In opposition, David Cameron battered Gordon Brown with two words: Broken Britain. It was his Murdoch-inspired catchphrase for hoodies scrapping in gangs, Neets necking alcopops, teenagers ending up pregnant. It set the framework for Iain Duncan Smith’s welfare reforms. Broken Britain summed up the dark side of the New Labour era: a busted social contract and a class wantonly sponging off the rest of society.
It always struck me as the right phrase for the wrong target. The real Broken Britain is the one revealed over the past four days in two reports from MPs. It is workers urinating into bottles at the “Victorian workhouse” of Sports Direct, because their toilet breaks are restricted. It is women being offered permanent jobs in return for sexual favours. It is BHS, a high-street chain nearly as old as the Queen, effectively killed by two “plundering” owners. It is 10,000 shop workers who will shortly be out on the streets, and 20,000 pension-scheme members who must now worry over how much they’ll have to live on in their old age.
The riots of 2011 were taken by Cameron as proof he’d been right all along: “Irresponsibility. Selfishness. Behaving as if your choices have no consequences … Reward without effort. Crime without punishment. Rights without responsibilities.” This is Philip Green and Mike Ashley summed up – along with all the well-heeled consultants, directors and credulous politicians (including Cameron) who applauded and subsidised them on their way, bought off with fat fees and cheap photo-ops.
The rioting kids who stole bottles of water and robbed tellies from their local Argos were given prison sentences worth a total of 1,200 years. By contrast, Greenand Ashley weren’t even going to bother facing MPs. Only after five months of back and forth did Sports Direct’s Ashley get in the chauffeured car down to Westminster.
Green went one better, demanding that Frank Field resign from the BHS inquiry – then rocking up to parliament and telling MPs to stop looking at him. Such prickliness from a multibillionaire would have been funny had it not been for the thousands of families whose lives he’d just ruined.
Two things stand out from the Commons reports. First, while they rightly make Ashley and Sir Philip Greed (as he surely must now be called) responsible for their malpractices, they make clear that they were supported and sustained by large corporate networks.
The staff filling Sports Direct’s giant Shirebrook warehouse came from two temp agencies, Transline and Best Connection. These are not two-bit operations, but industry leaders: a multinational, Transline was awarded Temporary Recruitment Agency of the Year in 2014. Yet MPs discovered it had broken the gangmaster licensing law, while a Channel 4 investigation accused the company in 2015 of paying below the minimum wage to workers at other businesses (Transline say itssoftware prevents this happening). Staffing Shirebrook alone was worth £50m a year to these two companies, estimate the MPs. Some people were making a lot of money from the degradation of others.
The collapse of BHS involved an even more stellar cast. There was the “complacent” Lord Grabiner, for whose “veneer of establishment credibility” and shocking apparent docility, Green paid a lot of money. The equally handsomely rewarded auditors at PwC signed off BHS as a going concern in March 2015 – just months before it finally collapsed. PwC was of course the auditor to Tesco, which admitted to exaggerating its profits by £250m. Green told MPs thatDominic Chappell, whom he sold BHS to, had been given the all-clear by the world’s most famous investment bank, Goldman Sachs – despite being a serial bankrupt and a world-class fantasist. On Chappell’s side, Grant Thornton and law firm Olswang were paid “generous fees” to drive through a deal that killed an entire business.
Britain is the finance capital of the world, and these are some of the biggest names in the industry. Yet Monday’s report finds them “culpable” of cashing the cheques and being conveniently blind to massive corporate failure. In that respect, what Field and his colleagues have done is torn down one of the delusions about post-industrial Britain. From the London Whale to the Libor scandal to BHS, what the City really leads the way in is not ingenuity or innovation, but in being the no-questions-asked SpivZone of financial markets.
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The second striking thing about the MPs’ reports is that there is a giant hole where politics should be. Green and Ashley might have acted as if they were above Westminster, but they couldn’t have prospered without its parliamentarians. This is directly true of Green, who was knighted by Tony Blair then given a government appointment by Cameron. Blair bestowed that honour despite Green having engineered the payment of a £1.3bn dividend to his wife, Tina, in the tax haven of Monaco – a historic handout that avoided around £300m in taxes. The tax savings on that one payout were worth 10 large secondary schools – or would plug half BHS’s pensions blackhole. For such financial ingenuity, Green was invited by Cameron to advise on where government spending could be cut, including which parts of social security could be axed.
If Green does walk away from the BHS pensions deficit, it will be savers at other company pension schemes who will ultimately have to make good his shortfall. Just as when Ashley let a business in Scotland collapse and stuck taxpayers with the £700,000 bill. Or when both men run business models that rely on poverty pay and the state picking up the tab.
In Brexit Britain, one of the most important contracts between businesses and the public has been broken. Companies increasingly rely on the public to pay their way: to top up wages with benefits and public services, and billions in subsidies and grants and tax reliefs. What goes with that is another broken contract: the one that says work always pays. From Norman Tebbit to Brown to IDS, that idea has been central to employment and welfare policy. It is now dead. As the Institute for Fiscal Studies said last week: “The new poor tend to live in households where there is someone in work.” This is a fact that those at the bottom of the labour market have known for years, but is only now working its way into the minds of policymakers.
Cameron warned of “the slow-motion moral collapse that has taken place in parts of our country these past few generations”. He was right. It’s just that it’s been led by those at the top – the ones at the boardroom tables, their expensive helpers – and their mates and supporters in politics using taxpayer money to wave them on.