Baron Myners "Capitalism without owners will fail" LAPFF 2013

The final speaker was without being at all disrespectful to the others, the best. Former City fund manager, Marks & Spencer Chairman, self professed trade unionist and former Labour Government Financial Minister, Baron Paul Myners.

Unfortunately this session was also held under "Chatham House Rules" which means I cannot report on what he said.

Which is a great pity but I understand that he is writing a book (with help of a top pension blogger and fellow founder member of "Struggle") so I assume there will be opportunities for us all to hear him in the future.

Paul actually joined in on the previous debate on investor collaboration but I assume his response to my question is also top secret? He did say it was nice to see me again (which I think is okay to report?).

This is my one and only Paul Myners story - normally at such conferences he tells me off for being on the Tower Hamlets Council pension committee that sacked him and Gartmore Group as our fund manager in 1990's. Being sacked by Tower Hamlets LGPS he has described as "the worse day of his life".  This time I introduced myself as a Newham Councillor which probably saved me.

:)

#Lab13 - Responsible Capitalism and Workplace democracy. Giving workers a real voice

This interesting lunctime fringe had been sponsored by the Fabians, TUC and PIRC. Chaired by Seema Malhotra MP.

TUC General Secretary Frances O'Grady started off by saying some of her members think that "responsible capitalism" is an Oxymoron! But her main point was why is corporate governance in the UK so peculiar and out of step with the rest of Europe?  Where employee representation on company boards is common place.

We need to rebalance Labour and Capital. Frances quoted a terribly condescending and even insulting comment (which she described as "patronising twaddle") from the CBI about why in the UK British employees aren't good enough to being represented on boards.  Workers keep being told that they are the organisations "greatest assets". Yet the arguments being made against employee representation remind her of those made in 19th century against getting rid of the property qualification in order to vote.

Chuka Umunna MP believes that it is all about balance. Do we want a mixed or a laissez faire economy? Leading businesses started talking about this debate before we did in Parliament. Things have got to change. Need to promote the long term. Value investment in people and skill up. Look at the damage done to BP reputation and profitability after the oil disaster. It is in companies self interest to have good governance models. 

Tom Powdrill from PIRC thought that the governance mascot was Lord Myners. Why did shareholders not stop the banks from destroying themselves? Excessive executive pay levels are being driven to the levels found in financial markets. Since oversight is not by shareholders but by fund managers and hedge funds who naturally will think such levels are appropriate. Need a dose of reality. Tackle the problem up stream before a decision is made.  UK Companies already invest in Europe where employee representatives are widely accepted -so why don't they support similar models over here?

Nita Clare from the IPA (see previous post here) was Tony Blair's advisor on trade unions and before that a national officer for unison for 17 years. Good businesses know the value of stakeholders. The CBI quote is now quite old fashioned.  She stressed the importance of the supply chain to business. If there is a fire in a Bangladeshi factory it is no use saying "nothing to do with us".

There has been a death of deference and trust at work. 60% of employees surveyed said they don't trust managers. Management style is critical. If you have a culture of fear in any organisation, private or public, then it will fail. The Social partnership approach in Germany will be difficult to adopt in UK

My question to the panel was similar to the one I made before was how is it that I am an employee representation on a £900 million pension scheme and I sit on a joint committee on health and safety that looks after the safety of thousands of workers but I cannot sit on the management board or remuneration committee of my organisation?

Myners Report: 10 Years On

Last week the Financial Times ran a number of articles on the anniversary of the Myners Report which was published in March 2001. This report was written by Paul Myners, former fund manager, Chair of Marks & Spencer and of course, a Labour finance minister in the last government.

In 2000 Myner was asked to review institutional investments and whether investors were acting in the best interests of beneficiaries.  The poacher turned gamekeeper concluded they did not and made a number of recommendations.

I was quoted here in the article here about the role of auditors and my view that there had been despite Myners a "spectacular failure" by asset owners to stop the Banking crisis.  This was due (in part) to scheme fiduciaries not acting as owners of capital. 

While Myner’s report helped turn me from being a trade union observer on my pension scheme investment panel in 1996 (with no formal speaking rights -I did of course speak, no rights to attend all meetings, to question or to receive information) to being a full voting member of an investment committee. However, this is nowhere near enough.

The banking crisis showed that there is still grossly insufficient governance. Owners of capital (pension and insurance funds) failed to take their responsibilities of ownership seriously and allowed their money to be squandered and even stolen by the managers they paid to be “on watch” and look after their assets. How ridiculous that we continue to allow this? Not only did we lose big chunks of our savings but as taxpayers we then had to bail the banks out and are now suffering huge cuts in basic public services to pay for it.

The dangers of ownerless assets is well known, even Adam Smith warned about this over 200 years ago.  Part of the solution is that trustees and representatives should undertake an in depth management and scrutiny role with our funds.  I compared the role of pension trustees with that of scrutiny panels in local councils, who meet monthly, go on visits, have specialist staff tasked to support them, co-op experts to assist and can call witnesses to be questioned about their performance.

I also gave a plug in the interview to the  Association of Member Nominated Trustees (AMNT) which I think will play an important role in better governance.

The FT concluded with a quote from Paul “You don’t wash or service a rented car because you expect to give it back. I still get the impression that shareholders treat their holdings like a rented car. For the efficient use of capital, that attitude has to change.”

Paul Myners LAPFF 2010: The Capital Market Crisis two years on

This report is a just a little late but better late than never...Former fund manager, Chair of Marks and Sparks and Labour Government Financial Services Secretary, Lord Paul Myners, speaking at the Local Authority Pension Fund Forum (LAPFF) conference in December last year. Myners gave his usual knockabout speech, entertaining and serious by turns. Usual caution about the literal accuracy of my hurriedly typed notes.

"This is the 4th occasion I have spoken to LAPFF. I was asked to speak about what lessons are to be learnt after financial crisis. What did we do and where are we now?- what are the governance and stewardship issues?

I should be writing a book about my time as a Labour Minister but I am lazy. At the moment I am studying theology. What caused the crisis? I am not sure? Sub Prime mortgages? The search for yield? Why is yield so important? There is now huge liquidity. China makes loans to us. They manufacture more than they consume which they export to us and get foreign currency back in return. This is still the main reason for the crisis. Nothing has been done about this. With the G20 you get warm words but few parsnips.

I became a minister for the first time in the eye of the storm. 12 days after collapse of Lehman Brothers. It was far worse than I first thought. But we still cannot rule out similar crisis in the future. Chances are lower. We still don’t have ways for banks to fail. We are trying to address problems of individual banks not the system.

People who 18 months ago were saying things must change are now saying well.. we have a competitive industry and should not scare them away. The role in the crisis of auditors not been looked at all. The Tripartite approach failed. My view is that this government is wrong at this stage to be putting forward only regulatory change. I was a Director at the Bank of England for 4 years. It is very good at economic analysis but not as a regulator. Lots of clever people with double firsts but it tends to look down at people from business. The jury is out about whether the Bank has right culture to do this. Macro prudential regulation. Take away punch bowl before the Party gets too riotous? Great idea but in practice....

When Mervin King came to Alistair Darling and I and first mentioned “Quantitative Easing”. None of us knew what it meant. We will not know full effects for 2 or 3 decades. The Governor of Bank of England is right to be not worried about inflation. Interest rates to control inflation is creditable. But to take the heat out of economy? No.

Some good news. The bond market is a crazy bubble. It will burst. Higher interest rates will help your pension funds. Why are advisers buying bonds? Ask yourself has it ever been right to buy UK gilts at 3.5%? Never! but pension schemes are doing this.

Fund managers have no idea what is going on either. I was a fund manager for 20 years. At the time I thought I knew what I was doing - but now I know they don’t. Don’t bother inviting your fund managers to your investment committees. Rather you should spend the time reading the Economist.

Where were the owners in all this? The board of directors at those companies had very little idea, nor did managers – they did not have a good sense of risk. But no one in fund managers industry fessed up – somehow - we didn’t do what we should have done. We were culpable as your agents. We did not engage as we should have done.

David Walker paper is a good report but a very little advance. Remuneration was a core failure for banks. Incentives encouraged them to take risk. They rewarded success but did not penalise failure. Remember that there were 200 Bank of Scotland employees paid more than Fred. The Government have now back tracked. Other recommendations in Walker report will wither on the vine. You, the real owners need (with PRIC and others) to get your act together. Work together to be agents for change. No more owner less corporations. Also you have shares in competitors, suppliers and customers. Only LAPFF speaks for the end investor. Only by mobilisation and shared interests can you see fundamental change in governance. Or run the continued risk of corporate or sectoral failure.

We cannot prove that good governance improves superior returns but we can prove bad governance does result in catastrophic failure. Black swans".

In the Q&A I introduced myself as a trade union rep from Tower Hamlets Pension fund and he immediately remembered us sacking him and Gartmore as our fund manager. He also said that he enjoys this blog! (kind person that he is).  I said he must write his book!

LAPFF Conference 2010: Roundtable on UK Corporate Governance Code.

“Shareholders were asleep at the wheel before the financial crisis” Phil Triggs (Warwickshire LGPS) agreed with Lord Paul Myners that this was true. Other members of this panel were Alan MacDougal (PIRC) and Cllr Neil Fletcher (NE Scotland LGPS). My notes are not great on this session so I will report what I found interesting and not attribute to individuals.

It was agreed that very few pundits predicted the crash beforehand and many say they did now only with the benefit of 20:20 hindsight.

Check FRC site for further information on the Code. “The UK Corporate Governance Code (formerly the Combined Code) sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders.

All companies ...of equity shares in the UK are required ...to report on how they have applied the Combined Code in their annual report and accounts.... The Code contains broad principles and more specific provisions...companies are required to report on how they have applied the main principles of the Code, and either to confirm that they have complied with the Code's provisions or - where they have not - to provide an explanation...the FRC issued a new edition of the Code which will apply ..on or after 29 June 2010”.

A problem with this Code is that it is addressing yesterday problems not what we will face in next 5 years? How can we really hold the directors of banks accountable and make sure that their oversight in the future is far more effective?

There is some controversy about how much the “bonus culture” was to blame for the financial crisis? There is evidence - such as the bonus problems within UBS for example. But how do you determine outcomes of behaviour?

There is an increased focus on below board level remuneration as being more important. Many employees in financial institutions are paid far, far more than the Board. Issue of the importance of Board oversight. Do they understand what is going on in their companies? The importance of Board diversity. Lot of evidence that dissent and challenge is good. Get any group of people together and you find if there is an extreme view challenging the consensus this results in a better outcome. Not enough boards challenge in this way.

Can having more women on boards change this? There is no hard evidence. But there are clear different styles of operation when you have more women on Boards. It does result in a change in the “group think” amongst men.

We constantly ask fund managers about their best practice but what about shareholders best practice?

Consensus that the Codes do work and have changed behaviour and practice. Nowadays there is no real discussion about whether or not you need to have independent executive directors for example. There are now very few now dominant CEO’s who don’t brook any opposition. But in the US this consensus does not exist.

Issue of “Governance imperialism” – the UK may be a world leader on good financial governance but is it just a modern form of imperialism for us to tell other countries (particularly ex-colonies) how to run their affairs according to our western norms and values? This is likely to be increasing issue in the future.

TUC asked by Gov to Sack Millionaire Banker Paymasters!

I could not resist this headline – but check out the excellent TUC blog Touchstone and Nigel Stanley’s post on Lord Myners speech to the Lords today

Who said “I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of GBP1 million this year.

I think the real responsibility here must lie with the shareholders. Accordingly I have written to the National Association of Pension Funds, the CBI and the TUC urging them to use their influence to persuade trustees to ask their fund mangers: ‘What are you doing to stop these quite unreasonable and unjustified levels of remuneration?’

The decisions about bonuses are going to be made over the next six to eight weeks and it is important our major institutions engage now with the companies and say that ‘we will not support grotesque payments and if you persist in paying them we will exercise our votes to remove from the board the people who authorised them’.

Rock on Lord Myners! By co-incidence I am currently writing up my report on my latest Local Government Pension Scheme Panel and Pension committee meeting. I wish Lord Myners had said this beforehand. It would have been interesting to raise the question with our fund managers. I suppose we need to write to our Panel and Committee chairs? Will ask UNISON Capital Stewardship unit for advice methinks? Colin?

UNISONActive: Time for Pension Funds to Control Executive Pay

“UNISONActive is produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective”.

A warm welcome to Blogland to the new site UNISON Active. It is bright, informative, sparky and well designed. This article on why it is about time that pension funds took action to control Executive Pay is just absolutely spot on.

As it says UNISON members via their pension and life assurance funds actually own big chunks of the Banks yet we supposedly allowed their managers to bankrupt themselves then we as tax payers had to bail them out. Now UNISON members are expected to take a drop in income in order to pay for all this???

We do need fundamental change to prevent this happening again. We cannot continue to allow control of our capital to be handed over to city fund managers who simply don’t give a damn over the long term performance of our money. They themselves are judged by short term investment performance every 3 months and sacked if they don’t perform. So it is not surprising that they appoint Bank Executives who promise fast returns in return for fat bucks. They are speculators not investors.

Paul Myners, the Minister for the City put it like this…."Disengaged investors lead to ownerless corporations and the risk of unaccountable executives and boards running amok."

Pension and life assurance policy holders are by definition in it for the long term. Despite my youthful good looks I have already 22 years of pension contributions and it will be another 19 years until I retire (hopefully 65-ish). Fingers (and toes) crossed I will then probably live another 20 years. There then of could also be a spouse pension.

So I’m interested in a 60 odd year relationship with my investments not just 3 months or 3 years. If my pension investments were properly aliened with my true interests then my fund managers would ensure the executives of companies they invest in on my behalf are rewarded on the basis of the long term added value and security they give to my fund.

BYW - I actually remember in the 1990's my fund sacked Paul (Now Lord) Myners who then worked for Gartmore as our senior fund manager due to short term "performance". The manager we appointed to replace them didn't do that much good and we have since sacked them as well.

Minister says “put the Unions in their place – the Boardroom”

Okay he didn’t quite say this but here is a great post by Tom P about the “suggestion” by Labour Treasury Minister, Paul Myners, that trade unions should be involved in the decision making by company remuneration committees. As Tom puts it - a trade union rep would not have agreed to Fred Godwin’s unreduced early pension package (even in the unlikely event he was a union member!)

The real underlying issue is of course about the principle of “ownership”. Fund managers have a fiduciary duty to their companies and shareholders - not to the pension funds who employ them. Yes, in theory they have contractual and regulatory obligations. Experience has shown us that the vast majority of fund managers care only for short term profits and have not been interested in the long term harm that their investments can cause to the wider economy. Their mandates are typically 3 years at best not 30.

Pension funds were also beaten up last week by the UN PRI who call for investors to take the blame for the credit crisis and take responsibility for fixing it.

Last week I attended a well attended London UNISON briefing on Capital Stewardship and governance in the Local Government Pension Scheme (LGPS). Nearly all the London schemes were represented. National Officer, Colin Meech briefed everyone on far reaching legal developments and the ambitious UNISON rolling training and support programme for pension representatives.

The total value of London schemes alone was (31.3.07!) £21.25 Billion. Now a lot less but still a huge amount of money. Yet in most schemes there was no effective scrutiny whatsoever of fund managers about their voting decisions at company AGMs. Pension funds “voted” to approve the appointments of the Bank Executives and their toxic remuneration packages that brought the British Banking system close to a collapse. We the Turkeys actually paid so-called experts to vote on our behalf for Christmas? This must never be allowed to happen again.

It’s about time the real long term owners of capital were allowed to start taking more responsibility for their savings. We are saving for our pensions for up to 40 years and on average pensioners live another 15 years on top that. So we at least have no interest in short term profits that can damage the fund in the long term.

So maybe a new trade union pension slogan to the City should be “No Remuneration without Representation”

Myners blasts “fat cats” Masters of the Universe

Tom P at Labour & Capital links here to a superb interview in the Times with government minister Lord (Paul) Myners.

“I've met more masters of the Universe than I would like to, people who were grossly over-rewarded and didn't recognise that. Some of that is pretty unpalatable. They are people who have no sense of the broader society around them . . . I think there is quite a lot of annoyance and much of that is justified. Let us be quite clear: there has been mismanagement of our banks.”

Of course, Tom also makes the valid point that workers pension funds didn’t challenge these rumination packages. The vast majority of trustees would have not been even aware that their fund managers were actively supporting this "mismanagement". This has got to change in the future.

Responsible Trade Union Trustees needed to Save the World (II)

I was hoping to be the first to post on this TUC press release but as usual Tom P beat me to it. Check out his post here on the call that: -

1. Pension funds should insert a “do no harm” clause into their statement of investment principles (SIP), requiring fund managers and other advisers to satisfy trustees that their investment decisions are not causing systemic harm to the stability of the financial system and therefore to the long term interests of their beneficiaries.

2. Institutional investors, particularly the large pension funds, should sign up to the United Nations Principles of Responsible Investment (PRI) as soon as possible. The PRI sets out a series of broad commitments for the engagement of investors with firms around corporate governance, environmental and social performance; it now has over 400 signatories, representing US$15 trillion in assets.

3. A collective reporting and monitoring body should be established to ensure institutional investors are acting on commitment 1. One way to do this would be to broaden the remit of the Investment Governance Group set up as a result of the recent review of the Myners Principles.

This has the support of some serious heavy duty folk. My view has always been that investment governance failures has contributed to the present day economic crisis.

Now we have “TUC General Secretary Brendan Barber, Chair of the Treasury Select Committee John McFall MP, Chair of the Work and Pensions Select Committee Terry Rooney MP, Chief Executive of the Work Foundation Will Hutton, founder of Hermes Stewardship Services and author of The New Capitalists David Pitt-Watson, FairPensions Executive Director Catherine Howarth, Ethical Investment Research Service (EIRIS) Executive Director Peter Webster, Pensions Investment Research Consultants (PIRC) Managing Director Alan MacDougall, HERMES Equity Ownership Services Chief Executive Officer Colin Melvin, RSA Chief Executive Matthew Taylor and Head of Responsible Investment at CIS Asset Management Ian Jones” .

Who all agree for action and are calling for the the economy to rebuilt on these principles and to prevent any repetition of this disaster.

Picture above is of some of my fellow UNISON Capital Stewardship pension reps who are all ready to do their bit and are waiting for the call.

Myners to sort out City Fat Cats?

I found the appointment of Paul Myners to become Minister for the City and to serve as an advisor on the New Economic Council particularly interesting. Tom P says “great news I reckon – he knows what he’s talking about and isn’t afraid to be radical”

The Times calls the Chair of the Guardian Media Group, Land Securities, Chair of the Low Pay commission and ex-Chair of Marks and Spencer’s a “respected figure in the City”. While The Telegraph has called him “controversial” which I think is nearer to the mark.

Many on the left will be most upset that he was a director of a hedge fund that made money out of the collapse of Bradford & Bingley. He also gave £12,700 to Gordon Brown’s leadership campaign.

However, there is more to him for those who want meaningful change in our financial systems that may at first appear. He is not at all easy to pigeon hole.

I first came across Paul many years ago when he was a senior fund manager with Gartmore investments. I was a relatively new trade union rep on my pension fund investment committee. The fund had decided to sack Gartmore for poor short term performance. Paul came to a meeting and gave a typically impassioned presentation to our committee about why we should not dismiss Gartmore due to its recent performance and that things will improve in the long term. The Chair of our investment committee however, had already decided Gartmore had to go...... and I went along with things. I don’t think that the replacement fund manager did that much better and has since been replaced anyway, but such is life. It did seem strange to me at the time (and since) that long term investors (pension funds) paid so much attention to short term performance.

I’ve heard Paul speak at a number of events since and he has always shown an edge as a City outsider with an appetite for controversy. Of course he is probably best well known for the Myners report on investment principals.

While I loved his appearance on BBC Question time last year where he said “The arrogant, superior young toffs who lead the Conservative Party, neither of whom have done a serious day's work in their life... David Cameron was executive at Carlton Television which lost over a billion pounds while he was there. I take no lectures from that young man about business competence. ...Nor can we blame Gordon Brown for the sub-prime disaster in the United States of America or the recklessness of bankers.”

At the RSA early this year I heard Paul declare that he spoke “ as a trade unionist” and “someone who wouldn’t join the Labour Party because it is not sufficiently left wing for my taste” but who urged that stamp duty on shares ought to be increased to 5% in order to encourage long term ownership (not short term trading). I assume he is now a member of the Party.

He also advised the unions to concentrate their campaigning on the disparity in Executive pay “the self appointed managerial elite are raping the resources of companies”. So called “independent” external advisers on executive pay are called “Ratchet, Ratchet and Ratchet”. His distaste was clear.

Today we learnt that the former head of failed Bank Lehman Brothers, Richard Fuld, (see picture above right) “earned” $300 million in the last 8 years.

So once the present crisis is over (which eventually it will be) shall the new City Minister take steps to tackle the abuse of executive pay and short termism – and help prevent the next “Great crisis”? We’re wait and see, but I feel that if anyone can have a go .....

Anchor Trust pays CEO £327,000- 32% increase

(The first of two things taken from “Inside housing” email bulletins).

£327,000 per year - what on earth is going on here? No wonder the sector has such a bad reputation for this sort of thing. Anchor is supposed to be a “not for profit” organisation, it employs 10,000 workers and has 50,000 clients.

What is the average salary of a worker compared to the CEO?

In the words of the former head of M&S, Paul Myner, do we have the same problem in the social housing sector with “the self appointed managerial elite are raping the resources of companies”. So called “independent” external advisers on executive pay are called “Ratchet, Ratchet and Ratchet”.

It just makes you despair. It is also a pity we have a new housing minister or I would have reminded her about this pledge.

“The chief executive of one of the UK’s largest housing associations raked in nearly a third of a million pounds last year following a huge pay hike.

John Belcher of Anchor Trust was paid £327,000 – up 32 per cent on the previous year. He is the first housing association boss to pocket more than £300,000 on salary and bonus alone.
Mr Belcher’s salary has more than doubled in seven years, from a more modest £162,000 in Inside Housing’s 2001 salary survey.

Last year’s pay packet included a car allowance of £15,000 and a massive £72,000 bonus.
Including £32,880 in pension contributions and £1,000 in medical insurance, his entire package is worth £360,880.

In 2005 Places for People boss David Cowans picked up £314,000, but this was partly due to an historic pensions underpayment.

Clare Miller, director of regulation at the Housing Corporation, said salary increases ‘should be proportionate and linked to organisational performance’.

Ms Miller, who received a 15 per cent salary increase herself in 2007/08, added that salary rates were a decision for each housing association. ‘We accept that leaders of large organisations need to be remunerated appropriately to reflect the nature of the challenges they face and their success in meeting these challenges,’ she said.

Michael Gelling, chair of Tenants’ and Residents’ Organisations of England, said Mr Belcher’s wage was ‘unjustifiable’. ‘The people they are serving are on the breadline – how can you justify being paid that much?’ he asked.

Anchor Trust said Mr Belcher’s compensation was high because half the association’s work was in care services instead of housing provision, a sector where the main competitors are private sector companies such as BUPA.

Tomorrow Investor – Royal Society Arts

On Saturday I was really pleased to have been invited as an “expert” witness by the RSA to address a “citizen Jury” on pension activism.

I’ll post on this separately but I had an enjoyable day and very appropriately for such a venue, my faith in the basic decency and common sense rationalism of the “great British public” has been fully restored.

I was there because the RSA are launching a new project called “Tomorrow’s Investors”. Last week they held a keynote lecture to mark the event.

“Much of the money invested in company equities is held on behalf of ordinary citizens, often saving for retirement and other major life events. Yet it appears that many of those citizens have little consciousness of their role as owners.

Should investors be more involved with their investments, with a greater awareness and understanding of the broader implications?

Would a greater degree of involvement yield better results – both financially and ethically?Speakers to include: David Pitt-Watson, founder and chair of Hermes Equity Ownership Service; Jasmine Birtles, journalist, broadcaster and finance expert; Paul Myners, Chairman of the Personal Accounts Delivery Authority; and Penny Shepherd, Chair of the UK Social Investment Forum.

Top "Labour & Capital” blogger, Tom P was also there, and has as usual captured the debate wonderfully in this post (see selection below) so I won’t need to add anything apart from a few observations.

I think it's fair to say the real action was the split between the views of Pitt Watson and Myners. David sketched a more optimistic picture, arguing that the democratisation of ownership through funded pensions and other savings had already started to have an influence on the nature of ownership. He gave the example of the success of UNPRI.

Myners was far more critical, arguing that there had been very little real progress. Most institutional shareholders didn't take ownership seriously, SRI barely figured on the radar of company boards (as an influence on them), trustees were still spoon-fed by advisers and still focus on short-term performance despite its irrelevance.

I think the broad consensus from our little group was that although the Pitt Watson view was the one we would like to believe, the Myners perspective seemed to fit more with our own experiences.

I thought that Paul Myners was being deliberately provocative - shock horror. There are still huge problems to overcome, but as David pointed out there has been an enormous change in living memory. I actually think that Myners is actually on on board with New Capitalism although unsurprisingly off message.

Even if he is a "trade unionist" and “someone who wouldn’t join the Labour Party because it is not sufficiently left wing for my taste”. Which is a somewhat unusual statement for the Chair of a Hedge Fund to say? As was his suggestion that stamp duty ought to be increased to 5% in order to encourage long term ownership (not traders).

He advised the unions to concentrate on the disparity in Executive pay “the self appointed managerial elite are raping the resources of companies”. So called “independent” external advisers on executive pay are called “Ratchet, Ratchet and Ratchet”.

We need someone like Myners to remind us how far we have to go. Hopefully, at some stage he may have some slightly more constructive remarks. But I agree (and I am sure that David would as well, but is too polite to say so) that the majority of pension trustees need to be more independent minded and stand up to professional advisers. There again to do this they need support and training. Who can do this other than the unions?

Jasmine Birtles was very entertaining and brought us back to planet earth, she remarked that on her money web site she has worthy features on ethical investment, but no-one reads them. The most poplar stories tend to be “how to get rich without really doing anything”. While Penny Shepherd combated Paul’s negativity and took him to task.

I was fascinated when David pointed out that the BT Final Benefit pension scheme (run of course by Hermes and owned by the scheme) only cost 0.2% in annual charges (I repeat 0.2% pa). While modern DC (defined contribution, money purchase, stakeholder, personal pension - what ever) Pension charge at least 1.5% which could swallow over the years up to 40% of the fund in charges.

Come back DB schemes – all is forgiven.

"Arrogant superior young toffs...”

“The arrogant, superior young toffs who lead the Conservative Party, neither of whom have done a serious day's work in their life... David Cameron was executive at Carlton Television which lost over a billion pounds while he was there. I take no lectures from that young man about business competence. ...Nor can we blame Gordon Brown for the sub-prime disaster in the United States of America or the recklessness of bankers.”

This was my crimbo present come early from Paul Myners on BBC1 Question Time
last week. According to today's Professional Pensions the Tories have now made an official complaint about Paul’s comments. He is the Chair of the government’s “Personal Accounts Delivery Body” PADB.

This is actually one of the most important governmental bodies you have never heard of – hopefully, soon up to 10 million Brits will be members of this “National pension scheme” which for the first time will oblige firms to contribute to their workers pension future (there are the usual “get out” clauses). The PADB should result in millions of people being brought out of poverty in retirement.

This is a really vital body and I suspect (hope) that while Paul was a probably a little unwise in his comments, as Chair of the PADB it will soon blow over. Part of his charm is that he is a bit of a maverick at times.

To me it shows how sensitive the Tories are to the justifiable accusation about Cameron that he is a “out of touch toff”

Hopefully, at worse Paul will just have his knuckles rapped. He is probably one of the most respected businessman of our time - chairman of the Guardian Media Group, the Low Pay Commission (which sets the minimum wage and advises the government on its implementation), and chair of the trustees at the Tate; a member of the Court of Directors of the Bank of England. Previously been Chairman of Marks & Spencer, and an Executive Director at NatWest; Trustee of the Brownite think tank The Smith Institute and has been dubbed "Gordon Brown's favourite businessman"; He is also part of the management team put together by US private equity house JC Flowers which is bidding to take control of Northern Rock.

He has written to the Tories pointing out he appeared on the programme in a personal capacity.He wrote: "I should also add that you make no reference in your letter to two other occasions on the same programme when I was deeply critical of government policy and actions. No mention was made of PADA or pensions in my description or during the programme."

I have meet Paul at various pension conferences and reminded him that Tower Hamlets pension scheme had sacked him (he was head of Gartmore Fund Managers at the time) in the past. Which he took in good part and described that occasion as the “worse day of his life” (joke). Of course being a staffside observer and not allowed to be a full voting member of the scheme I was able to blame everyone else for this decision!

NB - I thought Labour Employment & Welfare Minister Caroline Flint was very,very good at QT

“Protecting Future Pensions”: Conference for Trade Union Pension Trustees/Reps

The annual TUC “Trustee Network” Conference takes place on Friday 22 June 2007 at the Cass Business School, London, EC1Y. Keynote speakers are James Purnell MP, Minister of State for Pensions Reform (who took my photo with Tom and Nick Cohen last month), Paul Myners, Chairman, Guardian PLC and Chair, Low Pay Commission (my pension fund sacked him and his company, Gartmore, as its fund manager in 1994 – something he describes as the “worse day in his life” – a Joke BTW) and Brendan Barber, TUC General Secretary (photo with UNISON London region last week).

Seriously, this is the only Trade Union national meeting of member nominated trustees/representatives on pension schemes. Ordinary workers in this country actually own huge chunks of British and international capital via our pension schemes, life insurance policies and other collective investments (such as PEP’s, unit trusts, investment trusts). However, often we have little or even no influence over how this money is governed. Pensions are just deferred wages. We should be exercising our rights of ownership (as well as taking responsibility for what is done in our name).

The pressure group “Fair Pensions” describes how some of our money “is invested in companies that are attacking employees’ rights and fighting attempts to unionise. This can include the use of militias against trade unionists in South America to “Union-busting” in the UK. We need to use our investments to change some companies’ behaviour. Pension funds own almost a fifth of the stock market, but the vast majority of funds - including some that offer “ethical” options – make no effort to challenge this behaviour.

Responsibly-invested pension funds are already putting Wal-Mart under heavy pressure over its labour practices in the United States. In the UK, pension funds have successfully lobbied drug manufacturers to lower the cost of HIV treatments for southern Africa and persuaded companies to start tackling climate change.

Responsible investment is about using shareholder power to improve company behaviour, rather than avoiding certain industries, so it does not lower returns, and can improve financial performance by identifying the potential cost of corporate strategies that ignore legal, reputational and other risks”.

If you want an agenda and booking form contact Jayne Cranefield on 020 7467 1225 jcranefield@tuc.org.uk (normally a bit pricy – make sure that your pension fund or union pays). If you have a “funded” pension scheme (has actually investments rather than “pay as you go” UNISON and the TUC are running courses on pensions), check to see if you could be a member nominated trustee/representative. If you are already a trustee join the network

UPDATE: Download entry form from TUC