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Former banker heads commission

Interview: Ken Barclay, chairman, rates review

Ken Barclay
Ken Barclay (photo by Terry Murden – DB Media Services)

Rate expectations

Outside the coffee bar the first snow of winter is bringing an icy blast to Edinburgh’s west end, the traditional commercial heart of the city.

We’re also near the venue where, these days, career banker Ken Barclay is learning French.

“I like holidaying in France but I flunked the language at school,” he says. “I thought I’d do some brushing up.”

Barclay has also been given a metaphoric remit to sweep away the unwanted bits of Scotland’s unpopular business rates system and make some recommendations on how it might be improved.

After leaving the Royal Bank of Scotland last year he was asked by the Scottish government to chair a review commission.  The five members have met about every three weeks for the last four months and will deliver a report towards the end of June.

It’s not the most glamorous of topics, but it is one of the most important. The business rates system is the biggest single devolved tax, raising £2.8 billion.

It is also one of the most heavily criticised levies. Some business leaders have described the system as “no longer fit for purpose” and have demanded it be replaced with something fairer and simpler.

“One problem is that not many critics of the rates system have suggested what should replace it,” says Barclay.

“Usually when people say it’s not fit for purpose they mean that they feel it’s unfair – to them.”

He admits that it may need to be modernised and the commission – whose members include the former Scottish Enterprise veteran  Prof Russel Griggs and public relations executive Nora Senior – is looking at how to better use digital technology for payments and other processing.

“We think there are ways of making it more efficient. We believe that the current system is overly complex. The appeals process is difficult to determine. It needs to be easier to understand.”

The commission, whose other members are the former senior civil servant David Henderson, and the senior tax partner at Brodies, Isobel d’Inverno, has been given a “blank canvas”. But Barclays says it is unlikely it will recommend wholesale change.

“We are likely to recommend solutions where appropriate and where it might bring benefits. But we would have to ask for more time if we felt we wanted to recommend big changes.”

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On the business rates review: ‘It needs to modernise’

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Ultimately, he says the task is a simple case of finding a better way of implementing a rates system that will encourage economic growth, and be revenue neutral. That’s not to say radical ideas will not be examined, but a revolution or abolition is unlikely.

“At the end of the day, we will make recommendations and it is up to the government to take notice or disregard them,” he says.

Alternatives might include a land tax, or a turnover tax, but he points to the risks in introducing a completely new system.

“We would have to think through the unintended consequences,” he says.

The rates review is one of a small number of activities Barclay has taken on since leaving RBS. He is a compliance trustee for the Scottish Children’s Lottery and an advisory board member for the Institute for Public Policy Research. He is a director and trustee of PoppyScotland and chairs The Lens, a coaching and mentoring workshop for business modelling and innovation.

Until recently he was a one-company man, a Royal Bank of Scotland ‘lifer’, who joined as a 17-year-old and over the next 39 years rose through the ranks as it became one of the biggest companies in the world.

Between 1995 and 2012 he was managing director for each of four divisions, and latterly chairman in Scotland, the senior banking representative of the bank north of the border.

As a loyal and long-serving servant he is still coming to terms with its fall from grace, and how in 2008 it was reduced to putting out the begging bowl in a quest for survival.

“At one point RBS was bigger than Coca-Cola, Apple and Hewlett-Packard combined. It was a great success story,” he says.

He pauses between answers, appearing to be gathering his thoughts on what happened, and how it could have happened.

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On RBS: ‘Fred was a leader for his time’

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“It takes a long time to get over it. To go from that level of success to pariah was difficult.

“But in the end we had to be grateful to the taxpayer who gave us another chance. It was down to people like me to get the staff to accept what happened and get on with serving the customer. No matter how big the scars, life goes on.”

But did he feel let down by the senior figures in the bank?

“Fred [Goodwin, former CEO] was a leader for his time. Most people thought he was doing a good job. There was an element of collective responsibility by all the leaders in the organisation. I looked at myself and felt there were probably things I would have done differently.”

He understands the anger felt by the public, particularly over the huge pay and bonus packages received by bankers.

“It was mainly a few in the investment bank,” he points out, but admits the remuneration policy for executives was generous.

“Was I overpaid for what I did? Probably. Was I ridiculously overpaid? Others will have to judge. One of the things Stephen Hester [Goodwin’s successor] did was to re-calibrate compensation packages.”

He shares the frustrations of the current management trying to resolve outstanding issues, including the task of carving out what was supposed to become a new bank under the revived Williams & Glyn brand.

But he believes RBS itself will survive.

“There are politicians and others calling for it to be broken up,” he says. “That would be extraordinarily difficult.”

Ken BarclayPERSONAL CHECKLIST

Birthplace: Hamilton, raised in East Kilbride and later lived in Paisley

Age: 57

Education: Paisley Grammar School

Career Highlights: Joined RBS at age 17 and rose to become chairman in Scotland in 2012 via four managing director roles, including two years in Hong Kong as head of its Asia Pacific corporate business.

Outside work?

I play gold off a six handicap. Apart from learning French I’m also learning the piano. I gave up lessons when I was nine.

Which is the most difficult?

French.



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