The House of Commons’ Business, Energy and Industrial Strategy Committee has released its recommendations on how businesses can address mistrust among the public after a series of high profile corporate scandals and failings.
The report recommends a number of actions on executive pay, a new and stronger voluntary code of governance for private companies, better reporting by companies on how directors fulfill their duties and responsibilities and a major expansion of the role and powers of the Financial Reporting Council (FRC).
As a leading member of the Committee and author of the report, Richard said:
“Following our inquiries into BHS and Sports Direct, we are calling for more controls on senior executive pay, toughened up governance rules and a Red/Yellow/Green independent assessment of how company boards work. These measures are essential if we are to maintain the country’s strong international standing in corporate governance.”
On executive pay, the Committee recommends the simplification of executive pay and putting an end to long-term investment plans (LTIPs), which lack transparency and can distort decision-making. The Committee also suggests workers be represented on remuneration committees and for the chairs of remuneration committees to be expected to resign if shareholders fail to approve the company’s pay policy.
On gender diversity, the Committee calls for the Government to set a target that from May 2020 at least half of all new appointments to senior and executive management level positions in the FTSE 350 and all listed companies should be women.
The full report can be read here.
The Business, Innovation and Skills and the Work and Pensions Committees have concluded that leadership failures and greed led to the collapse of BHS.
The report found that Sir Philip Green chose to rush through the offloading of a beleaguered high street institution, which was losing money and encumbered with a massive pension fund deficit, to a buyer who he was clearly aware was “manifestly unsuitable”. Though the ownership of Dominic Chappell and his associates was “incompetent and self-serving”, the ultimate fate of the company was sealed on the day it was sold. Advisers were paraded by both sides as an “expensive badge of legitimacy for people who would otherwise be bereft of credibility” while the Taveta group directors failed to provide a semblance of independent oversight or challenge in a corporate group run as a personal fiefdom by a single dominant individual.
Richard Fuller MP, a member of the committee that drafted the report said: “Sir Philip Green should surrender his knighthood and make good the monies owed to the pension funds of the 20,000 BHS pensioners. At the start of our inquiry, I wanted to see evidence to confirm that Sir Philip Green’s behaviour constituted “the unacceptable face of capitalism” and we got evidence by the lorry load.”
MPs heard hours of oral testimony and considered thousands of pages of written evidence in the inquiry, which began when BHS crashed into administration just 13 months after the ill-advised and under-funded sale to Dominic Chappell. The Committees say the evidence at times resembled a “circular firing squad”, with a series of key witnesses appearing to believe they could absolve themselves of responsibility by blaming others. Sir Philip Green himself “adopted a scattergun approach”, liberally firing blame to all angles except his own.
The report documents the systematic plunder of BHS at the cost of the 11,000 jobs and 20,000 people’s pensions now at risk. Sir Philip Green, Dominic Chappell and the respective directors, advisers and hangers-on who all got rich or richer are all culpable, with the only losers the ordinary employees and pensioners.
The Committees say this is “the unacceptable face of capitalism” and that the story of BHS begs much wider questions about the gaps in company law and pension regulation that must be addressed. The two Committees will now turn to those question in new inquiries.
With the news last week that the Bedford branch of BHS may join the other BHS stores that have closed completely, Richard added: “I hope the findings of this report and the further action that I will be taking when Parliament resumes after the Summer Recess will give some comfort to BHS employees past and present that the fight for their interests will go on. There is still a lot owing to their pension fund and as the report says this is ultimately Sir Philip Green’s responsibility. He should fix it.”
The full report can be read here.
The Business, Innovation and Skills Committee has today published its findings into employment practices at Sports Direct.
The Committee was presented with a disturbing picture of the working practices and business model at Sports Direct. In evidence to the BIS Committee, Mr Ashley admitted for the first time that workers had effectively been paid below the national minimum wage and that Sports Direct had got too big for him to control.
The Committee also heard a series of accounts of worker mistreatment, including staff being penalised for matters such as taking a short break to drink water and for taking time off work when ill – the ‘six strikes and you’re out’ policy.
Other evidence pointed to serious health and safety breaches, with repeated ambulance calls to the Shirebrook warehouse, including one case where a woman gave birth in the site toilets.
Richard as a key member of the Committee, is leading efforts to persuade the Government led by Theresa May to bring forward proposals to ensure businesses work for their employees and not just for their bosses.
The full report can be read here.
Richard was part of the joint parliamentary committee on Wednesday which questioned Sir Philip Green over the sale of BHS.
Following this evidence session, Richard wrote to Frank Field, Chairman of the Work and Pensions Committee and Iain Wright, Chairman of the Business Committee, asking them to broaden their investigation to cover Arcadia’s pensions.
The Business, Innovation and Skills and Work and Pensions Select Committees’ joint evidence sessions into the sale of BHS continued last week with evidence taken from board members and directors of both BHS and Retail Acquisitions Ltd, including Dominic Chappell.
Part of Richard’s contributions to the work of the joint committee can be watched here:
The full evidence session of 8 June 2016 can be watched here.
As a member of the BIS Select Committee, Richard has begun taking evidence on the BHS pension fund in a joint inquiry with the Work and Pensions Select Committee.
You can watch Richard’s contributions to the first evidence session of the inquiry on 9 May here:
During January, Richard made contributions in the House of Commons on counter-terrorism and the UK’s support for the Nigerian Army in seeking to defeat Boko Haram terrorists and a comprehensive speech on the UK’s policy on trade, export and innovation. Richard has also tabled questions on a broad range of subjects including NHS Continuing Healthcare, compensation for Equitable Life policy holders, delays by the Home Office in processing visas and government policy on access to taxis for wheelchair users.
As a member of the Business, Innovation and Skills Select Committee, Richard has taken evidence from key witnesses on the digital economy, the productivity plan and access to Higher Education. The Committee has also published its first report on the UK Steel Industry. The work of the BIS Committee can be followed here.
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