Press Releases

Notes for editors
The Rural Shops Alliance (RSA) was formed in April 2001 and now represents over 7,200 independent retail members, employing some 40,700 staff. The RSA – a trade association with a difference – exists to be the campaigning voice of the independent rural retailer and the source for practical support particularly in terms of retail best practice. Many ‘blue chip’ and ‘retail service’ suppliers sponsor and partner the work of the RSA and help the organisation with category management and best retail.

THE BUDGET

The Budget announcement of a rise in the standard rate of VAT to 20% surprised nobody. However, retailers could be excused thinking that the timing of its implementation is overly cynical. After the last changes in the rate of VAT, many retailers complained, explaining quite reasonably that January is one of the worst months in which to do it, for all sorts of very obvious operational reasons. You would think that if government consultation with the industry had any meaning this lesson might have been taken on board. But no, January it is again. Those of a cynical bent might just think that for the government the price disruption in the January sales forms the ideal backdrop to a VAT increase, masking its effects and ensuring that retailers help to absorb or spread its impact.

Indeed, the Office for Budget Responsibility has assumed in their figures that retailers will take a third share of the pain by not passing on the full rise in VAT in the form of higher prices to consumers. On past form, we all know how this works – the big multiples will use their raw market power to ensure that the pain gets passed firmly down the food chain to their suppliers, with no chance for the latter to decline the chance to “help”. Meanwhile, smaller retailers either eat into their inadequate margins to stay competitive or else put up their prices, losing custom as a result. We have all seen it happen before.

This time, however, there is a difference. There should be a Grocery Ombudsman in office when the change takes place.

Ken Parsons, Chief Executive of the RSA, said, “This will be a real test of the Grocery Ombudsman. It is clearly a misuse of market power for a large supermarket to make suppliers assume part of the increased VAT bill that is properly a cost to the retailer. We would expect the Ombudsman, when appointed, to immediately ensure that this aspect of the market works fairly and transparently. If the large multiples want to hit their own bottom lines by absorbing part of the VAT rise for competitive reasons, then it is their shareholders who should take the pain. We would then expect these shareholders to hold the directors of these companies to account for their policies”.

ALL CHANGE FOR THE QUANGOS

The government’s bonfire of the quangos will inevitably impact on rural businesses, including shops. The widely-trailed abolition of the Regional Development Agencies (RDAs) will see their roles passing to new Local Enterprise Partnerships, with a white paper due later this year on how these will operate. Ken Parsons, Chief Executive of the RSA, said, “The RSA is not a great fan of most of the RDAs. With a couple of honourable exceptions, their priorities seem to revolve around large schemes in towns rather than small businesses in rural areas, but nevertheless several months uncertainty about what will replace them is not helpful in today’s economic climate. We would urge the Government to make sure that the decisions surrounding the setting up of Local Enterprise Partnerships are addressed as soon as is practical”.

The second announcement to affect RSA members is the proposed abolition of the Commission for Rural Communities. Set up in 2005, the Commission and its chairman, Dr Stuart Burgess, have been effective advocates. They have ensured that government policy takes into account the needs of rural communities, for example, by establishing ground rules by which new legislation can be “rural proofed” to ensure that it does not have unintended consequences in rural areas.

Ken Parsons said, “The disappearance of the Commission for Rural Communities will mean that organisations like the RSA will need to redouble our efforts to ensure that the rural dimension does continue to inform government thinking. The RSA has recently written to all English MPs with rural constituents alerting them to some of the issues affecting rural shops and we will continue to help fill the gap left by the demise of the old Countryside Agency and its short-lived successor”.

REDUCING THE REGULATORY BURDEN – A GOOD START

A recent Parliamentary oral questions session on Regulation provided some hope that the new government may be set to tackle the problem posed by the mass of regulations faced by small retailers.

Mark Prisk, Minister of State for Business and Enterprise, indicated a desire to “make sure that we make a real change in how we help small businesses.” He went on to say, “We need to change the system, not just deal with the symptoms of the problem. That is why we are introducing a one in, one out approach to change the whole culture of Government: no new regulatory burden on business can be brought forward unless reductions are made to existing regulations. That will change the culture of Whitehall and stop some of the nonsense…”.

Mark Prisk then accepted an invitation from David Amess MP, the chair of the All-party Parliamentary Small Shops Group, to meet a small deputation from the group.

The Rural Shops Alliance is a keen supporter of the Small Shops Parliamentary Group and we very much welcome this opportunity.

Ken Parsons, Chief Executive of the RSA said, “We very much welcome David Amess’s initiative for the All Party Group to engage with ministers so early in the new parliament. I am sure our retail members will be able to find numerous examples of regulation that is stifling their businesses to feed through to government.”