British MPs urge protection for Poundland from 'predatory capitalism' as 12,000 jobs hang in the balance

MPs have called on the government to protect the budget retailer Poundland and other high street stores from 'predatory capitalism' and asset-stripping. Uncertainty has grown over the future of the chain's 12,000 staff.

Poundland's fate became uncertain after it filed a notice of intention to appoint administrators at the High Court last Thursday. Gordon Brothers, the US restructuring specialist that controls Poundland, has lined up the advisory firm AlixPartners to run the process.

In an urgent question in the House of Commons on Tuesday, Gareth Snell, the 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 whether it would establish an urgent review of whether corporate governance and insolvency frameworks give sufficient protection against asset stripping and short-term financial engineering at the cost of jobs and high streets.

Green Party MP Hannah Spencer said the Poundland 'scandal' exposes a serious problem: the economy is vulnerable to private equity vultures who swoop in and prey on 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 held talks with Gordon Brothers on Monday night, and that she would meet Poundland's management team along with Usdaw, the shop workers' union, on Wednesday. Business secretary Jonathan Reynolds will also meet Gordon Brothers again later this week, as 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 not going 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 the investment group Innovest, is believed to have partial funding in place and to be advised by former Reform election candidate Charles Bunker.

Suppliers have held back deliveries, hurting Poundland's ability to trade, so the chance of avoiding mass store closures and job losses is shrinking by the day. 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. It appears they're not acting in the best interests of their loyal UK staff and stores.'

In a letter to the government, 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 that the chain had returned to underlying profit. The letter added, however, that like other high street retailers the company faces multiple economic challenges, including rising inflation, increasing staffing costs and shrinkage from severe levels of shoplifting, meaning 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, saying the current economic landscape is hostile to British business. Earlier on Tuesday, Poundland founder Steve Smith said staff at the chain could be out of work for years if it collapsed.