Sir Phillip Green was always going to get a hard time later this month from MPs investigating the collapse of BHS. So was Dominic Chappell, who had been bankrupted three times before heading Retail Acquisitions, the consortium that bought BHS off Green for £1.
The two men face an even more uncomfortable time now there is no hope of saving BHS and that the liquidators have been called in. It will cut little ice with the 11,000 people who have lost their jobs that Green says he is “saddened and disappointed” at the news. Nor, one suspects, with Frank Field, who will chair the joint gathering of MPs from the business, work and pensions committees.
Not to put too fine a point on it, Green and Chappell can expect to get a right kicking. And deservedly so. Green and other investors trousered £580m in dividends, rent and interest during his ownership, sold it to a man with a questionable business background, and saw it collapse little more than a year later with a £571m hole in its pension fund. Ted Heath once described the conglomerate Lonrho as “the unacceptable face of capitalism”. A similar description is appropriate here.
BHS is the biggest high street failure since Woolworths in 2008,when the economy had collapsed into the longest and deepest slump since the second world war. Does the demise of BHS mean another recession is imminent? Not necessarily. The economy is by no means humming and growth is slowing, but that’s really the result of poor industrial production, weak investment and struggling exports. Consumers are spending money; they were just not spending it at BHS, an analogue dinosaur in a digital age.
Finding new tenants for the prime high street sites occupied by BHS will be far from easy. These are big stores with expensive rents and high business rates, often spread across more than one floor. When Woolworths collapsed, many of the stores were bought by the discount retailers, but it is not immediately obvious who will make a move for more than a handful of the 163 BHS stores that will come on the market.
There is not much MPs can do to find buyers for unwanted BHS shops. But after they have vented their spleen on Green and Chappell they should propose changes to the law that would make it possible for pension trustees to be able to veto a deal when there is a risk of the scheme being left heavily in deficit.
