Will I live to be sixty?
Apparently I should start drinking milk with powdered aspirin if I want to live longer. I’m not sure how useful this is for me. Yesterday was the first day of my fifties but if the sixth decade goes on like it started there’s no way I’ll make it to the end.
As days in my life as RSA chief executive go I think yesterday could reasonably be described as ‘full-on’. The morning saw the launch of our Tomorrow’s Investor project report. It attracted huge media interest, including an item on the Today programme, BBC News, front page coverage in the Daily Telegraph plus extensive articles in other broadsheets and other expert publications. As well as this fantastic coverage, the main message of the report – that relatively minor changes to our regulatory framework could boost pension returns by 40 percent – seems to have really struck a chord, with a lot of follow-up from policy makers, universities and think tanks.
When David Pitt Watson – the report’s author (and Fellow) – spoke at yesterday’s launch he started by reminding the audience that the whole project began with a focus group made up largely of RSA Fellows. It was their horrified reaction to being told the impact that fees have on their private pensions (costing up to 50% of the money saved over the full life of the pension) which confirmed that this was something we should pursue. I have real hope that our recommendations will in time lead to a shift in Government policy.
Then yesterday evening we had our AGM.
I should start with a big ‘thank you’ to all those Fellows who turned out in the bitter cold (I know many of you travelled from far afield) and to everyone who took part by voting. Discussions have been raging (quite literally at times!) over the last few weeks on some of the issues on the agenda but there was virtually unanimous backing for a Fellow’s proposal to set up a Governance Review Panel and we will be putting the wheels in motion on this as soon as possible. I think we should set ourselves the ambition not just of finding a way forward on the issue of Trustee composition but of creating a model governance structure, ranging from the Board to regional structures and Fellows’ rights.
As any past Board Chair or Chief Executive of the RSA will confirm, the issue of relations between the centre, the regions and Fellows themselves has often been problematic. With more Fellow activity now than ever before, and a real enthusiasm among staff and Trustees to put Fellows at the heart of the Society, we have a chance to create a modern, open, flexible form of governance which provides the best possible platform for the RSA to be a powerful force for good and acts as a model for other membership organisations facing similar issues.
Plus ca change, plus c’est la meme chose
As I approach four years at the helm of the RSA I find myself assessing progress. The Society faces vitally important decisions about its future so it’s useful to get a sense of where we are now.
A long term trend in the RSA has been to expand our research capacity. A few decades ago we didn’t really do research and even when we did it had a somewhat random feel to it. We have come a long way since then. But it is fascinating that today’s new focus, new methods and new ambition are balanced by a strong sense of continuity. For example, I have on my desk the draft report of our Tomorrow’s Investor project. In the face of the shocking fact that many private pension savers see up to 40% of their savings consumed in fees, the focus of this report is how to put in place an affordable and well governed pension scheme. There is even an intimation that if Government rules change and allowed the new scheme we are proposing to be created, the RSA could in some way be involved in establishing it. While this is a big idea and a new research area, longer standing Fellows will see the continuity with one of the Society’s most influential projects in recent times: Tomorrow’s Company.
Another area of continuity is the RSA’s commitment to engage Fellows in projects. Not only is the Tomorrow’s Investor project overseen by a steering group made up of Fellows but the very first stage in the project – two years ago – was a kind of citizens’ jury of pensions savers largely selected from the Fellowship.
Next week will also see the publication of our report on ‘whole-person recovery’, which is, I think, an exceptional piece of work. The report breaks new ground for the RSA with a methodology which engaged up to two hundred people with drug and alcohol dependency issues in designing not only a new way of thinking about recovery but also new types of service. Not only is our model proving very interesting to central Government but is being taken up and used on the ground. But, again, there is continuity. This project emerged out of the work of our Fellow-led Commission on Drugs which was published to widespread acclaim back in 2006.
The same pattern is repeated elsewhere. Our Academy is going great guns and we are thinking about the possibility of having a close relationship with more schools. The Academy is developing the Opening Minds approach, now taught in over 200 schools, which was first promulgated in a report in 1999 which was itself based on earlier work on new forms of learning, again overseen by a working group of Fellows. And today we have a research project – the area based curriculum – based in Peterborough which could in time help develop a new direction for Opening Minds. This project was high on the agenda of a very lively Fellows’ network event in Peterborough earlier this week.
Our design team continues the long tradition of our student design awards but now the emphasis on service design and what we call ‘design for resourcefulness’ (how can design not only meet needs but help people to meet their own needs).
Overall, our projects team is getting more press overage, achieving greater impact with national and local government and attracting more external funding than ever before. But the progress we are making is built on the strong foundations set by a previous generation of Trustees, Fellows and staff.
Final salary pensions: RIP
The news that final salary pensions schemes have virtually ceased to exist, at least to potential new entrants is a reminder of the importance of pensions policy. It may be that the savings rate is now higher in the UK than for many years but most of us continue to save far too little to have any chance of the retirement income to which we aspire.
In a move which received little coverage outside the specialist press, Labour used the Pre-Budget Report to slow down the introduction of the Personal Accounts System including the element of matched savings through which employee contributions are matched by employers. Yet ministers and civil servants privately agree that even this system will only make a difference if the target savings levels are rapidly increased, as, for example, they have in Australia. Meanwhile the Conservative policy on pensions – arguably one of the most pressing policy issues we face – remains opaque.
The RSA addressed some of these issues with our Tomorrow’s Investor project last year and I am keen that we continue to work in this field. I have argued in the past that to close the ‘social aspiration gap’ more people need to be more self reliant. The truth is that we want to live longer but we don’t want to accept the consequences of this advance: to whit, saving more and working longer. In part, the collapse of final salary schemes (which were generally well managed and with low fees) came from an unwillingness by employees’ representatives to renegotiate the benefits of these schemes even as the evidence of their non affordability to the business and unacceptability to shareholders grew.
The result is that most of us are implicitly relying on the state or our grandchildren to keep us comfortable in old age (and this applies as much to the middle classes as the poor). Sorry to start the New Year with gloom, but this is a text book example of a combination of a lack of public realism and political courage conspiring to store up huge future problems.
The Tories steal a march …
On my way to Manchester for the RSA event at the Conservative Party Conference. The Conservatives have made an impressive start to the week; party strategists knew their key vulnerability was the charge of lack of substance to Tory plans. With their welfare to work plan and pensions reform, they have effectively buried this weakness, whilst also looking more credible than Labour in relation to reining in public spending.
Meanwhile, Labour’s plans to impose a pay freeze on well paid public servants look more like a political ploy which is, incidentally, highly centralising in its implications.
On pensions, I hope we can persuade the Conservatives to link the raising of the retirement age to the reforms set out in our Tomorrow’s Investor report. The new Pensions Policy Framework, set to be introduced in 2012, is basically right but without the reforms proposed by the RSA, the package will not work and could even be counter-productive.
PS: One of the blog posts I most enjoyed writing was – strangely enough – when West Brom lost in the play-offs. Having written yesterday about how I wish we used football to instil good character as well as physical fitness, it was great last night to see another example of football at its best. When Richard Dunne scored for Aston Villa against his old club, Manchester City, not only did the Villa fans celebrate, but also the City fans cheered the achievements of their former hero. It was a rare moment of generosity. We West Brom fans like to think of ourselves as the best in the country, with our capacity for humour and self-deprecation, but as far as I’m concerned, Manchester City take the crown – for the time being at least.
Responding to the Myners’ strike
Thanks to Duncan, Steve, Michael and Colin for their advice ahead of my gig last night at the Corporate Governance Circle. I was responding to a forthright speech to the always engaging and direct Lord Myners (who, gratifyingly, had also read the post and comments). I knew less about the subject – ‘Institutional Investors – are they the weakest link’ – than anyone else in the room but I think I just about got away with it.
My key point was to link the debate about corporate governance and stewardship to the emergence in 2012 of Personal Accounts. If these succeed – and the RSA has proposals which we think would help to ensure they do – they will create a huge source of regulated funds with the scope to impact directly on how British business is managed and indirectly on the behaviours of other institutional investors.
Although he expressed it in the most positive of terms, Lord Myners’ basic point was dispiriting for those seeking to improve the quality of corporate governance. He told the assembled investors that they already had the power to influence the companies in which they are invested. In typically robust style, he suggested that if company annual general meetings didn’t exist, someone would now be calling for them as the solution to all our problems: ’Hey, why don’t we have meeting every year where the whole board has to attend and at which shareholders can ask any question they want and table resolutions over key aspects of governance?’ ‘You have the power’ said the Lord ‘but the reality is that you choose not to use it’.
I had gone into the meeting thinking the big difficulty in this policy area was the principal – agent problem but I came to see that it is actually a collective action issue. The diffusion of ownership in almost all large funds – driven by modern portfolio theory – means that typically no fund owns more than one or two percent of a company. Why then should they be the ones to take on the onerous and risky business of holding companies to account? Interestingly, no one in the room denied Lord Myners description of the problem or offered a solution.
This morning David Pitt-Watson (who leads on our Tomorrow’s Investor project) and I met with Tory Work and Pensions spokesperson Theresa May to discuss our project and hear her views on personal accounts. She said some very interesting things to which I will return in a later post. But on the way back to John Adam Street I quizzed David on the issues of investor influence. The RSA proposal is for a low cost pension fund delivered through personal accounts but we also claim this fund could have a benign impact on corporate governance and stewardship, helping for example , deliver George Osborne’s vision (elucidated in a speech yesterday) of a more long term investment culture. ‘But how can we be both cheap and influential?’ I asked.
David assures me he has an answer and that it is in the forthcoming Tomorrow’s Investor report. I am looking forward to reading it
RSA Animate
RSA Mobile
RSA Comment- RSA Projects Blogs
- Twitter @RSAMatthew
- RSAMatthew: Matthew's blog: Developing development http://t.co/hhhUGYX1
- RSAMatthew: RSA Xmas Party was huge - my whole life I have been a snobbish git about ceilidh type fun - now I want to dance every night
- RSAMatthew: On my way to RSA Xmas party - I won't stay too long as it spoils the fun to have the boss around
RSA Bookshop
The RSA Bookshop, in partnership with Blackwell's the UK's leading academic bookseller, offers Fellows and friends an opportunity to purchase books and to explore our speakers’ ideas in greater detail. Visit the RSA Bookshop.