WEDNESDAY 3 NOVEMBER 1999

MS PATRICIA HEWITT, MP, MR BRIAN HOPSON AND DR ANN EGGINGTON

  260. What budget has been available? What resources in real terms have been given to that project?
  (Ms Hewitt) To the Small Business Service?

  261. Yes.
  (Ms Hewitt) They will be responsible for—this is not finally settled—significantly more than the Business Links currently are in terms of support for small businesses. It is a very large variety of programmes through which we can support small businesses. I would be very happy to send the Committee a note on that.

  262. But not a single bit of resource for retail outlets?
  (Ms Hewitt) As a Department we do not specifically sponsor food and drink retailing, as I said earlier.

  263. Any retailing of any description.
  (Ms Hewitt) For retailing generally we are working increasingly closely with the British Retail Consortium. A couple of weeks ago within the Department we had a seminar specifically looking at retailing and electronic commerce because the extraordinary growth of the Internet is going to transform, we believe and the retailers believe, the shape of retailing, not just in this country but across the world. It will have a dramatic effect upon the retail supply chain and we are therefore working with retailers, small and large, to ensure that they are aware both of the opportunities and of the threats that electronic commerce might pose.

  264. I was pleased to hear that you had had a look at the McKinsey report while you were Treasury Minister. Did you form a view on that report when you were a Treasury Minister?
  (Ms Hewitt) In common with other Ministers there we found it a very helpful analysis of the productivity gap that undoubtedly exists between our economy and particularly that of the United States of America. There are a variety of things that both the Treasury and the DTI are working on in order to raise the productivity of our economy. Of course that goes right back to the skills agenda, to the quality of management, to the supply chain work which the DTI is doing with retailers but also in other sectors of the economy in order to ensure that we have more world-class companies than we have at the moment.

  265. When you read the report as a Treasury Minister, and I have had a look at the report as well, did you notice that McKinsey produced no evidence whatsoever other than a very crude comparator by two charts between France and the United Kingdom and the United States of the conclusions it reached about our planning policy and competition policy? Was that a conclusion you came to while you were a Treasury Minister? Did you notice there was no evidence in the report?
  (Ms Hewitt) Not specifically. There was a great deal of discussion going on at the time. However, what is interesting is that we have evidence from the retailers themselves about the extent to which they are able to sell far more per square foot of space within their stores in the United Kingdom than would be the case, say, in France or in the United States. Therefore, I think that one might conclude that the restrictions on land and the fact that we have so much less land in this country has in fact driven retailers in this country to be much more productive in the use of the space available to them.

  266. So the comparison between United States space, French space and United Kingdom space, for example, you would regard as irrelevant?
  (Ms Hewitt) I do not think it is irrelevant. I think it needs to be taken into account. It certainly has been taken into account by the Competition Commission and it possibly needs to be looked at in the context of international price comparisons. The first stage with international price comparisons is to get good, reliable, independent information, which is what we are doing with the international price comparison survey.

  267. You spent some while this morning talking about mechanisms of government. What intrigues me, and maybe this is not an accurate perception, is the idea that somehow the DTI has a sort of rosy veil of ignorance over it concerning anything that DETR does about planning. Is there a mechanism in Government, for example, when a PPG is drafted, even before it has reached the public, that it is sent to your Department and your Department may say, "Here is a hypothetical idea: local stores driven out by supermarkets." The remaining stores then have higher prices for consumers and there is a great deal of evidence to suggest that that is the case. If your Department had that evidence would it then take that evidence and send to the DETR that evidence and say, "We support your planning policy guidance because our evidence suggests that this is an anti-competitive problem which we are addressing in our Department"? Would you do that?
  (Ms Hewitt) We certainly do at official level close relationships with DETR and there are discussions—

  268. You are not suggesting that Ministers do not talk to one another, are you?
  (Ms Hewitt) No. Ministers also talk, but I am also saying—

  269. Good.
  (Ms Hewitt) I was being, I thought, jeered at only earlier this morning for saying that the Secretary of State would talk to another Secretary of State.

  270. Minister, this Committee does not jeer. It seeks to elicit information. That is exactly what we are seeking to do.
  (Ms Hewitt) Yes, and I am saying that there are close working relationships between Ministers and between officials. I am not aware of the specific situation having arisen of the kind you describe, but I would certainly expect DTI to see draft planning guidelines in advance and to look at them afterwards. I will check, as I have already indicated, whether we are going to give a detailed response to the draft which has just been issued.

  271. So therefore, well before the Competition Commission has sat to talk about this particular subject, the DTI would have taken a view about competitive elements of planning policy guidance, before they were produced for public consumption?
  (Ms Hewitt) We would have a look at the draft that DETR was producing and see whether we could make any comments. We do have to be very careful not to pre-empt the findings of any Competition Commission inquiry because of the quasi-judicial role of the Secretary of State.

  272. I accept that. I am talking historically here, that what your Department has done already, not what it is minded to do or not when the Commission reports. When these drafts came round through the mail internally within departments, you have looked at them, commented on them and sent them back again?
  (Ms Hewitt) I believe that to have been the case but of course as a new Minister I have not myself been involved in any such process.
  (Dr Eggington) I myself was not involved in that process but we can check whether—

  Mr Whitehead: Could a note be supplied to the Committee?

  273. Could you supply the Committee Clerk with a note? It would be very helpful.
  (Ms Hewitt) We will certainly do that.

  274. Has the Department had any input on deciding the scope of the Competition Commission's work?
  (Ms Hewitt) That is a matter for the Competition Commission.

  275. But has the Department attempted to have any input in the scope of the study that is now being conducted?
  (Ms Hewitt) Not as far as I know. The Competition Commission is independent. They decide their own terms of reference. They conduct that inquiry.

  276. But as the Small Business Minister, does it concern you that it appears that the Competition Commission is concentrating solely on supermarkets without looking at the impact of smaller retail businesses as part of its study?
  (Ms Hewitt) No. I will reflect on the suggestion that I should be concerned, but it seems to me perfectly valid for the Director General of Fair Trading and now the Competition Commission to consider the question of competition within the supermarket sector.

  277. But as Small Business Minister do you not have a concern about the impact of that and the relevance of that upon the smaller business sector, in this case the retail sector?
  (Ms Hewitt) I think there is an issue about the extent to which supermarkets may compete with or even drive out of existence small retailers. That is a matter for the Competition Commission to decide whether they want to look at that and whether they want to look at the dominance of supermarkets within the food retailing or more general retail sector.

  278. Does the Department have any responsibility for consumers?
  (Ms Hewitt) Of course.

  279. Are you then not concerned about the impact of competition or other policies on those consumers who might be disadvantaged and those who have been identified under the Government's New Deal for Communities Programme?
  (Ms Hewitt) Indeed. We have set out in our Consumer White Paper, Modern Markets: Confident Consumers, a strategy that is essentially competition based to ensure that we have well informed consumers able to make effective choices within competitive markets.