Retail Industry Leadership Group meeting minutes: March 2023

Attendees and apologies

ILG members attending

• Tom Arthur, Minister for Public Finance, Planning and Community Wealth and ILG Co-Chair (Minister) NB Minister was delayed joining. Joined toward end of first item.
• Andrew Murphy, Chief Operating Officer, John Lewis Partnership and ILG co-Chair (AM)
• Reuben Chesters, Project Manager, Locavore (RC)
• Jackie Cuddy, Centre Manager, Eastgate Shopping Centre (JC)
• Tracy Gilbert, Regional Secretary, USDAW (TG)
• Meryl Halls, Managing Director, Booksellers Association of the UK and Ireland Ltd (MH)
• Debbie Harding, Chief Corporate Officer, Dobbies (DH)
• Sonya Harper, Central Operations Director, CJ Lang and Son (SH)
• Polly Jones, Senior Manager, Corporate Affairs, Scotland, Asda (PJ)
• David Lonsdale, Director, Scottish Retail Consortium (DL)
• Tony McElroy, Head of Communications and Devolved Government Relations, Tesco (TM)
• Mo Razzaq, National (UK) Deputy Vice President, National Federation of Independent Retailers (MR)
• Colin Smith, Chief Executive, Scottish Wholesale Association (CS)

Apologies

• Dr Pete Cheema, Chief Executive, Scottish Grocers’ Federation
• Luke McGarty, Head of Policy and Public Affairs, Scottish Grocers’ Federation
• Andrew McRae, Policy Chair, Federation of Small Business
• Chris Tiso, Director, Graham Tiso Ltd.
• Robert Deavy, Scotland Organiser, GMB

Presenters

• Sam Cassels, Place Principle Adviser, Scottish Government (SC)

Secretariat

• Celeste Wilson, Senior Policy Advisor - Retail Strategy and Delivery - Scottish Government (CW)
• Tom Lowry, Policy Officer - Retail Strategy and Delivery - Scottish Government
• Jane Macfarlane, Policy Officer - Retail Strategy and Delivery - Scottish Government

Observers

• Lucy Brown, Operations Programme Director, John Lewis Partnership
• Judith Young, Head of Tourism, Hospitality and Retail Division, Scottish Government

Items and actions

Welcome, apologies and introductory remarks

AM welcomed attendees to the third meeting of the Retail Industry Leadership Group (ILG), he noted apologies and provided an overview of the agenda.

AM asked if anyone had any comments or concerns about the minutes and actions of the last meeting.

DL highlighted the note of the minute touched on the Food Retail Summit and asked if there are any lessons learned from that.

AM confirmed that he has had two conversations with the Minister about the Food Retail Summit and also raised it with the First Minister. AM acknowledged that there is an acceptance that timing and approach to that meeting were not ideal. Scottish Government recognise that the Food Retail Summit could have been organised better and that it doesn’t represent best practice in the way we want to collaborate as industry and Government going forward.

AM expressed that it calls into question the roll of the ILG when things like this can bypass the group, but noted there is now a general acceptance of that and a commitment to do better.

AM said he believes it was done in good intent, but executed in a way which was unfortunate.

Post meeting Tom Arthur, Minister for Public Finance, Planning and Community Wealth and ILG Co-Chair corroborated AM’s comments acknowledging that this was an issue of flawed execution despite good intentions.

AM notified the group that only one action from the previous meeting had not yet been completed, that is the Retail Skills Action Plan. CW said that this will be covered later in the agenda.

Minutes and actions from the previous meeting was agreed.

Current industry perspective

AM started off by saying the cost of living standing agenda item would be expanded to take into account a broader industry view to underpin and inform other dynamics and issues within the industry. It is expected that the cost crisis will be a factor throughout the year.

Points raised in discussion:

Deposit Return Scheme (DRS) (raised by AM, TG, SH, TM)

• AM - stated the industry’s relationship with Government is at a key inflection point. For large parts of the industry DRS has become not only a practical issue which requires investment and attention but a totemic issue of where relationships between government and industry are. If the current timelines and commitments of DRS are maintained then the prospect of Retail and Scottish Government engagement being able to continue on an upward trajectory is virtually nil, confidence will be undermined if we continue on the path we are on. The industry are one voice on this, they understand the intent, but the execution is now destined to cause many more problems than it resolves
• AM - has written a private letter in a personal capacity to the First Minister on DRS in the tone of a critical friend – the content was and will remain confidential
• industry and SG will need to collaborate through the delivery phase. SG can’t afford to score an own goal on DRS and expect to move forward positively. Important that everyone is frank and candid with their own views. Discussions such as these are intended to ensure SG clearly understands issues and perspectives
• TG - has also written to the Minister on DRS, is also disappointed that Just Transition and jobs haven’t been integrated as would have been opportunities. Concern around impact on businesses and jobs – will update ILG on any response
• SH - discussed significant challenges in implementing DRS in smaller stores, lack of guidance and documentation proving difficult
• TM - reiterated DRS flaws, asked how we can use the new government as a moment of re-assessment. TM believes the role of retail under the current administration has been about delivering public policy. Would like the relationship with government to recognise contribution of retail to community, place and space

Violence against workers and effect on recruitment (raised by TG, AM, SH)

• BRC crime report shows that violence against shops workers has doubled, along with sick leave and fear of attending work. Thefts are up, driven by desperation, no longer primarily those with addictions, often about necessity, as seen by items being taken
• AM - recognised that Tony and Polly will agree that ability of those on the front line to cope wearing thin, and that the police response is not as prompt or fulsome as we’d hope
• SH - CJ Lang represents 250 retailers and armed robberies, break-ins, stock loss and staff safety are the biggest challenges, plus recruitment especially in the North/Inverness. Violence all over, urban and rural, means that staff don’t want to come to work
• AM – it is telling that in this conversation issues on recruitment have dropped down the list of problems, more due to the other issues that are dominating discourse, than because this issues has abated, - we are still talking about a skills shortage, but there’s a labour shortage too

Cost Crisis (raised by TG, PJ, MH, AM)

• TG acknowledged the impact on business in terms of losses and theft. Retail crime is likely to have increased as a direct result of the cost of living crisis
• staff being disciplined for stealing food to eat at work
• TG is awaiting final cost of living crisis survey results from USDAW members and will share this information with the ILG. Information gathered shows one in four families of retail workers are missing meals on a regular basis
• travel to work impacted with bus routes disappearing. Members also struggling with travel to work costs, especially fuel
• PJ covered the financial challenges of doing business including inflationary pressures, energy costs, supply support and colleague pay. Through its negotiations with USDAW Asda have announced a 10% pay increase for hourly paid store colleagues which is in addition to an 8% pay increase last year, these rates of pay exceed the Real Living Wage, this will make Asda the highest paid UK retailer
• the cumulative burden - Food Retail Summit/DRS/Alcohol Advertising Restrictions - is now critical and shows a lack of respect and understanding of the burden put on retail
• MH – from a SME point of view, the burden of the cost crisis on SMEs includes pressures building on minimum wage/fair pay, energy bills have gone up 400-500%
• AM acknowledged that divergence of scale means cost crisis is a much more existential threat to small business

Salad shortages (raised by PJ, AM, RC)

• politicians quick to criticise retail, but do not display understanding of supply chains and their impact on pricing. SNP leadership campaign exacerbates this
• RC - as a grower we’ve shown resilience, current crisis highlighting the need for greater government support in sustaining local production. Going to see more of these pressures in future and for resilience and food security need to increase local produce. Other countries such as Spain are experiencing issues like frost, so in 20-30 years believe we’ll be exporting to them
• AM – UK wide we need to consider what are the smart longer-term solutions rather than just reacting to each crisis

Leadership challenge (raised by TM, AM)

• TM - now in impossible situation of planning for something where we don’t know the outcome. Referenced Andrew’s speech at Business in Parliament – how do we, as an ILG, use this new government to pivot and deliver public policy; to get to a place where retail delivers a sense of place and community and work with new government to understand the true scale of what we can deliver?
• AM – current situation offers a potential point of reset. We can see from the hustings info e.g. DRS is prominent issue. Not knowing the implications of future change is harder than confirmed position and there will inevitably be a hiatus. His intent is to form a priority list to discuss with the Minister and officials and put to new FM
• DL – SRC has written to each of the three candidates. About the Retail Strategy / business rates, a collegiate approach would be hugely helpful

AM recapped for the Minister who joined during TM’s input

• the Minister thanked AM and offered his sincere apologies to everyone on the call for his delayed arrival
• the Minister thanked DL for his recognition of the Retail Strategy and to everyone involved in co-producing the strategy
• the Minister remarked that it is very important that the relationship between government and business should not be seen as transactional - shared aims and objectives can only be achieved through partnership working
• the Minister is grateful for the engagement with the retail sector and noted a roundtable meeting he attended with the Scottish Retail Consortium (SRC) in January. He is conscious that there is a lot of well-intentioned and very effective discussion around policy that is person centred and shaped by lived experienced, the work of the ILG can contribute towards a shift to a more business centred experience. He is very aware of the cumulative impact of various policy and regulatory change, as such it is those implementing these policies who are best placed to provide information on how to achieve policy outcomes

The Minister then gave some key updates:

• the Scottish Budget has been formalised and the Spring Budget revision was completed yesterday (07/03/2023)
• we have also seen parliamentary approval for National Planning Framework 4 (NPF4) and the formal adoption of NPF4 by Scottish Ministers last month
• the phased approach to Permitted Development Rights continues
• consultation on Community Wealth Building legislation will conclude towards the end of April – the Minister encouraged members to contribute

DL posted in the chat. The British Retail Consortium's Cyber security standards toolkit.

Progress report on the Fair Work Agreement – Tracy Gilbert

Key points:

Overview

• the first meeting of the Fair Work Working Group (FWWG) took place on 9 February 2023
• secretariat has issued a copy of the biographies of FWWG members to the ILG
• the meeting was an opportunity to gauge the group’s understanding of fair work and what they wanted to achieve
• the discussion covered the process, the aspirations and where it sat within government policy
• the meeting also discussed how a fair work agreement can be unique, measurable and deliverable

Approach

• future meetings will focus on the Fair Work dimensions, potentially covering one dimension each month
• will agree the order at next meeting, on Monday 13 March, and whether to split into subgroups per dimension. Such as Trade Unions leading on effective voice
• the group will seek analytical data and evidence base to underpin the issues

Evidence

• without evidence what is the incentive
• things for the group to consider

• do we know who pays the living wage?
• what the gender pay gap is?
• how do we make it unique in outputs that don’t already exist?

• DL emphasised the need for a shared understanding of the evidence base and knowing what success looks like. Any document needs to make a difference to people
• DL noted that we already have the Scottish Business Pledge and Living Wage Accreditation Scheme, he asked if we are utilising these tools fully before creating something new
• AM asked Tracy do you feel you have the right people and time to do this?
• TG advised knowledge in the group is good and crosses every area but how do we underpin all of that? We can bring it back to the ILG but what resources do we have? Some uncertainty going forward – for example we could ask for voluntary Trade Union recognition and that’s to be agreed with the group. We need to be prepared to be a bit uncomfortable and make compromises

Timescales

• the next meeting of the FWWG is scheduled for 13 March 2023
• TG sought approval from the ILG to delay the timescale to produce a Fair Work Agreement from spring 2023 to autumn 2023
• AM agreed timescales should be moved from spring to autumn 2023 to deliver a meaningful piece of work, get it right and be able to stand behind it. Needs to be confident that will be the timescale though

The ILG agreed to move the deadline to produce the Fair Work Agreement from spring 2023 to autumn 2023.

Action: AM to follow up with the Minister and Secretariat. ILG to devote agenda time to more comprehensive update and understanding where any points of contention or ambiguity are by the time of the next meeting.

Place – presentation from Sam Cassels, Place Principle Adviser, Scottish Government

Sam was joined by David Cowan, Sam’s background architecture and economics.

The presentation covered; The Principle; A Pragmatic Way Forward; A Person Centric and Place Based; Our Approach; and A Basis For Action.

Q and A on Place Presentation

AM opened the discussion and asked DL for his thoughts.

Q. DL queried the evidence based, using business improvement districts as an example - don’t know if retail is a good contributor to the various groups.

A. SC - Business improvement districts are powerful and need to be place led, we have anecdotal evidence, no two places are the same, evidence comes from stories, and we need more from retail.

DL - there is a public policy making conundrum and a business rates dichotomy. Could this group play a role in accessing UK Government levelling up funds? The Welsh government have something similar.

Q. TG - workers play a key part in communities - access to work, community safety, what do well paid jobs look like, crime and safety in workplaces, how do we contribute effectively?

A. SC - through Community Wealth Building and the move towards local working. We are at the early stages of dealing with the conflicting issues around working conditions and practices to create opportunities. Would be good to have a discussion with the Trade Unions separately.

Q. AM - would there be merit in a Place Working Group?

A. SC - there are a lot of Working Groups in place across government and organisations, this can be counter intuitive so would recommend against developing another, place is already on agenda, but danger of fragmentation, better to look where we can mainstream retail’s influence across decision making, e.g. Scotland’s Town Partnerships. His ambition is not to have place groups but to focus on mainstreaming retail’s contribution to those groups which ties into the deep dive approach. Look at places themselves, real localities and issues. Especially where we can make a specific impact.

Action: AM – co-Chairs will take this away with Secretariat. Deep dive approach, report back at next meeting.

Delivery Plan

Skills Audit and Action Plan: (CW reported on update)

• on pausing the Skills Audit and Action Plan work – as an independent review of Skills Delivery in Scotland is approaching its conclusion. (expected to report in April)
• the review is focussed chiefly on the functions and remit of Skills Development Scotland (SDS) who are our partner in the work of the action plan
• the review should make specific recommendations on how future skills provision is delivered
• this will include the governance and operation of Scotland’s apprenticeship programmes, skills provision through independent training providers and sector and regional skills planning
• work on developing the Skills Action Plan cannot meaningfully progress until after the review has taken place as any proposed actions will need to align with the new delivery landscape and SDS’s role within that
• AM agreed to pause the work until after the review has taken place
• Are members content that this action is deferred as proposed?

The group agreed to pause the work for the Skills Action Plan until after the review has taken place.

Data:

CW - consider moving that to later in the year due to resource constraints.

AM - any reason to believe any further delay?

CW - should be able to update over next couple of weeks.

Action: Secretariat will speak with statisticians over the next couple of weeks to find out resource and timescales to provide the group with data, analytics and trend statistics.

Any other business and actions to progress for next ILG meeting

AM thanked the Minister for his role, noting what’s been achieved over the last five years. Wished Minister good luck.

The Minister reciprocated; contributions valued from dynamic sector. lots more to do, for example at last week’s Economy and Fair Work Committee debate – raised the need for fundamental look at NDR which is a 170-year-old system – keen to get it Barclay review over the line and then progress further work on this, and committed to being involved in that. There are also opportunities and challenges for sector re Net-Zero. Open invitation to begin discussions on NDR with all stakeholders before the next election.