Cluttons’ openness over pension fund deficit was refreshing

EDITOR’S COMMENT: Cluttons is not the only business to have been defeated by a pension fund deficit in recent years. Nevertheless, to see a 250-year-old business submit is especially sad. To be clear, it will be in a better place after being bought out of a pre-pack administration this week by turnaround firm Rcapital. The brand survives, as do jobs: only 20 UK roles are at risk, a number that could halve. The major change is that it will shed its £42.9m pension deficit, a deficit which it says had “become unsupportable in the long-term”. That liability will transfer to the Pension Protection Fund, which has paid out £2.7bn over the last 12 years, and existing pensioners and deferred members’ policies will be protected. Any restructure of this kind leaves a sour taste. But it’s hard to fault the openness with which Cluttons approached the problem. In an interview with EG last September, senior partner Steve Morgan was candid: “There are loads of businesses out there that have this looming issue but don’t deal with it. We tried to take a proactive view. What are we going to do about this? What’s best for the business? What’s best for the pension fund trustees? Who are the best people to talk to?” The business, which had been trading well, was not helped by tougher market conditions this year. But the problems had been long-running. Their severity was highlighted in the firm’s 2015 accounts, when auditors reported there was “material uncertainty which may cast significant doubt” about the world’s oldest practising firm of chartered surveyors’ “ability to continue as a going concern”. A year later, its accounts warned “the size of the deficit remains hugely significant in terms of the group and LLP balance sheets”. There have been no shortage of talks over the last two years to try and avert this week’s drastic decision: with the trustees, with the Pension Protection Fund, the Pensions Regulator and Cluttons’ adviser Deloitte. The firm has been paying monthly contributions plus a “ghost partner” share of profits into the scheme. Something had to give. Cluttons isn’t the first business to succumb to a pension fund deficit and it won’t be the last. Yet its openness during the process though has garnered more sympathy than others who have taken a more closed approach. And ultimately that can only be good for business. • Here’s a thought for the PM on addressing the housing crisis. If, as I suggested on this page last month, housing minister Gavin Barwell is to be rewarded for his getting to grips with the brief, there’s one promotion that makes most sense. Why not move Sajid Javid and make Barwell secretary of state for communities and local government? That would ensure Barwell can continue to drive the housing agenda and would perhaps be more politically palatable than the other way of delivering reward and continuity:  elevating the position of housing minister to secretary of state level. And while I’m at it, if chancellor Philip Hammond is moved on after the election, May should consider appointing secretary of state for business, energy and industrial strategy Greg Clark to succeed him. Barwell and former cities minister Clark could make a formidable pair at the Cabinet table, with a keen focus on housing delivery. All this theorising assumes that one, the Conservatives form the next government and two, that Barwell hangs on to Croydon Central, the most marginal seat in the country. Both eventualities are probable. The appointments, I’d argue, are advisable. To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette