This is the full transcript of the interview:
Robert Peston [RP]: Sir Philip Green. BHS closed down, you owned it for 15 years, what would you say to those who’ve lost their jobs, who worked for the business or are worried about their pensions?
Sir Philip Green [PG]: Well obviously, I want to start with saying how sad and very, very, very sorry I am for all the hardship and sort of sadness caused to all the people who worked there, and all the pensioners. I hope and believe all the people that worked very closely with me at BHS for all those years and some for the whole journey will know, it was never my intention for the business it to have the ending it did. Unfortunately lots of sad circumstances occurred. The starting point of this is, I am sorry for where we have landed, but hopefully over these next few minutes I can tell you where we are and therefore, try to deliver some of the things we have agreed to do, and give you a progress report on that.
A small correction, there were actually more like 8,500 people – everybody always records 11,000 and for what I'm told, quite a large percentage of the high street workers were part time, so full time workers were actually substantially less than the number that is always quoted. After 15 years, for the ending to be what it was is obviously very, very, very sad. I can honestly say that I and my team did everything possible to not have the business go into receivership, administration. All of our efforts over time - and I want to give you some numbers - all of our efforts over time actually kept the business afloat. Keep the business working.
RP: So let’s look first of all at the pension. You were in conversations with the pension regulator. What stage is that at? Are you going to stand behind the pension fund?
PG: I can’t get into specific detail with you because I can't. What I can confirm to you is this - we are in very strong dialogue with the regulator for a solution. The commitment I made at the Select Committee stands. I said I would do my best to find a solution and that's what we continue to do. We've had a team of advisers working on this virtually every day. Myself and other executives are spending time on this every day. Just because I might not be sitting behind a desk, doesn't mean I'm not working on it. I am working on it and I have been working on it and I am hopeful that we have some light in the tunnel to a solution.
What I'd like people generally to understand is this. Without making any excuses, there are very, very, very many moving pieces and if you go to ten actuaries, you'll get ten different sets of numbers, so each time there's a conversation, it requires 20,000 new calculations to take place. There have been discussions and debates today about how long people are going to live - you move that six months or a year and it changes the calculations. So there's no employer, therefore there's complexities, how do you deal with that? BHS is not the only pension fund in deficit. Principally we have to find a sensible solution that delivers what we said we would deliver. What I can confirm to you is this - all the conversations are taking place.
RP: Just to follow up on one point you made there...would the plan be for you to ultimately stand behind the pension fund, rather than it fall to pension protection fund, which is the official rescue?
PG: Well I'd rather answer...not to avoid the question...it doesn't have an employer, a scheme or a sponsor and that's what's being worked on. What I can tell you is, if we arrive at the place where we hope to arrive, there will be no requirement for the Pension Protection Fund.
RP - For the Pension Protection Fund to provide any money?
RP: I know you don't want to put a precise number on the support that you would give...
PG: Well I can't
RP: But presumably we are talking about hundreds of millions of pounds...
PG:I I can't get into a conversation with you...
RP: You can't even say hundreds of millions of pounds?
PG: I can't get into a conversation with you about any of the detail.
RP: That's not a detail, it's important...
PG: Robert, Robert, the answer is, it will take what it takes to resolve it. We are in that discussion. There are things outside of my knowledge in terms of sponsor, how it works, how the funds are deployed and invested...the whole thing needs to come together.
RP: But the fundamental point is your plan is to rescue the fund and it not to be looked after by the PPF?
RP: And do you have any idea as to how long it is likely to take to bring that to fruition? It's been quite a long time and the pensioners are anxious…
PG: Well it has and it hasn't. If we actually go into how long it's been, it's only been maybe three months... three or four months.
RP: Well April was when the business went bust wasn't it..?
PG: Yeah but at that point we were not engaged in this, so a little bit after that, there were many conversations going on after that...Look I don't think there's any point going into the history, we're here. We're working on it, we're active on it, today will be another day but we are actively working on hopefully putting this to bed. The misery of dealing with this on a daily basis is not fun, it can't run our business. It shouldn't be forgotten but we still have businesses with 23,000 /24,000 people, a £330m payroll, our attentions are totally diverted and we need to, and want to concentrate on our existing businesses.
RP: Now the accusations made at you and to you by the Chairman of the Work and Pensions Committee, Frank Field have been pretty serious. He for example accused you of plundering BHS, you did take quite a big dividend from BHS, more than £300m, what do you say to Frank Field?
PG: Well I don't know if Frank Field has ever been in business, and I don't want to get into personalities, but the sad part for me is that first of all, Frank Field or any of his people on that committee never bothered to come to any of our offices ever to visit with us - we invited them to come and go through the detail. So if I could just respond to Mr Field's continued accusation that we "plundered" the business, ok? In the years that we took dividends out the business, just to be clear, the business made profits of several hundred million, so the dividends were not funded out of debt, as has been previously suggested, they weren't stolen or taken out of anyone else's money, they were monies made. In those years, the company actually paid £160million in corporation tax, actually made the profits and continued. From there on, where no monies were ever taken out of the business...it was always said we didn't invest any capital in the business. We invested £420m of capital.
RP: When was that? Over what time period?
PG: We invested £350m after the dividends were paid. So from the time the dividends were paid, in the rest of our ten year tenure, we invested £350m. We made loans to the business, unsecured, interest free, of £256million, so if you put those two numbers together you get to some £600m that we've put back. After that, when we sold the business to RAL sadly.
RP: So Retail Acquisitions Ltd, the Dominic Chappell vehicle?
PG: When we sold the business to RAL - and I know there were always different debates at the committee about what we did or didn't do. But in terms of actual cash, there was a bank facility of £25m that we underwrote plus real estate that was unencumbered, plus or minus gains of £200m. So if we actually look at the support we gave the business over the time, from '05 onwards, it comes to some £850m.
RP: So just to be clear, your own conscience is completely clear on this, you took a dividend from a business that was successful at the time. How do you yourself explain why BHS turned from a successful business to a struggling business?
PG: The short version was, I mean not making any excuses, BHS historically had, long before my time, before I bought it, a lot of leases that were signed many years back, expensive, the whole pricing in that middle market became a lot more aggressive, online revolution started, and principally - there are obviously things we may or may not have done wrong, but we couldn't get into...it didn't have a cost base that would allow it to become in the price led business. It wasn't possible in the market where it played. It was competitive in certain places - clothing, the marketplace is incredibly competitive, and ultimately it wasn't possible. And I think...probably what gives you the best demonstration, when the company got into serious trouble and they did a CVA which was then to go and negotiate with the landlords...
RP: This was a device that allowed them...
PG: It's a mechanism that...this is a voluntary arrangement. So you go to all the landlords and everybody...the 50 leases that were always troublesome, the landlords gave a 75% discount.
RP: So that was under the new ownership?
PG: Well that was when it went into process. To give you some idea, landlords don't give you 75% discount if they don't have to. If we'd have been able, or gone through a different route, and gone and done deals ourselves or put it through a process ourselves, which I didn't want to do, maybe in hindsight trying to go the right way was the wrong way. But if we'd put it through a process like they did, yes we'd have still had to deal with the pension, which for the purposes of the conversation we have, we did try to deal with the pension before we sold it...It's been suggested we sold it to RAL, to be very clear we had a project on the table to resolve the pension before we ever entered into...in '14 we had a project on the table, unfortunately it didn't develop, so hopefully that will demonstrate this was never about, it's been suggested we sold the business in a hurry, the conversation was going on for four, five months. A hurry is a week or two weeks, all the things that we said we would do, we were trying to do prior to disposing.
RP: Why did you sell the business when you did?
PG: I think, we put a lot of money into it, the market place is very competitive, we have six or seven other businesses that need energy and concentration. We now have shops across 30 countries, it's a lot more work today to drive these businesses hard, and it was just felt that our energies and our efforts would be better spent driving the other businesses. We thought we had gone as far as we could go, and therefore best to move on.
RP: You've explained though that the business did have some serious problems, did you think about closing it yourself?
PG: The answer is, I didn't want to take the business through a process if I could avoid it...
PG: Because I didn't want to. A lot of the people we've worked with, suppliers, people we have worked with for a very long time, I felt if we could avoid doing that, that's what I wanted to do. Therefore we looked at all the different options, I just felt if someone had a clean bill of health, they knew they would have to go and do deals with landlords, it wasn't a secret, there was very extensive due diligence carried out by Grant Thornton, they parked 13/14 accountants in our building for three and a half weeks.
RP: So Grant Thornton advising the buyer?
PG: ...advising the buyer with very detailed due diligence...Olswang advising the buyer, pretty aggressive in their work for the buyer, two firms both well regarded professional firms, they weren't afraid to charge, they charged £8.4m for their services. These two companies never got interviewed by the Select Committee, or the correct people didn't get interviewed by the Select Committee, in spite of Mr Field stating, when he was told I don't want reserves from the bench, he never called for the two principle people from the two companies to ask they what work they had done/ hadn't done. I'm not making an excuse, we felt that with two prominent advisers, there were two or three other lawyers in the team, we felt, basically they had a pension expect on their team, we felt they had relevant people around them, there were different letters that came, different views, letters came on finance being offered, so we thought there was a good opportunity for someone to take the business forward, with money, that was provided and give it a fresh start. Unfortunately that didn't work out.
RP: So, I've known you for a long time. Of all the business leaders I've met you are probably the most hands on, somebody who pays more attention to detail than almost any business person I’ve met. Dominic Chappell, if you were to look at his track record, former bankrupt, no experience of retailing, I am surprised that you felt he was the right person to buy the business?
PG: Look, I don't want to make any excuse. He was clearly, categorically the wrong buyer, OK. However venture capitalists, the entrepreneurs back people and they don't know anything , you know, this conversation about you 'don't know' about the business, well most venture capitalists buying companies and backing management and doing deals don't know anything about the business. I felt he was keeping the management team on board, the management team knew exactly what had to be done to the business, what things needed to be changed. And I felt comfortable he was discussing bringing in a CEO or an MD or bringing in some additional people. Like I said I'm not hiding at all. He was a bad buyer, wrong buyer. But we made that decision and, you know, for the last year and on a daily basis I, and my family, have got to live with this horrid decision and trust me these are not fun days I've been doing this, as you said, a very, very, very, long time and sadly it’s all suddenly sort of squeezed into, you know, the only thing in the world is BHS. I’ve done a hell of a lot of things in this industry and I'm being sort of chastised and criticized by Mr Field , like I said, don't even know if he's ever worked in a business, right. But, hopefully, we've put a lot back into the retail business, apart from, what's being discussed at the moment. We opened a retail college in 2006 started with 50 students, we now have 860. We've had a track record of getting 70% of these people jobs throughout the industry. 150 retailers have supported their work during in the course of their terms, we've put them out for work. We've supported for the last 14/15 years young designers, young talent in this country many now who have gone on to make a fantastic success of their business. Arcadia takes on many, many, many students. We support things quietly. This has been a horrible, horrible, horrible period.
RP: How has it been for you and your family? You've had photographers outside the whole time, there's very critical stuff written about you pretty much everyday in the press. How does that feel?
PG: It's horrible. But at the end of the day Robert, I haven’t run away. I’m here, I’m sitting here with you. I'm happy to look you straight in the eye. I want to fix this pension solution more than anybody in the world, right. I believe with good will on both sides we can fix it. As I said it is a very technical, and the fact that nobody ever, ever has come to the table to fix the pension- it's interesting they've picked on me. But anyway, we're here, we are.
RP: You've for the money to do it. Let's be clear.
RP: You have got the money to do it, the reason you haven’t fixed is not because you haven’t got the money?
PG: I hope not. Look, what I’d rather say is this. There has been no conversation with anybody involved in this who doesn’t believe that the funding will be made available, right to fix it. So it's not about funds available absolutely not, no. But it's about, as I said, very technical complex things that there are, obviously, takes two views to make a market and as I said, a couple of the views as I said because it's gone bankrupt and nobody has been here everybody’s sort of looking at how does the mechanics of this work, right. And obviously the chairman of the trustees Chris Martin who we've got very positive dialogue with, who's supportive of the efforts we're making and we're regularly in touch with him and he's on board, with the things we want to do. So, as I said, it's been heard and they'll be no doubt on Thursday Mr Field's saying 'oh we got to do da da da', he doesn’t even understand how it works and i can categorically tell you we're on it, we were on it yesterday, we will be on it today, tomorrow and who knows maybe I’ll be able to call you and say: 'job done'.
RP: MPs have got this debate later this week, they're having a vote on whether or not your knighthood should be taken off you…
PG: Right, OK. For what, first of all?
RP: Well obviously they have the power to do that. But, do you care about the knighthood?
PG: I think, I care about how these people are behaving, you know ,all hiding behind parliamentary privilege and that's not what it was designed for and just the way they're going about it, trying to bully everybody, right. The same way as i said earlier it's almost inconceivable that nobody from that committee wanted to visit this office and actually go through the detail i briefly went through with you. I think, one of the figures, I can't remember if I did or didn't go through with you. During the ten and a half years that we carried on funding…
RP: Is this 2005- 2015?
PG: Yes, right. There was a £1.25 billion pay roll that we supported over those years. We didn't try and get rid of people and axe the staff. We paid a short £500 million in business rates so it wasn't.... you know...every one of our obligations we had to pay during that period. We paid, now hopefully it stands for something. And as i said, we've got many, many, many people , you know, you're in our main building now, the average life of executives and senior people ,in our other businesses, is 10 or 11 years , people aren’t here working for me and my family because they don't trust us. And I think most people in this business that know me, know, that if I shake hands and say 'done', that's done.
RP: But one of the things i think I know about you is that you hate to fail. And I know one of the things we've talked about in the past was how horrible it was running a public company back in the late 80s early 90s and that because that didn’t go as well as you might have liked, you decided then to go private. This is the first big setback you've had in years. How do you sort of rationalise it for yourself, how do you come to terms with it for yourself?
PG: I come to terms with it because i can look in the mirror and know i made a bad mistake but i did it honestly and i felt i gave the best business...i gave the business the best shot, we felt, I felt, my executives felt- gave it the best shot to go forward. The easy route would have been- which other people have done- would have been to admin it, pre-pack it, re-package it myself.
RP: So, you're explicitly saying you did not cut and run which is the allegation that's made of you…
PG: Even at the end when this ...we were in the debate, even at the end and with the business had gone into admin or liquidation or whatever and there was a moment where, you know, they were trying to sell it to different buyers and I sort of thought, should I buy it back? Right. Well, based on where I’ve landed, you know where all of the deals on different properties had already been done, should I buy it back? And sort of we sat and discussed it and thought is that going to be worse? You know, what's the right decision? So even at that point, where there would have been an opportunity to buy it back in clean form, if you like, understanding the things that needed to be done had now been done, right, i felt it was the wrong thing to do. So, there was, unfortunately whichever way i went, there were tough decisions.
RP: I mean it's an extraordinary change of fortune for you. Back in 2010, David Cameron, the PM, calls you in and asks you to advise him on making the government more efficient. Theresa May makes, what is frankly an attack on you, in her conference speech. How do you explain that?
PG: Well, I think, I don't want to get into the debate of what the new Prime Minister said. I think hopefully we will send a letter of our propose some of the things I’ve told you and just understand we didn't take a load of dividends before the company failed, right. We ran the business, nobody can be a clairvoyant and know; you run the business for 10 and a half years, more importantly, we put back significantly more than we took out. So to be accused of, oh you know, we took all the business....but it's easy to say these things, we've got an easy audience listening without knowing all the facts. So I think, you know, we need to correct those facts.
RP: You don't have to live in this country, I mean you've made a colossal fortune, you could live anywhere in the world. Have you ever thought in the last few weeks and months, given the bile that has been directed at you that. Have you ever thought about turning your back on the UK?
PG: I think, let's fix the things we said we'd fix- that's the starting point; that's where we are. There’s no running away. We’ve got to fix the commitment i made to the pensioners and we will fix it; with good will on both sides. Both our side and the regulator side - it is fixable, let's get that fixed, let's get back to work. We’ve got stores today in 30 countries and i'd like to get back to my day job.
RP: How much of your time have you actually got for running a business?
PG: Not a lot. Not a lot.
RP: So tell me, how you're dividing your time up at the moment?
PG: Well, I try to sort of do as much work or keep in touch with all the business as much as I can, in between sort of, when different people are available to talk about or meet to discuss this issue; and it's a mix. It's sort of night, day, morning, early morning all sorts of crazy hours of trying to do both.
RP: And just to be clear, your priority right now, is what exactly?
PG: What my priority is, I’d like to call you up tomorrow and say we've made a proposal to the regulator and hopefully we're going to get finished. So, my priority is to finish this, because to be honest with you, the stress and aggravation of doing all of this. Maybe one last thing i was thinking about, should I or shouldn't I tell you…but maybe hopefully that will go down badly or not badly, ok? Six days before I was due to the parliamentary hearing, I had to have a stent done in my heart, a heart.
RP: Because you've had stents put in before?
PG: Yes but six days before the hearing, I had a stent put in. I didn’t call Frank Field to postpone me going or try to avoid it and use it as an excuse. I went there and stood there, sat there for six hours going through that, hopefully some people will recognise. I stood up to what I had to go and do I will continue to stand up to the things I’m being asked to do- I’m not running. And, as I said, come round this business and this building, people have been working here, working for me and my family for, since we've been here; and they're still here supportive of us and I want to get back to the day job; finish up the things we've got to sort out and move on.