The case for keeping business taxes low

Why should business pay tax at all? That’s a provocative but forlorn question to ask in Budget week. Business pays corporation tax on profits because that’s what voters expect, partly because many are conditioned to believe profit is a sin and partly because all would prefer to pay less tax themselves. Investors pay tax on capital gains because — as the American bank robber Willie Sutton said of his crimes — that’s where the money is. And companies pay more tax as business rates on premises because that’s the easiest way to collect contributions towards public services from which they benefit — but it’s also an easy levy to relieve

Barclays has woken up to the good news about Brexit

The bankers would all move to Frankfurt. The hedge funds would all decamp to Zurich. The asset managers would be off to Paris and Dublin, and the lawyers, accountants and consultants would swiftly follow them.  For much of the last four years since the UK voted to leave the European Union, it has been assumed across most of the continent that one of the big prizes of Brexit would be repatriating the lucrative financial services industry out of the City of London to a series of European centres. Indeed, Paris was confidently expecting to boom on the back of all the business that would hop on the first Eurostar to

Martin Vander Weyer

Don’t bet on Trump putting a stop to the hounding of British banks

President Donald Trump is demolishing his predecessor’s legacy as fast as he can sign executive orders, but one thing for which the Obama administration will be remembered is its zest for imposing fines on UK and European banks. In a flurry of Department of Justice activity ahead of the transfer of power, Deutsche Bank agreed to pay $7.2 billion and Credit Suisse $5.3 billion for misleading investors in mortgage-backed securities before 2008, while Deutsche also copped a $630 million penalty (from UK as well as US regulators) for alleged money-laundering on behalf of Russian clients. Meanwhile, Royal Bank of Scotland set aside another $3.8 billion, making a total provision of

Britain’s economic fate doesn’t depend on Heathrow

Hit-and-miss, heavy-handed, but a necessary use of justice to deter repetition. That was my summing-up, last year, of the Serious Fraud Office’s probe into the Libor and Euribor scandal, in which just nine low-ranking traders from four banks were convicted, despite evidence that rate-fixing malpractice had been endemic throughout the money markets for years. In the case of the SFO’s inquiry into the controversial capital–raising that enabled Barclays to escape a taxpayer bailout in 2008, the summary has to be ‘miss-and-miss, heavier-handed than ever’. But still I ask: was it worthwhile as a warning to others? The nub of the case was the payment to Qatari investors, to secure their

Coronavirus is a chance to buy cheaper – but it comes with a health warning

If anything, stock markets have been slow to respond to the spreading coronavirus outbreak. Stories of Chinese supply interruptions, from JCB digger components to plastic toys, have been circulating since mid-February, while hedge funds have been hard at work short-selling cruise-operator shares: Royal Caribbean and Carnival are both down 30 per cent. Now airlines have taken a pasting too, with easyJet and Ryanair among the big fallers in Monday’s sell-off of European stocks, following news of a cluster of virus cases in northern Italy. Meanwhile, a turning point may or may not have been reached in the rate of -reported cases in Wuhan, where the outbreak began. The World Health

Time for new leadership at Barclays and HSBC – and a new name at RBS

After a dull interlude, the big banks in their annual results season look a bit more interesting again. First to report was Barclays, where pre-tax profits were up 25 per cent to £4.4 billion but attention focused, yet again, on Chief Executive Jes Staley, whose name rarely appears in print without ‘accident-prone’ attached to it. The trouble this time is his link to the late billionaire sex offender Jeffrey Epstein, who was Staley’s client at JP Morgan in his earlier career: under investigation is whether Staley was sufficiently ‘transparent’ with his board and regulators in declaring that relationship. Staley survived previous embarrassments, including a £642,000 fine imposed by the Financial

Martin Vander Weyer

Investors were right to sell Carillion shares when they spotted trouble ahead

The fallout from Carillion’s bankruptcy spreads in slow motion — just as the outsourcing and construction giant’s finances gradually stretched to breaking point over the months before it went down in January. The company’s auditor, KPMG, was rightly under the spotlight this week. But the impact on the ground seems to have been less disruptive than early reports predicted. Receivers have made 1,000 redundancies but have re-let many contracts, securing thousands of other jobs. Construction of the £335 million Royal Liverpool Hospital — one of the overrunning contracts that contributed to Carillion’s cash crisis — won’t now be completed this year, but outsourced services in many other places have been

We should never have expected the SFO to bring banks to justice

Friends of former Barclays chief executive John Varley — I don’t mean ‘people who speak to the media on his behalf’, but rather people like me who have known him all our working lives and hold him in high regard — were relieved to hear he has been cleared of fraud charges relating to the bank’s 2008 capital raising from Qatar. Charges against Barclays itself were dropped last year but Varley’s co–defendants Roger Jenkins, Tom Kalaris and Richard Boath now face a retrial — so I’ll say no more for now about the Serious Fraud Office’s handling of this dossier. But it’s fair to ask, in general, how well our

Bramson the corporate raider is not wrong about Barclays

If you know my personal history with Barclays, you may be wondering whether I’m for or against Edward Bramson. To recap, I’m a former second-generation employee of the bank as well as the custodian of a family shareholding that’s never likely to be sold — and nowadays, rather miraculously given everything that’s happened to me and the bank since I left 27 years ago, a recipient of its pension largesse. Bramson, by contrast, is a Johnny-come-lately: a New York-based ‘activist investor’ whose firm Sherborne has become Barclays’ third largest shareholder by building a 5.5 per cent stake, and who is seeking a seat on the bank’s board at next week’s

The Irish border issue is no mere sideshow – and UK ministers are mostly to blame

We may or may not hear news soon of a settlement of the Irish border issue that will allow Brexit to proceed without the calamity of ‘no deal’. Word this week was that Irish taoiseach Leo Varadkar might offer a compromise ‘review mechanism’ for the ‘backstop’ which might otherwise leave the UK locked in a customs union — but like me, you’re probably none the wiser as to what that actually means. History will judge this episode as a disgraceful example of politicians bluffing in the face of tough choices rather than explaining complexities or acknowledging hard facts — set out, in this case, in a Northern Ireland Affairs select

Toys ‘R’ Us: the predator that became the prey

I remember the arrival of Toys ‘R’ Us in Britain, because as a young banker in 1984 I was tasked with devising a menu of exciting financial products to offer a brash American retailer that was clearly going to take a bite out of our sleepy — and in those days still Christmas-seasonal — domestic toy market. How we sneered at that childlike reversed R in the logotype; likewise the Guardian, commenting on insatiable demand for Cabbage Patch dolls, derided the chain’s huge stores as ‘-cathedrals to kiddie gratification’. But however tacky its image, this was the ultimate ‘economic disruptor’, to use The Spectator’s current favourite phrase: a business that

Running a bank’s tough. That’s no reason to start handing capital back

A mixed bag of annual results from the big banks. RBS, still 73 per cent owned by the taxpayer, recorded a small profit for the first time since 2008 but took flak for a newly released report on the outrageous behaviour of its Global Restructuring Group, the team that mistreated struggling business customers in the post-crash phase. No wonder chief executive Ross McEwan looked tired, irritable and homesick for New Zealand. Lloyds, having served its time in the sin bin alongside RBS, is now by contrast the sector’s comeback star, with profits up 24 per cent to £5.3 billon (despite another hefty charge for PPI mis-selling) and promises of more

Portrait of the week | 15 February 2018

Home The Charity Commission said it would hold a statutory inquiry into a scandal in which Oxfam staff paid for prostitutes in Haiti in 2011. Penny Lawrence resigned as deputy chief executive of the charity, saying that allegations had been raised about Roland van Hauwermeiren, Oxfam’s country director in Chad, before he moved to Haiti. He resigned in 2011, when Oxfam referred to unspecified ‘serious misconduct’. Penny Mordaunt, the International Development Secretary, said that no organisation could be a government partner if it did not ‘have the moral leadership to do the right thing’. Last year, Oxfam received £32 million from the government. Priti Patel, the previous development secretary, said

Martin Vander Weyer

Could the SFO put an end to Barclays as we know it?

The Serious Fraud Office has upped the stakes in the case of the controversial $3 billion Qatari financing that saved Barclays from a taxpayer bailout in 2008, by extending the charge of ‘unlawful financial assistance’ to the operating company, Barclays Bank plc, as well as the parent, Barclays plc. Four senior former Barclays employees, including the then chief executive John Varley, are already due to stand trial early next year on the same and other fraud-related charges. The significance of the SFO’s move is that Barclays Bank plc stands in danger of losing its licences to run banking businesses, including branch networks, in the UK and elsewhere if convicted of

The truth about Brexit? One professor’s guess is no better than another’s

Removing all trade and tariff barriers as part of a hard Brexit would generate ‘a £135 billion annual boost to the UK economy’, according to Professor Patrick Minford on behalf of Economists for Free Trade — while those who claim his ideas spell economic suicide are ‘hired hands, they work for government, they work for big industry…’ Well maybe, as I frequently say: Minford talks of a 4 per cent GDP gain from free trade, 2 per cent from ‘improved regulation’ and more from reclaiming our net EU budget contribution and ‘removing the taxpayer subsidy to unskilled immigration’. All of which adds up to much more, for example, than the

Why I’m sad to see Barclays in the dock – and astonished to see John Varley there

Regular readers know I have an umbilical connection to Barclays, because my father spent his working life there, I was on the payroll myself for a decade, and I wrote a book about the bank’s modern history, called Falling Eagle. So I cannot react objectively to news that the Serious Fraud Office has brought charges against Barclays’ holding company and four former executives in relation to the £7 billion fundraising from Middle Eastern investors, including Qatar Holdings, that saved it from a taxpayer bailout in 2008. On behalf of the extended family of Barclays folk, I cannot feel anything but sadness to see a once-respected institution brought into the dock.

A whistleblower mystery that illuminates the inner turmoil of the banking sector

What troubled places banks have become, I thought as I listened to two news stories, one concerning a formal reprimand for Barclays chief executive Jes Staley after he tried to uncover the identity of a ‘whistleblower’, the other trailing new revelations about the Libor scandal. But both, I’m afraid, were so badly explained that the majority of listeners must have been none the wiser. The Staley episode is mysterious. Anonymous letters to Barclays directors made allegations about a recently recruited senior executive: Staley felt this was an ‘unfair personal attack’, believed ‘honestly but mistakenly’ that it was permissible for him to identify the author, and tried to do so with

Spot the endangered species: white men grab the chairs while Hogg loses her job

Tesco chairman John Allan provoked feminist fury by telling would-be non-exec directors, ‘If you’re a white male, tough: you’re an endangered species’ — then claimed he was really trying to make the opposite point, that ‘it’s a great time for women’. But to the contrary, this was a week in which tough white males grabbed the corporate prizes, while one high-flying woman from an oppressed minority was hounded out of her job. First, the blokes. HSBC announced, for the first time in its history and to the satisfaction of governance zealots, the appointment of an outside chairman. Incumbent Douglas Flint is to be succeeded by Mark Tucker, a former professional

Charlotte Hogg didn’t know what her brother did at Barclays. Why would she?

It’s too late now, but I didn’t feel Charlotte Hogg made enough of her defence that until recently she didn’t even know what her brother did at Barclays. His own colleagues probably didn’t know either: operating somewhere below the board and executive committee where strategic decisions are really made, a ‘director of corporate strategy’ in an institution perpetually riven by power struggles is at best the equivalent of a powerless squire in Game of Thrones. I speak from experience: for a few months long ago, I held the title of ‘head of international corporate finance’ in Barclays’ investment bank, but as far as I could ascertain it carried no authority

The Big Bang did more harm than good

As the 30th anniversary of Big Bang loomed, I found myself back at the scene of my City demise. Ebbgate House — headquarters of BZW, the investment banking arm of Barclays where I worked until one fateful morning in 1992 — fell deservedly to the wrecking ball a decade ago. It was replaced by Riverbank House, and there I was last week, hovering above where my desk used to be, talking about ‘why no one listens to the City any more’ and reliving the P45 moment that released me into the happier world of journalism. Personal echoes apart, this was also a moment to revisit Big Bang, the Thatcherite reforms