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2 December 2020

Philip Green: the emperor runs out of clothes

The mogul’s retail empire has crumbled. Is it all his fault?

By Will Dunn

Lionheart is 300 feet long, weighs 2,990 tonnes and includes among its amenities a helipad, a gym, a beauty salon and accommodation for 12 people. Built in 2016 by the Italian superyacht company Benetti – whose other customers include Donald Trump and the totalitarian government of Turkmenistan – it has been moored in Monaco’s harbour since 10 October.

Thanks to the International Maritime Organisation and the internet, it is always possible to know where Lionheart is and often, therefore, the location of its famous inhabitant, Philip Green. This makes him, for journalists, the world’s most locatable billionaire, and his abrasive response to being doorstepped – he once threatened to throw a Sky News camera “in the f––ing sea” – makes for a reliably dramatic encounter.

The yacht also reflects how many people feel about Green: ugly, brash, it bobs in the warm waters of a tax haven, paid for by the vast proceeds of a business built on the work of tens of thousands of low-wage retail staff in the UK and garment factory workers in developing countries. It has become the focal point for the ire of taxpayers and employees who are enraged by the way Green handles his money and his businesses. 

There are plenty of reasons to be angry at Green. He represents an aggressive approach to retail learned in the 1970s, when – having, despite an expensive private education, left school with no O-levels – he stripped the assets of businesses that had gone under in the low-margin industry of cheap clothes and sold them on to shops and market stalls. His approach has always been to help himself. 

The best-known example of this took place three years after Taveta Investments – a company majority-owned by Green’s wife, Tina – bought the Arcadia Group. Following Arcadia’s 2005 annual results, Tina Green received £1.2bn. As a resident of Monaco, she paid no tax on what was one of the largest paycheques in British corporate history.

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A decade later, Green sold British Home Stores to Dominic Chappell, who had already been declared bankrupt on multiple occasions. The business had originally cost Green £200m but he handed it – and its £571m pensions deficit – to Chappell for £1. Within 18 months the company had gone into liquidation; 11,000 people lost their jobs.

[see also: Leader: Reimagine the high street]

The BHS debacle has been revisited this week after Green’s retail group, Arcadia, collapsed into administration on 30 November. Arcadia’s 13,000 employees are temporarily protected by a “trading administration” which lets the group keep its stores open for up to eight weeks – covering the valuable Christmas period, when the government has given shops permission to remain open for 24 hours a day – while the business looks for buyers.

But for the 12,000 people who work for Debenhams, one of the UK’s largest department store chains, the news has had a more immediate effect. Arcadia is the largest operator of concessions – the spaces in department stores given over to individual brands such as Wallis, Dorothy Perkins and Burton – in Debenhams’ 124 shops. Debenhams itself went into administration in April, and the revenue from Arcadia’s concessions was essential to its value to its prospective buyer, the sportswear giant JD Sports. But without Arcadia, its chances of rescue have disappeared. Having opened its first shop in 1778, Debenhams will soon go into liquidation.

To talk about forcing Green to sell his boat or stripping him of his knighthood is to indulge an easy portrayal of one bad person in an otherwise blameless system. Green has certainly taken what he can get from Arcadia’s brands. But it is the internet that has put them out of business. In a world that shops from home, all stores are the same size. The new department stores are websites such as ASOS, and the most valuable real estate is not on Oxford Street but on Instagram.   

Arcadia’s demise may also have been the decision, ultimately, not of Green but of his bank, and the government. Arcadia went into administration hours before the reintroduction of “crown preference”, which means HMRC gets paid before the bank if the company is liquidated. Tax experts have said that despite the government’s support for businesses, many companies have been pushed into administration by lenders who consider doing so a safer way to recoup their investments.

Green is not the worst asset-stripper in the business nor the most careless with company pensions – one pensions expert pointed to the directors of Carillion as more egregious in both cases, while the Greens put £363m into the BHS pension scheme.

“The Emp”, as he was called by fellow high-street tycoon Mike Ashley, is a convenient bogeyman – a perma-tanned, mullet-haired tax exile who insists on being photographed with supermodels (who invariably face away from him in such pictures), he once described the MPs debating whether his knighthood should be removed as a “bunch of old wankers”. But while we are angry about Green, we should perhaps ask whether we are offended by how he made his money, or how he spent it. 

This article appears in the 02 Dec 2020 issue of the New Statesman, Crashed