THE BUSINESS OF CHRISTMAS

As the dulcet tones of Noddy Holder singing “Merry Christmas Everyone” blares out for the umpteenth time on radio stations all over Britain, it is easy to forget that as we look forward to a few days of overindulgence and TV specials, this particular holiday season has become critical for many parts of the UK economy.

Nowhere is this more so than in the agricultural and food sector, which has been in the doldrums in recent years. According to statistics from the National Farmers Union, 10 million turkeys are consumed every Christmas along with 25 million Christmas puddings, washed down with 250 million pints of beer and 35 million bottles of wine.

In addition, over 8500 tonnes of carrots are sold in the week running up to Christmas with 3000 hectares of land utilised to grow the Brussels sprouts that go onto your Christmas dinner plate.

And it is not only on the dinner table where farmers are benefiting.

As you look at your festive decorations tonight, consider the fact that there are 6 million Christmas trees sold every year, with some having been grown for 20 years or more before they are chopped down for living rooms across the land.

Another key sector to get a major boost from consumers at this time of year is the retail industry. For shops and up and down the land, December’s sales can account for half of the annual pre-tax profits of non-food retailers and, for grocers, equates to about an extra month of sales. The stand out performer was again John Lewis, which reported record receipts for the second consecutive week in December, with sales increasing by 11 per cent as compared to the same time in 2011.

And the good news is that last weekend, it was estimated that Christmas shoppers have spent up to £2billion on present buying with the extra December trading weekend before New Year also promising record sales.

But the High Street is not the only place which is benefiting from increased consumer confidence. Online retail spending has increased by 10 per cent in 2012 and is estimated, by 2016, to accounts for a quarter of total retail spending in the UK. Incredibly, Amazon reports that even on Christmas Day itself, people are busy buying on the internet, with an increase of 263 per cent in online shopping on December 25 over the past five years.

For those of you with young children, have you ever stopped to consider how, every year, you are supporting the biggest toy market in Europe? Toys are worth around £3 billion to the economy with a third of this income being generated at Christmas, equivalent to an incredible 110 million toys that will be unwrapped on 25 December.

Christmas is also the time when companies show their appreciation to their staff through bonuses. Certainly, staff at JCB in Wrexham will be delighted at the announcement last week that all of the manufacturer’s UK employees would receive a £500 Christmas bonus payment. I am sure that others up and down the land will be rewarding their staff for working hard through what has been a difficult year for many firms.

The Christmas Party is also an opportunity for employers to reward staff for all their hard work throughout the year with one night of festive fun. It is also a major boost to the trade of local pubs, clubs and restaurants, and it is estimated that as much as £1 billion is spent every year on these corporate get-togethers. However, recent research has also suggested that hangovers from such parties cost the UK economy as much as £260 million in lost man hours, as a quarter of employees work for fewer than four hours the day after the annual Christmas party because they are suffering ill-effects from the night before, while around a fifth call in sick or show up late.

Despite this, Christmas parties are also providing a boost to both the retail and personal services industry as everyone tries to outdo each other in the office fashion stakes. In fact, research by George at Asda found that 45 per cent of women spend an average of £100 getting ready for the annual office Christmas party, with some spending much as much as £210 on outfits, shoes, make-up and tanning in preparation for their night out.

Therefore, Christmas is not only a time for celebration but is also a critical time for many parts of the UK economy. But let us not forget that the economic benefits of Christmas should not be exclusively for the big department stores, supermarkets and Amazon.
Certainly, if you have yet to finish off your shopping, consider whether you can buy gifts for your loved ones and friends in local shops, thus giving your local High Street the boost it deserves at this time of year.

Nadolig Llawen! Merry Christmas!

PUBLIC PROCUREMENT IN NORTH WALES - A LEVEL PLAYING FIELD?

An article in the Daily Post last month reported that of the £552m in goods and services procured by local councils last year, just £155m was spent in North Wales.

At a time when the local business sector needs to be fully supported as it struggles to emerge out of recession, the finding that 72 per cent of local authority procurement is obtained from outside of the region is a shameful figure.

In fact, when you consider that even if only half of the goods and services that councils buy were purchased from local firms, this would bring an additional £121m into the North Wales economy, generating thousands of jobs.

Of course, it is not only councils that should be under the spotlight and I would also like to see health boards, universities, colleges and the Welsh Government itself release similar data for the region.

Certainly, it is an issue I have been writing about since on a regular basis 2004 and I am glad that this is finally getting some of the attention it deserves by politicians across all political parties.

But local procurement is not an issue only for North Wales. Recent research from Europe showing that small to medium sized firms (SMEs) won less than third of all contracts above £5million. Micro-businesses, which employ less than ten people, got only 6 per cent of the total market of contracts in terms of value.

It has been suggested that this situation is exacerbated by the tendency to issue large single contracts, which seem to benefit bigger companies. Instead, critics have suggested that public authorities should promote the practice of breaking down tenders into smaller lots, a move that would increase the probability of smaller local firms becoming successful.

One of the recommendations I made as Chairman of the Welsh Conservatives’ Economic Commission was for the Welsh Government to promote is the imposition of targets for spending public budgets with local small firms, as is the case in the USA where the Office of Government

Contracting works to create an environment for maximum participation by small businesses in federal government contract awards. With the US government spending billions of dollars in purchasing goods and services from private firms every year, targets have been set for every government department as to the proportion of expenditure that will go to SMEs. More importantly, legislation in the USA ensures that the public sector must conduct a variety of procurements that are reserved exclusively for SMEs.

Those who defend the status quo in Wales suggest that it will be the taxpayer that will lose out if we favour smaller local firms over larger and, allegedly, more efficient, companies. There is simply no evidence for such a supposition.

I recently met with a group of North Wales construction companies who had expressed serious concerns over the new framework agreements for public sector construction in North Wales. These, they suggested, had been designed specifically to keep local companies out of consideration by a process that favoured larger national businesses.

Certainly, those public servants in charge of putting together these contracts, which are worth hundreds of millions of pounds, need to answer such concerns. However, when I asked the companies concerned about competition is that they said they would welcome it, as long as they weren’t excluded and given the opportunity to compete.

Indeed, as one of the owners of these firms stated quite firmly, “I have never lost a business contract to a large company and I am not about to start now”. Clearly, the evidence shows that the public sector in Wales needs to consider its policies towards supporting local firms through procurement.

However, it could start to address this issue immediately by ensuring that as a matter of course, every local business that wants to compete for a public sector contract is given the opportunity to do so.

And on such a level playing field, I would certainly back our companies to win these contracts every time.