Bad banking

No wonder the banks like Britain’s corporation tax regime. This morning’s newspapers all tell that Barclays paid just £113m in corporation tax in 2009, despite making profits of more than £11bn. In a rare instance of justified anger, Labour’s chosen men have launched an attack on the government’s failure to ‘take the robust action needed to make sure that the banks which caused the crash pay their fair share, and will stick in the stomachs of small businesses struggling to borrow and ordinary people feeling the pinch of the government’s austerity measures.’

Whatever the absurdities of Labour’s position, this news will ‘stick in the stomachs’ of the little people, whose wealth is withering before their eyes. Clearly the bank should be paying much more corporation tax, even under the new rate of 24 percent.  

This instance may be a one-off anomaly, but it feeds the populist line that the government has no grip on the banks, either in terms of tax or regulation. The popular narrative is predictably inaccurate: the Treasury is collecting more tax from banks, Project Merlin promises to give a small but nonetheless significant boost to lending, and casino banking is set to be isolated from the benevolent largesse of the taxpayer. But, as so often with this government, those intricacies have been drowned out by Labour’s simple conceits. Perceptions are important, and this government is seen to be hard on Middle England and soft on banks. It can’t afford to be.