Five of the Best

The top five comment pieces from today's papers

The Independent's Hamish McRae says that politicians must struggle to get the deficit under control before the next downturn in eight or ten years' time:

[C]orrecting the deficit is a race against time. We got through the downturn in the early 2000s in very good shape because our public finances were exceptionally strong when we went into it and public spending could, to some extent, offset slower private spending. We are doing badly this time because our finances were relatively weak. We don't want to face an even bigger catastrophe next time round.

In the Daily Telegraph, Irwin Stelzer writes that David Cameron continues to be alarmingly unclear about his economic policies:

[A]ll we know is that he plans to eliminate waste, and that he might go along with Labour's plan to raise the marginal tax rate to 50 per cent, but might not. He would like to cut benefits, but is not certain which ones -- or is not saying. He plans to extend parent choice, but is against vouchers. He might be planning green taxes, but we can't be sure. He does want to raise VAT, but might change his mind if the recession continues to bite and shopkeepers howl.

The Guardian's Jonathan Freedland warns that if Barack Obama can't win support for health-care reform there is no hope of the US reaching agreement on a new climate-change treaty. The greens and diplomats who hailed his victory may be disappointed:

They have seen a summer campaign demonise him as an amalgam of Stalin, Hitler and Big Brother, bent on sending America's frail grannies to their deaths in the name of a new socialism. If that's the response he gets when he suggests Americans should be covered even when they change jobs or get sick, imagine the monstering coming his way if he tells his compatriots they have to start cutting back on the 19 tonnes of CO2 each one of them emits per year (more than twice the amount belched out by the average Brit).

In the New York Times, Maureen Dowd says that the disciplining of Congressman Joe Wilson for calling Barack Obama a "liar" in Congress revealed a positive side to US politics:

It was a rare triumph for civility in a country that seems to have lost all sense of it -- from music arenas to tennis courts to political gatherings to hallowed halls -- and a ratification of an institution that has relied on strict codes of conduct for two centuries to prevent a breakdown of order.

The Times's Daniel Finkelstein argues that parties must broaden their membership to avoid the dangers of "group polarisation", under which individuals become more extreme as they deliberate with each other:

Group discussion among racially prejudiced people made them more prejudiced; the punitive damage awards of mock juries are higher than the median of individual jurors; a group of chess players was more inclined to a risky strategy than the individuals; a group of burglars became more cautious about the ease of breaking into a house than they would individually; protesters against police brutality became more supportive of violent action after group debate.

 

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.