These pop star-style pay deals for bosses may give Corbyn the keys to 10 Downing St
Lord Young hits out at the ‘appalling’ fat cat bonus culture If Theresa May asked him back into the Cabinet, he’d say Yes
IT’S now a truism that early retirement is becoming a thing of the past. Even so, few of us are likely to emulate David Young, who is still at the coal face aged 86. Better known as Lord Young of Graffham, he is about to step down from the Lords, where he championed small businesses and Margaret Thatcher’ s privatisation programme.
He is ‘ashamed,’ he says, to admit he only works four days a week for his investment business, Young Associates, and on other organisations, such as the Careers and Enterprise Company.
Naturally, he doesn’t have much sympathy for young people entering employment now, fretting about the prospect of working beyond 65. ‘Working longer is a good thing. I tell everybody, “Life is a bicycle – stop pedalling, and you fall off.”
‘To get a job and to do the same thing then to retire 50 years later is soul destroying,’ he says. ‘Life’s full of change now.’ A businessman by background, it is 34 years since he was first brought to Westminster to mastermind Margaret Thatcher’s privatisation plans.
Ironically, he is moving on just as that huge revolution is at risk of being overturned by Jeremy Corbyn and John McDonnell, Labour’s leader and Shadow Chancellor, who have put nationalisation at the heart of their political agenda.
‘Life’s a pendulum,’ sighs Lord Young, sitting smartly dressed in one of his trademark bow ties in Young Associates’ Regent’s Park office, a short walk from the home he shares with his wife, Lita.
‘When I was young, I was very Left-wing. I believed in the state owning things. When I saw what happened in practice, I grew up.’
Lord Young was one of Lady Thatcher’s closest advisers between 1984 and 1989, and worked on the public sales of companies including BT and Cable and Wireless.
He then spent two decades as a City grandee, working with a string of firms and organisations including the Institute of Directors and investment bank Salomon Brothers before David Cameron invited him to be the Coalition Government’s enterprise adviser between 2010 and 2015.
At this time, Lord Young established himself as a supporter of small business, and launched an £80 million start-up loan scheme.
One of the reasons this was needed, he says, is that the UK’s banking system has ‘gone wrong’. His view has been upheld by the recent revelations about Royal Bank of Scotland’s controversial GRG division that was supposed to help troubled businesses but exploited them instead.
‘To set up a unit whose job was to somehow foreclose on people in difficult circumstances, and then to sell the assets and then to get a bonus – if that’s what it was – then that’s appalling,’ he says. ‘The banks now do nothing to help small firms. That’s why we had to do start-up loans. Because there was no way for people to get money. I don’t know what’s gone wrong with the banking system, but it used to be an integral part of the small business economy, and now it’s irrelevant.’
Lord Young insists he is not ‘tribal’ about politics, despite having worked at the heart of two Tory-led governments. But he doesn’t hold back when asked about what Labour’s economic plans would mean for the future of our country.
‘I don’t know whether they all suffer from collective amnesia, but their views of how rosy the world was [are inaccurate],’ he says. ‘It’s schoolboy economics, it really is.’ Lord Young is confident the public will come to recognise the limitations of Corbyn and McDonnell’s plans to nationalise water and rail companies. But he fears anger over fat- cat pay – the ‘ unbelievable amounts of money that people are paying themselves’ – could prove a boon to Corbyn at the next Election.
‘Being at the top of a large company is almost a bureaucratic job – and yet you find people earning £5 million, £10 million – ridiculous amounts,’ he says.
‘ It is getting appalling,’ Lord Young adds when asked about the pay of Jeff Fairburn, the chief executive of housebuilder Persimmon, who was last year paid a £ 45 million long- term bonus. ‘ If you’re a pop star or even a foot- baller, you could earn a great deal, because that’s a market situation. But I’m not sure what people who run large companies are doing paying themselves large amounts of money. That is wrong. There’s no question about it. And that – that – will lose us an Election.’
If he was entering a government now, Lord Young says that this issue – along with taking on the UK’s housing crisis – would be top of his agenda. And he believes Lady Thatcher would have tackled the fat cats head on.
‘We believe in enterprise,’ says Lord Young. ‘We’re very happy for people to become wealthy by creating wealth. By doing things.’ He adds: ‘In the years I was growing up, there was hardly any difference in what you could earn. If you built up a business, tax went up to 80 per cent over £20,000 a year and there was a 98 per cent tax on dividends.
‘Now, it’s gone too far the other way. That’s exactly what she would have said.’
It would take a brave man to assume they could speak on behalf of Lady Thatcher were she still alive. But Lord Young is better placed than most to make such assertions. He speaks proudly of his regular one-on-one meetings with the Iron Lady and the level of confidence she had in him. ‘I was a political eunuch,’ he explains. ‘There was no way I could ever be a threat to her. So I was someone that could be trusted. She was an amazing woman.’
Were they friends? Strictly in a business sense, he says. ‘It’s very interesting, actually. I would not enjoy having dinner with her. She was awkward, difficult, because she was a driven person.’
But he adds that she ‘did wonders for this country’, and looks back at the pre-Thatcher days with horror: ‘It was the most miserable time in this country.’
Lord Young left school at the age of 16 in 1948, as did most others at that time, he says. He started out as a clerk in a solicitor’s office and studied for a law degree in the evenings. He later went into the industrial and commercial property business, ahead of his first spell in politics. After resigning from Lady Thatcher’s government in 1989, he went back into business and set up Young Associates in 1996.
He describes the five-year period in the Coalition Government as the best of his life, though he is con- cerned that UK politics has changed for the worse since the 1980s. ‘Some time in the Blair years they decided to turn politics into a profession and make it a full-time job,’ he says.
‘When I joined the Cabinet in 1984 I sat in my first meeting and looked around and worked out that of the 21 people there, 11 had started their own business.’
In the Cameron government, he says, people were generally ten years younger and did not have this experience. He fears the current Cabinet has the same problem. ‘What you need, I think, is life experience,’ he adds. ‘People who have taken responsibility for things and done things.’
And what would Lord Young say if Theresa May became the third Prime Minister to turn to him for some life experience in her Cabinet? ‘ Like a complete and utter idiot, I’d say yes.’
When I was young I was very Left-wing. I believed in the state owning things. Then I grew up...
What you need is life experience. People who have taken responsibility – and done things
THE chief executive of Skipton has joined an exclusive men-only elite of building society executives – the £1 million-a-year club. David Cutter, 56, and a Skipton employee for more than 25 years, received remuneration last year totalling £1,012,000 – an inflation busting 9.9 percent increase on the year before.
This heady sum – a mix of pay, benefits and bonuses – is supported by an accrued pension that will pay him at least £90,000 a year when he comes to retire.
Cutter, a former international hockey player, is the proverbial king of Skipton castle – the town’s medieval castle which the building society embraces as part of its corporate logo.
Among the country’s 43 other building society bosses, Nationwide’s Joe Garner is the only one who also receives a seven-figure annual pay package.
Although Garner earned remuneration totalling £ 3.4 million in Nationwide’s financial year to April last year, he oversees an organisation more than ten times the size of Skipton.
Unlike Cutter, Garner’s 2017 pay will not be revealed until early summer when Na ti on wide’ s accounts are published. The bosses of Coventry and Yorkshire – societies twice as big as Skipton – received less pay last year than Cutter. In defence of the Skipton boss, the business he oversees is more diverse, embracing an estate agency (Connells) and retirement specialists (Retiresavvy).
His rich rewards are revealed as part of a special investigation by The Mail on Sunday into the remuneration of building society bosses.
Despite most customers of these organisations continuing to suffer from paltry savings rates, the pay packets of many chief executives have spiralled, boosted by six- figure performance-related bonuses.
The bosses of Coventry, Leeds, Nottingham, Principality, Skipton and Yorkshire were awarded 2017 bonuses ranging from £ 103,000 ( David Marlow, Nottingham) to £363,000 (Mark Parsons, Coventry).
Five bosses received bigger percentage increases in remuneration last year than Cutter including the chief executive of Manchester, despite the fact the business continues to suffer losses. Loss-making building societies are usually frowned upon by the City regulator and taken over.
Only the boss of Saffron saw his financial package shrink as a result of overseeing systems changes which compromised the society’s ability to write new mortgage business. In total 15 chief executives – of the 24 where comparison with pay in the previous year was possible – received increases in remuneration ahead of inflation.
Even ‘retirement’ was rewarded with Graeme Yorston, who made way early last year for Steve Hughes to take over the reins at Cardiff-based Principality, receiving 2017 remuneration of £347,000. He will also receive further ‘awards’ this year and next under an executive rewards package.
The Mail on Sunday probe, based on analysis of executive pay at 27 building societies with December 31 year ends, comes as millions of customers are given the opportunity to have their say on the matter.
A raft of building societies have just sent summary 2017 financial accounts to savers and borrowers, inviting them to vote on key issues including directors’ remuneration. This is ahead of their annual general meetings which take place during the course of this month.
Although the vote on directors’ pay is non-binding, a big ‘anti’ vote can send a clear signal to the board that there is mounting disquiet over executive greed.
Unlike banks, building societies are effectively owned by their customers – so-called ‘members’. So, making profits is not the be all and end all. There are no shareholders to keep happy, which should mean – in theory at least – that customers get a better deal and executives do not receive mega bonuses.
Many Skipton customers have already indicated to The Mail on Sunday that they have voted against Cutter’s £1 million package. John Dawson, a 64-year-old retired baker from Preston, is ‘disgusted’ with Cutter’s rewards. He is planning to go to Skipton’s annual meeting on April 23 to register his anger.
He says: ‘I have only missed one annual meeting at Skipton since 2000. I find it disgusting that Cutter can receive such largesse when the society last year closed eight branches and some agencies. The society is there to serve customers, not aggrandise the chief executive.’
Another member of nine years’ standing, said: ‘Entrepreneurs who take risks to create successful businesses, wealth and employment deserve every reward they get. The chief executive of Skipton is not in this category.
‘This is a crass and insensitive move by a board that appears to have forgotten the interests of customers. It overshadows the society’s improving performance under Cutter’s leadership.’
On Friday, Skipton told The Mail on Sunday: ‘The remuneration of
executive directors reflects the strong performance of the group during 2017 – record profits, strong growth in membership, mortgage and savings balances.’
It added :‘ The pay of all executive directors is benchmarked against the marketplace to ensure it is appropriate in comparison to peers and competitors, and sufficient to attract and retain people with the skill and capability needed to run a complex and diversified business, en compassing more than 9,500 employees. Pay is set by a remuneration committee comprising independent non-executive directors who are supported by external professional advisers.’ Dawson urges customers who wish to make a stand against soaring building society pay – not just at Skipton – to use their annual general meeting vote carefully. If they opt for a ‘ quick’ vote, he says it will simply mean them backing all the soci- ety’s proposals including support for the directors’ remuneration. They should therefore avoid this option in favour of voting on each specific resolution.
Analysis of building society 2017 accounts also confirms a dearth of female representation in the boardroom, especially among executives. There is currently only one female boss among the country’s 44 building societies – Darina Armstrong at the aptly-named Progressive.
It is a shame it is only one of two building societies which refused to provide The Mail on Sunday with accounts.