Look at the Poundland scandal and see a crisis that goes beyond Britain’s high streets

‘I look out for my team,’ a store manager tells me, but Poundland’s US owner doesn’t care. Labour may be too late to prevent it becoming yet another casualty of venture capital

In the Poundland I visit, a treasure trove of bargains, the staff are dejected. The shelves are emptying because the owners have withheld £50m needed for new stock and paying wages. It’s just one of 600 stores in peril, and these employees just a few of 12,000 at risk of losing their jobs – with 30,000 jobs at risk in supply chains.

On Tuesday £10m was released: not enough, but preventing instant collapse. Gordon Brothers, the US owner that bought Poundland for a symbolic £1 last year, specialises in buying and “restructuring” distressed companies. Under pressure, it extended the deadline by 10 working days before putting this profitable business into administration. It profits more by closing Poundland down and breaking it up.

The manager, whom I’ll call Jim for anonymity, is at work an hour and a half after his paid shift ended. “I look out for my team,” he says, though Gordon Brothers doesn’t seem to be looking out for him. He says the outsourced security staff vanished this week as their pay was stopped. “The shoplifting is very bad now. Look, the high-end stuff has gone first”: the well-known brands, not unknown cheaper makes. Despite everything, he is remarkably proud of the shop and boasts of how much cheaper brands are than in Sainsbury’s. He pats the shelf with red velvet Santa stockings and glittery bows, glad some Christmas stock is in before the closure. “But no one is telling us anything.”

Will the staff get jobs if it closes? He introduces me to a man in his late 50s with an easy manner and a wide grin. “My best man, by far,” he says. “He’s been here 15 years, and never a single day off sick, not one. Will any other shop see how good he is? No, because his English is bad and they won’t know his worth to any manager. I don’t know what he’ll do. I keep putting him on the till to try to improve his English, to help him along.” Jim is proud of his eye for picking good staff and keeping them on warm terms, and is fearful for their future.

This is may not be the sort of shop where you expect steadfast dedication to the company. Jim’s attitude is just another reminder of what I often find reporting on work, that most people are attached to their jobs, despite recent British Social Attitudes research reporting their frustrations. Often the greatest aggravations are about lack of control. Jim says he could increase sales if he was allowed to be the buyer. “I know our customers in this area; the centre doesn’t.”

He belongs to Usdaw, the shopworkers’ union, but says there’s nothing it can do. Time and again the union has watched helplessly as these private equity and venture capital buyouts bring down viable retailers. As we talk, a customer asks indignantly why there are no packs of Boost in the cold drinks cabinet. Jim explains the situation and the man looks shocked. “No! You can’t close down! I’m always in here.”

Our surroundings, our streetscape is at the mercy of distant forces. Gap-toothed high streets and boarded-up shops cause us all an ache of loss. Poundland stores teetering on the edge are “anchor stores” drawing people to high streets, but may join those great voids just weeks before Christmas. Woolworths’ 807 stores closed after being taken over, losing 27,000 jobs and lifetimes of local history. BHS, sold for £1, is gone. Debenhams, WHSmith, Toys R Us, Maplin, TM Lewin and plenty more, adversely transformed or taken over by private equity for unkindly “restructure” that usually ends in closures. Some, bought with debts that are loaded on to their balance sheets, stagger but survive – think Asda and Morrisons.

Now it’s Poundland’s turn. At Wednesday’s closed-session select committee on business and trade, MPs heard its long-serving managing director, Barry Williams, challenge the owners, trying to save the business and showing that it made a £18.1m operating profit in the year to September. But Gordon Brothers has turned down offers, notably one from Martin Property Group, owners of NCP car parks.

Through complex financing, it would make more by breaking Poundland up. It has £30m debt to recover but, as it is both the owner and the creditor, it comes top of the list for repayment in administration: after paying tax, it gets paid before any staff who are owed wages. If there’s no money left, redundancy is paid by the taxpayer.

Andy Burnham weighed in demanding answers, but Gordon Brothers has no legal obligation to worry about staff, let alone social or public concerns. The chair of the Commons business and trade committee, Liam Byrne, is campaigning hard to save Poundland, calling Gordon Brothers “much like a wolf on Wall Street, on the British high street”, and adding: “It’s clear that they’ve taken millions out of Poundland at a time when they themselves said the business was on a knife-edge.”

But there’s nothing anyone can do if pressure and shame fails. Why should a company, especially a foreign one, care what anyone thinks when the bottom line says close it down?

Byrne is campaigning to prevent this in future, calling for changes to company law that at present gives shareholders primacy above all else, unlike the much preferable situation in Germany. He would stop pension funds making it their sole obligation to maximise short-term gains and thus investing ever more in venture capital. He’d also impose stress tests to stop asset strippers overloading a business with debt then taking the lion’s share when it’s broken up.

On the Poundland shop floor, Jim and the rest of his team serve their customers and wait another two weeks to discover their fate. A future change in the law is essential. Maybe it will come. But it will probably be too late for them.