Protect Poundland from predatory capitalism, MPs tell government

MPs have called on the government to protect Poundland and other high street stores from "predatory capitalism" and asset-stripping.

The fate of the retail chain and its 12,000 staff remains uncertain after it filed a notice of intention to appoint administrators at the high court last Thursday. The US restructuring specialist Gordon Brothers, which controls Poundland, has lined up the advisory company AlixPartners to run the process.

In an urgent question in the House of Commons on Tuesday, Gareth Snell, Labour MP for Stoke-on-Trent Central, asked the government what could be done to "send a message to Gordon Brothers that the predatory capitalism that they are putting into this company will not be tolerated, because we in this country will always stand with people before profit".

Another Labour MP, Antonia Bance, asked what measures the government would use to "hold Gordon Brothers to account", and if it would "establish an urgent review of whether our corporate governance and insolvency frameworks give sufficient protection against asset stripping and short term financial engineering, at the cost of jobs and our high streets?"

The Green party MP Hannah Spencer said the "scandal" of Poundland "exposes a very serious problem, that our economy is vulnerable to private equity vultures who swoop in and prey on our high street brands by loading them with debt and then trying to ditch them for a profit".

Kate Dearden, minister for the future of work, told parliament that government officials had held talks with Gordon Brothers on Monday night and she would meet Poundland's management team along with Usdaw, the shop workers' union, on Wednesday.

She said Jonathan Reynolds, the business secretary, would meet Gordon Brothers again later this week as political pressure mounts on the company to accept a solvent bid for Poundland.

Dearden said the government could not involve itself in the "commercial negotiations" with potential buyers or comment on individual bids.

However, she said the government was "taking a responsible approach not to sit by and do nothing" and was putting pressure on Gordon Brothers to accept it had "responsibilities as well as rights" over Poundland and its employees.

Gordon Brothers is understood to remain in talks with at least two potential buyers for the whole company, including a fully funded offer from Northern Ireland's Martin Property Group.

Another offer from Innovest, an investment group understood to be advised by former Reform election candidate Charles Bunker, is believed to have partial funding in place.

The chance of Poundland avoiding mass store closures and job losses is shrinking by the day because suppliers have held back on deliveries, hurting its ability to trade.

Gordon Brothers is believed to be unwilling to accept Martin Property's offer of about £15m, only half of which would be paid immediately, because it falls short of repaying a £30m shareholder loan.

The prime minister's spokesperson said: "We continue to stay close to what's an extremely worrying situation for Poundland staff, their families and communities.

"Gordon Brothers need to explain why they haven't accepted any offer to keep the company going. That's the case. It appears they're not acting in the best interests of their loyal UK staff and stores."

In a letter to the government, reported by Sky News, Gordon Brothers executive Mark Newton-Jones defended its approach, saying it had "supported Poundland with £85m of additional financing" since acquiring it for £1 last year and the chain had returned to underlying profit.

However, the letter added: "Like other high street retailers, the company faces multiple economic challenges, including rising inflation, increasing staffing costs and shrinkage from severe levels of shoplifting, which means it is still not cash-generative at a sustainable level despite the turnaround efforts."

Dozens of MPs from around the UK have called on the government to reassure their constituents that action would be taken to stop Poundland's collapse.

Bradley Thomas, the Conservative party business spokesperson, blamed the government for Poundland's demise. He said: "The current economic landscape is hostile to British business."

Earlier on Tuesday, the founder of Poundland, Steve Smith, told the Guardian that staff at the chain could be out of work for years if it collapsed.

Gordon Brothers was approached for comment.