Oral statement to Parliament

BHS: update on support for workers, pension schemes and the investigation

Statement on BHS by Anna Soubry, Minister of State for Small Business, Industry and Enterprise.

The Rt Hon Anna Soubry

With permission, Mr Speaker, I would like to make a brief statement on BHS.

The House will remember that on 25 April I made a statement to the House after BHS had entered administration. The administrators Duff and Phelps tried to sell BHS as a going concern, with a view to retaining all the stores and as many jobs as possible. I understand that they had talks with a number of interested parties.

As reported last week, the administrators have now concluded that process, although offers were received, none was sufficient to enable a deal to be completed, and they have had to take the decision to wind the business down.

This will of course be devastating news for the workers at BHS and their families, and also for those businesses who supply BHS, our thoughts are with all of them. This followed the sad news received by Austin Reed workers on 29 May that only a partial sale of that business was possible with the remainder being wound down over the course of June. A number of questions have quite properly been raised about how BHS found itself in this situation. The proper authorities – the administrators, the Insolvency Service and the Pensions Regulator – are already looking into these matters.

I am clear that any wrongdoing will be taken very seriously and I will return to that later in my statement.

Support for people

Our focus now is to support all those affected and get people back into work as quickly as possible.

Whilst we await the administrators’ plans for winding down the business, I can inform the House that Jobcentre Plus has already been in contact with the administrators and is preparing a range of support to assist staff.

Jobcentre Plus is on standby to go into BHS stores and directly advise affected staff of their various options.

Already, teams are centrally tracking vacancies in the retail sector and will make sure BHS branches are aware of any vacancies in their area.

Jobcentre Plus also stands ready to deploy its Rapid Response Service in acknowledgment of the scale of the job losses.

This is a service with a strong record of helping people at a very distressing time. They can offer workers support including:

  • help with job searches, including CV writing and interview skills
  • help to identify transferable skills and skills gaps, linked to the local labour market
  • training to update skills, learn new ones and gain industry recognised certification that will improve employability
  • help to overcome barriers to attending training, securing a job or self-employment, such as child care costs, work clothes and travel costs

I can also inform the House that the Department of Work and Pensions (DWP) has written to major retailers asking them to consider what opportunities they may be able to offer the workers and local areas affected as the situation becomes clearer this week.

DWP will also be monitoring the impact of redundancies locally on a continuing basis and will provide additional targeted support to any areas particularly badly affected.

I can assure the House we will do everything in our power to support workers and their families through this difficult time, not just for BHS but also for those made redundant by Austin Reed.

Insolvency Service investigation

Can I now turn to some of the wider issues here? On 3 May, the Business Secretary instructed the Insolvency Service to begin its investigation into the extent to which the conduct of the directors of BHS led to the insolvency of BHS and/or caused detriment to its creditors.

While the Insolvency Service can’t give a running commentary on its investigations, I know that the work is well underway. And I’m clear that if evidence is uncovered that indicates that any of the directors’ conduct fell below what is expected, then action will be taken. This can include applying to the courts to disqualify the relevant parties from being a company director for a period of 2 to up to 15 years.

If there are any indications of any criminal wrongdoing relating to BHS, we will ensure that the relevant investigatory body is informed.


Members will also be aware of considerable concern about the BHS pension scheme. The BHS schemes are in a Pension Protection Fund (PPF) assessment period. Now this test is whether or not the schemes’ funds are sufficient to allow each scheme to buy annuities which will pay members at least PPF fund level benefits. If it cannot the scheme will transfer to the PPF and compensation will be paid. The PPF aims to resolve these issues as quickly as possible.

PPF compensation is generally 100% of the pension in payment for anyone over the scheme’s normal pension age at the date of the insolvency and, for everyone else, 90% of the accrued pension, subject of course to a maximum cap.

The Pensions Regulator is also currently undertaking an investigation into the BHS pensions scheme to determine whether it would be appropriate to use their anti-avoidance powers. This means that if the Regulator believes that an employer is deliberately attempting to avoid their pension obligations, leaving the PPF to pick up their pension liabilities, the Regulator may intervene and seek redress from the employer, and if I may say Mr Speaker, rightly so. There is a clear process that must be followed and this can sometimes take a considerable amount of time. When it becomes appropriate to do so the Regulator will consider issuing a report of its activities in this case. We will closely examine its findings.

Retail sector

As I said on 25 April, retail is a vital sector for the United Kingdom economy and we are committed to it as a government, that is one of the reasons I will be meeting key retailers this Thursday with ministerial colleagues from other government departments. While the news of BHS’s closure is a huge blow, the retail sector as a whole is resilient. There are now 3.1 million retail jobs in the United Kingdom, up by 83,000 since 2010, and almost back to record pre-recession levels.

High streets remain a crucial part of our local and regional economies, creating jobs, nurturing small businesses and injecting billions of pounds into our economy. A recent report by the Association of Town Centre Managers found that town centres contribute nearly £600 billion pounds to the economy each year.

That is why we will continue to support the British high street.

By way of example, we’ve reduced corporation tax.

And in particular, I’m so pleased we’ve announced the biggest ever cut in business rates in England – worth £6.7 billion over the next 5 years, notably affecting small businesses.

I know little of this will be of comfort to BHS workers facing an uncertain future. But I can assure them and the House this government will do everything within in its powers to get every affected worker back in a job as soon as possible.

I commend this statement to the House.

Published 6 June 2016