On The Remaking of British Capitalism

Frank Field writes:

Theresa May arrived at Downing Street with a promise to the nation: that the government she leads will initiate a complete rethink of how capitalism is conducted in our country, so that it can be made to work for all of us, rather than a mere privileged few at the top.

That rethink is now urgently required, in the light of our select committees’ findings on the losers and winners from the tragic demise of BHS. 

Among the losers is Mrs C Patel, who is 56 and has worked for BHS since leaving school. She told us how she felt “so helpless about what is happening”. 

She is among 11,000 mainly low-paid workers whose jobs are now at risk, and 20,000 former and current pensioners whose pensions face cuts of up to 77%. 

One current BHS pensioner wrote to me to say her modest retirement had been put in “utter jeopardy” by the collapse of the company and its pension fund. 

No such concerns afflict Sir Philip Green, the man who ran BHS for 15 years from 2000. 

He and his family accrued enough wealth on the back of BHS to propel them towards the very top of the Sunday Times Rich List. 

They can count their wealth in billions.

Sir Philip and Lady Green clearly emerge as the biggest financial winners from BHS, although many others involved in its demise – including Dominic Chappell – also pocketed huge sums of money. 

Much of the Green family’s enormous wealth was built up during the early years of Green’s stewardship of BHS. 

And yet there is no evidence whatsoever from this period of the improved turnover, market share, or major increase in investment that might be expected from a leading retailer. 

Investment was evidently either inadequate in scale or ineffective in improving the competitive edge of the business. 

Here we are introduced to our second group of losers from this sorry tale, the BHS customers. 

Our select committees received reports from across the country of how the lifts in their local BHS had been out of service for five years, of gaping holes in the doors of the ladies’ changing rooms, of carpets being taped down, and of air conditioning systems being out of service and left to decay. 

The decay which set in at individual BHS branches mirrors that of its pension fund – it was allowed to decline from a surplus of £43m in 2000, when Green bought the business, to a £571m deficit last year. 

Companies that are suppliers to BHS are now also under threat.

So the picture that was presented to us in evidence was clear – the Green family’s wealth escalated beyond the dreams of avarice, while the health of BHS and its pension fund was neglected. I believe that two immediate responses are now required.

The first is for Green to write a large cheque to make good the shortfall in the BHS pension fund.

This most basic gesture is well within his capabilities – the Green family recently acquired a private jet and another luxurious yacht for a cool £146m – and would restore a sense of justice for those 20,000 workers whose pensions are at risk.

Next, we need the government to initiate a review of company governance in this country.

This review should be undertaken with one key question in mind: should directors be deemed fit and proper persons if they are prone to racking up huge pensions deficits while adding handsomely to their own personal wealth?

And should not such questions be applied to private limited companies, as well as publicly listed ones? 

Both of these questions will require answers if May is to fulfil her promise on the remaking of British capitalism, in particular the corporate greed we have witnessed throughout the sorry demise of a once great high street name.