Theresa May must 'get tough' on irresponsible businesses following BHS scandal

Britain's new Prime Minister will be urged to honour her pledge to get strict on irresponsible business practices, after a two-month inquiry into the collapse of BHS laid the responsibility for the company's demise firmly at Sir Philip Green's doorstep.

After a two-month inquiry into the demise of the 88-year-old company, MPs concluded the former BHS owner left the company on "life support" before selling it off to a "wholly unsuitable chancer", in the shape of Dominic Chappell.

The report represents Theresa May's first big challenge since replacing David Cameron as prime minister, as the former home secretary said she would "get though on irresponsible behaviour in big business".

May added that excessive executive pay was creating an "irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses."

MPs said their report was written in the same spirit that the PM expressed during her first speech on 11 July, and urged May to take a stance against what they described as "the unacceptable face of capitalism".

Oliver Parry, head of corporate governance at the Institute of Director, said the findings of the enquiries into BHS and Sports Direct could have a damaging effect on the industry's reputation. "BHS's collapse highlights some fundamental issues," he told IBTimes UK.

"It clearly shows government's infrastructure were not in place in the lead-up to the sale to Dominic Chappell and in the period that followed."

Tom Selby, senior analyst at stockbroker services provider AJ Bell, said policymakers faced a grim set of choices.

"Restricting dividends for companies with deficits, for example, risks making the problem worse as businesses could be starved of the investment they need to grow, generate cash and profits, and ultimately fund their pension promises," he said.

"If the Pensions Regulator takes a tougher stance on deficit recovery plans it would force firms to redirect cash to funding historic pension promises, rather than investing for growth, while allowing firms to cut back accrued rights would have a potentially devastating effect on trust in the system."

In a scathing report, the Work and Pensions Select committee and the Business, Innovation and Skills committee said Green gained "incredible wealth" during his 15-year ownership of BHS as "significantly more money left the company than was invested in it".

The Green family extracted more than £300m ($394m, €359m) from BHS, according to the report, while Chappell and his associates were described as "incompetent and self-serving".

"BHS fell victim to a lethal cocktail of record low interest rates, quantitative easing and rising longevity," Selby added.

"The Brexit vote could yet see the Bank of England push interest rates even lower to stimulate the economy, further inflating scheme deficits.Weak regulation has played a role in the current crisis too, with firms allowed to take contribution holidays and establish deficit recovery plans that ran into decades."

Josh Hardie, the deputy director-general of the Confederation of British Industry, also urged businesses to demonstrate their value and contribution to society.

"When a business treats its employees or customers unfairly, it damages society's relationship with all businesses and undermines trust," he said.

"This matters now more than ever if companies are to play their role in creating economic growth and spreading prosperity to communities across the UK."