Philip Green (rights and wrongs)
If you want an insight into the world of Philip Green, try this article which is free (despite the Sunday Times’ paywall).
Even with PPF compensation, the 20,000 BHS pension scheme members will lose out, receiving an average of 20 per cent less than their pensions promise (because of the PPF’s compensation cap, long serving senior staff with a pension of £50,000 for example would lose around 40 per cent). As BHS slashes prices to lure shoppers, spare a thought for those who will have an unwelcome discount applied to their pensions.
This blog is not about the rights and wrongs of Philip Green. To make things simple, we’ll take the wrongs, he can enjoy “his rights” on one of his yachts.
The long and the short of it
If you want to know what we can do about it, you can look at two different approaches.
The first, a short-term approach, put forward by John Ralfe is outlined here
The second, a longer-term approach ,put forward by Philip Augur is outlined here
I have sympathies for both positions (which are radically different) but being a liberal socialist , I feel the long-term answer lies with Philip’s approach. In the short-term we may more of the Ralfe medicine.
Is there any solution to endemic selfishness?
If that seems a lot of links and not a lot of substance, let me give you a potted tour of the two approaches.
John Ralfe is someone who likes clean solutions that leave no room for discretionary payments, conditional indexation or what we can loosely call “trust”. John wouldn’t trust his own typewriter if it hadn’t got a properly reserved for product liability insurance covering it.
Philip Augur – who Ralfe would regard as a woolly Liberal , sums up the problem like this
The weight of evidence suggests that for all the progress, responsible capitalism is not yet stitched into the corporate fabric and nor will it be until the business paradigm changes.
In 2011 our current pension minister described Final Salary Pension Schemes thus;-
Final salary schemes were always a bit of a con trick. They only work when the schemes are young, when lots of money is coming in and there aren’t many pensioners. It could be described as being like a Ponzi scheme. Pensions are not magic money. We’ve been kind of led to believe somehow that they are and that they’ll always be there, and anyone who’s putting money into a pension scheme somehow feels that that will guarantee them a good outcome in a way that isn’t realistic.
If final salary schemes are a con trick,then so’s the state pension. But if we are to continue to support state pensions, we – logically – must believe in something other than shareholder value, a pension policy (to use one of Ros Altmann’s more recent phrases) that “balances the longer term consequences, not just the short term”
The short term pension policy that John Ralfe advocates is a short sharp shock
Rather than continuing to muddle through, the government should introduce tougher pension funding standards and the Pensions Regulator should enforce them in a transparent way, otherwise we are storing up bigger problems for the future.
The longer term solution to the problems that Philip Green’s behaviour has created, is to create a social contract that makes dividend stripping, tax evasion, money laundering and the blatant theft of money by financial services so socially unacceptable that people will not do it.
I will shut up as Philip Augur shuts up, with a statement that hints at a new society while accepting we are where we are.
Enlightened managements now speak of shareholder value being a consequence of good business, not a prior objective, but the interests of other stakeholders have little traction. Until that changes, there are no grounds to believe that it will be possible to reverse a deeply entrenched culture in which selfishness is endemic.