilling the labour force.

Conclusion

So, ladies and gentlemen, these are challenging times. Particularly in retailing.

You face short and long term factors which will reshape both your businesses and the entire sector. Factors which will change how and where we shop. Factors which will even reshape our town and city centres.

That’s why we’re working with you to develop a clear strategy, a business led plan to help the sector grow.

It’s why we’re actively seeking to cut away red tape, to save you time and money. It’s why we are developing new ideas to help our high streets compete.

And it’s why we committed to providing the right work experience and training, to improve people’s skills and the pool of talent from which you can draw.

From my dealings with UK retailers I have every confidence that this sector has the creativity, innovation and entrepreneurial spirit to emerge from these challenges stronger and more competitive than ever.

I hope we can build on the partnership we have, giving you the support you need to help your businesses grow, and to ensure that we have a strong and prosperous retail sector, now and in the future.

Thank you.

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