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Get to Grips with Banks' Morality

by The Revd Dr Giles Fraser

Posted: 28 Feb 2011

"The corporate tax affairs of an organisation like Barclays are complex, and not reducible to simplistic comparisons," Barclays said. But it is not all that complex. Barclays has paid just 2.4 percent corporation tax on its 2009 profit of £4.6 billion.

Many people are justifiably outraged, not least because it seems that we have been round this one time and again, and nothing seems to change. After the credit crunch, the Archbishop of Canterbury challenged those working in banking "to stop and wonder whether this might be a moment of enormous and strange opportunity". It was an opportunity not taken.

But perhaps most of us have not been outraged enough; or, rather, we have expressed a generalised sort of outrage, without ever having tried to fathom out the details of what has been going on. For a year or so now, I have been running St Paul's Institute, an educational think tank that seeks to bring Christian ethics to bear on questions of finance and economics.

Given how much of the Bible is concerned with the right use of money, and the huge social impact that banks have on the way we live, one would have thought that churches would make the ethics of finance a high priority. But my experience is that, often, they do not.

Yes, the world of the City can be difficult to understand, and it may seem like a closed shop. Many issues are, as Barclays suggests, "complex". But we must not be intimidated or put off by this. There are ways for the non-specialist to grapple with the issues.

This week, the Ecumenical Council for Corporate Responsibility (ECCR) has published a report, The Banks and Society: Rebuilding Trust. It is a great resource for churches to get people thinking about the moral issues involved, including clear explanations of the slippery line between clever tax-avoidance and illegal tax-evasion, and of how banks set up "complex circular transactions with little or no economic value". Note that word "complex" again.

Complexity, of course, is the way some organisations mask what they are doing, throwing up a smoke-screen, so that ordinary people get baffled and walk away. We must not allow ourselves to be fooled. In December 2009, the Government set up a voluntary Code of Practice on Taxation for Banks, in which those who sign up - and Barclays has signed up - commit themselves to greater transparency and to reject the exploitation of tax loopholes.

It is up to us to hold the banks to their best intentions. And we can properly do this only when we develop a greater literacy in the ways of the banking world. The ECCR report is a good place to start.

About this author

Former Canon Chancellor of St Paul's Cathedral and previous Director of St Paul's Institute.

Sebastian Church - Posted: 27 Apr 2011

As ever (on current performance) Canon Fraser has it spot on. Some of it is complex, and some organisations abuse the complexity, furthermore the complexity is made difficult for the Directors of the businesses. Their legal duty is to maximise shareholder value; if a clever tax barrister comes up with a legal scheme to minimise thier tax liabilities it is always going to be hard for them to say no (particularly in an international and competitive market place).

Barclays paid little tax tlast year (2.4%) due mostly to vast losses in the previous year, however, all UK based banks still pay vast amounts in other taxes (particularly payroll related taxes).

Unfortunatley, the only approach that will work on corporate taxes is to put them at a level where companies prefer to pay UK taxes to taxes in other countries.



Jennie Brindley - Posted: 07 May 2011

Should we be challenging international corporations to be more transparent in developing countries as well? There is a discussion forum - Are we robbing the world's poor to fund our lifestyle? - to focus on tax and related issues this morning at St Barnabas Hall, Village Way, 10.45. Speakers include Loretta Minghella, Director Christian Aid. all welcome.


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