Nobody who has ever read this column on the subject of retail banks could call me a starry-eyed supporter of them. But sometimes a banking story breaks in which the banks themselves are not the villains of the piece. Such was the case last week, when Chancellor Gordon Brown’s attack on the high street banks evinced a modicum of sympathy for these service companies, in a breast that usually heaves with indignation at their incompetence.
Sometimes, my enemies’ enemy is not my friend. Sometimes, my enemies’ enemy is so lacking in judgment that one feels obliged to come to the aid of one’s enemies and say: “Lay off – they may be awful, but your behaving like a twerp can only make the situation worse.”
Such is the situation after last week’s attacks on the banks. And the twerp is the Chancellor. It is all the more disturbing to find myself on the side of the banks in this imbroglio, because hitherto I had believed the Chancellor to be a man of depth and distinction, characteristics that set him apart in New Labour’s mediocre ranks.
A number of commentators with earlier deadlines than mine have already laid into the Chancellor on this matter. Most have upbraided Brown for handing the banks a gold-plated opportunity to recoup the costs of their services to small businesses by charging the rest of us more.
But I believe that there are a couple of more fundamental points about the conduct of business – and the Government’s misunderstanding of it – that are more than worth airing.
Coincidentally, the first of these resonates with a point I made last week. I wrote, in relation to a prevailing political attitude to corporate social responsibility, that there is a residual left-wing assumption that companies’ profits are the fruits of wicked, exploitative acts.
I remarked that, if anyone doubted that this was so in post-socialist Britain, they should spend an hour or so in the corridors of Westminster. Little did I realise how quickly this observation would resonate in the actions of a senior member of the Government.
Brown rounded on the Big Four banks – Lloyds TSB, Barclays, HSBC and the Royal Bank of Scotland – for operating “against the public interest” and for making “excessive profits”, as if there were a causal relationship between these two factors.
What, we are entitled to ask, are “excessive profits”? They can only ever be those that go beyond a threshold estimated – quite arbitrarily and subjectively – by an individual who has decided that, at some stage, capitalism becomes unacceptable.
In this case, the individual is the Chancellor. He has, in his dignified and refined way, brought us to this Spartist junior common room before.
In 1997, we were all so weary of the spivs and hucksters who had been running the Tory governments in the stub-end of a right-wing revival that had lost its ideology when it lost Margaret Thatcher, that we willingly rolled over like penitents and accepted the “windfall tax”, levied on the privatised utilities when New Labour came to power.
This was an arbitrary levy on the allegedly “excessive profits” that had been enjoyed by the privatised utilities. These companies largely accepted the millions ripped from shareholder value, partly because there was the promise of reinvestment of these appropriated funds in public services – a popular prospect then, as now.
One might observe that we still await some improvement to our transport system and health services.
Now, the Chancellor has decided that the way to force the banks to offer a better service to small businesses is to force them to reinvest some of their “excessive” earnings in things like interest-bearing current accounts.
(Memo to HM Treasury: A few bob on a current account isn’t going to make the difference between life and death for a small business; the rest of us – including the owners of small businesses – will have to pay for it meanwhile, and new competitors will be discouraged from entering the small-business banking market.)
The banks are useless at providing small businesses with productive services. I should know. The answer is not to try to make them act like corporate benefactors in some Blairite Nirvana, but to provide an atmosphere in which small businesses can prosper to the extent that they command their own destiny and can consequently call the tune to their banks.
Which brings me to my second point. Economic and social engineering, as represented by such instruments as the Working Time Directive and the minimum wage, may be attempts to move us towards the aforementioned Nirvana, but they are a far greater burden on small businesses than are the banks.
As an architect of such legislative instruments, for the Chancellor to pretend otherwise amounts to rank hypocrisy. Small businesses care less about the profits of the big banks than they do about their own profits, which are far more likely to be adversely affected by heavy-handed socio-economic regulation.
So why has Brown done this, intelligent man that he is? My guess is that, in next month’s Budget, he will propose to subsidise public-spending plans through increased National Insurance contributions, which will make him unpopular with the business community.
Better, therefore, to have attention directed elsewhere when businesses are looking for a villain to blame for their misfortunes. Charming, isn’t it?
George Pitcher is a partner at communications management consultancy Luther Pendragon