BHS Contents

1Introduction

Our inquiry

1.In launching her campaign to be leader of her party and Prime Minister, Theresa May said that one way “to make our economy work for everyone is by getting tough on irresponsible behaviour in big business […] we’re the party of enterprise, but that does not mean we should be prepared to accept that ‘anything goes’”.1 It was in this same spirit that we undertook our joint work on BHS.

2.We chose to investigate BHS because it encapsulated many of our ongoing concerns about the regulatory and cultural framework in which business operates, including the ethics of business behaviour, the governance of private companies, the balance between risk and reward, mergers and acquisitions practices, the governance and regulation of workplace pension schemes, and the sustainability of defined benefit pensions. In Chapter 8 of this Report we set out how our work in these areas will continue.

3.In the main body of the Report we consider the actions and conduct of those who owned and operated BHS, those involved in the company’s March 2015 sale and acquisition, and those responsible for protecting the pension fund.

4.Our inquiry will not be the end of scrutiny of the demise of BHS. We support investigations by the Financial Reporting Council, the Pensions Regulator, the Insolvency Service and the Serious Fraud Office.2

Losers and winners

5.BHS, which was founded in 1928, was bought by Sir Philip Green in 2000. It became part of the Taveta group, which is ultimately controlled by Lady Green, in 2009. On 11 March 2015 it was sold to Retail Acquisitions Limited (RAL), owned by Dominic Chappell. BHS went into administration on 25 April 2016 and now faces being broken up: the end of a longstanding fixture of the British high street.

6.The jobs of the 11,000 employees of BHS,3 the majority of whom are low paid, are now at risk. Mrs Patel, who is 56 and has worked for BHS since leaving school, told us how she felt “so helpless in what is happening”.4 This was partly due to the prospective cuts to her pension entitlement. 20,000 current and former BHS employees face reductions to their pensions of up to 77 per cent,5 though the typical cut is far lower and will be felt over time. Those reduced pensions are set to be paid by the Pension Protection Fund (PPF), which is supported by a levy on 6,000 other defined benefit pension schemes with 11 million members. Many of those schemes are attached to businesses far smaller than BHS: more than 2,000 have fewer than 100 members.6 Other companies that are suppliers to BHS are now also under threat. More generally, Simon Walker, Director General of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.7

7.BHS’s demise has created many losers. Its 11,000 employees face an uncertain future seeking work or facing unemployment. Its 20,000 current and future pensioners face substantial cuts to their entitlements. Their pension costs will now be met through levies paid by other pension schemes, including many attached to small companies. Companies in BHS’s supply-chain, and their employees, have already been hit too. The reputation of business, the engine of prosperity, has been damaged, to the dismay of responsible investors, owners and business leaders. The episode is not, however, without winners. Many of those closest to the decisions that led to the collapse of BHS have walked away greatly enriched despite the company’s failure.


2 We would like to thank our Specialist Advisers: Robin Ellison, Gabriel Moss QC, Sir David Norgrove, John Ralfe, Mike Rollings, Ryan Perkins, Professor Prem Sikka and Hannah Thornley; and the staff of the House of Commons Scrutiny Unit and Web and Publications Unit.

3 BHS Annual accounts, June 2015, p.15

4 Mrs C Patel (PPF0022)

5 BHS Pension Scheme Annual report and accounts, March 2015, p. 7; BHS pension trustee minutes, 15 October 2015

7 Institute of Directors (PPF0057)




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22 July 2016