Local shops – at the heart of their communities

Introduction

Good afternoon, and thank you for inviting me to speak to you today. I am very pleased to be here.

The title of this event says it all, really – as local retailers you are right at the heart of your communities, providing an invaluable service to local people.

So I am pleased you have such an effective organisation, the ACS, to represent your interests. James [Lowman, chief executive] and his team are tireless advocates on your behalf.

I have no doubt your new chairman, Neil Turton, will keep up the good work.

Neil, congratulations on your new post. You are taking over at a challenging time for the convenience sector, but you have an excellent team to work with. And you have the full support of the Government. That’s why I am here today.

Government backing for the sector

Because I know the sector has been under real pressure as a result of the worldwide downturn.

While its origins were global, its effects have been local. And small retailers have been at the sharp end.

Local shops are a lifeline for the people who rely on them. So we want do whatever we can to support the sector, and work with you to make sure your businesses survive – and thrive.

That support is taking a number of forms – everything from financial support and business planning advice, to imaginative marketing campaigns promoting the strengths of the sector.

As the Regional Minister for Yorkshire and the Humber, I’ve seen the fantastic work being done by the Regional Development Agency, which has identified the retail and food and drink sectors as key growth areas.

The ‘Deliciously Yorkshire’ campaign is promoting the top-notch food and drink produced in the region – and the many grocers and local shops that sell them. It’s been a real success and a lot of small retailers are benefiting.

But of course, in the current climate, businesses also need the ‘nuts and bolts’ support that means they keep trading.

I know that, today, James [Lowman, ACS chief executive] has launched the ‘Heart of the Community Campaign’, which asks some tough questions of Government.

We welcome this, because it makes us challenge our own thinking, which has to be a good thing.

And I hope you would recognise that we share your concerns, and we are taking action on a number of fronts to tackle them. 

Finance

Cash flow is the number one concern for retailers today, just as it is for businesses in every other sector. So we are offering £1.3 billion in credit to viable small businesses having problems raising funds from the banks. 

 £120m of that has already been lent to retailers.  From 1 October 2009, two further types of Enterprise Finance Guarantee facility are now available via lenders – an Invoice Finance Guarantee top-up, and an Overdraft Guarantee top-up. Details are available on the “Real Help” pages of the Business Link website.

We are also allowing businesses to defer payment of some taxes. So far over 150,000 firms have reached agreement with Revenue and Customs to delay paying over £3.8 billion.

And we understand that business rates have a disproportionate impact on small companies. So in 2008/09 we have granted nearly £300 million in Small Business Rate Relief, reducing the burden on firms.

Companies can also spread their business rates over the next three years, paying 2% extra in 2009/10, and spreading the remaining 3% over the next two years. Businesses will be able to defer around £600 million across 1.6 million premises.

Retail crime

Of course, it’s important we help businesses maximise their profits so they don’t need financial help.

That’s why tackling retail crime – making sure owners keep the profits that are rightfully theirs – is one of our top priorities.

So I am pleased we are working closely with bodies such as the ACS, and others, to promote effective ways of tackling and preventing retail crime. 

We set up a £5m capital grants fund for small retailers in 50 areas especially affected by the downturn. Businesses will get up to £3,000 for alarms, security grilles, and other equipment to protect against theft. The first recipients should be announced soon.

We are also working with trade bodies to ensure small businesses know who their local neighbourhood policing officers are.

And we are committed to imposing tough penalties on those convicted of retail crime. Since 1997 the proportion of shoplifters going to prison has increased; and community penalties increasingly include an element of reparation.

But obviously we have further to go, and that’s why we are working with the ACS and others to implement the Retail Crime Action Plan.

Because it’s important we adopt a partnership approach with the retail sector to tackle these issues together.

Planning

And that partnership approach will be the key to success in other areas, too, as we shape the broader environment so small retailers can flourish.

Our draft planning policy statement, ‘Planning for Prosperous Economies’ [PPS4] will equip councils with the tools they need to nurture diversity – and maintains the ‘town centres first’ policy.

The ACS has worked closely with us on this and I thank you for that.

Draft PPS4 recognises that town centres are not only engines of the economy locally and nationally, but also lie at the heart of sustainable communities.

It requires councils to ensure a strong retail mix; and calls on them to recognise how smaller shops enhance the character and quality of town centres.

It also stipulates that the importance of shops and services in local areas should be taken into account when assessing proposals that could mean their loss.

The PPS will strengthen the tests for out of centre developments, and enable councils to reject developments that would significantly harm a town centre.

But we also know the recession is having a visible impact on our high streets, which can attract problems and damage people’s confidence in an area. That’s why we’re taking action to help councils respond. 

We’ve provided £3 million funding to 57 local authorities so they can try out ideas to boost their town centres, and we are making it easier for people to make use of empty shops. 

This is all about ensuring high streets are attractive, viable places that people want to visit.

Competition Commission proposals

Now, I know that is an issue on the minds of everyone in this room.

So I know you want to hear how the Government is going to respond to the recommendation from the Competition Commission, on setting up a Grocery Market ombudsman, and on introducing a competition test into town centre planning.

I understand your disappointment that we haven’t yet responded. But these are complex and important issues, and we need to take them all into account before we reach a decision.

We have to weigh up the possible costs or savings that would be passed on to consumers; the potential for a better deal for suppliers; and the regulatory burdens imposed supermarkets.

We expect to make a final decision shortly. At the same time we will, subject to any further developments, announce our decision on the Competition Test for town centre planning.

Energy

And let’s not forget that competition is a force for good. It can help address some of your other concerns, for example over energy prices.

That’s why the Department for Energy and Climate Change has produced a Consumer Focus guide for small businesses, to make sure you get the best possible deal from your suppliers.

We are acutely aware of the pressure that energy prices put on SMEs. So we want to help businesses make careful and active choices about the way they use energy, and the contracts they agree.

Greater energy efficiency is the other part of the equation. Even small changes will make a difference, to your carbon footprint and to your bottom line. UK businesses could save £3.3 billion a year on their energy bills. And help is available for this.

We are offering interest-free loans, from £3,000 to £400,000, to retailers and other SMEs to make energy efficient investments. An extra £100m was announced in this year’s Budget.

And in September Peter Mandelson announced that the Government would work with the sector on a Low Carbon Action Plan for Retail. I am pleased that the ACS will be playing a very active role in this important project.

It’s a good example of how a partnership approach can deliver benefits for everyone.

Change 4 life campaign

I think it’s important local retailers embrace this wider role, and secure their own future by playing an active role at the heart of their communities.

I’m delighted so many of you have signed up to take part in the Change 4 Life campaign, which is encouraging people to eat more healthily and take more exercise.

ACS members have been leading the way, using funding from the Department of Health to offer their customers a good selection of fresh fruit and vegetables, prominently displayed in-store, and promoting the benefits of healthy eating.

Project co-ordinators are working with retailers to help them maximise profits, minimise waste and promote fresh produce to the community.

Everyone is a winner – families eat better, public health improves, and retailers’ profits go up as demand rises. And now it is rolling out to every region.

Change 4 Life is a fantastic example of how retailers can improve the lives of their communities – and boost their bottom line.

Conclusion

In today’s climate that is more important than ever. I know that many of you in the convenience sector are going through tough times at the moment.

But I believe that projects such as Change 4 Life illustrate the crucial role that you play in your communities, and point the way forward. Showing how the local shop can be a hub for the people in the area. 

Because you are a vital local resource, and you are right at the heart of local life. That’s exactly where this Government wants you to remain. It would be a tragedy if that changed.

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

Thank you.

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