Shop Direct (Greater Manchester)

Jim McMahon Excerpts

Tuesday 1st May 2018 Commons Chamber

[Debbie Abrahams]

Absolutely; I could not agree more.

Shop Direct was created from the merger of the mail order and retail companies Littlewoods and Great Universal Stores, and the sites affected in Shaw, Little Hulton and Raven are the last remaining fulfilment sites in the north-west region. The company has been providing employment for families in Greater Manchester for many decades, and these sites have different generations of the same families working there. The impact of closures will be huge on hundreds of families, as well as local businesses and local communities.

This decision should in no way be seen as a reflection on the workforce’s capability or dedication. The professionalism and commitment of Shop Direct employees has been second to none. After years of dedication and commitment, many workers have been left reeling by this decision. I have received correspondence, including from one constituent who has worked for the company for more than 20 years, who said:

“I am aghast at how the workforce has been treated.”

I also understand that because of shift patterns, some staff received word of the closure by text message—just imagine how they felt.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate my hon. Friend on securing this important debate and on the sterling work she has done to co-ordinate our collective response to this issue. Many people have worked for Shop Direct over many generations, right from the early days of Littlewoods, some with 30 or 40 years of service. What really hurts people and offends me is just how little consideration Shop Direct has given to that loyalty. When the decision was made to relocate to the east midlands, it did not care a jot about the people who had given their lives to build up that company and make it profitable. They were cast aside. Does she agree that that is not the face of good business practice?

[Debbie Abrahams]

Absolutely; my hon. Friend has hit the nail on the head. This is a thriving business, and the callous disregard with which the workers have been treated is absolutely shameful. My hon. Friend the Member for Heywood and Middleton pointed to the fact that this business was named employer of the year. How can it be?

The decision is especially worrying because Shop Direct is not in financial trouble. It reported an increase in underlying profits before tax of 10.2% to £160.4 million last year. It has seen sales growth increasing over five consecutive years. The decisions it has made are purely commercial. The proposed site in the east midlands will employ fewer staff as Shop Direct moves towards increased automation. Given that automation is likely to offer commercial opportunities but also huge challenges for the UK labour market as a whole, the experience of Shop Direct workers has a wider impact on the UK labour market as a whole.

I am grateful to the Business Secretary for meeting me earlier today, but I will be seeking urgent action from the Minister in recognition of the support needed by Shop Direct workers in Oldham and Little Hulton and by workers across the country whose jobs may also be under threat as a result of automation.

Since the announcement, I have met the leader of Oldham Council and the USDAW union representatives for Shop Direct, alongside my hon. Friend the Member for Oldham West and Royton. I have also spoken to and subsequently met Shop Direct directors at a meeting convened by Greater Manchester Mayor Andy Burnham, together with my hon. Friend the Member for Worsley and Eccles South, council leaders, the Salford Mayor, Department for Work and Pensions and Department for Business, Energy and Industrial Strategy representatives and USDAW representatives, where we tried to seek a way forward.

It was essential to bring together around the table all the parties affected by Shop Direct’s proposed relocation to the east midlands so that it could hear directly from us our huge concerns about the move. At the meeting, Oldham Council tabled alternative proposals for a site of a similar size, accompanied by a favourable business package, at Broadgreen Park, Chadderton. Very disappointingly, however, this was rejected, and there was no willingness from Shop Direct to engage on alternative proposals in Greater Manchester.

Given that the Shop Direct executives appeared to have made their decision, my colleagues and I then pushed them to describe what specific training and support they would provide for the workforce over the next two years—including their communications strategy, given the poor communication to date—while in particular looking at options for the Raven Mill site as a specialist returns centre.

The Mayor put forward a proposal at the meeting to establish a taskforce, led by Greater Manchester’s Growth Company, which was agreed by all parties, including both Shop Direct and the Department for Work and Pensions. I understand that the first officers meeting of the taskforce was held yesterday, and I am awaiting feedback from it.

Working closely with USDAW, we will be holding the company to their legal obligations to engage in a meaningful consultation. The consultation started formally today, and the union has clearly stated that its test of whether it is meaningful is that Shop Direct should fully explore any options for relocating to a nearby site, as staff, through their trade union, are entitled to a say in the future of the business. The company has said in a statement that it will

“be partnering with local and national organisations to provide our colleagues with tailored advice and training, including career skills, access to financial planning and vocational courses to support re-training. It’s also our plan to offer apprenticeships in in-demand skills across our existing operational sites.”

I am grateful for the response to my letter to the Prime Minister which I received last night not from this Business Minister but from another one—the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington)—but it only goes so far. What specific discussions has the Minister had with colleagues in the DWP and elsewhere on support, quality training and reskilling for the Shop Direct Greater Manchester workforce over the next two years?

--- Later in debate ---

[The Minister for Universities, Science, Research and Innovation (Mr Sam Gyimah)]

I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this important debate, which follows the announcement on 11 April by Shop Direct Ltd that it would be closing three of its sites in the north-west of England, in Shaw, Little Hulton and Raven Mill, and consolidating its distribution operations in the east midlands gateway. I would also like to thank her for writing to the Prime Minister on this issue. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has responded and met the hon. Lady earlier today to discuss this issue.

I appreciate that this is a worrying time for employees of Shop Direct Ltd and their families. I have listened to the contributions made here today and recognise that colleagues on both sides of the House are understandably concerned about the impact of the closures. Shop Direct Ltd is in formal consultation with the Union of Shop, Distributive and Allied Workers and, subject to this consultation, expects to offer an enhanced redundancy package, along with tailored support to all affected colleagues. As the exit process is not expected to start until mid-2020, there is an opportunity for Shop Direct Ltd to provide that individualised support. This will include training, career skills, access to financial planning and vocational courses to support retraining. I also understand that a local taskforce has been established, led by the Manchester Growth Company, and will include representatives of affected areas.

I am sure the hon. Lady can appreciate that I am unable to comment on commercial decisions made by the company and that it would not be appropriate for me to do so throughout the consultation period.

[Jim McMahon]

I accept that the Minister cannot comment on the commercial decisions taken by Shop Direct, but can he confirm whether it has been given any inducements to move to the east midlands, such as business rate benefits or relocation grants?

[Mr Gyimah]

That is a very important question. I am not aware of any inducements given to Shop Direct to move to the east midlands. I am sure the hon. Gentleman raised this issue in his discussions with the Secretary of State.

For companies to remain viable, and to keep in step with the modern competitive market, difficult decisions sometimes need to be taken. However, I recognise that this does not make the situation that some employees face any less troubling. I can reassure the House that the Government have measures in place for such situations. I will now turn to the protections in place for employees facing redundancy and the support available at such a difficult time.

The law is clear that organisations are required to consult with employee representatives about proposed collective redundancies where at least 20 employees are at risk at one establishment within the same 90-day period. Employers are required to provide specified information to representatives, or directly to affected employees if representatives have not been appointed. The consultation should include ways to avoid redundancy or dismissals, or to reduce the number of dismissals involved to mitigate the effects. Any employees who feel their rights have been denied may complain to an employment tribunal, which may make a protective award to the affected employees of up to 90 days’ pay.

Our priority is helping those who are affected to find new employment through the Jobcentre Plus rapid response service or to retrain if necessary. Rapid response service support is delivered in partnership with a range of national and local partners, including Her Majesty’s Revenue and Customs and local service providers. DWP and Jobcentre Plus will also work with the company to understand the level of employee support required. Just to reassure the House, typical support includes matching people to known local job vacancies, helping them to construct or improve their CVs and providing general information about benefits and how to make a claim.

[Mr Gyimah]

The hon. Lady makes a good point about having some flexibility on when people get their redundancy, especially if they find new opportunities. That has been noted and the relevant Minister will get back to her about how we can raise that with the company. It is a relevant point. The support that I mentioned is available to all those who are affected by potential job losses and goes beyond direct employees of the business to those such as self-employed subcontractors and individuals working for suppliers affected by the outcome of such structural changes.

The hon. Member for Oldham East and Saddleworth asked generally about what is happening in the retail sector. We can all agree that the retail sector has a vital role to play in the local community and the national economy. The Government work with retailers to understand their needs and we have acted to support the sector. In March, we announced the Retail Sector Council as part of our industrial strategy. Its first meeting has taken place and through the council, the Government and industry are working together to contribute to the sector’s future direction to boost productivity and economic health. Council members will review the best way that retailers can adapt to changing consumer behaviour and trends. They will also look at new technology opportunities such as those that will improve customer service and the chance to grow skills through a sector push on high-value training.

The Government recognise the importance of our high street, and since 2010, we have given over £18 million to towns, funding successful initiatives such as the Great British High Street. In the autumn Budget 2017, we announced measures worth more than £2.3 billion over five years to cut business rates. This includes bringing forward the planned switch in the indexation of business rates from the retail prices index to the consumer prices index by two years to 2018. That will benefit retailers, as well as other businesses.

[Jim McMahon]

While we are on the business rates point, is the Minister aware that the two sites in Oldham together have rateable values of £1.3 million? Of course, Oldham is one of the business rates pilot authorities. If we do not find an alternative employer to take those premises, that will have a direct impact on the council’s budget. In context, that would be the whole of the council’s youth service budget gone.

[Mr Gyimah]

These are all very important points, but as I said, businesses make commercial decisions driven by their own commercial interest. The Government’s responsibility is to support the employees, find new work and to support the local community as it transitions through this period.

Let me come to some of the other points made by the hon. Member for Oldham East and Saddleworth. The broader question of automation was raised. Of course, we recognise the workplace challenges as well as the potential opportunities. Matthew Taylor stated in his review of modern working practices that history has shown that technological advancements and the automation of individual tasks can lead to job creation. In our response to his review, we set out our Good Work plan to ensure that the labour market is resilient enough to respond to the changes that automation may bring.