Our bond with the North can fuel big changes

Apr 10 2006 By Howard Walker, The Journal

Bridging the region's enterprise gap is no easy task, but as chairman of the North-East Enterprise Bond, Northern Rock deputy chief executive David Baker is hoping to help do just that, as Howard Walker discovers.

Appearances can be very deceptive.Take David Baker. The Northern Rock deputy chief executive seems every inch the polished banking professional, from his smart but sober suit to his firm handshake.

Yet the 52-year-old is a former sociology student who originally wanted to be a careers teacher and candidly admits he didn't even know what a building society was when he joined the Rock more than 30 years ago.

What's more, beneath that calm exterior lies a crack centre-forward who once notched up a record 46 goals in one season for Walkergate Community Centre and a Newcastle United season ticket holder whose dream job is being a football writer.

And despite building an enviably successful career in the highest reaches of an FTSE 100 company, Baker wonders how different his life could have been if the idea of starting up his own business had been put before him during his formative years.

"I think I have been very lucky in my career - it has been a good combination of being able to stay in the area I love for a company I enjoy and with people I get on with," says Baker.

"But part of me now thinks what would have happened if I had started my own business and been encouraged to do so. I would not say I am an innovative person but I might have been if I had been given a different path.

"I think everyone has creative skills in them and that's what the North East Enterprise Bond is there for - to open up and give encouragement in that direction."

Despite a relative lack of entrepreneurial experience - "I'm more of an enabler, someone who executes things" - the father-of-two is an eloquent and effective advocate for the Bond, which was launched last week and aims to boost the North-East's enterprise sector.

And there is no doubt that it needs boosting. The region is lagging so far behind in terms of creating new businesses that an extra 32,000 start-ups are needed just to bring the North-East up to the national average.

"I don't believe for a minute that people here are worse than people in Birmingham, Bradford, Belfast or wherever - I just don't think people naturally think about or are encouraged to start their own business," says Baker.

"The people are great, the area is great and it's a lovely part of the world, but in terms of enterprise it lags behind the rest of the country, and I don't like that.

"We have almost come to accept we are second or third division and I think that's wrong because the North-East and Newcastle was one of the prime cities in the UK for innovation with the likes of Parsons and Armstrong, but we have slipped behind to a point where it should not be tolerated.

"I've come to the conclusion that we can't rely on being subsidised by the public sector and the best way forward for this area is to create lots more businesses."

The North-East Enterprise Bond is born out of this kind of independent, self-help spirit and belief in the qualities of the region's people.

Under the scheme, which follows on from the Newcastle Employment Bond started in 2001, companies and organisations agree to lend a sum of money for five years. That total - it stands at £2.5m and the target is £5m - will then be lent to the North British Housing Association for regeneration work in the Walker Riverside area of Tyneside.

The interest the housing association pays on the loan will pay for Launch Pads - lorries converted into mobile presentation and classrooms kitted out with the latest technology which will travel across the region to bring the message of enterprise, literally, to the streets.

Working in partnership with enterprise promoters, including Big Ideas and People into Enterprise, the Launch Pad is intended to help to educate and inspire people to start their own businesses.

Enough money has already been raised to operate one Launch Pad for five years and a second will come into operation if the £5m target is reached.

At the end of five years, at least 50,000 people will have benefited and those who contributed to the bond, being administered by Northern Rock, will receive their money back in full.

Baker admits the concept may initially seem rather unusual - "I thought it was a bit barmy at first" - but says enterprise agencies have been raving about it, seeing it as the ideal way to engage people more into thinking about starting up on their own and to reach places which they normally cannot.

The scale of the funds already raised and the identity of the lenders - the likes of Sage, Greggs, NRG Group and the Northern Rock Foundation - show plenty of people agree.

Baker admits that the Bond is no magic wand. "It will be a long journey. One visit won't just make people start their own business on its own, but repeat visits will give people direction, point them to the right agencies who can then check up on them, help them with their business plans and help them set up their business."

There's no doubting his passion for the scheme, but surely the second in command at a FTSE 100 company wouldn't get into something if there was no commercial spin-off?

"Northern Rock are involved because I am involved and there is no commercial benefit for Northern Rock at all," says Baker, pointing to the fact that the bank already devotes 5% of all its pre-tax profits to the charitable Northern Rock Foundation it set up in 1997. Even if you were not to take the deputy chief executive's words at face value, common sense shows that as a mortgage bank, Northern Rock is not in the habit of carrying out business banking.

"Altruism is not entirely dead," says Baker with a wry smile at the line of questioning.

"If we don't do it for the North-East, no-one is going to and that's a sentiment that runs across many organisations in this region. Sage, Greggs and NRG have got good reputations for extending their hand to help voluntary and charitable activities in the North-East and we will engage them in this."

Baker's involvement in the Bond clearly stems from emotion rather than calculated reasoning. "I feel I have a responsibility to stand up for the region - I have an emotional response to this because I was born and bred in the North-East and I absolutely love it."

What he doesn't love about the region is unemployment and he speaks about joblessness in terms far removed from those you would expect of a senior banking executive.

"Unemployment is a social disease," he declares. "It undermines everything, creating crime, drug problems and undermining family life. When people are employed, they have got a structure to their lives and discipline.

"So, for many reasons, we have to keep plugging the idea of creating employment in the North-East."

This interest in society's problems and helping others help themselves seems to stem right back through Baker's life.

Born in Newcastle, he went to Dame Allan's Boys' School in the city before going to Newcastle Polytechnic to do a BSc in sociology - hardly what most aspiring bankers would choose.

"I wanted to do a career that would help people," he explains.

"My family came from that background. My sister was a nurse, my father was in the civil service, my mother was a teacher and I was brought up to think about helping others, so that was naturally steering me towards the public sector.

"After I graduated, I wanted to be a careers teacher but no-one would employ me. My dad was sick of seeing me round the house and saw an advert in the paper for graduate trainees with Northern Rock (then a mutual building society).

"I didn't know anything about banking or building societies - I had to get out a dictionary to find out what a building society was."

Baker even admitted this fact during his job interview with Leo Finn, who later became Northern Rock chief executive.

"He said I didn't need to know because I would get good training as a graduate," he recalls.

Baker's two-year training programme lived up to that promise, taking in all areas of the business, starting at the bottom.

"My first activity was to help push the post trolley round the building four times a day. It was done deliberately by Leo to knock any edge off me and make me realise I had to work with people."

Northern Rock was already starting a growth trajectory which continues to this day and Baker found this opened up scope for regular promotions in a range of different jobs at the society.

"I have never set goals because I didn't need to, since the company effectively pulled me along. I grew up and matured within my business life along those lines."

By the time Northern Rock demutualised and floated on the stock exchange in 1997, Baker was an executive director. He says the end of the Rock's mutual status was necessary for the business to continue growing, pointing to the bank's £200m investment in its offices in Gosforth and Sunderland, the ever-increasing dividends for the Northern Rock Foundation and the huge expansion in staff numbers from 2,400 to 5,800 as evidence.

And despite becoming a key cog in the running of what is now a major UK bank, Baker feels he has still stayed true to his beliefs.

"Creating jobs in the region is one of the reasons why Northern Rock has set itself against outsourcing parts of its operation to the Far East and India. It's awful to think of companies taking jobs abroad, particularly in this part of the world."

While keeping a tight lid on costs helps the Rock to take such a line, the bank does put its money where its mouth is.

Last year it announced plans to create 2,500 more jobs with a new office complex at Rainton Bridge Business Park in Houghton-le-Spring, investing £60m in the move.

However, the Highways Agency has since thrown a giant spanner in the works by slapping an Article 14 ruling on the scheme, blocking the development while it investigates how it will affect traffic in the area.

Baker chooses his words carefully when asked about his reaction to the Government effectively halting the creation of 2,500 jobs by a home-grown company which has not asked for a penny in grants for its plan.

"We are very disappointed," he says diplomatically.

"We think there should be more joined-up thinking here. What we are offering is to expand a local business and create a lot more jobs in an area crying out for job creation.

"We understand the Highways Agency have a responsibility to make sure the development won't create huge problems so we will give them all the information they need and we urge all the agencies involved to come to a decision as soon as possible."

* For further information on the North-East Enterprise Bond, contact Nikki Wilkinson or Estelle Vasey on (0191) 279-4839, email nikki.wilkinson@northeastenterprisebond. org or go to www.northeastenterprisebond.com

The Questionnaire

What car do you drive?

BMW X3.

What's your favourite restaurant?

Café 21.

Who or what makes you laugh?

Lots of things - corny puns, Blackadder, Peter Kay.

What's your favourite book?

Tess of the D'Urbervilles by Thomas Hardy.

What's your favourite film?

The Godfather.

What's your ideal job, other than your current one?

Football reporter.

If you had a talking parrot, what's the first thing you'd teach it to say?

"Have you lost weight?"

What's your greatest fear?

Relegation.

What's the best piece of business advice you have ever received?

"Your employees are your biggest asset."

Worst business advice?

None.

What's your poison?

New Zealand Sauvignon Blanc.

What newspapers do you read (apart from The Journal)?

The Times and The Observer.

How much was your first pay packet and what was it for?

£10 for one week as a gardener during summer holiday in 1972; I was useless.

How do you keep fit?

The Northern Rock gym - but who said I was fit?

What's your most irritating habit?

Please refer to my wife!

What's your biggest extravagance?

My No. 1 wood cost £200 and I have only hit the ball properly twice. I'm hopeless at golf.

With which historical or fictional character do you most identify?

Roy of the Rovers - great striker, great bloke.

And which four famous people would you most like to dine with?

Churchill, Henry VIII, Alf Ramsey, Jack Nicklaus.

CV

Education

1964-1971: Dame Allan's, Newcastle.

1971-1974: University of Northumbria, BSc Hons in Sociology.

Employment

1975-present: Northern Rock.

1996-2001: Executive director.

2001-2005: Chief operating officer.

2005-present: Deputy chief executive.

Directorships

1996: Northern Rock.

2001: Newcastle Employment Bond Limited.

2005: North-East Enterprise Bond.