The motion, proposed by Cllr Ben Ingham, called on the government to introduce such a levy for large stores and proposed that the resulting revenue be used for local benefit.
The motion was:
“That the Secretary of State gives Local Authorities the power to introduce a local levy of 8.5% of the rate on large retail outlets in their area with a rateable annual value not less that £500,000 and requires that the revenue from this levy be retained by the Local Authority in order to be used to improve local communities in their areas by promoting local economic activity, local services and facilities, social and community wellbeing and environmental protection.’
“The council notes that if this power was acquired it would present the opportunity to raise further revenue for the benefit of local communities, should the council wish to use it.
“The Council resolves to submit the proposal to the government under the Sustainable Communities Act and to work together with Local Works to gain support for the proposal from other councils in the region and across the country.”
Cllr Ben Ingham said that he was following a lead by other councils. He said supermarkets usually cause money to leave the district, whereas smaller businesses tend to keep money circulating in the local economy. He said he thought that supermarkets would like the opportunity to give something back. Most people would like this motion to be agreed, he added.
In my seconding speech, I confirmed that the scheme had been already in place in Northern Ireland and Scotland for around a year.
I outlined some reassurances to typical objections, such as:
The possibility of passing on costs to consumers
The British Retail Consortium (that represents all the major supermarket chains affected) said it would be “almost impossible” for the cost of the levy in Scotland to be passed on to customers. (Andrew Opie, Director of Food and Sustainability at the British Retail Consortium, BBC Radio interview, 22 September 2011).
A possible impact on jobs
Sammy Wilson, North Ireland Finance Minister, BBC News, 17 July 2012, said of the Northern Ireland impact: “As far as investment is concerned rather than see investment leaving Northern Ireland some of the big stores are actually going full steam ahead with new investment…As far as employment is concerned there has been no measurable impact in employment in the big stores at all.”
The four largest supermarkets chains have posted the following profits: Tesco – £2.47 billion, Sainsbury’s – £712 million and Morrison – £935 million (as stated in their 2012 annual reports) with Asda posting a 2011 operating profit £855 million. This levy, as stated above, would represent a tiny fraction of those profits.
Armed with these statements (I could already see disapproving heads shaking around the council chamber), I sat down and awaited expectantly the reaction from other councillors.
Cllr Ian Thomas was first to put his case. He said he was slightly confused and asked if Cllr Ingham had modelled himself on a “latter day Robin Hood.”
Cllr Thomas said the motion sent out the wrong message to other businesses, it was an anti-competitive drive to manipulate the local economy.
He said East Devon was not an island and the last thing the economy needed was a “disincentive.” He said it would cause successful businesses to migrate elsewhere. He cast doubt on the arguments that a supermarket caused a high street to die. It was “protectionist” he said, and urged the council to vote against the motion.
Cllr Ray Bloxham said he couldn’t support the motion either, but for different reasons.
He said that EDDC had kept the council tax frozen for four years to help people who couldn’t afford to pay. He didn’t believe that the costs wouldn’t be passed on to consumers. There would be more people pushed into poverty and going to food banks he insisted, and more people who wouldn’t be able to afford to eat healthily.
He added that the motion would wipe away four years at the stroke of a pen, what the council had sought to achieve for years.
Cllr Alan Dent didn’t like the motion because he said big businesses already pay sizeable sums of corporation tax and provided employment. It would be a big amount of money for a retail chain to absorb, he reckoned. As a former director of Marks & Spencer, he said that any rise in costs went straight on the selling price. He then presented councillors with a very long list of large retailer philanthropic gestures.
But Cllr Geoff Pook had made some calculations. He said that the levy proposed would have very little impact on supermarkets (sorry, note taking on Geoff’s calculations got sketchy here).
Cllr Pook said he could see no issue at all with the motion and he thought that councillors might be “overreacting”a bit.
Before the vote was taken Cllr Ingham suggested that the conservatives reaction had been “churlish.” He asked for a recorded vote. In line with procedure, Chairman, Cllr Godbeer, asked for a vote on whether a recorded vote should be taken.
The conservatives then overwhelmingly voted against a recorded vote, which was a bit of a surprise given that the tories who had spoken appeared to be utterly convinced that the motion was appalling!
The vote was taken and the conservatives voted virtually unanimously against calling on the government to introduce a levy on the supermarkets.
The libdems and independents were all in favour of the levy, bar one, I believe.
I had had my hand up wanting to make one last point (which I am sure would have made no difference), which was …
… that the government’s VAT rise in January 2011 from 17.5 per cent to 20 per cent, was over 35 times larger than the levy suggested here. The VAT rise was, in fact, absorbed by a large number of retailers and not passed on to customers.
In addition, two other councils in Devon – Torbay and North Devon District Council – have referred similar motions to their cabinets to debate.
Given the looming budget cuts, and concern about the future of public services one might have thought that councillors would have welcomed a bit of extra income, generated from companies that make millions and in some cases, billions of pounds, worth of profits.
I don’t think I will ever understand the desire to make so many allowances for big business while watching small businesses slowly fade away, along with our public services.
What do you think about the levy? Leave your view below….