We think that BHS report is rather biased against Sir Philip Green
Or at least that it is possible to think that Sir Philip might have a point here:
Sir Philip Green has broken cover to complain that a highly damning report by MPs was a “biased and unfair process” and is considering a legal complaint against the co-chairman of the Commons select committee responsible for the inquiry into BHS.
Aspects of this have been mentioned elsewhere but we think it important enough to repeat.
The essential set up of the report is that BHS paid substantial dividends to its owners then some years later there is a substantial pensions deficit. That is quite obviously true.
However, there're three points which really should have been investigated further.
1) As the report itself notes low interest rates play merry havoc with investment returns on pension funds. Assumptions of low interest rates out into the future blow out that deficit in a major fashion.
2) The pensions funds were slightly in deficit in 2006 and vastly so now in 2016.
Both of those points are to be found on page 3 of the report.
3) What is not found in the report is that interest rates have, under the monetary policy of the Bank of England (something we fully support), fallen from 4.75% to 0.5% over that period of time.
We are not pensions actuaries but would and do assume that some, perhaps a rather large, portion of that pensions deficit is due to that move in interest rates rather than anything which was happening internally to the company.
Further, we think that we would all be rather better informed if the report had pointed this out and attempted to quantify it. It didn't - therefore we think that it would be fair to say that there could be thought to be some bias in this report.
How much bias would depend upon someone doing that calculation. If anyone would care to inform us we'd be most grateful. As, obviously, so would Frank Field and friends as they become better informed.