BRITAIN - PLAN FOR GROWTH 2014 - ASDA Corporate
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GETTING
BRITAIN
G R OW I N G
- P L A N F O R G R OW T H -
2014
ASDA GETTING BRITAIN GROWING 2014 | 12 | ASDA GETTING BRITAIN GROWING 2014
INTRODUCTION
F O R E WO R D
Asda is a can-do business and when faced with a
problem, or a challenge, our philosophy is to solve it,
not duck it. It’s one of the reasons why I’m proud to
lead this company.
When I visit our stores and talk to customers and
colleagues, or sit in on a listening group of Asda mums,
I keep hearing the same story: people say to me that
they are still struggling to make ends meet.
I’ve thought long and hard about that, and I want to do
something to help.
If this were a different kind of place, we could just nod
sympathetically and carry on with our business. After
all, we have plenty of issues to deal with.
But that would not be the Asda way. It wouldn’t give
me confidence that we were doing the right thing.
As one of Britain’s biggest companies, we have a Our proposals fall into two categories.
responsibility to help make the UK a better place to
work, live and grow up. The retail sector is a force for Some of them reflect what we know are the key
good, employing hundreds of thousands of people, is pressures affecting our customers and colleagues,
a large investor in training and supports thousands of and where we can see possible reforms within the
small local suppliers. power of government that will help people and
Wherever I go in Asda - stores, depots, offices - I see
colleagues who are at the heart of their communities,
create growth.
Others are directly related to the barriers to growth
getting involved in projects and charities that make we encounter every day as a business: barriers which
a difference to local people. Community groups, seem to us to have little or no broader benefit to
charities and public services also find a place in Asda the country. If we want increased investment and
to host meetings, functions and activities. Maybe sustainable growth, they have to go.
it’s our Northern roots, but our customers, our
communities and our colleagues have come to expect Put together, they add up to an ambitious and practical
Asda to be there for them. I also want us to fight on programme of change which we consider would offer a
their behalf. further stimulus to the current economic situation.
PLANNING FOR GROWTH I fully accept that some of our suggestions will only
be achieved when the public finances allow. However,
I’ve listened to what our customers tell us about life we feel strongly that government policies should not
in Britain today. Things are improving, but not nearly stifle our ambition or determination to improve the
quickly enough for many people. So we’ve used prospects of UK businesses and our customers.
our knowledge and experience as shopkeepers to
offer a set of policy proposals, built upon consumer Asda is a business which touches very many people’s
choice and progressive taxation, to drive the recovery lives and sectors of the economy. So I hope we have
more quickly and fairly, putting pounds back into the produced a wide-ranging document which stands
pockets of those that need them the most. in a long tradition of fighting for the interests of our
customers and colleagues. I joined Asda to make a
Yes, the UK is heading in the right direction, but I positive difference to people’s lives, and this Plan for
believe there is a lot more that can be done to Growth has the potential to do just that.
promote growth and provide for a sustainable
economic recovery. I hope you find it thought-provoking and that it inspires
you too. My Executive colleagues and I would be more
than happy to discuss any of the ideas with you in
more detail.
ANDY CLARKE, PRESIDENT AND CEO, ASDA
ASDA GETTING BRITAIN GROWING 2014 | 3PUBLIC POLICY MAP
A S DA P U B L I C P O L I C Y M A P
Below is a summary of the issues and Government departments with which we regularly engage:
Community Life
Packaging Primary Authority Future Retail Model
Packaging
Environmental impact Scores on the Doors Asda Foundation Trade and Global Value Chains
Environmental impact Red Tape Challenge Reform of the planning system Doing the Right Thing
Sustainable Drainage Trading Standards Inter-departmental issues Global sourcing
TV Licensing Digital Inclusion Bangladesh / ETI
Pharmacy National Citizens Service
Disaster relief
Front of Pack labelling
Pharmacy
Supply Chain (horsemeat) Minimum Unit Pricing of Alcohol Change4Life
Scores on the Doors Quantity Discount Bans Responsibility Deal
Food Safety Late Night Levy Obesity
National Local Authority Code
Food additives Early Morning Restriction Order Cancer
Plain packaging of cigarettes Food poverty
Retail crime – shop theft Smoking
Knives Alcohol
Public Order Asda Active
Right to Work and immigration Don’t Get Burnt
Health and Well-Being Boards
DEPUTY PRIME MINISTER
Mumdex
Apprenticeships Income Tracker
Cost of Living Cost of Living
Social Mobility Alcohol Strategy
Business Rates
Planning Reforms
Sunday Trading
Economy
Business Rates
National Insurance Contributions Supply chain
Corporation Tax Grocery Code Adjudicator
Unspent capital investment Food Waste
Income Tracker Zero Waste to Landfill
Pensions WRAP
Retail Levies Sustain and Save Exchange
Community Life Sunday Trading Carrier Bag Charging
Business Rates Alcohol (pricing) Milk/Dairy
Planning Reform Fuel Duty Gangmaster’s Licensing
Competition Test Personal Tax Allowances Authority
Community Infrastructure Levy Financial services Local Sourcing
Permitted Development Rights Competition Palm Oil
Empty Property Rates Poverty Timber Sourcing
Europe Primary Authority Schemes International investment
Globalisation/trade Disaster relief (floods)
Developing Nations
Visas
International investment
European Union
(Multi-channel Single Market, Tobacco Products Directive, Food Information Regulations (FIR), Card Payment charges)
Welsh Assembly
(planning, business rates, digital access in stores, carrier bag charging)
4 | ASDA GETTING BRITAIN GROWING 2014PUBLIC POLICY MAP
Natural Hazards / Snow
Fuel strategy
Road User charging
High Speed Rail Carbon Reduction
Fuel VAT
Workplace parking levies Tax contributions
Disabled parking Energy Demand Reduction
Supply chain efficiency Carrier bags
Local delivery times
Driver Hours
Number of drivers
Highways improvements
COMPETITION COMMISSION
Asda Active
Broadband National Minimum Wage
Data protection Competition Test
TV License notification Grocery Code
Carbon price
Broadband Access Adjudicator
Legal costs
Judicial Reviews Alcohol
Privacy Credit regulation
Business Rates Advertising regulations
Data Protection Insurance regulation
National Insurance Contributions
Planning Reform
Competition Test
Permitted Development Rights
Multi-channel retail
Red Tape Challenge
Sunday Trading
Grocery Code Adjudicator
Ministry of Defence
Retail Levies
Reserve Forces
Carrier Bag charging
Veterans recruitment
Pharmacy Welfare reform
Cost of Living Universal Credit
Capital Investment Pensions
Retail Action Plan Pensions Auto-enrolment Work Experience
International Trade Policy Retirement age Work Placements
Employment law Poverty Community College
TUPE Long term sickness Retail Honours Degree
Flexible working Remploy Grocery Code Adjudicator
Shared Parental leave Disability Living Equipment Alcohol
Planning & Competition
N. Ireland Assembly
(Alcohol minimum pricing, health / obesity, sourcing, Community Life, carrier bag charging)
Scottish Parliament
(Alcohol minimum pricing, health / obesity, sourcing, business rates, independence, Community Life)
ASDA GETTING BRITAIN GROWING 2014 | 5EXECUTIVE SUMMARY
G E T T I N G B R I TA I N G R OW I N G :
E X E C U T I V E S U M M A RY
G etting Britain Growing offers a coherent series
of recommendations that aim to unlock the
potential of businesses, support sustainable
to produce our quarterly Asda Mumdex report.
We wanted to share these insights in the pursuit
of better policy to drive growth that will
economic growth and encourage a sustainable help everyone.
consumer-led recovery.
The retail sector is already an engine of growth in
We have ranged widely and explored a number the UK economy, accounting for more than 20%
of important national issues. We have done so of GDP and a third of total consumer spending
because we feel that we have a good insight into in 20131. The retail sector is also the UK’s largest
the views and aspirations of our customers and private sector employer, with more than three
colleagues and wanted to speak on their behalf. million employees2. Asda alone directly employs
We have also looked beyond to propose a series more than 172,000 colleagues across the UK.
of recommendations that will not just help the However, the retail sector has struggled in recent
retail sector, but the wider UK economy. years through a mixture of rising business costs
and falling household incomes which have failed
We provide 44 recommendations, in three to keep pace with inflation.
Sections, that are designed to achieve three
goals; create an efficient, effective and Supporting the retail sector is crucial to
affordable regulatory environment for businesses maintaining the UK’s competitive edge in the
to operate in; ensure the Government helps global economy. Given the right legislative and
businesses to exploit opportunities for growth regulatory environment, combined with targeted
and investment in the UK economy; and reduce government investment, we believe businesses
costs for customers, providing a boost to their can deliver much more.
spending power.
Where we can we have provided costings for SECTION ONE:
our ideas, but we recognise that some of our
suggestions can only be achieved when the public
finances allow.
UNLOCKING THE POTENTIAL
OF BUSINESS
We believe the combination of these policies
S
will have real economic advantages to the UK by ection One sets out proposals to improve
boosting growth, spending and employment. The regulation, reduce costs and increase certainty
focus of this document is primarily on regulations for businesses, while maintaining tax revenues,
that affect England and Wales, as many of the protection for consumers and ensuring a fair level
decision-making powers that affect business of competition. A regulatory framework should
and growth in Northern Ireland and Scotland are seek to deliver its intended aims in the most
devolved matters. efficient and effective way possible. This does not
always happen and therefore we have ideas on
Set against a backdrop of a British economy how to make improvements.
which is recovering, although unevenly in some
parts of the UK, we believe that what we are We also propose a number of recommendations
suggesting will help Britain grow and make the to improve the non-domestic business rate
lives of customers and colleagues better. We hope regime. Taken together, these proposals are
you agree. intended to increase certainty for businesses,
encourage investment and revive declining high
ABOUT ASDA AND streets. For example, we recommend using CPI
inflation, over a period of at least three months, to
THE RETAIL SECTOR calculate annual adjustments to the business rates
multiplier. This cost neutral measure would deliver
Asda is a leader in UK retail; we serve 20 million huge benefits for businesses – particularly retailers
customers every week in more than 560 stores, who pay proportionally more business rates than
through our mobile apps and on our Asda.com any other sector – by increasing certainty over
and George.com websites. We are closer to our future costs. We also propose measures to exempt
customers than any other retailer; we produce a some empty properties from business rates,
monthly Asda Income Tracker, which measures which is intended to provide a targeted boost to
family spending power, and we regularly talk to struggling high streets. We also urge a number
our panel of 5,500 mums about their household of measures to streamline the planning system,
finances, family life and their hopes for the future, by extending Permitted Development Rights
6 | ASDA GETTING BRITAIN GROWING 2014EXECUTIVE SUMMARY
for commercial properties, and reforming the enabling the Green Investment Bank to borrow
Community Infrastructure Levy. from capital markets or driving reform of the
European Single Market.
Efficient and effective regulation supports
business growth and boosts consumer confidence:
so that is why we also propose a Government
SECTION THREE:
review of product pricing and packaging
regulations, which determines how we price ENCOURAGING
and package our goods (such as price per kg
and minimum weights for some products). This A SUSTAINABLE CONSUMER-
tackles an unnecessary regulatory burden and LED RECOVERY
offers real benefits for consumers too. Similarly,
W
we propose a simplification of the regulation on hatever government and business do
age-restricted sales and extending the already together, we have also got to help the
successful Primary Authority Scheme. hard-pressed customer to get growth really
going. So Section Three proposes a series of
recommendations that we believe can ease
SECTION TWO: the pressure on UK households from low wage
growth and rising living costs, while also boosting
SUPPORTING customer spending to grow the UK economy.
Many of these measures naturally involve
ECONOMIC GROWTH investment from the Government; as a result we
recognise not all can be delivered immediately.
S ection Two outlines those areas where we
believe targeted Government assistance and
support for business can stimulate growth in the
However, we argue that reducing costs for
households today will deliver customer spending
and economic growth tomorrow.
UK economy. However good regulatory structures
are, businesses can still need the support of the For example, we propose raising the Personal
Government to meet future challenges and create Tax Allowance to £12,875, in line with a full-time
the conditions for sustainable economic growth: salary on the National Minimum Wage, ensuring
good transport links are one obvious example. those on low incomes are assisted with rising
living costs. We also argue that when the public
And Government has an important role to play in finances allow, VAT should be returned to 17.5%
setting strategic objectives – such as increasing - an aspiration it might be, but it is an important
exports in the food and drink sector – and one. We propose freezing fuel duty until 2020 to
helping businesses to achieve them. This is prevent transport costs soaring above inflation -
particularly the case with Small and Medium for many of our customers and colleagues driving
Sized Enterprises (SMEs). is not a luxury, but a necessity.
We propose, for example, extending funding for There are also a range of more targeted
apprenticeships to those aged over 25 years, measures that the Government could take to
enabling all employees to develop their skills assist households. Energy bills could be brought
and retrain throughout their whole careers. In down by increasing competition in the market,
addition, we call for all employment, training and strengthening the Green Deal and making it
back to work programmes to be brought under easier for customers to switch energy suppliers
the remit of a single Minister and government by rapidly implementing a switching service
department, increasing clarity for individuals and which takes less than 24 hours. Helping to
businesses that wish to engage with them. We tackle the cost of childcare by extending free
also suggest a targeted investment in a time- childcare provision not only eases pressures on
limited National Insurance Contribution holiday household budgets but helps get parents back
to provide a short-term boost to businesses that into work. The Government also needs to act to
may be looking to grow their workforce. support what could become a lost generation, so
we suggest helping young people into work by
We also believe the Government can do more subsidising their transport costs.
to empower local authorities and SMEs, so we
propose devolving more budgetary powers to We also make recommendations to enable
local authorities and expanding the Regional businesses to respond to changing customer
Growth Fund to boost local growth, ensuring that demand via a fast and effective roll out of digital
the UK’s economy is balanced and sustainable. infrastructure such as superfast broadband, the
The Government should also accelerate the expansion of public Wi-Fi and updating Sunday
construction of a High Speed rail line to Leeds trading restrictions for the 21st century economy.
and Manchester to help drive regional economies We firmly believe the policies in this document,
and set out clear commitments to increase UK taken together, will help get our economy going.
airport capacity. Finally, the Government must We welcome comments and suggestions on our
use its weight and influence to maximum effect, ideas and are ready to join the debate.
whether by creating a national business bank and
ASDA GETTING BRITAIN GROWING 2014 | 7FOUR FUNDAMENTALS
F O U R F U N DA M E N TA L S
O ur proposals range widely, but there are four steps which we believe the Government could take soon which
would accelerate the economy into a powerful engine of growth. They are;
RECOMMENDATION
Increase the Personal Tax Allowance to
be in line with a full time salary on the
National Minimum Wage
RESULT
Give those on low incomes more money in
their pockets, lifting up to 13 million
people out of the tax system
RECOMMENDATION
Freezing fuel duty until 2020 to assist low
income households with the cost of motoring
RESULT
Provide more certainty to households and
businesses when planning spending
8 | ASDA GETTING BRITAIN GROWING 2014FOUR FUNDAMENTALS
RECOMMENDATION
Reform the business rates system to
encourage investment in the retail sector
RESULT
Allow bricks and mortar retailers to
compete on an even playing field with
online retailers and provide more certainty
to businesses when planning to invest in
physical retail space
RECOMMENDATION
Relax Sunday Trading hours
RESULT
Enable retailers to meet the changing
needs of shoppers and our local commu-
nities, and level the playing field between
multi-channel retailers
ASDA GETTING BRITAIN GROWING 2014 | 9CONTENTS
CONTENTS
SECTION 1:
UNLOCKING THE
POTENTIAL OF BUSINESS
SECTION 2:
SUPPORTING SUSTAINABLE
ECONOMIC GROWTH
SECTION 3:
ENCOURAGING A
SUSTAINABLE CONSUMER-
LED RECOVERY
SECTION 4:
CONCLUSION
10 | ASDA GETTING BRITAIN GROWING 2014SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
SECTION 1:
1
UNLOCKING THE
POTENTIAL OF BUSINESS
INTRODUCTION
B usinesses recognise the important role good
regulation plays in encouraging growth
by creating a level playing field and providing
IN THIS SECTION:
consistency and transparency for customers.
We regularly work with Ministers, Advisers and REFORM BUSINESS RATES
Officials to ensure that new regulations are fit
for purpose and achieve their intended aims
without imposing unnecessary costs or STREAMLINE THE
bureaucratic processes.
PLANNING SYSTEM
There are several areas where government could
improve regulation, reduce costs and increase
certainty for businesses, while maintaining tax BETTER REGULATION AND
revenues, protection for consumers and ensuring
a good level of competition. For example,
THE RED TAPE CHALLENGE
reforming the non-domestic business rate regime
to ensure it is a proportionate and effective
system fit for the realities of the 21st century EXTEND THE PRIMARY
and streamlining the planning system. Similarly, AUTHORITY SCHEME
combining the 17 pieces of legislation concerning
age-restricted sales (such as lottery, tobacco and
alcohol) into a single piece of regulation would SIMPLIFY CONSUMER
simplify our compliance procedures without
reducing protection for consumers or colleagues. REGULATIONS
Finally, businesses have a collaborative role to
play with central government, local authorities
and enforcement bodies to ensure they are
compliant with the law and consumers are
protected. We welcome such an approach as it
increases transparency, mutual understanding
and ultimately delivers better outcomes for
businesses, inspection bodies and customers.
Therefore we strongly recommend a more
rapid and ambitious rollout of the Primary
Authority Scheme.
ASDA GETTING BRITAIN GROWING 2014 | 11SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
R E F O R M B U S I N E S S R AT E S
RECOMMENDATION 1: and mortar estate, who are also likely to
generate greater levels of employment, are
Use CPI inflation, over a period of at least three being unfairly disadvantaged compared to
months, to calculate annual adjustments to the their online competitors.
non-domestic business rate multiplier
The retail sector has also faced many other
RECOMMENDATION 2: cost increases in recent years, in addition to the
above inflation growth of their business rates
Introduce a three year freeze on future increases bills. Input costs (including labour, property,
in non-domestic business rates, while wider utilities) increased by 21% between 2006 and
reform of the business rates system takes place 2012, reaching approximately £116 billion, up from
just over £96bn in 20063. The total business rates
RECOMMENDATION 3: bill for the sector has increased from £5.5bn in
2007 to over £7bn in 2012. Over the same period
Landlords who are actively seeking tenants for retailers increased Gross Value Added by just 12%,
their empty properties should be exempt from as consumers have faced a prolonged recession
business rates and subdued wage growth. As a result, the retail
sector has shouldered an extra £20bn in non-
RECOMMENDATION 4: merchandise costs at a time of weak and rapidly
changing consumer demand.
Exempt from business rates all empty commercial
properties below 5,000 square feet (sq ft) and
introduce void relief at the start of their tenancies
RETAIL SECTOR BUSINESS RATES PAYMENTS
RELATIVE TO RENTS
NON-DOMESTIC
BUSINESS RATES 50%
N on-domestic business rates are a significant
and regressive cost for any business, being
levied against assets (property) rather than
economic activity. In 2013 we paid more than
£380 million in business rates, approximately
double our corporate tax bill. We pay business
40%
rates even if we don’t make a profit and they now
represent a much larger share of retailers’ total
costs relative to rent than in previous years (see
chart below), even though rents have fallen on
average by 8% during the downturn.
2006 2007 2008 2009 2010 2011 2012
In 2013 we paid more
than £380 million
(SOURCE: OXFORD ECONOMICS / VARIOUS)
in business rates,
Although welcome, recent falls in corporation tax
approximately double our have been unable to offset this continued rise in
corporate tax bill our input costs and business rates. Research
by PWC estimates that for every £1 of corporation
Although we recognise the importance of paying tax, the UK’s biggest retailers bore almost
tax on our properties, which support important £2.40 in other taxes, of which £1.44 related
local services, we think the current system is to business rates and £0.64 to National
unfair and unpredictable. The Government has Insurance Contributions4. Government must
tacitly acknowledged this through its decision to consider the impact of business taxation in
impose a one-year cap on business rates of 2% for the round, particularly for sectors with a large
2014/15. Retailers with a large bricks property portfolio.
12 | ASDA GETTING BRITAIN GROWING 2014SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
At present the business rates multiplier is adjusted on consumer spending. This would enable the
annually in line with the previous September’s Government, working with industry groups such
RPI inflation. However, using a single month
snapshot is inappropriate because it is subject to
as the British Retail Consortium (BRC) and the
Confederation of British Industry (CBI), to develop 1
substantial fluctuations and often differs greatly and implement an effective and proportionate
when compared to annualised inflation, creating business rates regime that reflects the realities of
uncertainty for businesses when forecasting the 21st century commercial world.
their business rates contributions and developing
We expect our proposals to amend how business
investment plans. Due to its inclusion of housing
rates are calculated to be fiscally neutral to the
costs, the RPI (and the RPIKJ) is also more Treasury, as business rates would continue to
volatile than the CPI. The unsuitability of the increase in-line with annual inflation and continue
RPI for calculating the business rates increase to contribute a similar proportion of revenue for
is demonstrated by the UK Statistics Authority the central and local government.
decision to downgrade RPI so that it is no longer
a designated national statistic because it fails to The proposed freeze on business rates would
meet International Standards5. naturally lead to a reduction in the overall amount
of business rates collected. However, this would
For example, it can take up to four years to be in the context of year-on-year increases in
obtain planning permission and build a new store, business rates during an economic downturn and
whose viability is determined by the projected the forecast increase in business rates to become
cost of operation, including the business rates the fifth largest source of government revenue,
bill. The difficulty in forecasting business rates – larger than council tax and fuel duty6.
demonstrated by the above inflation 5.6% rise for
2012/13 – imposes significant challenges to our EXTENDING EMPTY PROPERTY
investment planning. The chart below shows how
the annual rise in the business rates multiplier is
RATE RELIEF
out of step with, and much more volatile than,
annual inflation (using the CPI, calculated across
the year April to March).
C ommercial businesses may find themselves
with empty properties for a number of
reasons. Supermarket developments may include
a number of additional, smaller retail units which
take time to be occupied by local businesses.
ANNUAL UBR INCREASES VS PREVIOUS YEAR Refurbishing existing properties or moving to new
CPI, 12 MONTH AVERAGE premises may also leave a business with an empty
property that is liable for business rates, acting
6% as a disincentive to business investment, which in
turn hampers job creation.
Empty property rate relief was removed at the
height of the property market to discourage
landlords and developers from sitting on empty
properties in anticipation of an increase in their
3% value. However, the risk of properties being
used as investment commodities in this way
has diminished as the market has fallen and
high street vacancy rates remain high in many
areas. The Government should reintroduce
comprehensive empty property rate relief,
particularly for smaller premises such as those on
0% the high street.
‘05/06 ‘06/07 ‘07/08 ‘08/09 ‘09/10 ‘10/11 ‘11/12 ‘12/13 ‘13/14 ‘14/15*
Business rate multiplier increase (Based on previous September RPI figure) Empty commercial properties are currently
Annual CPI inflation for the previous year (April - March) eligible for three months rate relief. However,
empty property relief should be extended
(SOURCE: ONS: PRICE INDICES AND INFLATION) indefinitely for landlords who actively seek
tenants. This would ensure that proactive
landlords and developers are not penalised as a
The uprating of business rates should be result of the economic downturn and encourage
calculated using at minimum, a three month them to bring forward their planned investment
period and the CPI measure of inflation, which in new properties, providing a boost to the
would provide a more predictable and equitable construction sector. Those that fail to actively
system. The Government should also introduce seek tenants (by not employing an agent or
a time-limited freeze on increases in business advertising their vacant properties), should not be
rates, up to three years, to enable the high street eligible for empty property rate relief.
to recover fully from the continuing squeeze
ASDA GETTING BRITAIN GROWING 2014 | 13SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
In addition, all empty commercial properties would not need to fill their premises as quickly
below 5,000 sq ft, which are typically found on as possible.
the high street, should be exempt from business
rates and given an automatic first year relief on Although these recommendations may lead to a
their business rates bill once occupied. This would short-term reduction in the total value of business
provide the breathing space new start-ups need rates collected, we believe that encouraging
when first establishing their businesses and in business growth will deliver long-term benefits to
turn, encourage high street diversity as landlords the economy.
S T R E A M L I N E T H E P L A N N I N G SYS T E M
PERMITTED the store would make a real difference to many of
our customers, especially those who shop
DEVELOPMENT RIGHTS with their children. In a recent survey, a third
of our customers said they regularly use the
RECOMMENDATION 5: parent and child parking spaces and of those,
almost 60% found the idea of a covered walkway
Introduce greater flexibility for Permitted very appealing (please see graph below)7.
Development Rights for commercial properties
60%
I
n May 2013 the Department for Communities
and Local Government introduced changes 60%
to Permitted Development Rights, including
enabling the change of use of offices and retail 50%
units to residential. This change was intended
40%
to introduce greater flexibility into the planning
system that reflected the changing needs of
30%
communities and the economy; rather than
having shops or offices sit empty they could be 20%
converted into much needed housing, revitalising
high streets. 10%
A similar approach should be adopted for existing 0%
commercial properties, introducing greater
1 Not very appealing 2 3 4 1 Very appealing
flexibility in Permitted Development Rights so
they too can continue to evolve to keep pace (SOURCE: ASDA PULSE OF THE NATION APRIL 2012 )
with changing communities and the demands of
the economy. For example, our customers shop
with us through a number of different channels; Extensions - Retailers should be able to extend
in-store, buying online for home delivery, and supermarket buildings provided the extension is
increasingly through Click and Collect (order online, not used for sales. This could be limited to 10%
pick-up in-store). Many of these functions require of existing store sizes. This could be used for
us to use our existing space in different ways, for additional storage space in the stores where we
example building Click and Collect drive-through are rolling out our Click and Collect service. We
facilities in some of our car parks and expanding are also trialling a Collect Plus initiative which
the storage space in the back of our stores to allows customers to collect items from third party
accommodate grocery home shopping orders. suppliers in our stores (for example Amazon and
E-bay packages).
We have identified the following areas in which
greater flexibility created by PDRs would both Back of House - Retailers should have Permitted
encourage growth and investment by enabling Development Rights to alter and expand loading
businesses to evolve with the changing economy bays. This could be made subject to a condition
and customer demand for a more convenient that the alterations do not lead to a significant
shopping experience. increase in noise levels where the supermarket is
within a certain distance of residential dwellings.
Car Parks - PDRs should be expanded to allow
retailers to change car park layouts without the
need to apply for planning permission. This could
be subject to a condition that any such alterations
must not have an adverse impact on traffic
congestion. For example, the minor alteration of
erecting a covered walkway from the car park to
14 | ASDA GETTING BRITAIN GROWING 2014SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
COMMUNITY Development classes - A significant proportion
of local authorities are focussing their CIL
INFRASTRUCTURE LEVY charges on a very limited number of classes of
development, seemingly on the assumption that 1
RECOMMENDATION 6: these types of development are most able to
pay the CIL. For example, we are aware of one
The Government should undertake a review proposed charging schedule in which charges
of the Community Infrastructure Levy (CIL) to are only to be levied on large retail and housing
ensure that it is being used and achieving the developments. Where these charges are
objectives, originally intended focussed on a few classes of development, the
financial burden on these developments will
RECOMMENDATION 7: be even greater and their likelihood of
proceeding, diminished.
The Planning Inspectorate should provide local
Used as a planning tool - In our experience some
authorities with clear guidance on the calculation
local authorities are intending to use the CIL as
and assessment of their charging schedules
a planning tool as well as a source of revenue,
contrary to its original intention. We are aware of
RECOMMENDATION 8:
charging schedules which seek to impose much
higher rates upon out of centre development, or
The Government should introduce a refund
certain types of development than upon town
mechanism for CIL contributions, refunding
centre development, irrespective of whether there
developers when local authorities fail to invest
are no sequentially preferable sites. Some local
within a set time frame
authorities have also sought to impose much
higher rates on specific types of development,
T he Community Infrastructure Levy (CIL)
allows, but does not require, local authorities
to raise revenue to fund infrastructure within
such as housing or retail stores, in order to act as
a deterrent to development.
their areas (by levying a charge for every square
Section 106 Agreements - A significant number
foot of new development). The Levy is intended
of local authorities are failing to take into account
to work alongside, rather than replace, Section 106
the likely Section 106 and additional highways
obligations. The amount of CIL due will be calculated
contributions that will be payable after the CIL
with reference to the local authority charging
has been adopted, which is artificially inflating
schedule when a planning permission is granted.
the proposed CIL charges in their areas. There
is a risk that developers could pay contributions
twice. For example, a developer may pay towards
Each of our stores operates upgrading infrastructure in the vicinity of their site
prior to their development becoming operational,
an individual profit and but also pay towards a scheme which could
see the Section 106 investment replaced with
loss account, essentially infrastructure they have funded under the CIL.
being run as an To avoid creating these unnecessary barriers to
independent business investment, the Government should undertake
a review of how the CIL has worked to date to
Each of our stores operates an individual assess how much infrastructure funding is being
profit and loss account, essentially being run obtained, compared to the traditional Section 106
as an independent business. Therefore, like system. This would ensure the CIL is being used
many businesses, our investment decisions are as originally intended and not acting as a barrier
determined by calculating the potential return to growth.
on investment (ROI) for each proposed new
store. This is calculated by examining the costs We also recommend that the Planning
that would be faced by that individual store, Inspectorate provide local authorities with clear
including nationally and locally administered guidance on the calculation and assessment
taxes and charges, and balancing these against of their charging schedules to ensure the CIL
the projected turnover. The ROI for a proposed is used correctly. A refund mechanism for CIL
store must meet our strict criteria in order for contributions should also be introduced; refunding
investment to go ahead. The CIL adds another developers when local authorities fail to invest
cost to these calculations and can render some within a set time frame (this would be based on
projects economically unviable - even though the refund mechanism for Section 106 payments).
they may be sound in planning terms - having a
detrimental effect on the Government’s priorities We expect these recommendations to be cost
for job creation and housing provision. neutral for Government and to benefit local
authorities in the long-term by encouraging
In short, it does not encourage growth. business investment.
We have encountered the following challenges
when working with local authorities who are
seeking to introduce a CIL:
ASDA GETTING BRITAIN GROWING 2014 | 15SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
B E T T E R R E G U L AT I O N & T H E R E D
TA P E C H A L L E N G E
RECOMMENDATION 9: and must therefore have already reported their
condition to a medical professional. As such
Increase the scope and ambition of the Red Tape there is no benefit in having businesses
Challenge to address regulations identified by duplicate this reporting.
businesses for urgent reform
> Collecting data directly from the NHS and GPs
W e support the Government’s drive to
improve, simplify or scrap unnecessary
regulation through the Red Tape Challenge, Focus
would improve the quality of data as it
would be recorded and supplied by medical
professionals, rather than those without a
on Enforcement, and the ‘one in, two out’ rule. As medical background. We believe that this
businesses, technology and the markets in which could increase the number of incidents
we operate continue to evolve, we recognise reported as it would be collected from the
that legislation can become outdated or unfit source of treatment, rather than the business
for purpose. We submitted a detailed response that may be unaware that the incident took
to the Red Tape Challenge in May 2011, setting place, or that a hospital visit was required.
out those areas we believed could benefit from
simplification without having a detrimental impact The Office of Tax Simplification should move
upon consumers and colleagues. more boldly and more quickly in its revision of
the tax code. Tax is an essential revenue raising
There remains considerable scope to build on the tool for government that is paid by all businesses,
progress of the Red Tape Challenge. To date it whether through Corporation Tax, Value Added
has primarily focused on the low hanging fruit of Tax or property taxes. But tax also shapes how
removing redundant legislation from the statute businesses operate, determines their ability to
book, but a change in pace is now required to evolve and influences their investment decisions.
tackle those regulations that create problems An efficient, transparent and streamlined tax
for businesses. code is therefore vital for encouraging economic
growth. The UK tax code has continued to grow
For example, addressing the following issues and now runs to more than 5,500 pages, in
could have a material, immediate and positive addition to several thousand pages of guidance.
impact on businesses: Together with reform of business rates and a
National Insurance Contribution (NIC) holiday
Scrap the 100 hour rule for existing pharmacies – (see section 2) this reform has the potential to
the Department of Health (DH) scrapped the 100- increase certainty for businesses, giving them
hour exemption rule for opening new pharmacies greater confidence to invest.
in 2012. This suggests that DH no longer
recognises the value, or need for, pharmacies to We expect these proposals to be fiscally neutral
open for 100 hours per week. Pharmacies that for the Government and be cost neutral to the
opened under this exemption should be freed NHS and GPs as they are already required to
from the requirement to open for 100 hours report incidents under RIDDOR.
per week so that they can adjust their hours in
response to customer demand.
Streamline reporting requirements for RIDDOR
(1995) – The Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations place an
unnecessary burden on businesses. Reporting
could be streamlined and the quality of
information collected improved. For example:
> Removing the requirement for businesses
to report under RIDDOR would remove an
unnecessary, and less accurate, duplication of
reporting. For example, the reporting threshold
for lost-time injuries is those resulting in an
absence of seven days or more. However, any
employee would require a ‘fit note’ from
their GP to authorise an absence of this length
16 | ASDA GETTING BRITAIN GROWING 2014SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
RED TAPE CHALLENGE: PROGRESS TO DATE
1
The Government has continued to announce results from the Red Tape Challenge, identifying
those areas where it intends to either amend or repeal legislation. However, we remain
disappointed by the glacial pace of reform, with significant lags between the announcement of
proposed changes and their implementation. For example, it was nearly two years (July 2011)
after the Government announced plans to repeal the requirement of retailers to inform the TV
Licensing Agency when a new television is purchased (as required by the Wireless Telegraphy
Act 1967) before it was finally repealed in June 2013.
In its January 2013 Implementation Plan for the Retail Theme progress report, the Cabinet
Office reported that 64% of those regulations identified for simplification or removal had been
addressed. However 98 - approximately 60% - of these 165 regulations concern ‘Trading With
the Enemy’, largely a result of the Second Word War and Cold War. We do not consider the
scrapping of these obscure regulations to have a meaningful impact upon businesses, delivering
little in the way of practical cost savings or enabling increased efficiency or benefits
to consumers.
The age at which children can legally purchase Christmas crackers was reduced from 16 to 12
years from April 2013. This was a disappointing change as this increased the burden on the
business as we had no existing procedures for restricting sales to those below 12 years, whereas
we do have procedures for restricting sales to those aged 16 or below (petrol, lottery tickets
etc). Scrapping the age restriction on the purchase of Christmas crackers would have reduced
the regulatory burden on businesses.
T H E P R I M A RY AU T H O R I T Y S C H E M E
RECOMMENDATION 10: and work. It is of significant reputational benefit,
and makes clear business sense that our sites are
Extend the Primary Authority Scheme to include trusted to be safe environments. As a result, we
alcohol licensing, knives and fire safety have an excellent track record of compliance and
we believe this should be recognised by those
RECOMMENDATION 11: carrying out inspections.
The Primary Authority Scheme (PAS) has
Ensure that all relevant inspection bodies,
demonstrated that it delivers positive outcomes
including the police and fire service, are
for the public, businesses and local authorities,
brought within the scope of the Primary
while maintaining high levels of compliance.
Authority Scheme
Proposals to extend the use of Primary Authorities
demonstrates that Government, local authorities
RECOMMENDATION 12:
and inspection bodies are confident that it is the
best approach to ensuring compliance, while
Introduce the ‘no difference’ argument, enabling
reducing the number of inspections on business
Judicial Reviews for minor procedural defects to
and enabling resources to be focused on high risk
be dismissed at the Permission Stage
sectors. Therefore, we believe the Government
should seek to include as many inspection areas
EXTEND THE PRIMARY and inspection bodies as possible within the PAS.
AUTHORITY SCHEME
L ocal authorities and reputable businesses have
a shared goal; to provide safe and compliant
environments for the public and colleagues. As
Our parent company
Walmart has recognised
a large national business that serves the public
everyday, we have invested significant resources the UK business as a model
in developing robust compliance procedures. We
have a responsibility to offer our customers and
of best practice with
colleagues a safe environment in which to shop regards to compliance
ASDA GETTING BRITAIN GROWING 2014 | 17SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
O ur parent company Walmart has recognised
the UK business as a model of best practice
with regards to compliance. It recognises the
more robust than the police’s approach (the
police test to the legal age of 18). At a time
of reduced public spending it is unclear what
unique environment in the UK in which businesses benefits are delivered from duplications of this
and local authorities can work collaboratively to kind by a less robust approach.
achieve a high level of compliance and an excellent
track record. We believe that government should A significant proportion of our activity is low-risk
encourage local authorities to take advantage of and we do not believe it should be inspected as
this by bringing the following areas within the PAS: regularly as high-risk areas. Moving to a smart
compliance, risk-based approach would allow
• ALCOHOL LICENSING inspectors to focus on high-risk sectors, while
• KNIVES reducing the burden on low risk, highly compliant
• FIRE SAFETY businesses. This is a win-win situation; reputable
businesses are generally well-intended and well-
Our colleagues manage these issues with the informed and enforcement officers will be free to
same rigorous procedures as other issues covered focus on high-risk businesses, persistent offenders
by primary authority; age-related sales are and rogue traders.
handled via our Challenge 25 process, while fire
safety is a natural extension of our health and The success of a risk-based approach is
safety procedures. We believe that in principle, predicated upon the knowledge, experience
these areas and those bodies responsible for and awareness of the PAS amongst inspection
conducting inspections could be included within bodies. The Government should ensure that all
the PAS with little difficulty for businesses and of those involved respect the principles and spirit
local authorities. of the PAS, placing trust in the respective Primary
Authority to undertake compliance inspections
We participated in a trial to extend the PAS to on their behalf. Similarly, awareness should be
include fire safety and alcohol licensing during increased to ensure that all potential participants
2013. Although welcome, we believe that the understand the benefits of the PAS.
trial was insufficiently ambitious in its scope and
that Government must continue to encourage
more inspection bodies and their representative
EARNED RECOGNITION
organisations to support the PAS.
INSPECTION BODIES
I nspection bodies should recognise those
businesses that adopt a rigorous and robust
approach to compliance. For example, we have in
place procedures to ensure we are compliant with
I n order to realise the full benefits of the PAS and
ensure that it achieves its objective of reducing
unnecessary inspections, the maximum possible
age-restricted sales regulation (Challenge 25),
which are significantly more robust than those
used by inspection bodies such as the Police or
number of inspection bodies must be brought Trading Standards.
within its scope, including the fire services and
the Police. Inspection bodies have already begun to operate
under the principle of earned recognition. West
For example, the inclusion of Trading Standard’s Yorkshire Joint Services has asked other Trading
alcohol licensing inspections within the PAS has Standards bodies across the UK to approach
led to some police forces being more proactive age-restricted sales of alcohol and knives in the
in conducting inspections, not only replacing same manner as though they were part of the
but increasing the number carried out before PAS, recognising both the rigorous standards and
our Primary Authority agreement with Trading procedures we have in place and the benefits of the
Standards. We spend approximately £230,000 scheme. This demonstrates how earned recognition
every year on independent test purchases against is already recognised by enforcement bodies as a
our Challenge 25 policy, which is significantly legitimate and workable approach to enforcement.
ASDA AND THE PRIMARY AUTHORITY SCHEME
Asda is an advocate of the Primary Authority Scheme, having established its first Primary
Authority agreement with Wakefield Council in 2009. Wakefield is home to a number of Asda
stores and depots, as well as our importer of fresh produce, International Procurement and
Logistics (IPL). We agreed an Inspection Plan with Wakefield Council in August 2011, with the
explicit aim of improving local enforcement of legislation in Health and Safety, with particular
focus on Work Place Transport, Slips and Trips and Manual Handling. We established a Primary
Authority agreement with West Yorkshire Joint Services for Trading Standards related matters
such as date coding and age-restricted sales (excluding alcohol and knives which is currently
outside the scope of Primary Authority). We intend to build several further partnerships with
local authorities across the UK, making best use of resources and expertise.
18 | ASDA GETTING BRITAIN GROWING 2014SECTION 1 | UNLOCKING THE POTENTIAL OF BUSINESS
We expect these recommendations to be cost Businesses will also save money by reducing
neutral to government and to deliver savings to the number of unnecessary inspections and by
both local authorities and inspection bodies, by
reducing unnecessary inspections and enabling
consolidating their compliance procedures on a
national basis. 1
them to focus their resources on high risk sectors.
SIMPLIFY CONSUMER REGULATIONS
RECOMMENDATION 13: Many customers continue to be frustrated by
the difficulty in comparing the price of goods,
Undertake a full review of product pricing and particularly those that may be on offer for a short
packaging regulations period or used in a ‘3 for 2’ promotion. At Asda
our approach is based on ‘Every Day Low Prices’,
RECOMMENDATION 14: providing goods at their lowest possible price,
rather than promotions and temporary reductions
Consolidate age-restricted sales regulation into a in prices. Consumers’ ability to compare prices,
single piece of regulation both within our stores and against those of
our competitors, could be increased by more
simplified pricing regulation. This would in turn
PRICING INFORMATION boost consumer confidence in the products
they are buying and enable them to achieve
T here are a number of regulations which
determine the unit pricing in which we can sell
our goods. The three primary pieces of legislation
better value.
The Government should go much further and
- Price Marking Order, Supply of Goods and lead a review of all pricing regulations affecting
Services Act 1984 and Office, Shops and Retail products in the UK. Led by the Minister for
Premises Act 1963 - throw up numerous anomalies Consumer Affairs, this would enable businesses
and discrepancies that create significant and consumer groups to work together to
confusion for consumers, as well as hindering our develop clear and consistent pricing regulations
ability to provide clarity and consistency. that are designed for today’s customers. As part
For example: of this review, the Government should also seek to
scrap restrictions on all the packaging of goods,
We are legally required to sell beetroot in six enabling retailers to provide customers with
different unit prices, depending on how it is greater flexibility, encourage waste reduction and
packaged. Pickled beetroot is sold in millilitres better enable them to manage their budgets.
or litres, pre-packed beetroot in 100 grams
and kilograms and whole beetroots are sold by
price ‘per each’ or ‘per bunch’. This reduces AGE RESTRICTED SALES
transparency for customers, preventing them from
easily comparing the price of different goods.
Raw fish must be displayed at price per Kg,
C onsolidating the existing 17 pieces of
regulation concerning age-restricted sales
(such as alcohol and lottery tickets) would
cooked fish price per 100g. For some items, such have several benefits. This increased clarity
as smoked mackerel which are difficult to classify, would assist businesses’ compliance and in turn
this is both confusing for our colleagues and improve consumer safety, as well as reducing
customers. A more consistent approach would administrative costs for businesses. At present,
be welcome, as well as the flexibility to price all the wide array of regulations make it difficult for
raw meat and fish in price per 100g, to increase businesses to comply and add to training time
transparency and the ability to compare prices. and costs, particularly as there are a multitude
of different and inconsistent age restrictions for
The Weights and Measures (Packaged Goods) different products (age 12 for Christmas Crackers
Regulations 2006 place restrictions on a retailers’ and age 16 for party poppers; age 18 for solvents
ability to offer flexibility in pack sizes. As a result and age 16 for aerosols). The improved clarity
there are restrictions on the pack sizes of certain would also benefit consumers who are often
products, such as bread or butter, which may confused by age-restricted sales.
mean little to today’s customers. This reduces our
ability to minimise food waste by offering pack We expect these recommendations to be fiscally
sizes that reflect modern eating and shopping neutral to the Government, while providing
habits, as well as limiting consumer choice. savings for businesses by reducing the burden
Despite these regulations being highlighted in of compliance.
the Red Tape Challenge, to date only one small
amendment has been announced, scrapping
restrictions for the sale of knitting needles.
ASDA GETTING BRITAIN GROWING 2014 | 19SECTION 2 | SUPPORTING SUSTAINABLE ECONOMIC GROWTH
SECTION 2:
SUPPORTING SUSTAINABLE
ECONOMIC GROWTH
INTRODUCTION
E ven in an efficient and effective regulatory
environment, businesses still need the support
of the Government when investing and meeting
IN THIS SECTION:
new challenges. Governments, both at national
and local level, have a key role in targeting their SUPPORT APPRENTICESHIPS,
investment to create the conditions in which
businesses can themselves invest, grow and drive TRAINING AND JOB
the economy. This chapter sets out proposals CREATION
for targeted government investment – in skills
training, job creation and infrastructure - to help
all businesses to grow. It also sets out actions DRIVE REGIONAL GROWTH
the Government can take, in partnership with
businesses and local authorities, to grow
the economy. SUPPORT SMES AND THE
For example, successful economies need a skilled GREEN ECONOMY
workforce and employees need opportunities
to train and re-train. Similarly all businesses
are reliant on an efficient and robust transport INVEST IN TRANSPORT
network which can only be delivered by the
Government. We set out proposals for ensuring AND INFRASTRUCTURE
that the UK’s infrastructure meets the needs of
businesses, now, and in the future.
EUROPE AND
The Government also has an important role to INTERNATIONAL TRADING
play in supporting struggling or new sectors
of the economy, particularly during a time of
economic recovery, by ensuring businesses have
access to finance. This is importantly the case
with SMEs – which make up 67% of our supply
chain – which may not have the financial resources
of large businesses like Asda to take on the
challenges of the future, such as investing in green
technology and taking on new employees.
The Government can also work with businesses
to set strategic objectives that acting alone,
they may struggle to achieve. For example, the
Government wishes to see exports in the food and
drink sector increase, particularly of high value
items. We support this aim, but also recognise
that to achieve this and other goals, business
and government must work together on
challenges such as breaking down trade barriers
in overseas markets.
20 | ASDA GETTING BRITAIN GROWING 2014SECTION 2 | SUPPORTING SUSTAINABLE ECONOMIC GROWTH
SUPPORT APPRENTICESHIPS, 2
T R A I N I N G & J O B C R E AT I O N
RECOMMENDATION 15: into employment, particularly during a period
of high unemployment, we do not believe a
Simplify existing employment and patchwork of overlapping initiatives is the
back-to-work programmes into a single pathway best approach.
for young people aged 16 to 24 years, under the
stewardship of a single Government department
and Minister RETAIL AS A SHARE OF TOTAL UK EMPLOYMENT
100%
RECOMMENDATION 16:
80%
Implement proposals to place employers
in full control of apprenticeships and 60%
training programmes
40%
RECOMMENDATION 17:
20%
Funding for apprenticeships should be extended
to employees aged 25 years and over and to 0%
those already in work 16-17 yrs 18-19 yrs 20-24 yrs all ages
Retail employment Other
SIMPLIFY EMPLOYMENT (SOURCE: RETAIL IN SOCIETY, BRITISH RETAIL CONSORTIUM)
PROGRAMMES
Businesses thrive on simplicity and streamlining
T he retail sector is the second largest
employment sector in the UK (after the NHS),
employing approximately 3 million people and
and those seeking a way back into work would
also benefit from easily accessible programmes,
set within a wider and coherent framework,
around 15% of the UK workforce. Retail provides that are mutually reinforcing and beneficial.
many people with their first job, introducing For young people in particular, the existing
them to the world of work and providing them programmes should be streamlined into a
with transferrable skills that benefit them over clear pathway of pre-16 work experience, post
their whole career. A significant portion of the school interventions for those lacking basic
UK workforce will pass through the retail sector literacy and numeracy skills or basic work
during their careers; around a third of those experience, before leading in to employment
employed by the sector are aged under 25 years, opportunities, including apprenticeships.
with approximately 40% of all 16 to 17 year olds
working in the sector8.
Retail offers a wide range of exciting careers, The retail sector is the
regardless of a person’s background or
educational qualifications. It provides jobs and
second largest employment
training opportunities combined with flexible sector in the UK (after
working, often in areas of the country with
challenging local economies. As a result, it is well the NHS), employing
placed to make a significant contribution to the
development of vocational education pathways,
approximately 3 million
particularly for young people. people and around 15% of
A range of government funded programmes the UK workforce
designed to help individuals, particularly young
people, into work has been made available for When we surveyed our customers, 64% called
employers. This includes the Work Programme, for greater access to apprenticeships for young
Work Experience, Work Placements, Youth people, suggesting that access is not easy at
Contract, Traineeships and Apprenticeships. present, with a third arguing that it was a better
Each programme has different aims, objectives, option than university9. They also noted that there
funding mechanisms and sponsoring government was a lack of sufficient careers advice in schools
departments. Although we understand and for those wishing to participate
support the need for programmes to help people in apprenticeships.
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