BHS

Dennis Skinner Excerpts

Thursday 20th October 2016 Commons Chamber

[Frank Field]

Again, that is an incredibly relevant point, and it links to the previous one. We were certainly left with the impression that the problem would be sorted shortly. There is no concrete proposal on the table to bring justice to the pensioners, and a question of corporate governance is raised about how someone can take over a company with its pension fund in surplus and a good order book. An interesting aspect of Sir Philip’s evidence to us was that he said he could have annuitised all the pension liabilities when he took over BHS, but decided not to do so. Had he done so, we would not be in this position today.

[Mr Dennis Skinner (Bolsover) (Lab)]

Only a small point: this Napoleon thing has reared its head. I had always thought that Sir Philip Green was more of a Maxwell. He had the money and he had the yachts. He had the workers and he robbed them of their pensions. It is almost a parallel.

[Frank Field]

Sir Philip has threatened to sue me over my comments about that. I am still waiting for the writ to arrive. I long to be in court to have a trial by jury, but that will be for another day.

I return to what I see as the main findings. There was some pretty important engineering going on from the early years in respect of the profitability of the company. We were much amused in Committee when Sir Philip said that his business prowess extended to halving the cost of coat hangers. It would have been more interesting, of course, for him to have told us about his secret share dealing with one main supplier who during those early years, because they were party to BHS decisions, knew the costs of other orders for which tenders were coming in and was therefore able to bid accordingly.

I maintain that thanks to that measure, Sir Philip was able to get perhaps artificially low supply costs, boosting BHS profits during that period, so it looked even more profitable than it was. That individual shareholder, as I say, was involved in a secret share deal. When he came to sell his shares, he managed to sell them for £90 million. Going on from there, we know that this played a key part in allowing £400 million in dividends to be taken from BHS, which most observers would not necessarily have seen as anything extraordinary.

The next stage of this sorry saga—my second theme—is, what was Sir Philip able to achieve from that BHS base? Gaining ownership—control—of BHS allowed him to acquire the group of companies known as Arcadia. From Arcadia, he managed to sponsor a huge gearing operation. Was it £2.6 billion? Was it £2.9 billion? However, the key thing about the ownership of Arcadia, which came only from what appeared to be the adequate —or more than adequate—running of BHS, was that there were huge sums of money sloshing around Arcadia. All too soon, £1.3 billion of money geared—loans acquired—on Arcadia through a number of companies found its way up to Lady Green.