BHS savaging could mark watershed for Select Committees

Few will have been surprised that Sir Philip Green came in for a hammering when the Business, Innovation and Skills Select Committee published its report on the collapse of BHS. But you can be forgiven for any shock at the extent of the criticism and the comments of Committee co-chairman Frank Field. And you would likely not have expected the response from Sir Phillip.

Mr Field was very outspoken in his criticism of Sir Phillip’s role in the running of BHS, its sale to Dominic Chappell and the eventual folding of the business. He spoke outside the scope of Parliamentary Privilege and thus encountered Sir Phillip’s wrath, whose lawyers were swiftly threatening legal action if Mr Field didn’t apologise – which Mr Field has said he won’t do in no uncertain terms.

Without dwelling on the specifics of a case that at this point looks set to find its way to the courts, the episode is significant for two very important reasons.

Firstly, it is perhaps the most high profile example thus far of the private sector testing the authority of Parliament, at least in the form of Select Committees. The saga between Sir Phillip Green and Frank Field has been a long-running one not confined to yesterday’s report. And you will remember that Mike Ashley of Sports Direct was a reluctant guest of the Select Committee in recent times.

This isn’t to say that corporates don’t respect the role of Select Committees. Far from it. But there does seem a willingness to test the boundaries. It may now be a question of if rather than when a business leader outright refuses to appear in front of a committee to give evidence. And, if that happens, what the committee and Parliament is prepared to do about it.

The second reason this story is important is that it underlines the interest that Select Committees have – and will continue to have – in corporate governance. High profile businesses like BHS and Sport Direct will always attract attention, and criticism when things go wrong (in the case of BHS spectacularly so). But, if you think about it, these are far from isolated incidents. After all, in recent weeks the Transport Select Committee has been highly critical of Southern Rail.

There is perhaps a lesson this in this for those corporates not yet communicating with Select Committees and their members as part of their parliamentary engagement and external communications. And there is a further lesson in how engagement with Select Committees affects reputation.

The short version is that it’s a rare company or individual that comes off well when subjected to the criticism and critical scrutiny of a Select Committee. And that places the onus on corporates to communicate with Select Committees so their members understand individual business practices. That can help smooth relations, help Select Committees reach the truth and comprehensive conclusions, and generate investigations rather than interrogations.