I have not
posted for a few weeks now, partly because I took some holiday at the beginning
of April, partly because of pressure of work, and partly because I have been
writing several blog posts for various sites working with the EU Remain campaign. The
most recent of these can be found here
for anyone interested and there are several more in the pipeline. And in the even
more unlikely event of anyone being interested in my holiday, my new profile
picture shows me emerging from a Norfolk pub (quite sober, I should say) whilst
I was away.
So there’s
plenty I could write about but I’ll focus on the news this week that the
retailer British Home
Stores (BHS) has gone into administration, with debts of over £1.3Bn and a pension
deficit of £571M, leaving the 11,000 employees across its 164 UK stores in
limbo, and creating much insecurity for former employees with deferred pension
rights. Like all statistics, this depersonalises the reality but I visited my
mother this week and, by coincidence, her care assistant used to work for BHS
and told me how worried she was about her deferred pension. I tried to reassure
her that the Pension Protection Scheme meant that 90% of her rights were
assured, but for someone on (I guess) the minimum wage and with limited pension
expectations that 10% matters, even if she trusts that the 90% will be
forthcoming.
BHS is one
of those high street stalwarts that seems to have been there forever – I can
remember one of my sisters having a Saturday job there in the 1960s. In fact it
goes back to 1928 and joins the long list of British companies, some of which I
mention in my book (pp. 105-106), that have fallen by the wayside. There are
all sorts of reasons for that, of course, from the rise of the internet to the
growth of Pound shops. I actually go to BHS quite regularly to – look away now,
kids – buy cigarettes and that branch, at least, seems faded, dilapidated and
dated, and the staff demoralised.
That is because
underneath the general trends in retailing there is another story to be told
about BHS. Bought by the fabulously wealthy tycoon Sir Philip Green for £200M
in 2000 he sold it for just £1 in 2015. In the interim, rather than investing
in modernising the business it had been used as an enormous
cash cow and systematically
pillaged for massive dividend payments. Far from ‘adding value’ in the
manner self-righteously claimed as the hallmark of dynamic entrepreneurship,
value was ripped out of BHS and pocketed. There are now calls
for a public inquiry into what happened but, whatever the details specific
to BHS, it is just another case of the consequence of rapacious financial
engineering of the new capitalism (discussed in chapter 5 of my book). Hardly
less noteworthy is that its post-2015 owner was a company run by a twice
bankrupt former racing driver with no retailing experience, and the demise
of BHS comes as no surprise. Interweaved into this sorry saga are the usual
array of offshore tax avoidance schemes and global investment bank advice.
Such stories
have become so commonplace that they lose the power to shock. Even so, there is
still a jolt of surprise in recollecting that as recently as 2010 Green
was commissioned by the British government to make recommendations on
improving its efficiency. Reading his
report today, my immediate reaction was to think how thin it seemed – I have
seen undergraduate student workplace projects with more depth. My second
reaction was to recall how similar it was to the 2004 review of public
sector efficiency by Sir Peter Gershon. In fact, on government procurement
especially, the
Gershon recommendations were nearly identical. It makes you wonder what the
point is of these endless reviews – perhaps they have the same ritualism as
public inquiries, about which I
have written before.
Anyway, Green’s
review concluded – surprise, surprise – that the way forward was for government
to adopt the methods of the private sector, apparently unaware that this has
been exactly the approach since the early 1980s, so what he was observing was
the consequence of precisely the course of action he was advocating. And his
headline finding was that the government was “failing
to leverage both its credit rating and its scale”. In other words, the government should get
on the wagon of the same financial engineering techniques that he was at the
time so assiduously applying to bring BHS to disaster.
With the controversy now surrounding him, it’s
unlikely that Green will in the future be asked to give advice on how the
government should organize itself. But there will always be someone else –
whether a faceless but fresh faced MBA from a big league consultancy, or
whoever the currently lauded tycoon may be – to apply the same failed logic.
Because however often it fails it is never discredited; worse, each failure
provides the impetus for its re-application. That, too, has lost the power to
shock.
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