Retail Industry Leadership Group meeting minutes: June 2023

Attendees and apologies

ILG members attending in person

• Joe FitzPatrick, Minister for Local Government Empowerment and Planning and ILG Co-Chair (Minister)
• Reuben Chesters, Project Manager, Locavore
• Tracy Gilbert, Regional Secretary, USDAW
• Andrew McRae, Policy Chair, Federation of Small Business
• Chris Tiso, Director, Graham Tiso Ltd.
• Robert Deavy, Scotland Organiser, GMB
• Polly Jones, Senior Manager, Corporate Affairs, Scotland, Asda
• David Lonsdale, Director, Scottish Retail Consortium

Attending via MS Teams

• Andrew Murphy, Chief Operating Officer, John Lewis Partnership and ILG co-Chair (AM)
• Meryl Halls, Managing Director, Booksellers Association of the UK and Ireland Ltd
• Dr Pete Cheema, Chief Executive, Scottish Grocers’ Federation

Apologies

• Debbie Harding, Chief Corporate Officer, Dobbies
• Sonya Harper, Central Operations Director, CJ Lang and Son
• Tony McElroy, Head of Communications and Devolved Government Relations, Tesco
• Mo Razzaq, National (UK) Deputy Vice President, National Federation of Independent Retailers
• Colin Smith, Chief Executive, Scottish Wholesale Association

Scottish Government

• Judith Young, Head of Tourism, Hospitality and Retail Division, Scottish Government
• Celeste Wilson, Team Leader - Retail Policy, Scottish Government

Secretariat

• Tom Lowry, Policy Officer - Retail Policy, Scottish Government

Observers

• Lucy Brown, Operations Programme Director, John Lewis Partnership

Items and actions

Items and Actions

Welcome and formal introductions of members to the new Minister

AM welcomed attendees to the fourth meeting of the Retail Industry Leadership Group (ILG). He also welcomed and introduced Joe Fitzpatrick, Minister for Local Government Empowerment and Planning, who has taken on the role of Ministerial Co-Chair for the group.

Apologies noted.

ILG Members

Due to  retirement, Jackie Cuddy, previously Centre Manager, Eastgate Shopping Centre, has stepped down as a member of the ILG. Karen Stewart, Centre Manager of the Livingston Designer Outlet, has accepted an invitation to join the ILG. 

AM announced that he has informed the Minister and Secretariat of his intention to stand down from his role as Co-Chair of the group and resign his membership of the ILG. This will be his last meeting as Co-Chair, although he will continue to hold conversations throughout the summer into early autumn. The Secretariat are currently working through the approach to source a new Co-Chair and will update the group in due course. AM thanked the group for their support and their contribution to the work thus far.

The Minister thanked AM for his commitment to the group and for his continued support until a new Co-Chair is appointed.

Minutes of the previous meeting agreed by members. Action three in the delivery plan on resource and timescales to provide the group with data, analytics and trend statistics. Members agreed that Scottish Government analysts would come and speak to the group before the end of the year to discuss these requirements. 

Hot Topics

A current industry perspective on how businesses, employees, suppliers and local authorities are experiencing the industry. Before opening up a discussion AM handed over to the Minister to give an update following the recent announcement from the First Minister on the New Deal for Business group and the postponement of DRS.

Minister - the New Deal for Business Group launched last month. The group will help ensure that we deepen our relationship with business from not just engaging and communicating with them, but actively aligning our policy with business and working in partnership on common goals. The first meeting was held on 17 May, and I was pleased to see that David Lonsdale of the SRC and member of the ILG has agreed to be involved in two sub-group workstreams ensuring the sector is having valuable representation going forward. The Group met for the second time on 1 June to discuss the work of each of the sub-groups, the third meeting was held yesterday, 28 June. 

The First Minister and the Circular Economy Minister met with more than 80 stakeholders earlier this month from a broad range of sectors including retailers, producers and hospitality. We have been left with no other option than to reset the timescale of DRS and delay the launch until October 2025 at the earliest. DRS will happen but it is disappointing that it will now take longer than needed and more limited than it should be. I would also like to advise that a DRS Retailer Sectoral Group has now been set up and are engaging on improvements to the current scheme. I was pleased to see that our ILG members Pete Cheema from SGF and Mo Razzaq of the Federation of Independent Retailers are members of this group, along with Ewan MacDonald-Russell from the SRC, and that sectoral interests are being represented. Hopefully this is positive news for the Industry.

Points raised in discussion:

Deposit Return Scheme (DRS)

• Have to acknowledge that for the ILG and what we are seeking to achieve both in the delivery in the Retail Strategy and also in terms of an organised relationship with the Scottish Government the DRS process has been a distraction and does generate a loss of confidence and reliability between the sector and the Scottish Government.
• Need to make sure the relationship between Government and sector are as positive and as constructive as they can be.
• When we deliver things together that confidence increases. 
• There is some regrouping to do, would encourage Government on strong collaboration from the earliest stages in policy research and formation right through to delivery which requires trust and openness between all parties.
• Members welcomed the fact Government wishes to re-engage with business.
• Feeling that DRS was never industry led and always producer led, need to take learning for the future.
• No input from employees point of view who will be working within the scheme, need to make sure messaging is going out to the public so they know how the scheme works and best practice in terms of policy for workers and businesses.

Violence against shop workers and anti-social behaviour

• Employee safety is a real concern, pressures on individuals and their disposable income and subsistence income is so profound that it is having a very detrimental effect on front line retail employee safety.
• The UK Government’s focus on what has been termed as ‘greed-flation’ with the major supermarkets is contextually very unhelpful. This has led to the belief that supermarkets are making large profits and therefore gives people licence to shoplift.
• Media coverage and language around profiteering is equally ill-informed and unhelpful as there is a feeling this drives crime against shop workers.
• Bookstores have been targeted by protesters who are objecting to Pride and Black Lives Matter window displays.
• Colleague safety in Asda stores has been enormously challenging. This has been a challenge throughout the UK, but Scotland seems to be particularly bad with anti-social behaviour. Perpetrators are generally young people therefore the police are finding it difficult to deal with as they are minors. Many examples of youngsters riding e-scooters in stores and causing damage and creating mess, such as throwing milk everywhere.
• Members noted more brazen thefts and more aggressive behaviour towards staff.
• Uptake in anti-social behaviour likely caused by a myriad of things; economically driven, a sense among perpetrators that there are little consequences, therefore they are emboldened by that, even an element of taunting staff, boredom, lack of youth services, thefts are lucrative to the perpetrators. 
• The base level of anti-social behaviour has increased since COVID which is effecting staff recruitment and retention.
• There is a feeling this increase in anti-social behaviour is influenced by social media.
• Within independent businesses it is not staff dealing with this but business owners themselves, who may be working alone, need to be mindful of that.
• Massive under-reporting of issues, need to be conscious of.
• USDAW crime figures show that 74% of staff have suffered abuse, 49% receiving threats and 8% physical violence. Shoplifting is also shown to be increasing.
• USDAW members survey to be published on 15 July shows; 1 in 4 members are skipping meals. 76% can’t afford to take time off, 59% receiving Universal Credit, 81% feel worse off than they did this time last year, 30% struggling to pay energy bills, 65% are having to cut down on heating, 68% say the cost of living crisis is having a negative impact on their mental health, 24% of the staff say they can’t afford to buy food in the shops in which they work.
• Would be useful to get figures on police stats in relation to the Protection of Shop Workers bill.

Cost Crisis

• Inflationary pressures and interest rates having a significant effect on sales, consumer confidence and footfall is down.
• Decisions in the upcoming budget will have implications for retailers and the wider business community, but also for consumers and household disposable income as well. 
• The Asda Income Tracker saw annual growth of 0.9% in May. This marked the strongest year-on-year change since October 2021. However, the income tracker shows 40% of households are in negative income which is the highest yet. Household spending power is likely to see noticeable gains from July onwards. This will be the result of upcoming falls in household bills, with Ofgem recently announcing a cut to its price cap.
• Although some members haven’t found trading challenging within the first period of the year there is concern that the industry is not robust. Businesses are pausing investment and freezing recruitment due to the deeply uncertain outlook in the months ahead. Margins are sensitive, softening in top line sales are increasing anxiety.
• Distinct difference in approach taken by landlords. Landlords who are large investors seem to be very supportive and collaborative and as they operate in the commercial space they are very aware of the economic challenges and the need to support their tenants. Institutional landlords who largely represent large pension funds are not sensitive to the  recalibration that is taking place on the high street, this will create significant problems in the years ahead as leases come to an end.

Food inflation

• Inflationary pressures are having a significant effect on food sales.
• Media coverage and language around profiteering has been extremely unhelpful. Supermarkets have been accused of greedily fuelling inflation at the expense of their customers.
• The term ‘greed-flation’ has been used by both the media and UK Government which has led some people to have concluded that supermarkets are "profiteering".
• It would be useful to give some explanation around the fact base which makes it clear that there is no profiteering going on. Members encouraged to feed into this with the group Secretariat.
• There have also been ongoing challenges with food supply chains.
• SRC data shows food inflation is decreasing

Pay

• Asda have increased colleague pay by 10% to £11.11 per hour, the new rate will be paid from 2nd July. This is on top of an 8% rise last year.
• Chris Tiso also stated that he is applying increases to salary of lowest paid workers.

Regulation

• Continued legislation towards the food and drink sector is not helpful, especially during the cost of living crisis.
• High volume of regulation, legislation and ambition, both from the Scottish Government and UK Government, highlights the importance that the processes need to be right and to ensure industry has been consulted. New Deal for Business is a really good foundation for going forward on that. 

Non-Domestic Rates (NDR)

• Not on an equal footing with our English counterparts.
• Aware Scottish Government are unveiling a tax advisory group which will help the process.
• Rates relief communications extremely poor.
• Bills come out very late. System has changed from relief being applied automatically to businesses having to apply, communication on this not clear.
• The Minister noted that work is ongoing for a potential sub group to consult on NDR.

Action: Minister to speak with Equality Minister in relation to targeted attacks on bookstores.

Action: Minister would like a deep dive in Security at the next ILG 

Action:  Officials to follow up with NDR officials re the problems with bills being late and relief not being applied and to highlight the impact this is having on retail businesses. 

The progress of the Fair Work Working Group and ILG discussion on future work of the group

• Fair Work is a key deliverable of the Retail Strategy.
• Agreed alignment of shared values and intent around the fair work society is quite straightforward but agreeing how to make that practical and tangible as an industry will be fairly challenging, particularly as there are low margins within the industry. 

How to form a meaningful Fair Work Agreement for the sector

Approach

• The FWWG has been set up to develop the Fair Work Agreement, which is a key NSET commitment, and this remains the terminology that is being used across the group as opposed to a charter.
• However, this position has not yet been set in stone and will, to some extent, depend on the calls of the Group in each of the five areas.
• The Agreement will be provided to the ILG for consideration and approved by members for implementation by Retail sectoral stakeholders.

Progress

• There has been some progress in the FWWG with discussion on two of the five fair work dimensions – Security and Respect. 
• Currently working through the 5 fair work dimensions and pulling out the key priorities, and what that will then look like for different business types and how it will impact on different business sizes, i.e. an SME compared to a multi-national - ‘not a one size fits all’.
• These discussions has some difficulties and area of disagreement. Despite these areas of disagreement, there is a strong working relationship across the group and a commitment to continue the work and deliver relevant outputs.
• The WG is keen to look at how we can drive meaningful change when there are areas of significant difference

Evidence

• There is a mix of evidence currently being used to inform how the Agreement takes shape. 
• Evidence has been provided by the Scottish Government and well as evidence and experience from members of the Group.
• Getting a robust evidence is hard given limited access to employees. USDAW evidence base is not a complete picture as most of the evidence is based of work places are where TU recognition is established.
• It has been suggested that there is a need for a wide and more comprehensive pool of qualitative data in order to better understand the needs of those working in the sector and priorities for the FWA. Currently there is some qualitative data, but there are gaps. 
• How much research and data-modelling is required to adequately inform the FWA? And how can this be sourced?
• Qualitative data is vastly missing which is an ongoing frustration.

Timescales

• Prior approval had been granted from the ILG to delay the timescale to produce a Fair Work Agreement (FWA) from spring 2023 to autumn 2023. 
• This will need to be reviewed in autumn, if the group feel they need a further extension the Chair will request at the next ILG meeting to push back to Winter 2023.
• This will be the first FWA produced in any business sector so need to ensure we get it right.

Points raised in discussion:

• There is an understanding that there is a refresh of the Scottish Government’s Business Pledge underway, unsure of timeline, is there a way of representing retail when refreshing the Business Pledge?
• Pre COVID The Business Pledge showed Retail ranked 5th out of the 18 sectors measured on fair work in the overall table, feeling that based on this data retail is doing relatively well 
• There is a risk that if the FWA is too binary it will exclude people from it, the FWA shouldn’t show only one way of doing things. For example, if the FWA says you have to have union membership and collective bargaining, that will exclude co-owned businesses – for example John Lewis.
• FWA needs to be aspirational, looking at commitment to the principles of Fair Work – something employers can work towards which is achievable and which they can evidence for themselves. 
• The FWA should be flexible and consider diverse employers and the financial size of businesses.
• Need to also be considerate of any administrative burden, the need for additional resource could be off-putting to businesses.
• Need to determine how ongoing monitoring will be governed to ensure practices are maintained.
• Employers who already consider themselves as a fair work employer and who pay above the National Living Wage will not want to sign up to something that ties their hands, especially large employers who need to plan large pay budgets.
• Needs to be pragmatism in the short term in order to get something down which we can agree that is tangible and moves us on beyond the principles that we all agree.
• The ambitions of fair work will be around throughout the lifetime of the sector, and this group, developing something perfect is not only unrealistic but also unnecessary, we need to generate confidence in a tangible form that we can make a purposeful step. The value of this agreement is to encourage those who are not already bringing forward tangible forms of delivery to do so and a challenge is that the main target for the agreement is likely to be those who are not at the table.
• AM suggested bringing together three subject delivery headers and a few prototype delivery options that each organisation might be able to identify as it’s appropriate delivery option, not to mandate every aspect of it, but to accept the value of the goal and envisage implementing the delivery option to achieve it. If that can be done by October and then refined and delivered by Christmas that seem like a reasonable way forward and a steer to the working group.
• Have to narrow our focus in the short term. Need to come back with one or two goals by the next meeting that we believe have buy-in across the sector and would be a meaningful move forward in delivery for at least some members of the sector. Try to re-frame within the next two weeks to make the work more contained and deliverable, providing markers of progress. This doesn’t in anyway sacrifice any longer term goals or the desire to achieve more.
• (Minister) Important that we deliver something tangible and impactful rather than meet a prescribed and artificial timeline. Deadline to move to December if required.
• The Retail ILG is better knowing and exposing asap if there is, in fact, a fundamental disconnect between its business, union and governmental stakeholders and thus we should not hold back from pushing hard on accelerating agreement on just a couple of key deliverables - which will either expose this issue or, hopefully, establish our first tangible points of agreement.

Action: Come back to the next meeting with one or two goals that we believe do have buy-in across the sector.

Action: Try to re-frame within the next two weeks to make the work more contained and deliverable, providing markers of progress.

Action: Officials to contact policy colleagues regarding the review of the Business Pledge and see if there is scope for representing retail within that.