let's be generous to barclays

Submitted by antarchi on February 20, 2011 - 02:22
UPDATED:
Correspondence with Evan Davis

Good old BBC. Let's try as hard as we can not to make the banks look too bad.

Nearly all outlets are reporting that Barclays paid out less than 1% of its stupendous profits in corporate tax:

The Guardian
Sky News
FT (uses Barclays' own initial declaration of 11.6 bn in profit, which gives the 1% figure for corporate tax.)
The Daily Torygraph (yes, even them)
The Mirror
The Daily Mail (uses 11.6 bn figure)

The Independent ... manages to bump it up to 4.5%

And the BBC?

This page on the BBC says 'Barclays has revealed it paid £113m in corporation tax to the UK in 2009, 2.4% of its £4.6bn global annual profit.'

This page (BBC) says 'Barclays has said it paid £113m in corporation tax in 2009, which was 2.4% of its global profit.'

Evan Davis reveals all in his morning chat with Joe Lynam on the Today programme:

ED: First just tell us what the profits are, because the Guardian calls it 11.6 billion pounds of profit
JL: ... and Barclays say that was correct for 2009. But then they changed the number when they released their figures this week on Tuesday, so they .. they're now saying that the official figure that they should have said last year was £4.6 billion. Both the Guardian and Barclays are correct, because they sold a huge management company called BGI for around 7 billion, they then took that back off the profits that they had ...
ED: So let's call it ... let's call it 4.6 billion, be generous to Barclays, which makes it a rate of 2.4%...

'Let's be generous to Barclays'!!?

Why, Evan? Have we not been generous enough to the banks already1? Do they need our generosity - more, for example, than the ordinary tax payer needs it? Do they need it more than the sick, the disabled, the homeless, the jobless? Do they need it more than our schools, universities, libraries, hospitals, care homes - all of which must expect less generosity from the state because (so we are told) there is less in the coffers to support their genuine needs?

Less in the coffers, of course, because the previous government was so generous towards the banks which held us all to ransom, and through their greed nearly collapsed the system. And less in the coffers because the banks even today cannot be 'generous' enough to pay back into the system any more than they pay out to a single individual who helps to bring them more than 11 billion in profit, who shuffles the profit around and launders it out to the Cayman Islands in order not to have to contribute in any way to anyone or anything that lies outside the sphere of his or Barclays Bank's immediate interests. And incidentally, whose personal wealth is already of such magnitude that it would take the average worker in this country 5,000 years to accumulate - as long as for the whole 5,000 years she paid out nothing at all on food, housing, clothing, healthcare, entertainment, pension contributions, or getting from place to place. And nothing at all in tax.

Really, who is it that needs our generosity today?

Letter to Evan Davies:

Dear Evan Davies
In your interview this morning with Joe Lynam, you having clarified to your satisfaction the level of Barclays' profits, you went on to say 'let's call it 4.6 billion, be generous to Barclays, which makes it a rate of 2.4%' Can you tell me why you decided to settle on Barclays' preferred figure, the one which makes the level of corporate tax paid by the bank appear higher? Why did you decide to be 'generous' to Barclays: is that the role of a journalist?

Almost every other news outlet is quoting Barclays' initially declared figure of 11.6 billion, which results in a rate of corporate tax at less than 1%. The BBC stands almost alone in holding out for Barclays. Why does Barclays deserve generosity when its own lack of it directly impacts on the government's ability to provide services and benefits to those whose welfare depends on them?

Thank you for your time
EK

Response from Evan Davis:

Hi Ellie

Thanks for your email.

It's funny that you think Barclays case looked stronger the way I presented it. That's not my view at all. The difference between 1 per cent and 2.4 per cent is trivial so getting the tax rate up to 2.4 is hardly helpful to the bank.

My desire was to make it clear that the low tax rate was not a result of the definition of profit.

Saying "even if you accept Barclays argument on profit, the tax is almost nothing" is not to favour the bank.

Evan

My response:

Dear Evan,
Many thanks for responding. You may be right that the difference between 1% and 2.4% is relatively trivial. My point was mainly that it is surely the BBC's task to be accurate rather than generous. Why opt for the generous interpretation rather than the accurate one?

I'd also say that to an ordinary person, the difference between £4.6 billion of profit, and £11.6 billion (a mere £7 billion) is far from trivial. Barclays itself reported its own profit for 2009 to be £11.6 billion. The fact that part of that figure included the sale of BGI, which would have been taxed at a different rate, is irrelevant to the amount of money they made (pre-tax).

Much of the public interest in the story is connected to the enormous sums of money being made by banks, particularly given the role they played in causing the financial crisis. In using a figure for pre-tax profit which is less than half that announced by Barclays, I would say you were indeed being very generous to Barclays.

With thanks
EK