BHS: Pensions Regulator tells Sir Philip Green to pay up. Now it must be ready to see a long fight through

Given the political storm surrounding the collapse of BHS, the watchdog had little choice but to act

Sir Philip Green is facing a fight with the Pensions Regulator (Reuters)

Lesley Titcomb and the Pensions Regulator she runs have just lit a 300 page touch paper. You’ll have a great chance to enjoy the fireworks. The display is going to last for years.

That 300 pages is the length of the notice issued to Sir Philip Green, outlining why the watchdog believes he should pay millions into the BHS pension scheme to help plug a ballooning £600m deficit.

Similar papers also been served on Taveta Investments, the Green family’s Jersey registered company owned by Sir Philip's wife Tina, Dominic Chappell, the former bankrupt who bought BHS from the Green family for £1 and might now have cause to regret doing so, and Mr Chappell’s Retail Acquisitions vehicle.

It follows months of talks between Sir Philip and the watchdog that have got precisely nowhere. Sir Philip argues that he’s put forward forward a “credible” proposal for dealing with scheme’s funding shortfall which would benefit members and keep them out of the Pension Protection Fund (PPF).

The PPF would ensure they get paid when they retire, but only to the tune of 90 per cent of what they had been promised. If the scheme does go into the Fund, which it probably will given the size of its deficit and the lack of a sponsor to pay into it, it won’t do members any good even if the regulator wins a battle with Sir Philip.

That's because money will simply go into the PPF pot to ensure it can pay benefits too all the people in all the schemes that have fallen on hard times and found their way to its doors.

Bad news for BHS pensioners, perhaps, but good news for the taxpayer as the PPF’s ultimate backstop.

Sir Philip could argue in the court of public opinion that an offer from him, even an inadequate one, would be better for scheme members than that. They would get more.

But that point is moot. We don’t know the details of the offer he has tabled, and using scheme members as a bargaining chip like that would be highly cyncial. Had Sir Philip engaged in a more constructive dialogue with the regulator, and the likes of his Parliamentary bette noir Frank Field, in the first place we might not be here.

He didn’t, and the growing political storm has left Ms Titcomb and her colleagues with little option but to do what they have done.

Sir Philip, meanwhile, is almost certain to fight because that’s what he does. His people say he’s confident that he has a good case. His response to the papers — “I have read the statement from the Pensions Regulator this evening and noted its contents” - amounts to a holding statement while he works out his next move. It will probably involve his lawyers who will doubtless be delighted at this latest development. There’s nothing lawyers like more than a long and complex legal battle.

The Pensions Regulator has proved that it can win them. A couple of years ago it secured a £184m settlement from Lehman Brothers, the investment bank that collapsed in 2008, almost triggering financial armageddon in the process and paving the way for multiple bank bail outs.

It took six years of investigation and legal proceedings to get the money paid but the happy result was that nearly 2,500 members of the Lehman Brothers pension scheme got their retirement benefits paid in full and the Pension Protection Fund wasn’t called upon.

It would be dangerous to compare the two cases. What the Lehman Brothers affair does show, however, is that the regulator has proved every bit as willing as Sir Philip to engage in a long and bruising fight.

Even if BHS pensioners remain the losers from this sorry affair, that’s no bad thing.

Accountability at senior levels of corporate life in Britain has often appeared to be sadly lacking. When businessmen oversee messes they sometimes appear to feel they can wash their hands and walk away, leaving others to pick up the pieces. That’s unconscionable and goes some way to explain the simmering anger and bile that is responsible for some of the malign political developments we have seen in recent years in Britain, and, for that matter, in Europe and America too. The public feels it's one law for them and one law for us.

Democracy is at risk when its institutions fail to step up to the plate and show that isn't so. The Pensions Regulator, in this case, has done that. Now it must see the case through to an end that will probably be bitter.