Arcadia and Debenhams: Business Support and Job Retention

Debate between Paul Scully and Ed Miliband

Wednesday 2nd December 2020 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on support for business and the retention of jobs on the high street in light of the announcement of Arcadia entering administration and Debenhams going into liquidation.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

Speaking as the retail Minister, let me say that I hope the right hon. Member for Doncaster North (Edward Miliband) realises that although the Secretary of State is not here, we take this incredibly seriously. That is why I want to focus on the detail, because it is a worrying time for the retail sector, particularly for those affected by the announcements this week.

On Monday, Arcadia Group Ltd, which employs approximately 13,000 people, appointed administrators, who are assessing all options available to the group. They will honour orders made over the black Friday weekend. No redundancies have yet been announced and existing sales channels will continue to operate while administrators evaluate options. The Secretary of State has written to the Insolvency Service asking that it expedites consideration of the administrators’ report. Yesterday, Debenhams, which employs approximately 12,000 people, announced the decision of administrators to wind down the company. No redundancies have been announced and existing sales channels will continue to operate while administrators evaluate options. We know that this will be a worrying time for employees and their families, and we stand ready to support them. I pay a particular tribute to the hard-working staff, who have kept these well recognised businesses going in difficult times for so long.

Although the Government have no role in the strategic direction or management of private retail companies, we are in regular contact with both companies and the administrators in order to understand fully the situation they are facing. The coronavirus crisis has made life difficult for retailers such as Arcadia and Debenhams, particularly those that were already facing challenging trading conditions before the pandemic. We acted quickly at the start of the pandemic to deliver one of the most generous and comprehensive economic packages in the world. It included: the coronavirus job retention scheme, which up to 30 September had provided £7.7 billion-worth of support to companies in the retail and wholesale sector; removing all eligible properties in the retail, hospitality and leisure sectors from business rates for 12 months—that is worth more than £10 billion; cash grants of up to £25,000 for retail, hospitality and leisure businesses with a rateable value of between £15,000 and £51,000; more than £50 billion in business loans, which supported 9.6 million jobs and provided flexibility; and legislation to protect commercial tenants from eviction.

Through the plan for jobs, we have also announced a series of measures to protect, support and create jobs, including our £2 billion kickstart scheme and a doubling of the number of frontline work coaches, which will be important in this situation in particular. The Government have committed to supporting the retail sector, and we are working closely with industry through these unprecedented times, particularly to ensure the safe reopening of non-essential retail today. On Monday, my right hon. Friend the Communities Secretary encouraged local authorities to allow shops to open for extended hours, to accommodate more shoppers safely in the lead-up to Christmas. I will continue to work with the sector to meet future challenges. Indeed, I will co-chair the next meeting of the Retail Sector Council tomorrow to discuss our strategic approach to the sector. I have regular retail calls, including one last week, with representatives from Arcadia among the retailers on that call. We are confident that the sector has the skills, knowledge and drive to bounce back.

[Edward Miliband]

Let me join the Minister in expressing deep sympathy for those who are at risk of losing their jobs. The test of Government, and indeed the House, is whether that sympathy translates into action, so I have four specific questions for him.

First, Philip Green owes workers at Arcadia a moral duty. His family took from the company a dividend worth £1.2 billion, the largest in UK history, more than three times the size of the pension deficit. Workers at Arcadia should not pay the price of Philip Green’s greed, so will the Minister now publicly call for Philip Green to make good any shortfall in the pension scheme, and will he ensure that the Pensions Regulator takes all possible steps to make sure that that happens?

Secondly, we need to learn lessons. In the summer, Labour tabled amendments to the Corporate Governance and Insolvency Bill to make pension fund holders priority creditors when businesses went bust. The Minister said it was not necessary. Does he now agree that that was a mistake, that that change would have better protected the pensions at Arcadia and that this should be put right through legislation in the future?

Thirdly, on the workers at Debenhams and Arcadia facing redundancy, given the scale of redundancies and the grim economic backdrop, will the Minister look at providing specific and targeted help for them to get back into work? Fourthly, we have an emergency on our high streets, with an estimated 20,000 shops closing and 200,000 workers losing their jobs since the economic crisis began. While we welcome the support that has been provided, will he recognise that the Government must do more: extend the rent evictions moratorium beyond December, when it is due to expire; increase support for hospitality businesses, which was called for across the House yesterday; and address the massive disadvantage that high street businesses face around business rates compared with online retailers?

Today is a day of great news on the vaccine, but the Government have a massive responsibility to preserve the businesses and jobs we will need on the other side of this crisis. They are still not acting on a scale that meets the economic emergency our country faces. They need to do so.

[Paul Scully]

I am grateful to the right hon. Gentleman for raising some really important points. On pension schemes and support for those facing redundancy, the majority of defined pension schemes are run effectively. We are fortunate to have a robust and flexible system of pension protection in the UK. The independent Pensions Regulator has a range of powers to protect pension schemes, and it works closely with those involved. For schemes where the employer goes insolvent, the Pension Protection Fund is there to help protect the members. Anybody already in receipt of a pension will continue to be paid, and other members will receive at least Pension Protection Fund compensation levels. The Pension Protection Fund is confident that its funding plan investment approach positions it well to weather the current market volatility and future challenges.

It would not be appropriate at this stage for Ministers to comment on individual cases, which are a matter for the regulator. However, in respect of staff facing possible redundancy, the Department for Work and Pensions’ rapid response service has been in ongoing conversations with Debenhams and has now been in contact with Arcadia. Both have been offered support by the rapid response service, including connecting people to jobs in the labour market, helping with job search—including CV writing, interview skills, where to find jobs and how to apply for them—helping to identify transferable skills and skills gaps linked to the local labour market and what benefits they may get and how to claim. I talked about the fact that we have doubled the number of workplace support staff in Jobcentre Plus. Clearly, knowing where the big stores are, for Debenhams in particular, we will be able to offer that sort of targeted support.

The right hon. Gentleman talked about his proposed changes to the Corporate Insolvency and Governance Bill. This was a matter of balance, because elevating pension debts, which can often be quite large, will by its very nature dilute the amount available to trade and credit suppliers, but also to other suppliers, including people with unpaid wages. It is trying to get that complexity and balance right.

Finally, the right hon. Gentleman talks about hospitality and support for other sectors. Clearly, the high street is an ecosystem—it is not only about shops and retail. We need to make sure that we do as much as we can to continue to wrap our arms around the economy at this particularly challenging time. As he acknowledges, there is light at the end of the tunnel, but we must not take our foot off the gas. We must remain alert, in terms of our own behaviours, as community members going up and down the high street, shopping local where we can to support retailers as they remain open, but also as a Government, making sure that we support the retail and hospitality sectors through both the support that I mentioned but also through encouraging them to be able to trade and remain open in all three tiers as best we can.