(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the implications of the decision of Marks & Spencer to close 14 branches across the United Kingdom.
I welcome the chance to address the House on this matter. I pay tribute to the hon. Lady for her chairmanship of the all-party group on textile and fashion, and I commiserate with her on the fact that one of the stores that will be closing is in her constituency.
Who among us is not touched by the hand of M&S? I counted up this morning, and I am in fact wearing three items of M&S clothing—I will not declare what they are. Indeed, my breakfast this morning entirely comprised items bought at the Gatwick M&S after a late-night flight. By the way, I defy anyone in the House not to say that they have at least one item of clothing in their wardrobe from that fine retailer. This is, however, a worrying time.
As the hon. Lady said, Marks & Spencer made an announcement on Tuesday about 14 of its UK stores. This is part of a well-advertised plan to reshape its estates and, essentially, to reshape its stores to compete, given the very big challenges of many online retailers in the country. Five of the stores will close this year or early next year, and all colleagues at those locations will be offered redeployment to other stores. Nine other stores have been proposed for closure, and Marks & Spencer has entered a period of consultation on the redeployment of staff in those stores. All of us will of course recognise that this is a worrying time for the over 600 staff members currently going through that process. I know that there will be concern among Members on both sides of the House about this issue. The Government—the Department for Work and Pensions and Jobcentre Plus—will of course stand by, should support be required, to work with the company.
There have been a number of announcements in the retail sector recently—negative and also positive in terms of job creation. We should all recognise the incredible contribution of this sector to the UK economy—it was almost £95 billion in 2016—and this Government’s ongoing support for the sector. We have announced measures worth more than £2 billion over the next five years to cut business rates, with a positive change to the indexation of business rates.
Only this March, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths), set up the Retail Sector Council, which is determined to drive up this sector’s productivity and ensure that it is fit to face future challenges. Sitting on the sector council are retailers—large and small; online and offline; in town and out of town—and the unions are of course very much a part of that process. The object of the council is for the Government and industry to work together to drive up productivity, and also to secure our fantastic retail sector’s future health and direction. We are working together on the requirements to make sure that productivity and economic growth in this sector can continue for many years to come.
I must just say—I probably do not have to, but I will do so anyway—that I share the Minister’s enthusiasm for Marks & Spencer, which is a most admirable institution. What she said about almost every Member having an item or more from Marks is incontrovertible.
I thank the Minister for her response.
Over the past few years, there has been a cascade of commercial announcements from well-known companies saying that iconic retail high street stores need to close if they are to cut costs: British Home Stores, Mothercare, Toys R Us, the Royal Bank of Scotland and now Marks & Spencer. As chair of the all-party group on textile and fashion, I know that the market is changing, but retail companies need to strike a balance between remaining competitive and understanding the wider implications of closing landmark stores. Marks & Spencer’s proposed store closures—14 imminently, and more than 100 in the next few years—will not only result in thousands of potential job losses, but could devastate our local town centres. It is well known that when anchor stores close, the surrounding subsidiary stores feel the impact of reduced footfall, meaning that many close as well.
Are our high streets to become ghost towns? My constituency has already felt the effects of BHS closures, and we expect to lose 67 jobs if the Marks & Spencer closes. Has the Department made any assessment of the impact of the proposed closures on local economies in Scotland and across the UK? What is the impact on disabled people who find it difficult to travel to outskirt retail parks to shop? Since the report by Mary Portas on saving the high street that the Government commissioned in 2011, how many of its recommendations have been implemented? Finally, will the Minister agree to meet jointly with the all-party group, MPs affected and representatives from Marks & Spencer to facilitate further consultation on these proposals, and to consider desperately needed plans to save our high streets?
The hon. Lady raises some valid points—there is an M&S food shop in my Devizes constituency—and is right that attractive stores bring in footfall from which subsidiary stores benefit. Of course, the Government have taken forward many plans to support the high street, which is part of the reason for the rate changes. Local councils, which might be responsible for setting parking policy, rely on parking receipts to fund other transport services, but if those rates are remitted straight back to Westminster, their desire to create a more attractive parking and retail culture might be diminished, which is why it is important that our rate localisation policy proceeds. I hope that the Scottish National party will support it.
The hon. Lady asked whether an assessment had been made. There are ongoing assessments. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton, who sends his apologies for not being present, would be the person to take that meeting. I would not like to speak on behalf of his diary, but I shall make sure that the hon. Lady’s representations are put to him. He is working tirelessly on this issue across Government even while our retail sector continues to thrive and grow. As she will know from her work on the all-party group, there have been several important announcements in the last few weeks: Amazon has announced the creation of 400 jobs; Lidl has announced the creation of 40 new stores; and ASOS, an amazing online store employing thousands of people in call centre and support capacities, has seen its sales grow by 30% this year—it is becoming a truly global brand.
There is definitely a rotation in the way in which we all shop. I am sure that we all now buy many more of our unmentionable items online—sometimes we even buy them in stores—but the hon. Lady makes some valid points. We should all think hard about what we can do as individuals, particularly to support our local authorities, which are often responsible for planning, decision making, rates setting and parking decisions, all of which can have a material impact on the high street experience.
I will take away the hon. Lady’s request and make sure that my hon. Friend the Under-Secretary responds to her. I assure her that the reason for setting up the Retail Sector Council—it includes all sorts of retailers, from farm shops to large online companies, and of course the vital Union of Shop, Distributive and Allied Workers, which is providing so much support to workers in the industry—is to make sure that these conversations can be had on a cross-Government basis, and that policy making can be joined-up.
I must declare an interest: I am wearing a Marks & Spencer suit, although I do not want to give the House the impression that I am the fashion icon for Marks & Spencer.
Does the Minister agree that it is not all bad? Marks & Spencer has opened a massive store at Rushden Lakes in my constituency. It is hugely successful and employs lots of people. The store is a mixture of retail and leisure. It might just be that times are changing and Marks & Spencer is changing with them.
In relation to the first part of the hon. Gentleman’s inquiry I say simply this: so am I, and neither do I.
Perhaps there will be a competition at the end of these proceedings to judge who wears M&S best—I am declining all responsibility for that.
My hon. Friend the Member for Wellingborough (Mr Bone) makes an important point. Companies such as Marks & Spencer, John Lewis and other major retailers have embraced this change and worked out how to be fit for the future. Sadly, in other companies—BHS, for example—the corporate management and the level of responsibility that were taken did not prepare the chain adequately for that change, meaning that many jobs were lost. Addressing that is partly the responsibility of the Retail Sector Council.
I appreciate that changes to jobs can be worrying for the more than 600 staff involved, but it is great that one of our iconic British retail chains is prepared to embrace the future, invest, and ensure that it can continue selling us the things that all of us—old and young—would like to buy. I will declare a final interest: I have about 12 Marks & Spencer jackets. They are the perfect combination of cheap and bright, meaning that I could catch your eye, Mr Speaker, when I was standing on the Back Benches.
Truly the Minister is a woman of the people.
My suit is from an independent retailer in my constituency, not from M&S.
The Press Association reported last month that 21,000 retail jobs were at risk in the first three months of the year, with administrations at Maplin and Toys R Us, and store closures at New Look, House of Fraser and Carpetright. We now learn that M&S is to close 14 branches this year, and 100 stores by 2022. As we express our fond memories of M&S, may we remember that 872 members of staff will lose their jobs? We need some sobriety in the proceedings here.
High street retailers struggle to compete against out-of-town and online shopping, given their lower cost base, and that is not helped by the long-term squeeze on incomes under this Government. The Government have their much-trumpeted industrial strategy, but where is the retail sector deal? How do they propose to help the affected communities and high streets? The Government must go much further on business rates because the changes simply have not cut through to make the difference needed by high street retailers. What conversations have the Minister and her colleagues had this year with trade unions that represent retail workers?
Unless the Government are prepared to step in to secure a level playing field between our high streets, and online and out-of-town retailers, more shops will close, more high streets will lose key big-name brands, more communities will lose out, and more workers will lose their jobs. The Marks & Spencer closures show that leaving market forces to their own devices is simply not working, and the Government must ensure that there is a fair market in retail for the good of businesses, workers, communities and our high streets.
The hon. Gentleman and I are in violent agreement. That is why the establishment of the Retail Sector Council, which absolutely involves store worker representatives, is vital. A series of financial measures has been taken forward. The Government have given almost £20 million to towns funding initiatives such as the Great British High Street. We have established the Future High Streets Forum, which is chaired by the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend Member for Rossendale and Darwen (Jake Berry), and that also involves retailers. More than £2 billion of measures were introduced in the autumn Budget to cut business rates, including the 100% small business rate relief that is so vital to independent retailers.
It is not working.
The hon. Gentleman says that, but he bought his suit from an independent retailer, which will no doubt have benefited from that—[Interruption.] He should have bought more suits there, Mr Speaker.
One point that has not been raised is that there is an unfairness in the current structure of online and offline retailing because of the way in which retailers pay VAT. That is an issue for us all, and it is why online prices can be much lower. We are therefore bringing forward a review into the wider taxation of the digital economy to ensure that international corporation tax rules are fair, and that sellers that operate across online and offline marketplaces pay an appropriate amount of value added tax.
I assure my right hon. Friend that she is indeed a fashion icon in her M&S outfits.
This sad announcement by M&S, particularly for the people who work there, puts further pressure on our high streets, on top of the correct announcement on betting regulations and the trend towards online shopping. Will my right hon. Friend redouble her efforts, and that of her Department, to ensure the vitality and diversity of our high streets up and down the land?
Most assuredly. Working with high streets in my constituency, as I am sure many right hon. and hon. Members do, I know there is a huge power in having a vibrant high street sector with lots of shops and big anchor tenants, and perhaps also, as a way of driving footfall, shops where people pick up their online packages. Our high streets are part of our incredibly vibrant history. Many of us represent small market towns where the high street is a hugely important part of the local economy. Let us not forget that they employ hundreds of thousands of people right across the country.
All this is terrible news for our local retailers and for businesses on our local high streets. We have lost a staggering number of businesses over the past two or three years. It is terrible news for the employees and their families, and for our local economy. In my constituency, we will lose about 90 employees, which will have a devastating impact. Is it due to a combination of the Government’s austerity and the clicks versus bricks regarding VAT rates, which we have just spoken about? I know that the Government were planning a consultation on VAT. Will the Minister update us on where we are with that consultation? Is there any possibility, as I asked the Chancellor some time ago, of reducing VAT for our high streets to give local shops and high street retailers a fighting chance against online retailers?
The hon. Gentleman anticipates the review I hope we can all support. I will ensure that my hon. Friends in the Treasury bring it forward as soon as possible. I do have to push back slightly. The hon. Gentleman is right and wrong. He is right that we are buying less stuff. In fact, there is the phrase “peak stuff”, which suggests that the younger folks among us no longer go shopping for pleasure, but prefer to do other things with their time—mostly involving their phones, as best I can tell from my own kids. There is the view that the acquisition of products and services is on the decline globally. I believe the vacancy rate for shops in great cities such as New York is now in double digit figures, which is very surprising and reflects a global trend.
We should welcome the fact that in this country real wages are now going up and increasing ahead of inflation. People are getting more money in their pockets. The Government’s actions in cutting taxes by over £1,000 for over 3 million people and in continuing to invest in high streets, allowing both money and choice, has meant that spending has held up reasonably well—in particular, since the Brexit referendum, which was supposed to deliver the death knell to shopping in this country. That has not happened. We are seeing a change in the way people spend, but it is vital we recognise the importance of this sector as part of our industrial strategy going forward. Industrial strategy, by the way, does not just mean smokestack industries. It means retail industries and creative industries—[Interruption.] The hon. Member for Sefton Central (Bill Esterson) should welcome the fact that we have a sector council up and running and should look closely at the steps it suggests the Government need to take.
Speaking as a former Marks & Spencer supplier and current Marks & Spencer customer, the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) highlighted the importance of an anchor store to a town’s retail offer and the social importance of the high street. I entirely agreed with her question. Will my right hon. Friend remain vigilant on, or at least sensitive to, the impact of business rates for physical retailers as compared to internet retailers? Will she monitor that carefully, because we want to ensure a level playing field for the social benefit we have been talking about?
I agree entirely with my hon. Friend. We have tolerated that difference for too long. It is right to have a fair allocation of VAT between both channels.
It cannot be fair for our high street retailers to have to compete with online companies that offshore themselves for tax purposes and often use the most exploitative employment practices, such as minimum hours contracts. The Government have to act more urgently to deal with this problem. Does the Minister really think that if an employee loses their job at Marks & Spencer and goes to work for a company like Amazon, they will be given the same rate of pay?
The hon. Gentleman flags up the reason that the Government commissioned the Taylor review on the future of good work: clearly, the workplace is changing. The expectation, and it has been pleasing to hear Marks & Spencer talk about this, is that it will do everything it can to redeploy its workforce, particularly into stores nearby that might be transitioning to food. I have been very struck on my forays into M&S by its incredible investment in its workforce—its commitment to increasing diversity and to providing good jobs over the long term—and we must all work to make sure that those jobs continue.
I declare an interest as a former supplier to Marks & Spencer, and I am still involved in—but not paid by—the company that supplies Marks & Spencer. It is one of the most innovative retailers. It trains its staff, as other people have mentioned, and is a huge supporter of the British food industry. However, north-eastern Scotland has had to withstand 50% of the business rates increase, so I ask the Minister— [Interruption.] I ask her whether that increase in business rates can be justified and to be very conscious that business rates are damaging the high street, particularly as we are seeing in Scotland—[Interruption.]
Mr Speaker, you can tell by the vigorous debate on this point the importance of having local government and national Government—[Interruption.]
Order. There are very unseemly exchanges between Scottish National party Members and Government Back Benchers. All should be united in wanting to listen to the reply from the Minister of State.
This vigorous exchange points to the responsibility that we all bear—Westminster, national and local governments—for supporting our high streets and not using short-term measures, particularly tax-raising measures, that might further drive out the precious high street stores that we are all so interested in protecting.
Will the Minister tell us whether the closures will affect any Marks & Spencer hospital branches? If she is meeting the company, will she raise the scandal of the higher prices in these shops than in high street shops? When I met the company over two years ago, it flatly refused to match the promise of WHSmith by ending premium prices in hospitals. I hope that the Minister agrees that this is absolutely exploitative and must stop.
The hon. Lady raises a fantastic point. We were all so shocked to see that practice; it seemed to be a terrible example of predatory pricing. My understanding is that no hospital shops are closing, but I will certainly ensure that the issue is raised by the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths). This practice must end.
Regrettably, Marks & Spencer chose to leave Rugby town centre a couple of years ago, but the good news is that it relocated to a much larger edge-of-town site at Elliot’s Field and is able to offer a much more extensive range. Does the Minister agree that this announcement means that it is important for retailers to work with developers and local authorities to continue to enhance and improve the retail experience?
I absolutely do. The work that so many do on an unsung basis in our neighbourhood planning process should take into account these issues: how do we create vibrant centres where people want to live, work and travel to, and which mean we have a very vibrant high street sector? If you will indulge me for one minute, Mr Speaker, Marks & Spencer has been a leading company in its drive for zero-emissions activity. It was one of the first companies in the sector to set up such a plan. It has done amazing work with its supply chain and stores to reduce carbon emissions and sell sustainable products. I really do applaud it for that.
This is a very worrying time for Marks & Spencer’s employees. I was therefore very pleased to be able to support my excellent store in Sutton by buying this suit there a month or so ago. While I agree with the Minister that people’s purchasing habits are changing, does she agree that inevitably, the report from Mark Carney that household incomes are now £900 lower than had been predicted before the EU referendum will have had an impact on Marks & Spencer? Does she also agree that if “max fac” is introduced, a £32.50 charge for every shipment, given that Marks & Spencer operates in 23 out of 28 EU countries, will also have a significant impact on it and the retail business generally?
I am not going to comment on hypotheticals, both pre and post Brexit, in terms of the impact on the economy. However, the right hon. Gentleman points out the absolute requirement both to satisfy the referendum result, in terms of leaving the European Union, and to ensure that we have as close and as frictionless a trading relationship as possible, so that we do not see food prices or the prices of goods and services going up for these very integrated operators in the UK.
I commend the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) for raising the issue of accessibility to the high street. I have witnessed the closure of shops in the high streets in my constituency and the movement away from high streets towards out-of-town parks, and I think we should try to stop that.
Companies in my constituency are paying some of the highest business rates in Europe, and, obviously, Scotland’s business growth is below that of the rest of the United Kingdom. May I ask the Minister to work with me and with other colleagues—on a cross-party basis, if needs be—and with the devolved Administrations to increase business growth in Scotland, so that we can at least match the rest of the United Kingdom?
My hon. Friend referred to disability access, and I think we still need to do more about that. We must bear in mind that it is not enough for companies simply to relocate out of town if people need cars or some other form of transport to get there.
High streets throughout the country will be the poorer for this decision. Retail closures are coming thick and fast now. May I press the Minister on one point? When will we see a change in VAT rules that will help our local shops?
As my hon. Friend—for he is a friend—knows, it is an unwise Minister who pre-empts a Treasury announcement, so I will not be tempted. But I think that we should focus on the fact that through such actions we can end up with a thriving great British company that is able to compete in the 21st century and to maintain its stores. We have seen too many great British names go under, partly because their managements did not make the right decisions and did not think enough about their staff in the long term.
I thank my hon. Friend and constituency neighbour the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) for securing the urgent question. The closure of the store in East Kilbride will also affect communities in my constituency such as Waterfoot and Eaglesham, where some of its staff live.
One of the problems with high street policy is that it involves a complicated mix of local government, devolved government and Westminster government, with often competing priorities. Will the industrial strategy present an opportunity for some combined thinking, so that we can develop good national policies that will ensure that our high streets can thrive?
My hon. Friend has made clear exactly why the industrial strategy—which, as I have said, sounds a bit “smokestacky”—is actually focused on industries such as retail and hospitality, in which we know we must increase productivity and in which so many hundreds of thousands of staff, many of them women, are employed. That is why the sector council was set up. It has existed for only six weeks, but it has already had several very productive sessions. Ultimately, this is why the move to local industrial strategies, working with local enterprise partnerships and devolved Administrations—[Interruption.] Goodness me. Members are very shouty across the Chamber today. We have already had a discussion about politeness.
As I said a few moments ago, there is too much shouting between Conservative Back Benchers and members of the Scottish National party. The Minister must be heard. If Members want to squabble, they should not squabble when a Minister, a shadow Minister or anyone else is on his or her feet. Let us hear the answers.
Thank you, Mr Speaker. I will endeavour to be brief.
It is vital for us to develop the national industrial strategy and to make it local, ensuring that mayors, devolved Administrations, local councils and local enterprise partnerships are involved in these decisions.
As we know, the retail sector predominantly employs women. What can the Government do to support them during this process and to ensure that they are not disproportionately affected by the closures?
The hon. Gentleman is right—retail is very much a female employment sector, often because women are working part time—but he and I should celebrate the fact that there are more women in work than at any time since records began and that the gender pay gap is at its lowest-ever level.
The hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) made some very valid points, but let us be clear about one thing: M&S is changing its business model in response to changing customer needs, behaviour and desires, and it has survived since 1884 precisely because it continues to do that. Revenues are up—let us not paint a picture of gloom and doom—but profits are challenged, so what is happening is perfectly fair and reasonable. Does the Minister agree that we must ensure that there is a level playing field between online and offline on the high street?
Does the Minister—for whom I have the greatest respect—accept that small towns have been hardest hit by these and previous closures and that central and local government policy is partly responsible? In Accrington, for example, hundreds of jobs have been lost, either as a result of council redundancies or because the Government have relocated public services to bigger towns or cities. Hundreds of well-paid workers have been taken out of town centres, and that has affected retailers such as Marks & Spencer.
Our two constituencies share similar characteristics. There is a very complex mix. People’s working and commuting patterns are changing, and their mobility is different. The hon. Gentleman has his brand-new trains coming, which might encourage more people to out-commute from the market towns. There is a complex series of problems, and they cannot all be solved in Westminster; they need national Governments, local governments, local economic partnerships and industry working together, and the great thing about the industrial strategy is that it is the first time that I can remember that industry and the Government have sat down and defined what they need to do to drive up their productivity, to make sure there are good jobs in these sectors, both in central towns and smaller towns for the future.
Does my right hon. Friend agree that, in the internet age, car parking charges in town centres make it more difficult for retailers both large and small and that local authorities might wish to reconsider them?
As my hon. Friend knows, that is a difficult issue because local authorities rely on that revenue stream to fund other services, including buses in my constituency, and that is why the localisation of the rates, allowing local authorities to have more revenue from driving up activity in the high street and therefore rates revenue from the high streets, cannot come soon enough.
I thank the Minister for her response to the urgent question. What consideration has been given to possible management and staff takeovers—such as by establishing co-operatives—of individual shops marked for closure? What discussions has the Minister had with Marks & Sparks in relation to that, and what help can the Minister and the Government give to help that happen?
There has been close contact with Marks & Spencer at Government level to understand what is happening. There is also now a period of serious consultation between the company, unions and staff affected in those stores to make sure there is the best possible outcome for all.
Kettering’s Marks & Spencer shop is one of the 14 whose closure has been announced, and this is very bad news for local shoppers in Kettering who use the store and in particular for the 58 employees. The decision is even more bemusing given that Kettering sits in one of the fastest growing areas in the UK, with new houses going up all the time and the population increasing at a rapid rate. Will the Minister ensure that large retailers like Marks & Spencer are fully apprised of housing growth plans, because they might be making their decisions on incorrect information?
My hon. Friend makes an important point and I will certainly make sure the Department ensures those pieces of information are shared, and of course a consultation is now under way—that was announced yesterday—with the stores affected and there might be new pieces of information that have not been thought about that should be used.