The Guardian view on BHS: the tainted love of business and politics
|
Version 0 of 1. Sir Philip Green, the retailing giant long beloved by politicians of all parties, was asked this morning what he understood by a good business. He was invited to define corporate social responsibility. Sir Philip appeared perplexed, as he often did in the course of his long session in front of a joint committee of MPs who wanted to know how BHS and its pension fund went from profit to disaster on Sir Philip’s watch. But this time it may not have been a front. There is no official description of a good business. Beyond the regulations protecting pension funds and shareholders, and the laws on the minimum wage and health and safety, government and the statute book alike are virtually silent on the question of what makes business good. After the Guardian exposed Mike Ashley’s employment policies at Sports Direct and with the news this afternoon that the entire pharmacy sector is to be investigated after a Guardian report on practices at Boots, it is time to call time on business as usual. The role of the pensions regulator in the collapse of BHS, with a £571m hole in its pension fund that is jeopardising the benefits of thousands of current and former employees, is already under scrutiny. Sir Philip’s big announcement today was his close involvement in work with the pensions regulator and the pensions protection fund to resolve the problems the fund faces. He told MPs that he hoped a settlement could be found within a week. He apologised. But he accepted no blame. He refused to commit himself to protecting the existing benefits of pensioners, or the 11,000 BHS employees whose jobs are under threat; and he appeared flummoxed by the question of why Arcadia, owned by his wife Tina, and which lent £35m to BHS, is a secured creditor, and will thus be paid before the pension fund. Lady Green is now to be invited to give evidence to the committee herself. On other occasions, attempts to persuade Sir Philip to contemplate the impact of withdrawing £400m in dividends soon after buying the high street chain also failed. MPs repeatedly expressed astonishment; one pointed out that Sir Philip, who insisted his businesses were run in autonomous divisions in which he rarely interfered, had once intervened to change BHS’s coat hangers to save £400,000 per year. The chair of the business committee, Ian Wright, suggested that perhaps the thin-skinned belligerence displayed in front of the MPs by the retail wizard reflected a corporate culture that rebuffed all challenge. Sir Philip, who had already complained about the way one MP was looking at him and the manner of questioning of another, refused to answer. Instead he relied on a mix of strategic amnesia and injured innocence to deflect questioning from MPs who had neither the time nor the resources to pin him down successfully. And although, as the work and pensions committee chair Frank Field pointedly observed afterwards, it wasn’t just the MPs he had to satisfy, it was his reputation that was at stake, a public airing of his inadequate defence will not be enough to bust the culture of greed that taints the corporate world. The former BHS boss delivered his evidence with all the expansive confidence of a man accustomed to getting his own way from politicians for most of his long career. Knighted by Tony Blair, sought out by David Cameron almost as soon as he became leader of the Conservative party, Sir Philip is one of a long cast of business people that has been feted rather than challenged by governments in a model of politics that began even before new Labour went off to woo the City on the rubber chicken circuit on its climb back to power in the 1990s. Shareholder capitalism is supposed to be a self-correcting mechanism. A company’s profits drive its share value and the share value dictates its directors’ bonuses. What really happens is that crazy new ways of inflating share prices deliver unprecedented rewards to directors at the expense of investment in the company or pay rises for employees. Owners get richer as workers are impoverished. Only a sense of morality and a concern for the long term stands between a business and its assets. It is not employers who ensure adequate pay, it is the taxpayer. Apprenticeships and skills training and even infrastructure like new roads and incentives like business rate holidays, are all considered to fall to government rather than being an obligation of business. Government is a mere facilitator. But only government can be the guardian of a framework that defines the notion of a good business. |