Shop Direct (Greater Manchester)

Sam Gyimah Excerpts

Tuesday 1st May 2018 Commons Chamber

[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.

[Barbara Keeley]

During the speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), I said that the company seems to expect that employees will stay for two years and across two Christmases, and not get their redundancy till the end, when they could all land on the unemployment market at the same time. Surely, it makes sense for redundancy packages to be spread across the two-year period, so that if job vacancies arise, my constituents and my hon. Friend’s constituents will be able to take advantage of them. Otherwise, in a ward such as Little Hulton, where unemployment is twice the national average, it will be pretty hard in the end.

[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.

[Debbie Abrahams]

My specific point about Shop Direct is that we need BEIS support—Government support—to ensure that, if it does ultimately leave the sites in Greater Manchester, alternative employment will be brought in. Just saying that it is the responsibility of the employees to reskill and retrain is not good enough.

[Mr Gyimah]

I certainly have not said that it is the responsibility of the employees to reskill and retrain; I have said that the Jobcentre Plus rapid response service will be working directly with them, and BEIS will work with the taskforce at the local level as far as the transition is concerned. A number of important conversations will have to take place on this over the next few years, but I can give the hon. Lady a categorical assurance that Ministers, as well as BEIS employees, will work closely with her and her colleagues to make this transition as smooth as possible for the employees and the local community.

Question put and agreed to.