May Pledges to ‘Reform Capitalism’ in Wake of BHS Collapseby
Prime minister wants new rules to stop ‘reckless behavior’
Legislation likely on executive pay, boardrooms and takeovers
U.K. Prime Minister Theresa May is aiming to reform capitalism in the wake of corporate failures including the collapse of retail chain BHS, her spokeswoman told reporters.
A report by lawmakers published Monday blamed BHS’s former owner, retail billionaire Philip Green, for rushing through the sale of the chain to an unsuitable owner. May’s spokeswoman, Helen Bower, said it highlights the need to change the way business operates.
“The prime minister has already set out that we want to tackle corporate irresponsibility and reform capitalism to make sure it works for everyone, not just the privileged few,” Bower said at a regular briefing in London. “That means in the long run doing more to prevent irresponsible reckless behavior.”
The prime minister’s office didn’t offer details of what’s meant by that, but “reforming capitalism” is a phrase May used herself in 2013, when she gave what remains her biggest speech on her political philosophy. That argued for the state to take a strategic role in supporting industry and to protect consumers from abusive businesses.
May’s only detailed policy speech of her unexpectedly short campaign to be prime minister, delivered July 11, had similar themes. As part of an overall message of ensuring the country works for all, she promised to protect strategic industries from foreign takeovers, make companies put workers on their boards, force them to publish the ratio of pay for their highest and lowest earners, and make shareholder votes on executive compensation binding.
Those pledges would all require legislation, which is likely to get a high priority. When SoftBank Group Corp. announced it wanted to buy Arm Holdings Plc days after May took office, she welcomed the deal as being in the national interest. Had she thought differently, as she did about Pfizer Inc.’s 2014 bid for AstraZeneca, she would have had few powers to stop it from happening.
May has also pledged greater use of existing competition law, as well as its reform, to stop utility firms and banks exploiting dominant positions. In her July 11 speech, she said this was to help companies, not hurt them.
“It is not anti-business to suggest that big business needs to change,” she said. “Better governance will help these companies to take better decisions, for their own long-term benefit and that of the economy overall.”