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Post-BHS capitalism

by
29 July 2016

THE collapse of the BHS stores, stripped of their assets during the group’s ownership by Sir Philip Green, has brought to the fore the Prime Minister’s pledge to tackle the unequal treatment of rich and poor in this country. Responding to a damning report by a joint committee of MPs into the demise of BHS, a spokeswoman for Mrs May said: “The Prime Minister has already set out that we need to tackle corporate irrespons­ibility, reform capitalism so that it works for everyone not just the privileged few. That means in the long run doing more to prevent irresponsible and reckless behaviour.”

Nothing attracts the Government’s attention like a hefty bill. It has been estimated that the taxpayer will have to pay up to £36 million to cover redundancy payments for the 11,000 staff. (In the mean time, Sir Philip’s remaining company, Arcadia, as a secured creditor, will most likely recover the £35 million that it is owed.) There remains a serious pensions shortfall, MPs say of £571 million, that will have to be covered by the Pensions Protection Scheme — unless the charm offensive waged by the committee’s chairman, Frank Field MP, persuades Sir Philip to refund the missing sum, perhaps in return for keeping his knighthood.

It is impossible to guess what sort of reform Mrs May and her advisers have in mind. Given the party that they belong to, it is unlikely to be the restoration of the workers’ rights that helped to counterbalance capitalism during much of the 20th century; nor the introduction of a co-operative element in com­pany board­rooms; nor a cap on pay differentials. This leaves the prospect of increased regulation and financial super­vision, two areas that the former Chancellor, George Osborne, spent much of his time denuding of power and staff in order to attract overseas investment. But this will not sit well with the promotion of Britain as “open for business”, freed from the irritating bureaucratic constraints imposed by the European Union — not that Mr Osborne had much difficulty side­stepping many of them. If an owner and his family can pay themselves £307 million in dividends from a company that makes £208 million, as the Greens appear to have done in 2002-04 — and avoid paying tax through a web of property companies and offshore accounts into the bargain, they are not going to stop just because the Prime Minister asks them not to.

Apart from occasional periods under a rapacious empire, ownership of wealth has never been so divided from the means of production. International competition for investment by the super-rich has handed them all the power and none of the responsibility for the mistakes they make. If Mrs May attempts to impose a social conscience on investors, they will simply take their funds elsewhere. Concerted action by groups of countries, such as, dare we say it, those in Europe, is the only recourse against a broken system that the last Government did nothing to repair.

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