Lessons for new select committees from the BHS inquiry

5 Jun 2017
Closing down sale at a BHS store in Chester

When select committees in the new House of Commons look for a successful past inquiry from which to learn, they may think of that into Sir Philip Green and the BHS collapse. Here, the Clerks of the two committees involved back select committee inquiries into such cases, but suggest rare features of the BHS inquiry mean it might not work as a general model.

Adam Mellows-Facer, Clerk, Work and Pensions Committee, House of Commons
Chris Shaw, Clerk, Business, Energy and Industrial Strategy Committee, House of Commons
Adam Mellows-Facer,
Clerk, Work and Pensions Committee, House of Commons
Chris Shaw,
Clerk, Business, Energy and Industrial Strategy Committee, House of Commons

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When the new departmental select committees in the next House of Commons are formed and first meet to consider their objectives, working methods and subjects of inquiry, they may want to draw on lessons from the 2015 Parliament. In particular, they may want to reflect on what can be learned from one of the most high-profile and effective select committee inquiries of recent years: the joint inquiry by the Work and Pensions and Business committees into the collapse of BHS.

The BHS inquiry pushed the boundaries of select committee work in several ways, not least in departing from departmental scrutiny to investigate a corporate failure that damaged the well-being of thousands but which would otherwise have passed without the glare of public scrutiny.

To recap, BHS collapsed into bankruptcy in April 2016, a year after being sold by Sir Philip Green for £1 to the inexperienced and thrice-bankrupt Dominic Chappell. The collapse left 11,000 people out of work and 20,000 facing lower pensions from a scheme in enormous deficit. The fact that relevant policy responsibilities were split between government departments combined with great interest in the issue on both committees to prompt the decision to work jointly. Through a series of astonishing evidence sessions and publication of thousands of pages of documentation, the committees uncovered an extraordinary tale of incompetence and greed. In their report, they found Sir Philip ultimately culpable, both for the sorry state of the business at the point of sale and for its subsequent complete collapse under “manifestly unsuitable” new ownership. Sir Philip eventually made a cash payment of £363 million to the pension scheme in February 2017 in the face of ongoing parliamentary pressure, including a resolution recommending he be stripped of his knighthood.

Select committees have carried out detailed investigations of extra-governmental conduct before, from bankers to phone hackers to charity executives, with mixed results. Such inquiries are resource-intensive and high risk, with no guarantee of finding an agreed version of events or identifying responsibility for them.

In the BHS inquiry, starting from a position of very limited information the committees demanded known documents, rather than calling for written evidence, and followed the trail to companies and individuals all keen to blame anyone but themselves. These demands, together with the reluctance of some witnesses to attend, raised the question of select committee powers, which remain subject to legal uncertainty (and could be revisited in the new Parliament). However, in the BHS inquiry, existing powers proved largely adequate, not least because the court of public opinion remained on the side of the committees.

The committees were certainly helped by an outraged and absorbed press. The evidence sessions competed with the EU referendum for media coverage, and journalists feasted upon the almost daily publication of contracts, board papers and emails uncovered by the committees. In turn, the high public profile of the inquiry encouraged those with relevant information to come forward, and encouraged journalists to pursue interesting leads and characters in the emerging evidence. Where there is to some degree a confluence of interests, the combination of select committee evidence and findings, on the one hand, and front-page news and strident editorials on the other, can be extremely powerful. Without such pressure – sustained in particular by Frank Field, as Chair of the Work and Pensions Committee, for many months after the committees reported in July 2016 – it is difficult to believe that Sir Philip would have paid as much into the pension fund as he did.

But it is a risky combination too: the press would have been equally ready to criticise any inappropriate use of parliamentary powers and ineffective or grandstanding questioning. Any factual inaccuracies in the committees’ report would have been seized upon by the many highly-rewarded advisers representing the parties involved. In this high-profile case, committee members were aware that they, as well as the witnesses, were to some extent ‘on trial’.

The time commitment required from busy MPs to consume the enormous volume of often technical information needed to perform well in the high-stakes theatre of the evidence session with Sir Philip Green should not be underestimated. Nor should the task of assembling the right support team to advise the committees, analyse the mountains of paper and assemble the report. This level of intensity could not be maintained as ‘business as usual’ for select committees. The committees also benefitted from a sense of shared purpose that such a cross-party group investigating ministerial conduct or a government failure may be unable to achieve.

The collapse of BHS is subject to several ongoing official investigations. Some might argue that House of Commons select committees, with their inherent political considerations, ought not to be conducting complex investigations into private companies and individuals. However, the committees were able to operate with speed, reporting within three months of BHS going into administration; with independence from government; and at minimal additional cost to the public purse. No other body or public inquiry could have achieved this. Select committees have a unique ability to hold to account those in positions of great power and responsibility.

While there is intrinsic value in MPs, as public representatives, asking questions and drawing conclusions about the conduct of bankers, lawyers or retail magnates, ideally such inquiries also yield wider public policy gains. Having reported on BHS, the two committees separately examined the regulatory and legal frameworks surrounding pension schemes and corporate governance. This work was drawn upon explicitly in green papers and in party manifestos for the 2017 general election. It is reasonable to conclude that the committees’ work has resulted not just in a financial settlement for BHS pensioners, but also in an improvement in the reputation of select committees and changes in government policy.

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