To be kept informed about events and site udpates, enter your email address and click on the arrow search
CPGB-ML Blog Hands off China Gallery (Flickr) Videos (YouTube) Radio (Soundcloud) Red Youth Lalkar Shop
Proletarian
Search Proletarian search

>>back to Proletarian index >>view printer-friendly version
Proletarian issue 72 (June 2016)
BHS workers facing loss of jobs and pensions
This is not the ‘unacceptable face’ of capitalism; capitalism itself is unacceptable.
On 3 May, the BBC reported that Business Secretary Sajid Javid had ordered the Insolvency Service to investigate the collapse of the BHS chain of department stores. (See MPs set to question BHS directors and advisers)

For many people, 25 April, when BHS filed for administration, was the first that they had heard of the company being in any financial trouble – yet just over a week later the government was launching an inquiry.

What happened to send the well-known chain down the sink, leaving so many workers looking at the prospect of unemployment and a reduced pension?

The Financial Times of 25 April provided this helpful timeline for BHS from the date of its acquisition by Sir Philip Green, which sheds an informative light on the developments leading up to the company’s collapse:

2000 Sir Philip Green buys British Home Stores for £200m from the Storehouse Group and rebrands it as BHS

2004 Sir Philip awards himself a £40m final dividend from BHS

2005 Tina Green, Sir Philip’s wife, receives a £1.2bn dividend from Arcadia, a company she owns

2009 Arcadia buys BHS for about £200m

2011 Arcadia reports a 38 percent drop in annual profits and announces plans to close up to 260 stores

2015 Sir Philip sells lossmaking BHS for £1 to Retail Acquisitions, led by Dominic Chappell, writing off £215m of debts in the process

March 2016 More than 95 percent of landlords, suppliers and other creditors back the retailer’s company voluntary arrangement (CVA), a form of insolvency under which it can continue trading. Landlords agree to cut rents as BHS seeks to raise £100m from loans and property sales

22 April BHS suffers delay in receiving a crucial £60m loan, jeopardising the rescue package

22 April BHS files for administration after failing to secure a rescue.
(See BHS history: the retailer’s rise and fall)

At the point of filing for administration, BHS had debts of £1.3bn – including a pension deficit of £571m – putting 11,000 jobs at risk across 164 stores nationwide and threatening both those current workers and all surviving past workers at BHS with a possible 10 percent reduction in their pensions.

When Green bought BHS in 2000, he took over a company that was thriving, attracting 13.4 percent of all clothing shoppers through its doors and accounting for 2.3 percent of the entire British clothing market.

Green is the archetypal ‘businessman’ of the final, imperialist and most decadent and degenerate stage of capitalism. While an earlier generation of capitalists built up chains like BHS, the Greens of this world devour them. They greedily rifle through the assets with a view to wringing maximum profit from each bit. Then, before the carcass has been completely stripped, they sell it on with a few scraps of meat still attached to tempt the junior vultures, who may or may not get their grubby claws burned teasing out the last juicy morsels. (See BHS: murder on the high street, The Guardian, 25 April 2016)

The ‘junior vultures’ in this case were a company called Retail Acquisitions (RA), whose biggest shareholder is Dominic Chappell – a man who has been bankrupt three times. Of course, bankruptcy is no mark of shame among the ranks of the asset strippers and ‘coupon-clipping’ shareholders who live off of the destruction of companies and workers’ jobs.

The chair of RA is Keith Smith, a former stockbroker who was involved in the public listing of what turned out to be a shell company in 2003. It subsequently collapsed in a fraud scandal, although he was never charged with any offence. (See Sir Philip Green sells BHS to ex-racing driver and broker with no retail experience by Jim Armitage, Independent, 12 March 2015)

So what were these junior vultures planning to do with BHS once they bought it from Green’s Arcadia for £1.00, taking on that huge pensions black hole in the process? They were not looking to turn the business around or to sort out the pensions, and certainly not to secure the jobs of BHS’s workers. There was and is cash in there and they simply wanted to extract as much as possible.

Over the fifteen years of their ownership, Green and his family had taken at least £586m tax free (due not least to Tina Green’s Monaco residential status) from BHS in dividends, rental charges and interest payments. This figure puts into perspective Green’s having bought it for £200m in 2000, before selling it to his company Arcadia for the same amount in 2009 and then selling it for £1.00 to RA in 2015.

In turn, RA were not slow in getting their teeth into what was left. Dominic Chappell oversaw the sale of BHS’s main distribution centre in Atherstone, Warwickshire, for £15m and then used some of the proceeds to pay off a loan he had taken out from Allied Commercial Exporters (ACE) on the day of buying the retailer for £1.00. Retail Acquisitions received payments of more than £25m from BHS over the period of its stewardship.

A small matter, but worthy of note, is the fact that on the list of interested parties looking at buying up all or part of BHS now, the name of Retail Acquisitions is to be found once again, although the company has not revealed the source of funds it will need to launch a bid to keep its hands on the retail chain. (See BHS collapse: owner sold main distribution centre to pay off loan by Graham Ruddick, The Guardian, 10 May 2016)

Two committees of MPs and the Insolvency Service have now launched investigations into BHS, while the Serious Fraud Office (SFO) is also examining whether there are grounds to launch a formal investigation. But, apart from some huffing and puffing about a few aspects of morality and responsibility, there will be no serious charges and no changes to standard ‘business practice’. This is capitalism – this is what it does!

Meanwhile, the public purse looks set to be opened to partially resolve the pensions ‘problem’. The Pension Protection Fund (PPF) is a government-run scheme that was set up to rescue the schemes of insolvent firms. It was established by the government in 2004 so that private sector workers would not risk losing all their pensions if their employer should go under. The PPF pays full pensions to those who have already retired, but imposes a 10 percent cut for those who retire early or remain in work.

Our pensions are deferred wages, part and parcel of our terms and conditions, and to have 10 percent stolen on the basis that ‘It’s better than losing the lot’ shows exactly the relations between worker and employer; between the working class as a whole and the bourgeois state. It turns out that nothing is guaranteed, and if our masters decide to take something away from us they will do it, no matter how many legal contracts are violated in the process.

The only thing that can change this inherently flawed situation is workers standing together – not only in the workplace but also in society at large, behind a revolutionary party prepared to lead our class in its historic duty of putting an end to capitalism and establishing the rule of the working class, thereby creating the conditions to end forever all kinds of exploitation and oppression.

>>back to Proletarian index >>view printer-friendly version