WEDNESDAY 3 NOVEMBER 1999

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

  280. But, Minister, in that case why are you not concerned at the apparent failure of the Competition Commission to include in this study the impact of supermarket trading on consumers who have access only to single shops?
  (Ms Hewitt) That is an issue I would want to reflect upon but, as I have said, the Competition Commission does set its own terms of reference as an independent body. On the other issue that you raised, of the vulnerable consumer, perhaps the low income, elderly person or somebody living on a low income in a very disadvantaged community, there is a very important issue there that we as a Government are looking at within the work that has been pioneered by the Social Exclusion Unit on disadvantaged neighbourhoods and the DTI is represented on the policy action team, the champion Minister for which is in the Department of Health, looking at shopping and food shopping within disadvantaged neighbourhoods. As one of the champion Ministers for that Social Exclusion Unit to work, I am very pleased to see that some of the retailers are already beginning to respond to the needs of disadvantaged communities. In my own constituency, in one such community, the Co-op has recently expanded and refurbished its store significantly expanded its line of goods, increased substantially the range and quality of the fresh food they offer, and have found, to everybody's pleasure, that they have substantially increased their business as a result. They are one of the partners in the New Deal for Communities that is taking place within that very deprived part of Leicester. There are I think quite encouraging developments beginning to go on in that front. We certainly need to see more there because, as we know, there are shopping deserts, food deserts, within many of our disadvantaged communities.

  281. Do you see any connection between the developments you have just described and the possible consequences of the change in supermarket competition policy?
  (Ms Hewitt) The decline in shopping and banking facilities in those very disadvantaged communities goes back for a couple of decades and I think there are a number of factors at work there, one of which is the fact that, as the relative income of those communities has declined and the concentration of disadvantage has increased, it has become very difficult for retailers or banks to make a commercial return. That difficulty has been compounded by the very high crime and vandalism that you often get within those communities. There is a larger pattern of disadvantage and the Government is developing a strategy to reverse it. What I am saying is that we are beginning to see success in that with the reversal of the trend and the development of some shops within those areas. Part of my remit as the Small Business Minister is to ensure that the Small Business Service supports the development of self-employment and small businesses of all kinds within those disadvantaged areas, and the Financial Secretary to the Treasury and I launched one of the policy action team reports on this particular issue just yesterday. That is part of creating a sustainable economy within the disadvantaged areas and it will mean that we have to develop more small businesses and more self-employment within those areas. I believe that that can be done and they can be commercially viable even with the existence of supermarkets in other parts of town or out of town.

  282. Do you not feel that the Competition Commission, since it is looking at supermarket competition policy and possibly changes there, should have within its remit consideration of local retailing activities?
  (Ms Hewitt) That is something which, as I have said, I would like to reflect upon further, but I am sure the Competition Commission will also want to take note of what you have said.

  283. Would you give us a note on your conclusions, Minister, as you are not able to tell us today?
  (Ms Hewitt) I will certainly let you have a note after I have reflected on that issue.

  284. I will reiterate that I have an interest as a director of a town centre retail store. Minister, do you think that more out of town supermarkets are good for competition or not?
  (Ms Hewitt) I think that falls so much within the Competition Commission inquiry that I cannot express a view.

  285. You do not have a view yourself?
  (Ms Hewitt) No.

  286. When you were talking about disadvantaged areas what exactly did you mean?
  (Ms Hewitt) I mean areas where there is a concentration of people living on very low incomes and typically in those most disadvantaged communities you will find not just a very high incidence of poverty but also a very high incidence of unemployment, crime and family breakdown, ill health, very poor facilities, including retail facilities, and often very poor transport links.

  287. Would you not agree with me that people who do not have access to cars, such as the elderly, are disadvantaged if they cannot have access to lower prices because the lower prices are out of town?
  (Ms Hewitt) That is a very real problem and it is one of the reasons why the Government has changed planning policy in order to try and encourage the revitalisation of town centres and easier access not by car but by other forms of transport to a variety of shops.

  288. But would you not think that if the town centres have unfair disadvantage, for example parking charges levied in town centres but not outside, that is an unfair advantage for the out of town centres?
  (Ms Hewitt) As Mr Hopson was explaining, there are different views on whether or not car parking charges would make any significant difference, but as a policy issue that really is one for DETR.

  289. Would you, Minister, prefer to go somewhere where you paid for parking or not?
  (Ms Hewitt) I am trying to avoid using my car and in fact, as the Minister for E-Commerce, I have just started my supermarket shopping on line.

  290. Would you say that e-commerce is also not going to be widely acceptable despite the generous offers of the Chancellor?
  (Ms Hewitt) Mr Randall, I do think we should consider how the context of the issues we are discussing is going to be radically changed by the growth in electronic commerce. At the moment many of the consumers we are talking about, consumers without cars, consumers who may be on low incomes, are unlikely to have access to the Internet. That will change very radically with the arrival of interactive television and, in a couple of years to come, the arrival of mobile Internet telephones and so on. I believe we will see in a not very long period of time a very significant increase in on-line shopping. Of course, what that implies is that the consumers who now, because they do not have cars, or because there is no cheap shop near them, are having possibly to pay higher prices for a variety of goods, will in future be able to shop remotely, get the advantage of low prices and have their goods delivered to them.

  291. But they are unlikely to be on the Internet.
  (Ms Hewitt) Mr Olner, that was precisely the point I was making.

  292. If they cannot afford a car and things like that they are not likely to have a television sitting there that they can interact with.
  (Ms Hewitt) Television penetration is extremely high and since satellite, cable and terrestrial digital television will make possible interactive services, and since satellite and cable television already have very high rates of penetration, it is perfectly reasonable to believe that both analog and digital interactive television will make home shopping a much more common experience for a very wide variety of people.

  293. Is electronic convergence also a policy of your Department? Are you responsible for electronic convergence?
  (Ms Hewitt) I am responsible for electronic commerce.

  Chairman: But not for convergence. Perhaps we will come back to that on another occasion. It is a fascinating subject, Minister, and it is very nice to know your policies on it.

  294. Could I refer to several questions asked by a colleague who has just left the room, Mrs Ellman? I have found it very difficult in the last hour to understand why the Department is taking such a detached point of view in relation to planning laws and requirements and the Competition Commission. Who is the champion of the small business person who at times has to pit his limited resources against those of the five very large supermarkets? Is it not right and proper that they look to your Department to provide succour and to provide relief and representation to the Competition Commission and indeed also to the DETR? If they cannot look to your Department as the Minister responsible for promoting and encouraging small business people, to whom do they look? I do not know whether I am reading the questions correctly this morning, Minister, but I am rather disappointed at the detached manner in which the Department views its role with the Department of the Environment, Transport and the Regions and also the Competition Commission.
  (Ms Hewitt) I am sorry if I have disappointed you, Mr Cummings, but first of all I have a responsibility as Small Business Minister for all small businesses. Food and drink retailing is sponsored as a sector not by the Department of Trade and Industry but by MAFF.

  295. Do you not have a legitimate right to make positive representations to the planning ministry if indeed you believe there is going to be an adverse effect upon small business people?
  (Ms Hewitt) This Government has already changed the planning regime in order to inhibit the growth of out of town superstores which proceeded apace over the last 18 years, and to ensure that town centres, where small businesses are likely to be found, can flourish. I welcome that. I also have explained that as a Minister in the DTI, like all my DTI colleagues, I cannot pre-empt the findings of the Competition Commission. I understand that that may be frustrating to you but, because the Secretary of State will have to make in effect a quasi-judicial decision on any adverse findings that come from the Competition Commission, it would be quite wrong for me as one of his Ministers to seek in any way to pre-empt or to give the appearance of pre-empting the findings of that inquiry.

  296. I am not suggesting pre-empting the findings. I am just trying to ensure that representation is made and that all of the evidence is considered by the Competition Commission, evidence perhaps which may wish to be submitted by very small business people who are working 16 hours a day who do not have the resources nor indeed the time or the expertise to give out the particular case.
  (Ms Hewitt) Small businesses have their own federation and representative bodies and they also have in the food and drink retailing sector their own sponsoring department in the form of MAFF.

  297. This inquiry is about the environmental impact of supermarket competition and as Minister for Competition I want to ask you what the three most important factors are in establishing a healthy and competitive retail sector for the UK?
  (Ms Hewitt) I am not sure that I can give you three factors off the top of my head.

  298. Give me the most important one or two.
  (Ms Hewitt) What we want to see is a competitive retail sector and specifically a competitive supermarket retail sector and that means having enough players in the market to ensure that there is effective competition.

  299. That is not the case in France, is it? There are fewer supermarket players there than they are here. They have less profits than we do here. I will come on to that point later. There must be dominant concerns in the DTI, ones which you think are the biggies, the things you must get right in establishing a healthy and competitive retail sector, that would not depend on an outcome of the Commission report.
  (Ms Hewitt) I think it would because it is a question of making sure that there are not unjustified barriers to entry—and this would be true in any sector, it is not specific to supermarkets—that there are not monopolies or complex monopolies, that there is not abuse of dominant positions or anti-competitive agreements. We have strengthened the legal framework to ensure that there is competition across all sectors and within that legal framework the Director General of Fair Trading has responded to concerns that have come from consumers, from some Members of Parliament, from some of the agricultural suppliers to the supermarket chains and as a result of his inquiry there is now a Competition Commission inquiry underway. If they produce adverse findings on competition in this sector then the Secretary of State will decide what action, if any, should be taken.