Wednesday, 4 April 2018

Your Building Society ???

by Christopher Draper

BUILDING societies, like most good things, were invented in the North.

Founded by workers as mutual aid organisations, building societies provided a safe home for meagre savings so that in the long term members could secure homes for themselves and their families.  Over the decades the money men and city spivs moved in, privatised many societies and subverted democratic control of the rest.  You won’t see many millionaire money men walking the streets of Bradford these days but you’ll find a fair few if you pop into the Boardroom of the Yorkshire Building Society (YBS), a mutual aid for the wealthy.

Hell and Halifax
YBS isn’t the only example of the hollowing-out of the mutualist ideas and working class ideals of the original building societies.  The capitalist feeding frenzy that privatised the ‘Halifax Building Society’ (then Britain’s biggest) and then almost destroyed it shows YBS and other remaining ‘mutuals’ have further to fall from their idealistic origins.  A comprehensive analysis of every surviving mutual would be onerous to compile and boring to read so I’ll concentrate on contrasting the professed ideals of YBS with the actualite but the critique applies across the board.

'Our Society'
YBS ‘members’ who legally own the ‘society’ nowadays play no greater role in the business than they do in MacDonalds, Google, Asda or any other retailer yet YBS, like the other fake mutuals, constantly claims we do. Our Society a Place Where We Belong', “Members…at the heart of everything we do’, As a building society we are set up specifically to help people rather than make money from them’.  In the last few years YBS wasted millions of pounds of members’ savings settling fines and compensation claims imposed as a consequence of negligent and cynical trading practices. 

The Financial Conduct Authority discovered YBS indulged in mis-selling PPI; YBS neglected and improperly overcharged mortgage customers experiencing repayment difficulties and YBS promoted and sold bonds that promised financial returns that were virtually impossible to achieve.

Even a cursory examination of YBS documents reveals a focus on growth and expansion rather than member involvement. The truth is that bigger businesses bring bigger bonuses for bosses and for Mike Regnier, YBS CEO, this year’s bonus added a further £275,000 to his already massive salary. A YBS survey of “customer experience” over an identical period recorded a drop from 27th to 87th place (comparable organisations) yet had no negative impact on Mike’s bonus.

Once Upon a Time in Huddersfield
YBS started in the nineteenth century with the creation of 'The Huddersfield Equitable Permanent Benefit Building Society' by a handful of workers and tradesmen in a small building on the corner of King Street and Queen Street. In the twentieth century the 'Huddersfield' amalgamated with Dewsbury’s 'West Yorkshire' and then Bradford’s 'Self Help' to, in 1982, form the 'YBS'
From its foundation in 1864 until 1896 none of the Directors of the ‘Huddersfield’ drew any salary from the Society’s funds now the YBS Director’s trough is lavishly swilled with members’ savings.

The YBS Board comprises 9 directors and includes 6 non-executive directors. In 2017, the executive directors received a total remuneration of two million and fifty-six thousand pounds with CEO Mike Regnier alone getting almost a million (£930,000). As the average local wage is £20,929, Mike gets more every year than a Bradford worker would earn in a lifetime!

Keeping Members Informed
You’ve doubtless received one of those booklets that building societies send out to members as an annual report.  The first thing to note is that these documents are not actually ‘Annual Reports’ but selective, propaganda pamphlets that Directors employ to bamboozle members into thinking they’re involved.  For YBS the official 2017 ‘Annual Report’ is double the page size (A4 rather than A5) and six times the length of the Annual Review’ sent out to members.  Both documents are essentially sales brochures boasting of how brilliantly the ‘business’ is being run but occasionally key details can be gleaned from the full document omitted from the dumbed-down version.   This year (2017/18) the YBS members’ pamphlet made no mention of the gender pay gap that all big organisations are legally obliged to publicly report but tucked away at the foot of the inner column of the ‘full’ document on page 71 we find that YBS operates a 31% gender pay gap but of course even here there’s no admission of guilt rather a statement of pious bullshit, The Group strives to create an environment where diversity in all forms is encouraged and barriers in the way of colleagues fulfilling their potential are removed.’

The full 190 page Report includes lovely full-page, full-colour pictures of Chairman John (Uriah) Heaps and CEO Mike Regnier yet still doesn’t fully report YBS’s legally required analysis of its gender pay-gap (it’s available online).  This records women are very much in the minority among its highest paid employees (top quartile: 42% women/58% men) whilst down at the bottom end (quartile) the lowest paid YBS employees are overwhelmingly female (80% women/20% men).  In place of these facts the Report obfuscates:
In simple terms there are more females occupying less senior roles. It is this imbalance that results in the gender pay gap’.

YBS Democracy
Like all fake democracies YBS have the problem of manufacturing consent.  Pictures of people of all types and colour are an essential ingredient of all YBS booklets, sites and propaganda accompanied by slogans asserting ‘inclusivity’.   The aim is to make members think everyone else is involved and if you’re not it’s your lazy fault.  The truth is that YBS is as mutual as the Co-op is cooperative, it’s been captured and run by money men with no radical, socialist or even cooperative agenda.  Any claims to mutualism are utterly superficial.

In 1864, there was a plumber amongst the originators of the Huddersfield Building Society but you won’t find a ‘butcher, baker or candlestick maker’ amongst the directors now, most come from the banking world with a leavening of hotels, pubs and gambling directorships.

Directors know few members turn up at the AGM and there’s little likelihood they’ll be challenged.  Even if they were the Chairman wields thousands of proxy votes from members who returned their voting paper in response to whatever gimmicky inducement YBS offers that particular year (in 2018 it’s a donation to charity).  Few notice or understand the import of the inconspicuous phrase, The Chairman will be your proxy unless you choose someone else by completing the box on the back of this form’.  Although almost fifteen thousand members voted against last years lavish directors’ emoluments with a further three thousand withholding their agreement the Chairman claimed the backing of 128,159 proxies as authorisation for the Board to stuff their wallets.  Business as usual and triples all round, Cheers!

Some more Equitable than Others
In 1864, the Huddersfield Equitable offered members the prospect of a home and interest on their savings of 5% interest (at a time that inflation was zero).  In 2018 Chairman Heaps claims YBS 'are proud of our 150 year commitment to our mutual values – delivering long term value' but consider what has been delivered by Heaps and his fellow buildings society money men.  'Our mortgage customers face average house prices that are almost eight times average earnings – an all-time high…By 2020 only a quarter of 30-year olds will own their own home, in contrast, more than half the generation currently approaching retirement were homeowners by their thirtieth birthday.'   Whilst consumer price inflation is running at around 3% per annum YBS savers are offered only 0.85% so even labelling them 'savings accounts' smacks of 'mis-selling'.
Branch closures reduce the service to members, increase centralisation and bring banks bad publicity but YBS is equally guilty with 48 branches closed last year with a further 18 closures already planned for 2018.

YBS isn’t doing anything illegal and is typical of the building society sector and that’s precisely the problem, the rot is endemic.  What started as local mutual-aid societies founded by workers and tradesmen to shelter themselves and their families from the ravages of the marketplace have been gradually infiltrated by the values and personnel of commercialism.  Poorly paid, largely female, workers are welcomed at YBS to do the donkey work at the counters and computers but money-men run the show on classic capitalist lines. 

In 1994 YBS was the first building society to operate its own share-dealing service (subsequently sold) and members were encouraged to redirect their mutual saving into stock market speculation.

In 2018, as ordinary YBS members suffer miserable, below inflation, returns on their savings there’s rich pickings for the boys in the boardroom.  The members 'Annual Review' prominently boasts of £1.5m'contributed to our local communities' but fails to mention that this is less than the amount 'contributed' to board members Mike Regnier and Stephen White.

Re-building Society
The nineteenth century working class created a rich variety of mutual aid organisations, Building Societies, Benefit Societies, Trade Unions, Political Parties, Burial Clubs, Reading Rooms and much more.  Like YBS, most are now ideologically moribund zombies with some appearance of the original but devoid of humanity and political idealism.  The causes are complex but in almost every case a tendency to apathy and materialism amongst workers was exploited by lawyers and city slickers to gain control and extract value.  Hierarchies and huge pay differentials replaced equitable ideals and egalitarian practice. 
There’s no quick solution but we can all do a bit to reclaim our moribund organisations.  If you’re a building society member don’t ever return the paper giving the Chairman your vote, either tick all the 'against' or 'vote withheld' boxes. 
It’s optimistic to dream of reversing the decline in building societies and similar mutual aid organisations but we can at least try to stop the rot.  Recognise the rips-offs and speak out, don’t be complicit, expose the injustice and ridicule the rapacious.  Even YBS is not entirely immune to activism, every creative act of protest supports, encourages and incites others – You’d Be Surprised…

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