Employers should be threatened with huge fines to prevent a repeat of the BHS debacle in which Sir Philip Green walked away from pension promises to 20,000 former workers, MPs say.
Penal fines, stronger powers for regulators, mandatory vetting of takeover bids and the speedier repair of pension schemes in deficit are among a string of recommendations from the House of Commons cross-party work and pensions committee.
It said that if its proposed “nuclear option” of big fines had been in place, Sir Philip would have been forced to address the shortfall in the BHS scheme long before he sold the company.
Frank Field, chairman of the committee, said: “It will sadly be of no comfort to the 20,000 BHS pensioners facing cuts to their promised pensions, but had just some of these measures been in place they might never have ended up in this situation.”
The centrepiece of the MPs’ review was to give The Pensions Regulator (TPR) the power to threaten huge fines when taking action against employers, to try to force them to make contributions to pension funds in deficit.
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“We recommend that fines that could treble the original demand be considered,” the committee said. In the case of Sir Philip, who faces a reported demand for £350 million from TPR, this meant that he could have been threatened with a £1 billion fine.
The threat alone would have brought him to heel, Mr Field suggested. “He would have sorted the pension scheme long ago.”
MPs called on the Department for Work and Pensions to consider equipping TPR with greater fining powers in its green paper due early next year. It accused TPR of being slow to respond to potential problems and of being “aloof” with trustees.
BHS failed in April with the loss of 11,000 jobs and left 20,000 employees facing big cuts to their pensions.
Sir Philip, whose family owned it until March 2015, was personally criticised in a previous report by the committee for repeatedly refusing requests from the trustees for cash to plug the shortfall.
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He sold the chain to Dominic Chapell, a former bankrupt with limited retail experience, for £1 last year. Sir Philip argues the committee has been unfair and biased against him and he has repeatedly promised to “sort” the pensions issue.
He continues to negotiate with TPR over a settlement. However, this is thought unlikely to be enough for pensions to be paid in full.
TPR said that it noted the committee’s recommendations and would consider them carefully. It was continuing to provide input to the DWP ahead of the green paper.