Why is it that every now and then business does its best to give itself a bad reputation? Currently there are parliamentary enquiries into Sports Direct and BHS, and uncertainty around the future of steel-making in Wales.
Politicians pontificating are nothing new, in fact it would be a worry if they didn’t. As one would expect, the pontification is inversely proportional to what they know on the subject. But it does not take a massive intellect to know when something is not right.
I am sure the deal around BHS was all perfectly legal. The lawyers would have had their fair share of fees to ensure this was the case. But the motives around the deal are questionable. The losers are thousands of employees, not just those who lost jobs but those who will see their pensions severely diminished.
There is a case to be argued that successive pensions legislation has made it increasingly difficult for employers to continue to support pension schemes. This, along with tax raids – notably by former prime minister Gordon Brown – has meant schemes increasingly entered into deficit and are finding it hard to get out. It is worth reminding ourselves that the architect of the big change in legislation was Robert Maxwell, another well-known businessman of his day.
The attraction of selling a business for £1 just to unload £600m of liability is irresistible. The purchaser perhaps thinks they can make a few million for a couple of years then pass it on again. It is like pass the parcel, until the game stops.
It is reminiscent of the Lehman Brothers crash where suspect mortgage assets got parcelled up and passed from one institution to another – transformed from junk status to AAA in the great money market laundry.
This type of behaviour offends our sense of fairness. These instances erode trust in those who engage in these practices, those who facilitate them and those who say something must be done, then do nothing. I wonder whether anyone round the table at the BHS deal gave a thought to the consequences.
Business is not just about making the most profit. It should be about a fair return. One can cut back so much that you lose sight of what you have become.
I recall the story of a car firm boss showing a union boss the robots working in his factory – triumphantly saying he would not be collecting union dues from them. You are right, said the union guy, but I don’t think any of those robots are going to be buying your cars either.
I wonder how many construction workers can afford to buy the houses they are building today?
