I should like to make a brief statement on British Home Stores. The House will remember that, on
A number of questions have properly been raised about how BHS found itself in that situation. The proper authorities—the administrators, the Insolvency Service and the pensions regulator—are already looking into these matters. I am clear that any wrongdoing will be taken very seriously and I will return to that later in my statement.
Our focus now is to support all those affected and to get people back into work as quickly as possible. While we await the administrators’ plans for winding down the business, I can inform the House that Jobcentre Plus has been in contact with them and is preparing a range of support to assist staff. Jobcentre Plus is on standby to go into BHS stores and directly advise affected staff of their various options. Already, teams are centrally tracking vacancies in the retail sector and will ensure that BHS branches are aware of any vacancies in the area.
Jobcentre Plus stands ready to deploy its rapid response service in acknowledgment of the scale of the job losses. The service has a strong record of helping people at very distressing times. It can offer workers support, including help with job searches, CV writing and interview skills. It can also help to identify transferable skills and skills gaps linked to the local labour market. It can help with training to update skills and learn new ones, and gaining industry-recognised certification will improve employability. It can give help to overcome barriers to attending training, and securing a job or self-employment, such as childcare costs, work clothes and travel costs.
I can inform the House that the Department for Work and Pensions has written to major retailers asking them to consider what opportunities they can offer the workers and local areas affected as the situation becomes clearer this week. DWP will also monitor the impact of redundancies locally on a continuing basis, and will provide additional targeted support to any areas that are particularly badly affected. I assure the House that we will do everything in our power to support workers and their families through this difficult time—not just BHS workers, but those made redundant by Austin Reed.
On the wider issues, on
Members will be aware of considerable concern about the BHS pension scheme. The BHS schemes are in a Pension Protection Fund assessment period. The test is whether the schemes’ funds are sufficient to allow each scheme to buy annuities that will pay members at least PPF-level benefits. If it cannot, the scheme will transfer to the PPF and compensation will be paid. The PPF aims to resolve these issues as quickly as possible.
PPF compensation is generally 100% of the pension in payment for anyone over the scheme’s normal pension age at the date of the insolvency, and, for everyone else, 90% of the accrued pension, subject to a maximum cap.
The Pensions Regulator is currently undertaking an investigation into the BHS pension scheme to determine whether it would be appropriate to use its anti-avoidance powers. This means that if the regulator believes an employer is deliberately attempting to avoid its pension obligations, leaving the PPF to pick up its pension liabilities, the regulator may intervene and seek redress from the employer—and, if I may say so, Mr Speaker, rightly so. There is a clear process that must be followed and this can sometimes take a considerable amount of time. When it becomes appropriate to do so, the regulator will consider issuing a report of its activities in this case. We will examine its findings closely.
As I said on
High streets remain a crucial part of our local and regional economies, creating jobs, nurturing small businesses and injecting billions of pounds into our economy. A recent report by the Association of Town Centre Management found that town centres contribute nearly £600 billion to the economy each year. That is why we continue to support the British high street. We reduced corporation tax and I am so pleased that we announced the biggest ever cut in business rates in England, worth £6.7 billion over the next five years, which will of course benefit small businesses in particular.
I know little of this will be of comfort to BHS workers facing an uncertain future, but I assure them and the House that the Government will do everything within their powers to get every affected worker back into a job as soon as possible. I commend the statement to the House.
I thank the Minister for advance sight of her statement.
The whole House will be concerned for the 11,000 staff who are losing their jobs as a result of the liquidation of BHS and Austin Reed. The closures also affect supply chains, local economies and communities. Can the Minister tell me whether the taxpayer will have to pay for redundancies, as happened at Comet where the previous owners, not staff, were preferred creditors? Given what she said about the Pensions Regulator, does she envisage an investigation into the actions and activities of Sir Philip Green? Will he be asked to make up the pension shortfall, so that pensioners are not short-changed by receiving only 90% of their pensions guaranteed under the PPF?
The Minister mentioned work done to support the high street. I agree that the high street is a crucial part of the UK economy, but I am afraid the evidence of the failure of BHS, Austin Reed and others suggests that the work done by the Government simply has not been enough. As Mary Portas said, the Government have so far made only token gestures to help our high streets.
The allegations about what happened at BHS are beyond belief. A BHS pension surplus became a deficit of £571 million. The business was sold to Retail Acquisitions, a firm whose head was a three-times bankrupt with no apparent experience of turning around struggling retailers and who appears to have taken significant sums out of the business while it was still trading. What investigation will the Minister’s Department carry out into why Sir Philip Green sold the business when he did and what due diligence he carried out into the buyer?
Sir Philip Green’s family were paid hundreds of millions of pounds in dividends, and all the while the business was lacking the investment in modernisation that might have allowed it to survive and indeed thrive, as others have done. While his former workers contemplate redundancy with significantly reduced terms and a reduced pension, he awaits the delivery of a brand-new £100 million yacht. The Minister mentioned possible investigations. Will she say whether under existing insolvency law she thinks criminal investigations should be considered? Does she envisage a change in the law so that obscene profiteering by the likes of Sir Philip Green and Retail Acquisitions are made illegal? Just what scrutiny does she think is needed of the period prior to insolvency in cases such as those of BHS and Comet? Does she think, as many people do, that Sir Philip Green should be referred to the police for his actions while he owned BHS? It is not just Opposition Members who think his actions a disgrace; one of her own Back Benchers described this as the “unacceptable face of capitalism” the last time we debated the challenges and concerns around BHS.
BHS, as with Comet before, is an example of wealth extraction, not wealth creation, and a system that favours a very small number of people, rather than the wider economy. The Minister and her colleagues need to intervene and investigate in full what happened at BHS and make sure that action is taken against the likes of Sir Philip Green; otherwise they will be complicit in a system of exploitation by a few owners at the expense of the many staff and pensioners.
As I have said, I will not refer to any individuals. The Pensions Regulator is—quite properly—conducting an investigation into the BHS pension scheme, and there are other investigations. I have made it clear that I and everyone in government take such misconduct, where there is such misconduct, extremely seriously, and if the investigations find the sort of misconduct that should lead to a police inquiry, so be it—let the full process take place—and if anybody needs to be brought to criminal justice, that must be right. As the House knows, I am a one nation Conservative. I support capitalism but not unfettered capitalism without compassion and care, and that extends to anybody working for any business in our country.
I think the Minister said that any wrongdoing would be dealt with, but the problem is that much of this was, I suspect, legal. That places a moral responsibility on every Government over the last few decades who have allowed such action to be legal. The actions of Philip Green, his family and his companies, in taking out more than £500 million in dividends from a company that cost them £200 million, can be described as little else than asset stripping. What matters now, however, is that those employees dependent on the pension scheme are set to lose 10% of their pensions, if the scheme goes into the Pension Protection Fund. Many Government Members think that the minimum that needs to happen is for Philip Green to pay back enough to save them from that.
As I said, I will not name any individual. Investigations are being conducted—quite properly—so before we rush to judgment in this place or anywhere else, let us wait for those full investigations to conclude. Then we can see if we need to take matters forward.
I thank the Minister for early sight of the statement, and I particularly welcome her robust comments about pursuing any wrongdoers—that is entirely the right thing to do. If ever there was an unacceptable face of capitalism, it comes in the form of Sir Philip Green and his like.
The BHS store in Kirkcaldy, in my constituency, is one of 16 stores affected in Scotland, many of them in middle-sized towns such as Kirkcaldy, Livingston and Falkirk where the loss of employment will create considerable problems. These employees have contributed to their pensions at BHS over a lifetime and now find that, because of Green’s failure as a businessman and his naked greed, which may have been legal, they face redundancy and great anxiety about their pensions, even if they are guaranteed the 90% of accrued pensions, subject to a cap.
Furthermore, to have sold off BHS for personal convenience for £1 to Retail Acquisitions—led as we have heard by Dominic Chappell, who has been declared bankrupt three times as of the end of last week—is, to say the least, scandalous, even more so as we now know that Green rejected the opinion of Goldman Sachs, his own advisers. This raises profound questions about the due diligence process, which the Minister may wish to reflect on. Many will be thinking that Green is little better than a corporate crook. He cannot be allowed to sail off in his third yacht, a £100 million luxury “gin palace”, as one newspaper put it. The SNP stands with the communities, families and individuals affected by this dreadful situation. We believe there is a fundamental need to readdress the regulation of the pensions industry to ensure the protection of workers.
I end with three brief questions. First, in Scotland the Partnership Action for Continuing Employment initiative will respond to assist all those made redundant. What are the UK Government’s plans to mirror the breadth of action undertaken by PACE? Secondly, what action do the UK Government contemplate to address the ease with which unscrupulous chancers such as Green can denude businesses of their financial assets? Finally, does the Minister understand why many employees will feel that the Pensions Regulator should seek the entire £571 million actuarial deficit from Green himself?
May I thank the hon. Gentleman and say that it is a long time since I had the great pleasure of going to Kirkcaldy? It is a few years now, but I know it is a great town. As on many high streets, wherever they might be in the United Kingdom, the role of BHS has been critical. Unfortunately its fortunes have not been good for some considerable time. Perhaps that is the fault of us all for not paying a visit and buying in its shops—I suspect I am guilty of that from the time I used to go up to Kirkcaldy as a regular visitor.
The hon. Gentleman makes a good point about greed. It does not matter who it is, it is certainly not acceptable, whatever one’s faith may be—I am helpfully reminded by the Deputy Leader of the House that it is apparently a deadly sin. The hon. Gentleman makes a number of points. As I say, there are a number of investigations. We have to await the outcome and if we need to take further action, we will not flinch from doing that.
The questions at the heart of British Home Stores are not necessarily ones of legality; they are ones about the judgments made by people in positions of authority at British Home Stores and Arcadia and about the ethics of those entrusted with such responsibilities for those companies. My right hon. Friend will be aware that over the last few weeks Sir Philip Green’s reputation has come under substantial fire. Of course it is up to him to decide how he wishes to respond, but is she also aware of the concern of others in business at the collateral damage being done to people’s trust in business across the United Kingdom by the actions of the people involved at Arcadia and British Home Stores?
I could not agree more with my hon. Friend, and I thank him as ever for his valuable contribution. The reason I am choosing my words today with some care is not because I do not have my own views, based on what I have read, but it is important that we allow these investigations to take place before we rush to judgment. However, it is fair and right to say that, on the basis of what we have read in the newspapers, nobody could be in any way content with some of the allegations that have been made. They are very serious and my hon. Friend rightly makes the point that in effect that damages the reputation of all businesses, and that cannot be right either.
It is clear from the woeful evidence given to our inquiry by Lord Grabiner, chairman of Arcadia, that effective corporate governance in BHS was almost entirely absent—something that prompted the director general of the Institute of Directors to state in a letter to my right hon. Friend Frank Field and me on Friday that it
“represents a blight on the reputation of British business,” adding that
“if the Chairman of Arcadia is not properly looked at, it could set an appalling precedent for future sales of failing businesses.”
Has the Minister raised BHS with the Financial Reporting Council, which, six weeks after the business went into administration, has still not committed to investigating the matter? Will the Government consider altering the FRC’s remit to ensure that directors and their failings are brought under its jurisdiction?
I pay tribute to the great work that the hon. Gentleman and indeed his BIS Committee do. I know that he is already conducting—I think, successfully—an inquiry into the working practices of one business, and he has successfully acquired attendance at the Select Committee. He raises important points, and I will write to him on the specific questions he raises, because I will need to make further inquiries about them. I reiterate that we must await the outcome of full investigations, so that we know all the facts, but he can be absolutely sure that we take these matters extremely seriously and that we will not have the good name of British businesses besmirched by the wrongdoings of others.
While managers and owners can and should be concerned about, and indeed be answerable for solvency, viability, governance and employee wellbeing in their own companies, does the Minister agree that there are serious legal complexities involved in dictating that owners must assess the viability and character of purchasers or be responsible for purchasers’ business conduct post-sale?
I am grateful for my hon. Friend’s well-informed contribution, as his contributions always are. He makes some very good points. I am sorry to bang on about this, but it is very important to say that investigations have, quite properly, been started, will continue and will reach conclusions and that if there are any allegations of wrongdoing, we will be absolutely firm in our view that justice will be done.
BHS was an anchor store in the Prince Bishops shopping centre in my constituency, and the staff who work there are really concerned about their future and that of their pensions. There are wider issues, too, about the impact of closure on our high street. Can the Minister tell us what she is going to do to address my constituents’ concerns and to call to account previous owners and current owners and directors for any part they have played in the downfall of BHS?
Let me make it clear to the hon. Lady that I would be more than happy to meet her. The Under-Secretary of State for Communities and Local Government, my hon. Friend Mr Jones, who has responsibility for the high street and the Under-Secretary of State for Disabled People, my hon. Friend Justin Tomlinson are in their places, for which I am grateful. I think that shows the level of absolute determination we have to make sure that all those affected by this closure are found alternative work. I reiterate that a full investigation is going on and we expect it to be conducted properly. If there is a need to take further action, that will happen.
While the investigators must be allowed to get on with their work, does my right hon. Friend agree that wider lessons might need to be drawn on the corporate governance of large private companies, both in respect of how decisions are made and the degree of transparency that applies? The Cadbury code looked into listed companies; perhaps large private companies should look to their own governance arrangements and the degree of transparency around them.
I completely agree. If the reports are right, this is obviously very deeply concerning, and many lessons might well have to be learned. We await the conclusions of these various inquiries before deciding what further action needs to be taken. We will not hesitate to do that.
I thank the Minister for her statement, and use my response to it to express the anger on both sides of the House at the threat to 11,000 jobs and 20,000 pensions. When the Minister goes back to her Department, will she consider blowing a whistle on the break-up of this great empire? Is she satisfied that a company that could be sold for a quid should now be broken up because somebody could not meet a timetable for £100 million-worth of working capital? Is she satisfied that the firm entrusted with dealing with the break-up will actually behave in the best interests of the whole network rather than perhaps sell off some assets rather cheaply to known figures in this terribly sorry saga?
I have faith in the workings of the administrators. They are under strict duties and I expect them to comply with those duties. I know of no reason why they would not do so. I also pay tribute to the good work being done by the Insolvency Service. It takes these matters seriously, as do all Members on both sides of the House.
The right hon. Gentleman asked a number of questions, and I have no difficulty with that. I am more than happy to write to him with any answers that I can provide to all the questions he raised.
I welcome the Minister’s statement on BHS, but it is not only BHS that has a problem. Companies in the supply chain could also have problems, including Courtaulds in my constituency, which has just been put into administration. There are companies that want to buy that business but cannot do so because it is a shed and the things inside have gone elsewhere. They have not gone elsewhere physically, but they have been put into another company. I would like to commend the Minister’s Department and the Department for Work and Pensions for their rapid reaction on the day BHS told people that they were to be made redundant, but will the Minister investigate what is happening at Courtaulds, because I think that there could be some wrongdoing there?
Courtaulds is very much part of that supply chain and, as I mentioned in my statement, this is not just about the workers at BHS. Of course, it is a dreadful moment for those individuals and their families when they lose their job, but there is also huge concern right the way through the supply chain. As an east midlands MP, I am of course familiar with Courtaulds. It is a great company, and, like my hon. Friend, I am concerned about its demise. I take this matter very seriously. I do not know whether someone in my Department has already offered to meet her to discuss these matters, but I am more than happy to meet her to ensure that the best is now done by Courtaulds.
We must never forget that pensions are deferred wages for people who have worked hard all their lives. The Pension Protection Fund was set up under a Labour Government, and it plays a vital role in protecting workers and pensioners when an employer goes out of business. Will the Minister join me in sending a clear message from this House that the pensions regulator has our full support in being as robust as possible on this matter? We must also look to the proposed pensions Bill to close any loopholes and deal with any scapegoats that exist as a result of the current regulations. We need to make those regulations much firmer so that people can no longer get away with any wrongdoing when it comes to wages.
The hon. Lady makes a good point. When people reach retirement, they look forward to receiving the pension they have paid into. They have put their money into their pension on trust, and they expect a certain benefit to come back to them when they retire because they have already paid into it. We all know that there are a lot of problems with a lot of our big pension schemes, but it is imperative that all employers do the right thing by those schemes. I absolutely pay tribute to the Labour Government for setting up the Pension Protection Fund. We are not content, in that it cannot always deliver what people would have had if their schemes had been successful, but it is nevertheless an extremely good lifeboat when pension schemes unfortunately fail. As I have said, an investigation is taking place and there are no doubt lessons to be learned.
I welcome the ongoing investigations, and I trust that regular updates will be given to the House and to the employees as appropriate. I am also pleased to hear that further action is being taken for our high streets, and I would encourage the Minister to focus not only on retail but on commercial, leisure and residential activities to bring new life back to the high street in a more balanced way, given the current trends in online trading.
I could not agree with my hon. Friend more, and the high street Minister, my hon. Friend Mr Jones, is nodding furiously in agreement as well. The high street needs to diversify, and I urge all hon. Members to look at the great report written by Bill Grimsey. It was commissioned by the Labour party, and it provides an outstanding forward look into the future of the high street. It is packed full of ideas, some of which are controversial, and it is full of good, sound advice that many a high street and town centre should put into action.
Kilmarnock in my constituency has one of the 16 BHS stores in Scotland. My hon. Friend Roger Mullin referred to the concerns for the workers and for the potential void in our high streets that will need to be filled. In her statement, the Minister said that Jobcentre Plus would help to identify and fill skills gaps and vacancies. However, my local jobcentre and the Department for Work and Pensions have confirmed that jobcentres do not monitor long-term vacancies as a matter of course and would therefore not identify any skills gaps relating to those vacancies. Does she not agree that such monitoring should be a routine measure, in that it would help to create opportunities and fill the gaps?
This is the sort of conversation that I should have with the hon. Gentleman, because this subject is not within my field expertise or ministerial brief—I will be quite frank about that—but if he is right, that is obviously of concern. I am more than happy to speak to him about the matter, but he is quite right to identify that the main thing for consideration today should be all those who find themselves without a job.
It is becoming increasingly clear that Philip Green, aided by weak directors such as Lord Grabiner, washed his hands of the business because it was doomed and had a doomed pension scheme. There is a long-established principle in English law that a seller should not have to vouch for their successor—caveat emptor—but is it not time that the Minister, perhaps aided by the inquiries of this House and others, revisited that in instances where a seller recklessly or knowingly sells their stake in a business to somebody who is completely unsuited and unable to meet creditors’ demands?
I really do thank my hon. Friend for that important and incredibly profound point. We are holding an investigation, and there will no doubt be many questions at its conclusion and there may well be some sort of action. He raises an incredibly important point that will undoubtedly be considered seriously by this House and by the Government at the end of the investigations.
It would have been useful to have heard from the Minister how long the investigations will take to conclude, because people will be worried about their jobs and pensions in the meantime. Referring back to the question of my right hon. Friend Frank Field, when did the Minister last meet the administrators? What discussions has she had with them about what stores could be saved as a going businesses? For example, at the weekend I was talking to an employee of the BHS store in my constituency, who believed that the store was doing well, so there are clearly businesses within the business that were faring well. What discussions is the Minister having about keeping jobs rather than losing them and getting Jobcentre Plus to help?
I can completely answer the hon. Gentleman’s question face on: I have not had any discussions with the administrators, but I do not believe that that would be the norm. I have confidence in them, and I have confidence in the Insolvency Service, which does have regular contact with my Department. If the hon. Gentleman wants me to make further inquiries, I have no difficulty with that and am more than happy to do so, especially in relation to jobs for BHS workers in his constituency and in anybody else’s.
Just as it is right that the circumstances that brought BHS to this point, which have been raised extensively today, are properly looked into, it is also important that everything possible is being done to help those employees affected by this devastating news. Will my right hon. Friend reassure me that Jobcentre Plus’s rapid response service will receive all the support it needs from her and Government to do everything it can for the affected employees?
I am grateful to the Under-Secretary of State for Disabled People, my hon. Friend Justin Tomlinson, for attending today, because he is the relevant Minister in the Department for Work and Pensions. He has heard all that has been said. I have been assured about all the support that is available through the rapid response service. If there are any difficulties, we will take them seriously. We are going to do everything that we can to rectify any of that. It is important that people are given good support so that we can get them back into work.
Insolvency Service inquiries have always been restricted, but the Minister told the House on
As I said, the Government have looked at the widespread reports about the goings-on that led to this unfortunate situation. We take those allegations extremely seriously, which is why we have said to the relevant organisations that there must be a full inquiry. We expect the inquiries to be concluded as quickly as possible, but they must be thorough. After that, we will take any action necessary to ensure that if there has been wrongdoing, people are brought to justice.
The staff at Jobcentre Plus provide a fantastic service in getting people who have lost their jobs back into employment. What can the Jobcentre Plus rapid response service do for BHS staff? Does the Minister agree that the retail sector, in which we hope these people can be found alternative jobs, will be far healthier over the next five years as a result of the business rates cut announced in the Budget?
I do not really want to go back through my statement, but I did identify in some detail the assistance that people are given, be it help with CV writing, or making sure they have access to training and reskilling. The Department for Work and Pensions—this is a good and admirable idea—is contacting other retailers to see what jobs might be available locally for people, so that they can, in effect, transfer over and apply for those jobs. And, yes, I do believe that our cuts to business rates for small businesses was an outstanding achievement of the Chancellor in the last Budget, and I am confident that as a result real assistance will be given to small businesses, notably those on the high street.
The first concern of everyone in this House are the people who have lost jobs and pensions, and there are many questions to which they and we still want to hear answers. Looking forward, however, will the Minister assure the House that the Department for Business, Innovation and Skills will look at the lessons from this and the failure of Austin Reed? Will she consider launching a retail strategy, working with business, so that we do not end up with high streets that are all just payday lenders and betting shops?
We started a great deal of work, as the last Government, on looking at the future of the high street, going to Mary Portas and others for ideas on how we could assist. That has mainly been done through not only BIS, but, notably, the Department for Communities and Local Government. As I am sure the hon. Gentleman is aware, local government can play a hugely important part in ensuring that high streets develop in the right way, thrive and grow, which is one reason why we changed the planning laws. Often this relies on local people thinking outside the box and being radical in how they think about the future of their high street. I think there was another question, but I cannot remember it, because there were quite a few. In any event, the usual rules will apply: I will write to him if there is anything I have forgotten.
Given that 11,000 direct jobs and many other indirect, supply chain jobs are at risk, I find it very difficult to understand why the Minister has not had a meeting with the administrator. Given that the Denton store, in my constituency, and the Stockport store, which also covers part of my constituency, tell me that they are profitable parts of the BHS business, the Minister has to have a discussion with the administrator about what parts of that business can be saved, in another guise or as part of BHS reinvented. The fact that she has not had any time to meet the administrator is shocking and a travesty, given those 11,000 jobs.
Just when I think it is going so well, the hon. Gentleman always disappoints. I did not say that I did not have the time—
The hon. Gentleman wants to talk about the 11,000 people, so let us do that and not score party political points. Of course we came to the situation where the administrators could not find a buyer only in the past few days. So we do not have government interfering in that process, but now we are where we are—[Interruption.] He shouts from a sedentary position, “Ditch them.”
Meet them. Well, I have just said to one of the hon. Gentleman’s comrades that I do not have a problem in contacting the administrators if that has and will have any benefit at all. But we must get a sense of proportion here: this unfortunate news has only just been announced.
This really is not good enough. It is not good enough that the Minister has not met the administrators to talk about the people who are affected. It is not good enough that 11,000 people face redundancy and an uncertain pension while the millionaires cream tens of millions of pounds off the top to pay for brand-new yachts. The people in my constituency, where the store is likely to close, will not see justice in their view until somebody is in the dock, facing trial. Does the Minister agree with me that Sir Philip is not fit to lick the boots of those people, let alone be a knight of this realm? Will she support me in having that revoked?
There are a number of points there. Let me make it absolutely clear: the Government are not legally entitled to intervene and direct the administrator. The administrator has to act absolutely independently. We have already—quite unusually—announced a number of investigations into these matters. We will wait to see the outcome of the investigations rather than rush to judgment. As I have said repeatedly, if there is further action to be taken, we will not hesitate to take it.