Writer Neil McLeod says former BHS owner Philip Green embodies everything that's wrong with Britain's attitude towards business
AFTER his fatal, catastrophically clumsy handling of British Home Stores (BHS), to call people like Philip Green 'entrepreneurs' is an insult to genuine entrepreneurs like Arthur Daley and Del Boy. I'd call him a spiv. But that's also an insult to genuine spivs like Private Walker.
The BHS debacle is just the latest chapter in the rather sordid tale of a British love affair with entrepreneurship, a kind of Barbara Cartland meets Stephen King mash-up where charming and supposedly intelligent businessmen rob the naïve of their money and their virtue, or a Mills and Boon with zombie flesh eaters who also steal your pension fund.
This worship of the entrepreneur as the hero of trickle-down economics is very much a product of the Thatcherite 1980s, but it has continued to be a dominant social aspiration since, exemplified by Dragon’s Den, the X Factor for budding entrepreneurs who want to join their 'dragon' heroes as celebrities, feted by Hello magazine and the Daily Express. The pop stars of the business world.
'Greed is good' became the mantra of a generation who failed to see that Gordon Gecko wasn’t actually supposed to be a role model.
Entrepreneurship is, of course, all perfectly productive and healthy in its place and in proportion, but it has been blown out of proportion in these bloated last few decades where 'greed is good' became the mantra of a generation who failed to see that Gordon Gecko wasn’t actually supposed to be a role model.
Every aspect of the BHS story is symptomatic of a broader problem with British politics and business. Too many businesses run for the quick profit of shareholders in preference to a long term growth to the benefit of employees, suppliers and customers.
Indeed, the overriding message of the Companies Act 2006 is that companies ought to be run primarily for the benefit of shareholders.
Putting Philip Green in charge was like putting your local swimming pool in the hands of someone who’ll appoint an unqualified lifeguard to preside over several floater-related shutdowns and a drowning, causing the pool to permanently close – all of which is of no concern to him because the only value he sees is in the short term profit of selling the building and its fixtures and fittings for scrap rather than any ongoing social and financial gain of actually continuing to run something for the community.
In their joint report the work and pensions and business, innovation and skills select committees revealed that, over 15 years, Green extracted £586m from BHS, in the form of rent, interest payments, and dividends to shareholders (mostly his family).
Without a second thought for the workforce and the stability of the company, he sold it to a serial bankrupt, Dominic Chappell, with no business experience, who went on to receive millions in salaries and management fees from the company.
In their joint report the work and pensions and business, innovation and skills select committees revealed that, over 15 years, Green extracted £586m from BHS, in the form of rent, interest payments, and dividends to shareholders (mostly his family).
The committee report concludes that BHS was subject to "systematic plunder" by Green, Chappell and their respective "hangers-on", directly leading to the collapse of a company that once employed 11,000 people.
Weak corporate governance at Green’s Taveta group, which was run as a "personal fiefdom by a single dominant individual", meant there was no effective independent oversight to challenge his decisions.
The lack of effective corporate governance utterly endemic and UK company law effectively allows majority shareholders to extract as much as they want from companies to the enrichment of their own bank accounts and the diminishment of their companies and the economy in general.
It is these arrangements that are part of the structure that has led to the UK becoming one of the most unequal societies in the west. One-hundred-and-twenty billionaires now live in the UK (although not that many 'reside' here, for tax purposes), 77 in London alone. Germany as a whole has 66. As the High Street shrinks, the pockets and bank balances of the few bulge further.
It must be emphasised that the BHS debacle wasn’t the work of a maverick loose cannon, or some venture capitalist giving establishment businessmen a bad name. This is the work of a true government insider who did all of this in plain sight.
Tony Blair recommended him for a knighthood in 2006, and David Cameron gave him a job reviewing public spending and procurement in 2010. In an example of 24-carat irony, he reported back that there was a lot of money wasted.
The lack of effective corporate governance utterly endemic and UK company law effectively allows majority shareholders to extract as much as they want from companies to the enrichment of their own bank accounts and the diminishment of their companies and the economy in general.
The Commons’ committee report concluded that there was "little to support the reputation for retail business acumen for which he received his knighthood". Was there ever? If successive governments hadn’t been so seduced by the myth of the self-made man as a financial hero, the truth would have been there for all to see if they'd looked beyond the clichés and luxury yachts.
Green isn’t even a genuine jack-the-lad market trader. He was born into reasonable affluence, privately educated and given his first jobs by his own mum. Independent analysis of Green’s financial abilities predates his knighthood and government role.
In 2003, then Guardian's city reporter, Ian Griffiths, a qualified accountant, published a critique of his finances, taking the unusual approach of using objective facts and figures. Tax expert Richard Murphy highlighted Green’s dubious tax arrangements in 2006, when he was knighted.
These and other criticisms were dismissed as leftie whinging and met with foul-mouthed attacks from Green, while Tony Blair basically stood by saying, "you tell ‘em Phil".
Suggestions have been made that Green should personally repay the pensions shortfall to keep his knighthood, which underlines that not only can you effectively buy a knighthood, you subsequently ensure that you keep it by throwing more money at it when you are caught in a mind-boggling level of cheating incompetence that would see most ordinary punters ruined or even jailed.
What all of this highlights is something deeply rooted and deeply damaging in British society: an emphasis on making money and material wealth as the sole indicator of success, and the elevation of those who do so to a position of unchecked power and influence.
Anti-intellectualism and a pathological emphasis on putting a financial value on everything from schools to hospital beds is part of this obsession with pound signs and profit.
What all of this highlights is something deeply rooted and deeply damaging in British society: an emphasis on making money and material wealth as the sole indicator of success, and the elevation of those who do so to a position of unchecked power and influence.
I have seen this strand of thinking throughout my adult life. As a student at Glasgow Polytechnic in the early 1990s, I witnessed the management propose that the soon-to-be university should be named 'Glasgow Merchants' in order to style itself as attractive and full of entrepreneurial spirit by recalling tobacco and slave traders.
In my subsequent jobs with the Citizens Advice Bureau, I saw a methodology of assessing the worthiness of casework on the simplistic financial formula of how much money was involved. A businessman’s £100,000 debt was literally 100 times more important that a granny’s £1,000 Provident debt.
If something brought no measurable 'financial gain' it was effectively worthless, never mind if it had some other, more subjective positive impact like keeping a roof over someone’s head or keeping them in a job.
It is this number-crunching culture, this short-termism plutocracy that has to change if we are going to stop the continuing detrimental exploits of all the Philip Greens out there.
The obsession with entrepreneurship is the financial equivalent of the overindulgence in sugar and alcohol. All of these things can form part of a healthy balanced diet, but consumed in such large quantities will only amount to a clogged up, fatal lifestyle.
Picture courtesy of BBC TV
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