More than 167 years ago, the Darlington Working Men’s Equitable Permanent Building Society was formed ‘to benefit local people’.
The need back then for a supportive organisation who could help ‘the industrial and frugal’ to get on to the property ladder was seen as a vital step for communities who were increasingly desperate to put down roots and make progress for their families.
At the meeting at Mrs Johnson’s Eating House, in Church Row the society was formed to provide a route ahead and even then, the need for a long-term view was important with the inaugural members insisting on it being a ‘permanent’ society to differentiate it from the ‘terminating’ alternatives which closed when borrowers had paid back their loans.
This was clearly going to be a commitment to the town and an investment in its future and the wellbeing of its people.
After several name changes, the man at the helm of what is now Darlington Building Society, Andrew Craddock, is a custodian of those principles of support and keeps them at the forefront of the organisation and its staff. There is plenty of competition for people’s money, so the society’s character and personality – the reason why people trust an organisation with their lifelines – is increasingly important.
Andrew is a calm and measured man who embodies that community feeling. You’d be pleased if you found him behind the counter for an important appointment at your local branch – oh good, Andrew’s in today.
His experience in the business of looking after people’s money is impeccable. Coming from a banking family, the foundations for his own career were laid when he was working for the students’ union at university in Leeds.
He put that financial experience to good use by getting a job with Barclays in the branch network around London, before moving into a project management role in the head office.
He was then head-hunted by Allied Irish where he ended up as UK Chief Operating Officer before moving on to become Chief Executive of Buckinghamshire Building Society.
Now the North East is lucky enough to have him.
“After 30 years, I had started to think there was more to financial services than just making money,” he tells me in the boardroom at Mutual House, on Morton Park.
“So I moved into the mutual sector, where you actually give things back and your members and colleagues are far more important than your dividends and your shareholders. With building societies, you can manage for the longer term because you’re not constantly looking at your share price and your dividends.
“When Darlington came up I had a good look around it and I liked the way they managed the business and the way they were giving back to the community through the 5% pledge – and they were ambitious.
“They wanted to continue to go and do good things and invest in the business – particularly around digital – and it was really something I wanted to be part of.
“Luckily the board decided that I was the right person. We all knew it wasn’t a massive shift in strategy or direction, it was more a case of building on what was already there.”
His views of the regional and national financial landscape are clearly important. The Chancellor’s Autumn Statement seems a good place to start – a pre-election performance or a genuinely good deal for the region?
“In general I was supportive of the measures taken,” he tells me.
“I imagine it was setting up for an election, but I don’t necessarily think that’s a bad thing because what do you want from an election – they want to be feeling good about their money, their homes and their cost of living.
“That’s what we all want in the economy and this statement was there to make people feel better with some tax cuts, although that’s obviously offset by a huge amount of fiscal drag. But at least I think it’s moving us in the right direction.
“We will always bring our members into these conversations because they are the most important voice and I think the main feedback we’ve had from them is around what it all means for interest rates.
“On the borrowers side, I think people see that interest rates have probably peaked now and they’re going to start to come down, depending on how strong the economy is, but there is still a huge amount of variance – and therefore uncertainty – in when they’re going to start reducing. Some people believe Q1 or Q2, but then Andrew Bailey said it might not be until Q4 2004.
“The two elements that I felt the Autumn Statement was really missing are both particularly important to us at Darlington Building Society – helping individuals to save for the future and helping people onto the property ladder.
“With interest rates at the level they are now, you don’t have to have too much in savings to start to get over your personal savings allowance, so I would really like to see the chance to raise that. The Chancellor made a few tweaks around the edges, but actually that £20,000 ISA limit is still there and the £1,000 personal savings allowance is still there, so I would like to see them push them up to try and encourage people to save more and perhaps put in some sort of tax incentives around people being able to save more through workplace savings schemes.
“On the housing side he did make some moves around the planning system, making it easier for people to build and improve their properties, but he didn’t really do anything for first-time buyers who are really struggling to get on the property ladder.
“Some sort of resurrection of the ‘help to buy’ scheme or help with stamp duty would encourage people to progress.”
You can see why these issues are at the heart of Darlington Building Society. As a mutual, Andrew and his team have a different set of decisions to make – people before profit.
He sums up what that means to him perfectly: “We’re not out to make as much money as we can, we’re here to make enough money to do what we want to do.”
There is the opportunity then to cushion the blow as percentages rise to uncomfortable levels. They can pass it all on or absorb some of it themselves.
Andrew says: “Increasing rates is in general a good thing for banks because you tend to be able to widen your margin as rates go up. But we deliberately decided that we weren’t going to do that.
“If you look at our rates over the last 18 months as the base rate has increased, yes, we have changed our rates on the savers side to push them up as high as we can as fast as we can on.
“But on the borrowers side, we’ve delayed passing on the increases and have put on as small an increase as we feel is practically possible. If you look at our Standard Variable Rate on the mortgage side, two years ago we were 45th out of 76 lenders. We’ve now repositioned that so we’re about 26 out of 75.
“So we haven’t taken the opportunity to widen our margin as the base rate has gone up and commercially that means we’re not going to make as much profit. But we feel that’s the right thing to try and support our members as best as we can.
“As a building society, we look to optimise our profits rather than maximise them because we want to make sufficient to invest in the business for our members and for our colleagues. That also means we can build up our reserves so that we have sufficient capital for the future.
“But then apart from that, we will always want to be giving money back to our borrowers and our savers.”
I suggest that might seem very counter-intuitive, but he disagrees, and as he states his case – ‘enough money to do what we want to do’ – I sense that this is the Craddock way as well as the the society’s way.
The two may well be inseparable.
The lesson in economics that he uses to delve a little deeper into the effects of Jeremy Hunt’s statement – largely written at the Darlington Economic Campus, of course, – is particularly illuminating.
“If you look at income and split it into deciles (*no, neither did I but it means taking data and ranking it from 1-10 to put it into subsections) so that you’ve got the lowest income up to the highest income, then in general our members are around five and above – the more well-off people.
“If you then look at the cost of living at the moment, that’s really impacted deciles 1, 2, 3, with 4, 5, 6 generally OK and then 7, 8, 9 who are probably always going to be OK.
“Because we give mortgages to people who want to buy houses and have a sufficient level of income, they’re generally in those higher deciles so what we do is we try and invest back in the local community to support the people in 1, 2 and 3 through things like savings rates and giving 5% of our profits back to the local community every year.”
If Darlington Building Society was a single person, this would be pure philanthropy – you have more than you need so you share it with those who have less.
The fact that there is a dedicated and passionate organisation behind it with more than £900m in assets and nine branches makes Darlington Building Society a powerful part of the North East regional economy – with growth still very much a part of its plans.
Andrew says: “In the last five years we’ve grown our balance sheet by 50% from around £600million total assets to about £920million now, and the plan is that we’ll get to £1billion – a big milestone for us – sometime in 2025.
“Then we want to continue to grow – and there is plenty of very clear evidence that we are already doing that at a good pace.
“If you put all the building societies in the UK in order from biggest to smallest, when I took over here five years ago, we were 21st and then we moved to 20th and are now at 19.
“But we’re not growing just for the sake of it, we’re growing because the bigger we get, the larger asset base we get, the more revenue we can generate off those assets and therefore the more we can invest back into the business. That gives our plans momentum which continues to build going forward.”
Investing in the region with jobs and mortgages is hugely influential on its own, but reaching out to its people – the foundations of the next 20, 30 and 40 years of this remarkable region gives Andrew and his team a very special place in our community.