The release of a damning MP report pins down Sir Philip Green as responsible for the demise of BHS and huge pension blackhole for its employees.
The MPs’ report found Sir Philip, the billionaire former owner of BHS, extracted large sums and left the business on “life support”.
The report, from the Business, Innovation and Skills and Work and Pensions committees, comes just days after it was revealed Sir Philip’s knighthood is being kept “under review”. Petitions group 38 degrees has set up a petition to have Green stripped of his knighthood, in the aim of convincing the government to stop honouring “the unacceptable face of capitalism”.
The report reveals that Greens failure to resolve BHS’s £571m pension deficit was a major factor in the firm’s demise.
Sir Philip vowed to MPs last month that he would sort out the pensions “mess”, but has declined to respond to the report so far.
MP Frank Field, co-chair of the BHS inquiry carried out by the committees, said Sir Philip should write a cheque for “at least” £571m for the BHS pensioners.
The Green family extracted more than £300 million from BHS, enabling them to accrue “incredible wealth” and with either “inadequate” or “ineffective” investment pumped back into the business, according to the report.
“By 2014, BHS was left on life support, having drawn on all its accumulated reserves and more as a result of large dividends and heavy losses,” it found.
Sir Philip also gave “insufficient priority” to the pension scheme over an extended period, leaving 20,000 pensioners now facing substantial cuts to their contributions. He is said to have ignored suggestions to put money into the scheme.
“Sir Philip owes it to the BHS pensioners to find a resolution urgently,” the report said. “We still do not doubt that Sir Philip has heartfelt affection for BHS. To an extent it created him; it could also bring him down.”
In the past, Green has privately expressed his willingness to make some kind of financial contribution, but is understood to be reluctant to make a payment direct to the Pension Protection Fund (PPF).
BHS is in the process of closing down after what the MP report called the “shambolic” ownership of Dominic Chappell, who bought the retail chain from Sir Philip for just £1 last year.
Sir Philip thinks the accusations that he and his family profited while pensioners suffered are wrong, but he does admit to one big mistake. By choosing Dominic Chappell, a serial bankrupt with no retail experience, Green chose, in his words, “the wrong jockey”.
“The tragedy is that those who have lost out are the ordinary employees and pensioners,” the report said. “This is the unacceptable face of capitalism.”
“Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable,” the report found.
Commenting on the report on BHS, Graham Vidler, Director of External Affairs, Pension Lifetime Savings Association, said:
“There are over 6,000 defined benefit (DB) schemes in the UK, with 11 million members and over £1 trillion of assets, so it’s important to make sure schemes are secure and working hard for both members and the wider economy. As this report highlights, these schemes are operating in a very challenging environment and even the most supportive sponsoring employers find themselves making very difficult choices about how best to balance the interests of their DB scheme and the wider business which supports the scheme, its members and many other employees.
“In this case the Committee has reached a clear conclusion that the sponsoring employer was not supportive and says Sir Philip Green ‘and his directors repeatedly resisted requests from trustees for higher contributions’ to the scheme and concludes that the ‘massive deficit is ultimately Sir Philip Green’s responsibility’. This sends a welcome and strong message about employers’ duties to the millions of defined benefit pension scheme members in the UK.
“The Committee’s commitment to ‘investigating how to secure a fair and sustainable settlement’ can be reached is also very welcome, including its focus on whether the balance in the regulatory framework is correct in that it can offer both adequate protection and strong enough recourse for schemes and trustees. It is important to recognise that over the last decade employers have put a record amount of money into DB schemes generally but this has made little impact on funding levels because the challenges facing schemes are complex and varied. ”