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17 Jan 2021

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Negative rates won't boost the economy, says Nationwide boss
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Negative rates won't boost the economy, says Nationwide boss 


Joe Garner has disappeared. We’ve arranged to speak over Microsoft Teams – a lifeline for many firms whose staff are working from home – but I can’t see or hear the Nationwide boss on my screen. 

When we finally give up on video conferencing and revert to an old-fashioned telephone call, I get the feeling Garner is rather relieved. 

‘Video meetings are so draining,’ the chief executive says in his first major newspaper interview since he joined the building society in 2016. ‘The cognitive energy you are using on these calls is massive. 

‘You have to put so much energy into those two-dimensional conversations because you don’t get the human interactions that normally come alongside it.’ 

Vision: Joe Garner says now is the time to put in post-virus planning but questions whether negative interest rates will help

Vision: Joe Garner says now is the time to put in post-virus planning but questions whether negative interest rates will help

In fact, Garner is so concerned about the daily tyranny of endless virtual meetings during lockdown that he has asked all Nationwide staff to take a break from video calls between 11.30am and 1pm each day. 

It’s one of many Garner initiatives to keep staff motivated during the pandemic – including handing every worker a one-off payment of £100 last month to give them a boost. 

But the 51-year-old admits that it’s getting harder to stay positive – and describes the past week as one of the toughest so far.

‘It feels like this latest lockdown has hit the national mood very hard,’ he says. ‘I think it’s because in the run-up to Christmas there was optimism and hope, and a feeling the worst was behind us.’ 

Negative rates won’t help the UK 

Negative interest rates won’t boost the economy, Nationwide boss Joe Garner believes.

The building society executive says another rate cut by the Bank of England later this year – as has been speculated – would ‘raise big questions’ about how people are supposed to save for retirement. 

The base rate is currently 0.1 per cent, having been cut repeatedly since the early days of the financial crisis in 2007. ‘We’ve never had a society that has lived with interest rates at around zero for so long,’ Garner says. ‘How do you save for your retirement in a world of zero-everything?’ 

Garner adds: ‘I’m trying to understand the argument [for negative rates] better. 

‘The argument seems to be that negative interest rates make people spend money rather than save it. But the issue is that people can’t spend their money because of Covid, it’s not because of rates.’ 

He says: ‘And the reason businesses are not making investment decisions is uncertainty about the future. 

‘There are a lot more savers than borrowers in this country, so we really do need to understand the long-term impact of this super-low base rate environment.’

However, rather than dwelling on the negatives, Garner is thinking to the future – specifically, how businesses and the Government can work together to rebuild communities when the pandemic is over. 

To that end, Garner has launched a working group with representatives from major consumer-facing firms including Asda and Kingfisher. The group will look at how to restore key aspects of British life by examining changes in attitudes to offices, houses, high streets and our finances. 

The panel will draw up a range of recommendations to feed to the Treasury and the Department for Business, which Nationwide will make public. 

‘The short-term outlook on the virus has darkened recently, but all of this will pass,’ Garner says. ‘And if we want to make the most of the opportunity on the other side then we need to start thinking about it now.’ 

Garner – who held senior roles at HSBC, Dixons, Procter & Gamble and BT Openreach before he joined Britain’s biggest mutual almost five years ago – has already thought in some detail about how working life could change at Nationwide. 

Staff will be allowed to decide how and where they want to work when the Covid crisis fades. 

And Garner doesn’t even want them to decide on a set number of days in the office every week, rather to think about which jobs are best done in certain settings. ‘We’ve seen a significant increase in productivity of repetitive work done at home,’ he says. ‘But we are wondering if we get the same level of creativity that happens when people mix in an office. 

‘So instead of thinking about where someone should be working on a particular day, we should be thinking: what are they trying to do, and what is the best place for them to do that?’ 

Garner thinks many people at Nationwide will want to work from home at least some of the time, so he hasn’t ruled out using video calls – but he does think they will be used differently. 

‘There is something very democratic about meeting on Microsoft Teams or Zoom,’ he says. ‘It’s much easier for people to have a fair share of the conversation, and much harder for one or two people to dominate. 

‘Maybe the best way to have a board meeting is to still have it with everyone on Zoom, but then you get together in real life and have dinner at the end of it.’ 

Garner believes Nationwide also has a role to play in reviving high streets. He has promised to keep open all branches that are the last in a particular town until January 2023. It’s all about being more creative with how those branches are used, Garner explains. 

For example, he is considering using some branch space for offices for staff in the local area, or as call centres during quiet times. 

‘When our branches were quiet during lockdown, we routed our phones through the branches and they became mini-service centres for our members,’ Garner says. 

‘A lot of our members who thought they were calling someone in a call centre were actually talking to someone in a branch somewhere around the country. 

‘We started to think that when things are quieter on the high street, our staff can be doing other worthwhile things. 

‘That means we can keep those 600 branches or so, and we can see them as not just being there for people on the high street, but also as 600 mini-service centres for our members, wherever they may be.’ 

The other major change on high streets could be more housing, he says, adding: ‘The shopping part of our high streets is going to be smaller – although I don’t think it’s going to disappear. That will create space.

‘Quite a lot of the housing that has been created in recent years has been conversions from commercial property into residential property. 

‘We can envisage the high street with a smaller shopping component, a wider localised service centre, and more in housing as well.’ 

Creating greener homes is another item at the top of the Nationwide chief’s post-pandemic agenda. 

The building society has set aside £1billion in cheap financing for people looking to make home improvements that save energy. But the fund has only had 200 applications so far – and Garner thinks the Government needs to do more to encourage people to go green. 

‘We need to see a whole supply chain to build up around this, because there are energy-efficient solutions for your home,’ he says. 

‘The problem is that it is so expensive up front that it’s a long time before you get your money back.’ 

But he warns that any Government policies must be thoroughly vetted. The Government’s ‘Green Deal’ promised cheaper energy bills to low-income households, but thousands of families were left in damp and mouldy properties when contractors botched the work. 

‘If policies are handled in the wrong way on this it could be a real disaster, a policy mis-step that makes properties unmortgageable could be a catastrophe,’ he says.

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