Theresa May promises an economy that works for everyone. For the BHS pensioners it cannot come soon enough. The collapse of the familiar high street chain should be a watershed that marks the end of the celebrity entrepreneur. Sir Philip Green, the party-loving gossip-column favourite whose penchant for supermodels and superyachts seems to have dazzled big City firms almost as effectively as it seduced politicians like Tony Blair and David Cameron, was not the only example, but his exploits, described by MPs as the unacceptable face of capitalism, should be the spur to ensure that it cannot happen again.
As if to confirm his tabloid reputation as Sir Philip Greed, the man at the heart of one of the most damning reports that MPs have ever produced is on his yacht in the Mediterranean, and not returning calls. The MPs’ report into his management of BHS, and, in its final days, Dominic Chappell’s, painfully illustrates the way a ruthless businessman with a team of expert advisers operating a private company is very hard to stop. The people who should have intervened at the time of the company’s disastrous sale, the City professionals such as the bankers Goldman Sachs, or the accountants Grant Thornton or the lawyers Olswang, appear not only to have been blind to Sir Philip’s unscrupulous behaviour but ready to condone it. All of this was carried out under the kitemark of approval from the Palace in the form of a knighthood awarded on the recommendation of Mr Blair, a stamp of approval subsequently endorsed by Mr Cameron.
For the thousands of BHS pensioners – and the 11,000 workers, many of whom are now looking for other jobs – the bigger picture matters much less than the future of their pensions. Sir Philip, in his unblushing appearance before the joint committee last month, during which he blamed the pension fund trustees who he alleged were “asleep at the wheel”, pledged to find a way of improving the significantly reduced benefits currently on the table. In the wake of the MPs’ detailed description showing how he had taken hundreds of millions of pounds out of the two defined benefits pension schemes – in effect, since occupational pensions are a form of deferred pay, taking directly from the pay packets of staff – he needs to do much, much more than that. The funds, in surplus when he took over in 2001, were in deficit by 2006. The trustees’ protests about non-payment of employer contributions were ignored. When finally Sir Philip sold BHS for £1, it was described as debt-free, even though pensions debt is properly regarded as a company obligation.
The backstop for pensioners’ interests is the Pensions Regulator, or TPR. TPR was pursuing BHS’s owners over the non-payment of employer contributions right up until the business went into administration. They are now wading through 75,000 documents to see if they can mount an anti-avoidance case. But for the pensioners, these are technicalities. If Sir Philip values his reputation (and, perhaps, if he wants to have a chance to keep his knighthood), he should pay back the £500m that was extracted from the company in the early years of his custodianship. Even that would not be enough to buy annuities to meet all the funds’ obligations: falling interest rates mean the amount needed now is £570m and rising. But it would be a very considerable help. The regulator is rightly calling for extra powers and more resources to deal with an increasingly fragile pensions economy.
The fall of BHS is a catastrophic example of a series of failings. It may be unfair to make Sir Philip the sole embodiment of what’s wrong with capitalism. But conduct like his is at last widely seen to be not just unethical but profoundly damaging. Taking away his knighthood might look no more challenging than making him rearrange the sun loungers on his superyacht; but it would mark the end of the celebrity entrepreneur.