Business

BHS was 'crashed into a cliff', says senior Labour MP

BHS Image copyright Getty Images

Failed retailer BHS, was "crashed into a cliff", the chairman of the Business Innovation and Skills Committee, Iain Wright, has told the BBC.

Mr Wright said leaders of Retail Acquisitions, which bought BHS in 2015 for £1, were "untried and untested".

He also implied that the previous owner, Sir Philip Green, "stripped" the company of cash.

Sir Philip is due to answer questions before a joint hearing of two Commons committees at a date of his choice.

Mr Wright's Business Innovation and Skills Committee and the Work and Pensions Committee want to ask Sir Philip about the sale of BHS and how it was left with a deficit in its pension fund of £571m.

"Is it right that people can buy a company, strip it, in many respects, of cash in terms of dividends - without real regard to pensions or to employees - and then sell it for a pound to untried and untested people who then crash it into a cliff?" said Mr Wright on BBC Radio 4's Today programme.

Sir Philip has offered to make an £80m voluntary contribution to the pension fund.


Analysis: Edward Curwen, BBC Analysis & Research

Much attention in the wake of BHS falling into administration has been on the pension deficit. So who is to blame?

First the £571m deficit is the most conservative estimate possible. It is known as the buyout deficit and it is based on the cost insurance companies place on closing the gap between what is owed and the money a pension scheme has.

The deficit that needed to be eliminated while BHS was still trading was calculated using a different method and it was closer to £350m.

In 2012, BHS agreed to put £10m in every year over the following 23 years to get the scheme back into the black.

The plans were agreed between the trustees of the pension scheme and the company, and the Pensions Regulator supervises the process to make sure any agreement is credible.

Critics say this wasn't enough cash and it would take far too long.

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When BHS was sold, there were questions over the lack of retail experience of Dominic Chappell and his team at Retail Acquisitions, which became the majority shareholder of BHS.

Last week it emerged that Mr Chappell attempted to move £1.5m from BHS, to BHS Sweden, just days before BHS went into administration.

BHS Sweden had no connection to BHS, but was owned by a friend and fellow board member of Mr Chappell.

The money was transferred back after protests from BHS chief executive Darren Topp.

Pensions cutback

BHS filed for administration on 25 April, putting 11,000 jobs at risk.

It will continue trading while the administrators seek a buyer for the business.

The administration means members of the pension scheme who are yet to retire will be paid a less generous pension.

One Labour MP, John Mann - a member of the Treasury select committee - said Sir Philip must repay £400m of dividends that were paid out of BHS or give up his knighthood.

Mr Chappell has been asked to appear before the parliamentary committees, along with Tina Green, Sir Philip's wife.

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