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MPs: Stop sale of Philip Green's Arcadia sale to fix pension deficit

Tim Wallace
Sir Philip Green is facing questions over Arcadia's pension fund deficit and his plans to keep savers safe if the company is sold - Bloomberg News

Retail veteran Sir Philip Green should explain how pensioners will be protected in any sale of Arcadia, MPs have warned – and regulators should have the power to stop the deal until savers have had a say.

Frank Field, the chairman of the influential work and pensions select committee, is writing to Arcadia and the Pensions Regulator in an effort to keep the shop workers’ pensions safe amid reports that 65-year-old Sir Philip is in talks to sell all or part of his empire.

The company, which is controlled by Sir Philip’s wife Tina, owns high street brands including TopShop, Dorothy Perkins and Miss Selfridge, which have come under pressure from fast-growing online rivals such as Asos and Missguided. It had sales of just over £2bn in 2016, 26,000 staff and 2,800 stores.

Frank Field wants the regulator to be able to pause major corporate sales so that pension savers can have a say

However, it recently announced plans to “streamline” its TopShop/TopMan stores and in recent reports retail experts estimated that a sale of Arcadia might fetch just £500m given the potential cost of overhauling its store estate.

Documents published last year by MPs put Arcadia’s pension deficit at £565m on an ongoing basis, or almost £1bn on a buyout basis. Last year Arcadia said it would double pension fund contributions to £50m per year, which it expects to close the deficit in eight to nine years.

“The committee will be writing to try to ascertain how this might affect the pension funds, because they are in deficit,” Mr Field told The Daily Telegraph. “There is a repayment plan in operation. What is going to be promised to the pensioners if there is a sale?”

BHS's collapse left pensions savers in the lurch Credit: Paul Grover

He wants to avoid a repeat of the BHS scandal when the company was sold for £1 by Sir Philip, but workers were left in the lurch when it collapsed just over a year later with a £571m hole in its pension fund. “We have all been here before,” said Mr Field.

The tycoon eventually agreed to pay £363m to top up the BHS pot.

Mr Field is urging the Government to enable the Pensions Regulator to “pause” sales. “The Pensions Regulator should have the power to temporarily hold a company sale until the issues of the pensions have been sorted out, so the pensioners would have a say at this crucial stage,” he said.

“Nobody is proposing the regulator should have permanent power, but it should have a temporary stay of execution while the pensioners’ voice is heard by the regulator.”

Mr Field compared it to the system where a valuable work of art can be kept in the UK temporarily rather than being sold overseas to see if a British buyer can raise the funds.

The Pensions Regulator last night said it would reply to Mr Field’s letter as quickly as possible.

Sir Philip sold BHS to Dominic Chappell for £1. Just over a year later the venerable retail brand collapsed with a pension fund deficit of £571m Credit: David McHugh/ Brighton Pictures

Sir Philip is in talks to sell his stake in Arcadia to Chinese investor Shandong Ruyi, according to a report in The Sunday Times. He sold a 25pc stake in TopShop in 2012 to US investor Leonard Green in a £350m deal which included terms that stopped either party selling or floating the company for five years – a term which has now expired.

Sir Philip, Leonard Green and Shandong Ruyi were not available for ­comment.

Sir Philip and his wife’s stake in Arcadia has been estimated to be worth in the region of £2bn. The company made an adjusted operating profit of £211m in 2016, the last year for which it has published financial results.