Osborne under assault from all sides

Alastair Campbell slams Boy George

It must count as some achievement to simultaneously attract the ire of Alastair Campbell and Simon Heffer. That's the unusual position in which George Osborne finds himself this morning, with Campbell writing a deliciously catty letter to the Financial Times and Heffer calling on David Cameron to sack his shadow chancellor.

The departure point for Campbell's letter is the growing awareness that Osborne is more concerned with grabbing headlines than he is with credible economic policy. His pledge to ban retail banks from paying out large cash bonuses may have translated well in our soundbite culture, but it was soon exposed by economists who pointed out that it would weaken planned curbs on the investment banks responsible for the most extravagent bonuses.

Osborne's claim that capping bonuses would lead banks to lend more similarly fell apart under scrutiny. Banks would almost certainly use any spare cash to build up their balance sheets.

Campbell astutely notes that Osborne's dual role as shadow chancellor and election co-ordinator may be responsible for his economic shortcomings:

In appointing Mr Osborne to both positions, David Cameron perhaps reveals his own weakness in failing to differentiate between strategy and tactics. It might be sensible for the Conservative leader to relieve Mr Osborne of one of his two posts. I sense that the City would like it to be the shadow chancellorship. The Labour Party will be hoping that's the one he keeps.

Some may be surprised to see a Labour tribalist like Campbell pop up in the FT, but as I've noted before the paper is not the free-market bible some imagine it to be. Thanks to a strong Keynesian faction, the title has backed Labour at every election since 1992.

I notice that Iain Martin, formerly of the Daily Telegraph and now of the Wall Street Journal, has launched an "FT Watch" on his blog. That the most economically literate paper on Fleet Street has turned its guns on the Tories says much about the state of Conservative policy.

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.