Coventry IKEA Store Closure

Debate between Taiwo Owatemi and Kwasi Kwarteng

Thursday 13th February 2020 Commons Chamber

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

It is very good and pleasing to see you back in your rightful place, Mr Deputy Speaker. I concur with remarks that have suggested that the tone in this Chamber has significantly improved since the last election.

I congratulate the hon. Member for Coventry South (Zarah Sultana) on securing this important debate. She has shown in her brief time in this House a real concern for her constituents that is very much noted and very impressive, particularly in the context of this sad news from IKEA.

I have no doubt that the announcement from IKEA is of great concern to employees, their families and the wider community in Coventry. I am sure that the House will be sympathetic to all those whose livelihoods have been affected, or are likely to be affected, by this announcement. I understand that IKEA is currently in consultation with its staff, and it would not be appropriate for me today to make any assumptions about the possible outcome of those conversations and that consultation. IKEA has made it very clear that its ambition is to retain as many workers as possible. I can assure the hon. Lady that the Government will work closely with IKEA to ensure that all affected employees are provided with the required support to move to their next employment quickly or to be reassigned within the company.

The retail sector, as the hon. Lady observed, has been going through a period of unprecedented change. Companies across our economy need to merge, expand and sometimes contract and reorganise in the light of quickly changing economic and commercial circumstances.

It is important to understand why IKEA proposes to close its Coventry store. The business has stated that the reason for announcing this closure is that, when it opened the shop in 2007, it was testing a new format to meet its customers’ changing needs and expectations.

[Taiwo Owatemi]

From the meeting I attended with IKEA alongside my two colleagues in Coventry, I understand that the Coventry IKEA store was a pilot store. There was no other city-centre IKEA like it in the UK. Infrastructure was built around this project. Does the Minister agree that pilot stores should face more scrutiny before they are built or large units such as IKEA stores are purchased?

[Kwasi Kwarteng]

That comment makes sense after the event; I have no doubt about that. Like the hon. Member for Strangford (Jim Shannon), I have shopped in IKEA, but, I am sure, with considerably less success in putting together the items of furniture I bought. I remember that at the time, it was hailed as a significant step. People welcomed the employment opportunity and the opportunity to shop in the centre of Coventry. It now transpires that it has not worked out as people anticipated. The hon. Member for Coventry North West (Taiwo Owatemi) is right; there needs to be a measure of scrutiny, but I would be reluctant to introduce legislation that would prevent other companies from innovating and opening pilot stores in the way that IKEA did in 2007.

The store attracted significantly less footfall than IKEA originally forecast. It was built over seven floors, and there were issues with how easy it was to shop from the top and then go down to where the payments were made. The company found it very challenging, and the operating costs were high. When the company conducted a full review last year, it felt that the only option it had, or the easiest and most profitable in terms of the entire company and its employees, was to review the operation of the store. The company felt that the bespoke nature of the store design and the high costs involved meant that it had to reconfigure the unit, and sadly, it has decided to close the store. I understand that it looked at other options aside from store closure, and it maintains that this is an exceptional case.

I welcome IKEA’s recent news that it is investing £170 million in the acquisition of Kings Mall shopping centre, which demonstrates the fine balance between investing in new facilities and making difficult decisions about existing ones. IKEA has confirmed that it remains committed to this country and to its ambitious growth plans, and it will continue to invest in stores and provide jobs, employment and economic opportunities to its staff. It has not turned its back yet on the city-centre format, and it is also looking at digital capabilities.

I now turn to what the Government are doing to support retailers. We are all aware of the difficulties in the sector. People rightly talk about business rates. My Department is conducting a review of business rates, and my colleagues at the Treasury are committed to a fundamental review of that tax. It is vital to provide the right tax environment for businesses to invest and grow. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), co-chairs the industry-led Retail Sector Council with Richard Pennycook, chairman of the British Retail Consortium. The council’s objectives are driven by industry and by consumer needs. It wants to make positive change, increase productivity and ensure that the sector remains robust and sustainable.

The hon. Member for Coventry South mentioned the need to create new forms of employment in areas that have suffered from deindustrialisation. As a Government and as a society, we have to think about new forms of industry and job creation. My Department is at the centre of that. We are driving innovation in green jobs. She will know about the strides we have made in offshore wind, which I know is not necessarily directly associated with Coventry. The fact remains that through environmental innovation, our environmental concerns and the green agenda, we are looking to create hundreds of thousands more jobs in that sector across this country than exist today. The statistic I remember is that we have 460,000 jobs in the green economy today, and by 2030 we hope to have 2 million, which is a four times increase in the number of jobs. This is a hopeful subject not only for constituents up and down the land but for the UK economy and the fight against climate change.

In concluding my remarks, I would like to speak generally about the high street. Coventry has a great high street, as many of our towns and cities do. As constituency MPs, we all appreciate how important the high street is, what a centre it is and how it forms the heart of many of our communities. People care about high streets. They are hubs for local people, job creators and nurturers of businesses of all shapes and sizes. I fully understand the devastating impact that the closure of IKEA in the centre of Coventry and the loss—the potential loss, because those people have not lost their jobs yet—of 352 jobs. We all understand the massive and depressing effect that that can have on the high street.

People up and down the land rightly feel very passionate and concerned about their local high street. We in the Government also recognise that this is a problem, and we share the passion and concern. That is exactly why, in July 2019, the Prime Minister announced a £3.6 billion towns fund to re-energise local economies. This included an accelerated £1 billion for the future high streets fund, which is going to support and is already supporting local areas in England to renew and reshape town centres and high streets in a way that not only improves the experience but drives growth and a future economic path. I acknowledge the fact that Coventry city centre was among the first 14 places announced as taking part in the high streets taskforce pilot. This Government feel that the high street is at the centre of our national life, and we are absolutely committed to maintaining its strength.

I hope that these schemes demonstrate our commitment to communities across the country, especially Coventry and the wider midlands. The Government will not just stand by and watch valuable retail industry fade away. Nobody in this Government fails to recognise that retail is absolutely vital to our economy and our various communities. The Government are committed to working with industry to address the key issues of concern and to drive positive change and innovation. Retailers remain a crucial part of our regional economies.

[Taiwo Owatemi]

Will the Minister set out how the Government are encouraging more innovation in the retail industry? It is no secret that shopping behaviours have changed, so the industry must change too. The Government must lead the way in helping small and medium-sized businesses to adapt and survive these changes.

[Kwasi Kwarteng]

This is absolutely at the centre of the strategy. The hon. Lady will know that we have many schemes in BEIS, such as local hubs, and we also encourage people to work with their local enterprise partnerships. As I have stated, we have already announced a £3.6 billion towns fund. There are opportunities, and perhaps she would like to meet me and officials in my Department to discuss how we can drive some of these issues further and how we can tap into or unlock some of those resources. There are those schemes, and there is an absolute commitment on the part of this Government to make sure that our retailers do not fade away.

In conclusion, I know that in the immediate aftermath of that announcement there is little the Government can do to soften its immediate blow, but I am convinced there is a way through this. I believe that IKEA’s commitment to this country means that it will bend over backwards to ensure that as many people as possible can be redeployed and found other employment. If that is not the case, the Government are willing and eager to engage with representatives, and Members of Parliament from across the House, to consider ways to provide security, employment, and a better future for our citizens across the country.

Question put and agreed to.