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Stop tinkering with tax and create an industrial strategy, says boss of L&G

Vision: Sir Nigel Wilson wants a fairer society through investment

Vision: Sir Nigel Wilson wants a fairer society through investment

Vision: Sir Nigel Wilson wants a fairer society through investment

Nigel Wilson – or to give him his title, Sir Nigel – is a Northern powerhouse and individual advertiser for social mobility. The boy from a council estate in the North East of England grew to be Britain’s biggest investor.

And as chief executive of insurance giant Legal & General, where he is steward of £1.2trillion of our retirement savings, he is determined to make good use of the influence that gives him . Wilson, who recently announced he would be stepping down after more than a decade at the helm, has spent his time at L&G trying to use the money his company manages for savers to kickstart Britain’s economy through ” inclusive capitalism”.

“There is £5 trillion invested in UK pension funds. We should be spending more on growth capital and infrastructure,” he says.

According to him, a long-term industrial strategy is more important than specific fiscal changes in the budget. Hunt’s early days, he says, were “knowledgeable” on “pressing issues like childcare and empowering our cities.” “But we need real investments that raise living standards and solve climate change.

“Tax burdens in Britain are at an all time high, but tax relief is not necessarily the answer. The key question is how to structure industrial policy.

“For too long the Conservative Party has believed that the market will deliver. But we must have an industrial strategy, supported by a fiscal strategy.

Injecting people’s pension savings into neglected parts of the UK and into supporting research at our top universities will, he says, create a virtuous cycle that benefits everyone. He says the disruption caused by the pandemic has opened up an opportunity for the UK to bounce back. “Science and technology can give us a second chance. We have to seize it.

“We need to be much more active in determining what new industries we are going to support. Otherwise, our successful start-ups are bought up by American companies and, as a result, we have gutted the economy.

He adds: “We will be a low-value, low-productivity, low-wage service economy with all of our manufacturing moved elsewhere and it will be very difficult to bring it back.”

We are, he says, good at innovation but not at going all the way.

He notes that more of our pension fund assets are invested outside the UK than on our shores. Around £150billion, he says, is being invested in new-style pension schemes, but almost none of that has been invested in early-stage, potentially high-growth companies.

“They are the future FTSE. We can decide whether these companies are listed here or on the Nasdaq market in the United States or in Amsterdam.

Wilson, with 11 years as CEO, has served roughly double the time of a typical FTSE 100 boss. well ahead of the FTSE 100.

The company was hit by the mini-budget pension slump, but its full-year final results showed operating profit up 12% to £2.5bn, with an increase 5% of the dividend.

He earned £41million during his time as head of L&G, but lives in a one-bed rented flat and uses public transport rather than driving. He frequently returns to the North East and still enjoys playing dominoes in the pub.

If there was any chance he would outgrow his boots, he would be straightened out by his mum who, he jokes, wouldn’t let him go to local stores without a list.

He also likes to tell how when he phoned her to tell her about his knighthood, she ticked him off for ringing too late in the evening.

After putting him in his place, she was, of course, “very proud” to accompany him to Windsor Castle where he was knighted by the current king.

Does he think the economy would work better if more people from ordinary backgrounds like his were in charge? “The world is so complicated that you need people who look at life differently,” he says.

Was his approach to the economy and management of L&G influenced by his Northeastern roots? ‘Yes yes. We need to build a fairer society, this is inclusive capitalism, not exclusive capitalism. We have gone backwards in terms of social mobility.

“Someone who lives in the kind of house I grew up in, a counseling house, would now have a really hard time doing a PhD at MIT. [the elite Massachusetts Institute of Technology where Wilson studied].’

“A lot of people don’t have mentors in their lives. People in the North East could say to me, ‘I could have been you, I should have been you’, but they weren’t, because they didn’t have the benefit of great mentors and coaches that I had. People can get to the top with resilience and ability. Resilience is underrated.

Unusually for the North East at the time, Wilson’s father was a Tory. Nigel himself went to apply for the Labor Party when he was 11 years old. “I was politically engaged quite young. Now the country comes first. I think the people, the place, and then the politics are the right order.

His slogan “inclusive capitalism” sounds good – even if it’s a bit Tony Blair – but what does it really mean?

It is, he says, to invest in projects that will generate good returns for its investors and its policyholders, and which will provide a dividend to the company.

Think housing, healthcare, green energy and innovative companies spun off from universities. “We want real wage growth and people to have the opportunity to have a better life.”

During his time at the top, he tried to put these principles into practice. L&G has supported Helix in Newcastle upon Tyne, a £350m innovation hub on a site that was previously a coal mine and Brown Ale brewery.

He has also funneled money into Dreaming Arrows, with a £200m investment in Oxford University’s Life and Mind Building, for the departments of Zoology, Plant Science and Experimental Psychology. .

Why does he think other insurance bosses haven’t followed the same path? “You have to be confident that you’re going to be in the job for a long time and that you’re going to be successful.

“I never doubt that I will succeed in the sense that I will always have done my best.”

Outside of work he is an avid runner and has several British Masters titles in the 100m, 200m, 400m and 800m and supports his local football team, Newcastle United. Does he have any regrets about his time at L&G? “I don’t think about ‘should’s’ and ‘could’s’, my brain doesn’t work like that. I left them behind and can’t wait, like when I left the North East.

Wilson’s route out of the North was education. He went to the University of Essex, followed by a doctorate in economics from the Massachusetts Institute of Technology.

Once L&G finds a successor to succeed him, he hopes to return to academia with a teaching position at a university. “I have business to attend to,” he said. “The economy was wrong and it needs some refreshing thinking.”

“We have outdated models. The magnitude of the disruptions we see now far exceed the capabilities of what was developed by Adam Smith and John Maynard Keynes so many years ago.

“I want to pitch in and help out.”

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