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Jones Brothers, Islington

Volume 173: debated on Friday 8 June 1990

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and question proposed, That this House do now adjourn— [Mr. Nicholas Baker.]

2.34 pm

I wish to raise the subject of the closure of Jones Brothers department store in Holloway in Islington. The store has served the people of north London extremely well for decades. It provides a much-valued service, a wide range of goods and courteous service and maintains some rather old-fashioned concepts about treating the customer well. It is used extensively by people in my constituency and that of my hon. Friend the Member for Islington, North (Mr. Corbyn), who I hope will have an opportunity to speak in the debate.

Most of us who live in Islington or neighbouring areas shop in the store on a regular basis. It employs about 500 people, many of whom are my constituents. The John Lewis Partnership, which owns the store, announced in January to an astonished work force and an angry public, that it intended to close it on 21 July this year. That closure decision prompted me to seek this debate.

The closure has aroused massive public protest. Thousands of local people have signed petitions, written letters to the John Lewis Partnership and to the store itself, withdrawn their accounts from John Lewis and demonstrated in large numbers their dismay and distress at the decision to close the store. Yet John Lewis has remained adamant about its decision. It has been arrogantly dismissive of local feelings, local people and local elected representatives.

One of the main reasons initially advanced by the John Lewis Partnership for its decision to close the store was that the building was worn out. It said that the building was in need of major refurbishment and that an urban development grant application made about five or six years ago to assist the refurbishment had been turned down by the Government. The application for urban development grant was made by the London borough of Islington on behalf of the John Lewis Partnership in 1984. It was for a public sector contribution of some £700,000 to the rehabilitation work. The application was refused in August 1985.

It is perhaps worth analysing why the Government refused that application. We should also bear in mind that had the Government accepted the application, we might not face the prospect of the store's closure. There are several discernible reasons for the Government's rejection of the application. First, there was an unusually high proportion of public sector leverage. Of course, that could readily have been discussed and reassessed in consultation among the three parties involved.

Secondly, it appears that at that time the Government were reluctant to use urban development grants for retail purposes. Since then, urban development grant has been made available to Arlington Securities for a shopping centre in Oldham, for a mixed-use scheme in Birmingham and even for the Business Design Centre in my constituency, which has close connections with the retail trade. The bar against any major consideration of support for retail purposes cannot persist.

The major reasons were outlined in the Department of the Environment letter to the London borough of Islington of 13 August 1985 which announced the refusal decision. The letter is worth quoting because it shows clearly what was in the Government's mind and because it may lead us to reflect that circumstances have changed. It states:
"The improvement in the store's trading performance attributable to recent management action has been noted and, whilst it is accepted that the project would be likely further to improve that performance, it did not appear that the store would be likely to close in the near future if the project was not carried out or that the project would in itself secure the future of the store if trade generally in the Nag's Head area were to fall off."
Note that the Government stated clearly that there seemed no likely prospect of closure and that that was why they did not believe that the urban development grant application should succeed. That circumstance has changed completely.

The letter continued:
"I would, however, add that this decision reflects the view taken of the merits of this particular development proposal. The Department are not ruling out in principle the use of Urban Development Grant in support of retail development in the Nag's Head area."
I ask the Government to put this case back on the agenda.

The likely impact of refurbishment or non-refurbishment of the Jones Brothers store will be considerable on the whole Holloway-Nag's Head shopping area. There is a danger that closure would have a spin-off effect on other businesses and stores nearby and the potential to cause a gradual decline in the quality of the shopping facilities and community life. Already since the announcement of the closure there has been a noticeable slackening of interest by businesses in the revival of the Nag's Head which the local authority has planned for many years. If Jones Brothers goes, others are likely to follow. Any cycle of decline of this sort removes the life, bustle and heart from an inner-city community. I do not want that to happen in the Holloway area.

My major question to the Minister this afternoon is: in the light of the announced closure by John Lewis Partnership, is he now prepared to consider sympathetically a new application for urban development grant, or as it now is, city grant, for this store? To John Lewis Partnership I have the following to say: I am deeply disappointed by the way in which the announcement was made without consultation with staff or local people and by the way in which the partnership has rebuffed all attempts to urge it to reconsider and all offers of assistance to enable it to reconsider its original decision. For a firm which supposedly prides itself on its responsibility to the community, its behaviour over the closure of the store has been unbelievable.

I am amazed at the changing reasons that the partnership has given for the closure. When in February I first took up the matter, it told me that the reason was simply that the building was worn out. When I came back on that and other issues subsequently, it told me that the real problem was that although the store was making a profit and no loss was being incurred on the current trading position, it was not making enough profit. I suspect that that gives us a glimpse of the real reasons behind the decision.

We are seeing part of a worrying trend upon which John Lewis and other department chains are embarked. They are closing their inner London stores in local shopping areas like Holloway. That applies also to Streatham, where the partnership simultaneously has announced the closure of Pratts. It is keeping its flagship stores in central London—Oxford street and Sloane square—but otherwise it is moving to the outer fringes of the capital, catering only for motorists in new, amorphous and relatively unwelcoming superstores. Effectively they are saying, "You can shop in Oxford street or at Brent Cross, but there will be nothing in between."

In an inner city area such as Islington, my constituents are left high and dry. Many of them have no form of private transport. The policy makes bad economic sense, especially when a store such as Jones Brothers is making a profit. It removes a valuable asset for the community and it leads ultimately to the decline and eventual destruction of inner city areas.

I ask the Government to join me in urging the John Lewis Partnership to think again, even at this late hour. I ask the Government also to reconsider a refurbishment grant application. I ask the John Lewis Partnership, as passionately as I can, to change its mind.

2.46 pm

I thank my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) for securing the debate and for giving me some of his time. As he explained, Jones Brothers is a store on the Holloway road, which is the border between our constituencies. The store is sited in Islington, North but its customers and staff come from throughout the borough and neighbouring boroughs.

We are in an extraordinary set of circumstances. The John Lewis Partnership apparently decided at high management level some time ago that Jones Brothers was earmarked for closure. I suspect that that is one reason why it has not spent as much money on the refurbishment and decoration of the store as it might have done over the past few years. Senior management arrived at the store one morning, summoned a meeting of the partners—that is the term used for those who work within the partnership—and informed them that the closure was due to go ahead. It then told a number of other people that this announcement amounted to staff consultation, agreement and support for the closure. As my hon. Friend said—I strongly support him—there is no evidence that the staff at Jones Brothers, or any other department store in the partnership, support the decision.

It is interesting, too, that normally store closures are met with some ignorance and passiveness by the local community. That is not the case with the proposed closure of Jones Brothers. Immediately after the announcement posters started to appear bearing the slogan "Save Jones Brothers". A local campaign was established and public meetings have been held. Many people have written to my hon. Friend and me. It is extraordinary that public meetings should be held in support of a department store. As my hon. Friend said, however, Jones Brothers is an unusual but genuine department store. It is the centre of the Nag's Head shopping area, which is patronised for most part by those who live in the area, and who generally walk there or travel there by bus. It is not a heavily motorised shopping area, although a major road runs through it. Jones Brothers is an important part of the area.

The John Lewis Partnership has been involved, in meetings with the supporters of the campaign, representatives of the local authority and shareholders, and at a meeting that I attended with the leader and chief executive of the council, Margaret Hodge and Eric Dean, in discussions on the closure of the store. We were told that the store was not being closed because it was losing money, but because it was not making enough money and that it was past its useful life.

At a later stage, however, we heard that the Brent Cross store is not only not making any more money than the Jones Brothers store, but possibly losing money. One wonders what was in the minds of the planners of the John Lewis Partnership when they decided to close a much-loved, successful inner city store that employs local people. That store commands a great deal of support and is doing extremely well. Why have they decided to close it in favour of amorphous, out-of-town shopping areas

I am concerned that the future of inner city shopping areas such as those my hon. Friend and I represent is now in the balance. If all the multiple stores are allowed or encouraged to move out to the North Circular road, the M25 ring or to the motorways leading into London to develop hypermarkets, what future is there for the 60 per cent. of families in communities such as ours who do not have access to a car or the elderly people who do not want a car or cannot drive one? They need a local store in which to shop. The only future for them is poor shopping facilities or expensive ones, or perhaps a combination of both.

The partnership's decision is detrimental to London, and even at this late stage I hope that it will realise that its public image of being a caring organisation that looks after its staff, which is concerned for its customers, which is never knowingly undersold and upon which it has built so much, will suffer greatly if it now undersells the people of Holloway by closing Jones Brothers. The people of Holloway have been loyal shoppers at the store and I hope that the partnership will not treat them in the cavalier manner that I fear.

If the Minister has time I hope that he will visit Holloway and the shop. He will then realise why we are worried. The area has a great deal of through traffic—fortunately the motorway scheme is not going ahead, but we are still fearful about the effects of red routes on traffic flow. The shopping area is relied upon by many not necessarily wealthy people. Jones Brothers is the centrepiece of the shopping area as it sells a variety of goods. If it goes I am certain that the other fairly large shops in the area will think twice about staying. We will then be left with a rundown, boarded-up shopping area alongside a major road on which much traffic hurtles through. The people of that community will be the losers, as will the 500 people who work in Jones Brothers. That will be a sad day.

If the store closes, John Lewis Partnership will be seen to be just like all the other high street multiples. It will be running away from the inner city areas and its loyal, perhaps poorer, customers. Instead it will move to its shiny stores on the outskirts of London where those who have sufficient money to own a large car can make bulk purchases. That course of action might lead to profitability for the partnership, but the people of Holloway will be left with a shopping area that will be made worse by such closure.

The partnership and the Government should recognise the support that the local community has given to the store and the campaign to keep it open. I hope that the Minister's reply is supportive and that he will do what he can to pressurise the partnership to change its mind. If he was prepared to support an urban development grant for the new development in the area that would guarantee the future of the shop.

2.53 pm

The Parliamentary Under-Secretary of State for the Environment
(Mr. David Heathcoat-Amory)

I congratulate the hon. Member for Islington, South and Finsbury (Mr. Smith) on securing this debate and on the eloquent way in which he made his case. I am also grateful for the weighty contribution from the hon. Member for Islington, North (Mr. Corbyn) whose neighbouring constituency has an interest in the matter.

I, too, was disappointed to hear about the John Lewis Partnership's decision shortly to close Jones Brothers. I regret the loss of jobs and the valuable facilities in that inner city area. I understand that it is one of a number of closures announced by the partnership and I hope that it will reconsider its decision.

The Government do not own or control the partnership, so the decision must ultimately be for the commercial judgment of the partnership, and doubtless it will listen to representations made to it. It is certainly not my job to tell it how to run its own business.

Our general policy on retail projects is that we will consider them for grant. There was an initial perception that we automatically refused applications to grant-aid retail developments. That is not the case. Indeed, we have funded a number of other retail developments.

The hon. Member for Islington, South and Finsbury referred to the original decision to refuse urban development grant. It is true that an application to refurbish the store was made in early 1985. It received careful consideration by my Department and in particular by an experienced team of independent private sector professionals who were seconded to the Department as an appraisal team.

In this case, after extensive discussions with John Lewis and Islington borough council, the appraisers concluded that the project represented poor value for money. The grant requirement at that time was estimated at £700,000 to support a total investment of £1,750,000. That would have given a public to private investment gearing of 1:1·5, which would have been very poor compared with the average of 1:4.

Moreover, the project would have created only 25 new jobs and the cost per job of £28,000 compared unfavourably with the average at that time of only £3,500 to £4,000 per new job created.

The John Lewis Partnership argued that if the project did not go ahead, the existing 500 jobs in the store were at risk. The appraisers concluded that that was unlikely in the short term, and they were also of the opinion that the net benefits to the inner city were overall too small to justify a £700,000 grant.

Five years have elapsed since that initial decision to refuse grant, so the appraisers can claim to have been right in that the store did not shut in the short term, although regrettably the decision has now been taken.

The hon. Member for Islington, South and Finsbury said that urban development grant had been made available for a number of other projects. He mentioned the royal agricultural hall—the so-called Aggie—which I have visited, and a fine place it is. It is a tribute to the entrepreneurial flair of the Morris family in getting the project together. That received urban development grant of £2,850,000, which helped to convert a potentially derelict hall into an international business design centre with a retail flavour to it. That demonstrates that projects in the retail or near-retail sector can receive favourable consideration. Overall Islington has received urban development grants with public and private sector investment in excess of £13,500,000. Apart from the royal agricultural hall, £375,000 of urban development grant was awarded in 1988 to redevelop United house, off the Caledonian road. The building was originally used for the manufacture of horse-drawn carriages but has now been transformed into 28 self-contained offices. That shows that Islington has had its fair share of urban development grant, and has been well provided for under the separate urban programme.

In 1989–90 Islington received £8,567,000 worth of urban programme grant, and for the current year the figure has been set at £8,550,000. A fair spread of projects have been aided in that way. I simply refer to one or two which appear to be directed especially towards helping the area round the store in question. For instance, I understand that about £52,000 was contributed towards the removal of a redundant railway bridge over Holloway road, close to the area, which is a useful contribution to its improved environment.

Nevertheless, I accept that closure of a store of that importance is a considerable blow. I do not overlook that fact. The hon. Member for Islington, South and Finsbury sought assurances that future applications for city grants would be considered favourably. I can give no assurances about the availability of grants, but I certainly assure the hon. Members for Islington, South and Finsbury and for Islington, North that if and when an application is made it will receive the close attention of the department.

At present, no proposals are before the Department, so we are only speculating.

I am grateful to the Minister, and he has probably gone as far as anyone could reasonably expect him to at this stage. However, may I press him a little further because two factors have changed dramatically since five years ago? First, we are now faced with imminent closure of the store, which we were not at that stage. Secondly, it is becoming obvious that if the refurbishment of the store does not go ahead and it is closed we shall be faced with not only the loss of 500 jobs in the store but, over time, the loss of other facilities and jobs in the Holloway area. Will it be possible for the Government to take those factors into consideration if an application is made?

If an application is received—it does not have to be from the John Lewis Partnership, it could be from any private sector development with a worked-out scheme to redevelop or refurbish the building, either as a retail centre of for some other purpose—it must be assessed on its merits and against the normal criteria. Certainly, any application will meet strong competition from elsewhere, because many projects are competing for what will always be a limited quantity of public money.

However, I can reassure the hon. Gentlemen that the strong representations that they have made this afternoon will be taken into account, if and when an application is made, and that the application will receive close, and I hope reasonably speedy, attention. If some of the ex-employees, as they may then be, could benefit from a future grant we would take that into consideration.

Question put and agreed to.

Adjourned accordingly at three minutes past Three o'clock.