Barclays’ CSR does not add up – by £1.5 billion

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Barclays CEO John Varley spoke at the Fifth Ethical Corporation Summit in London on 31st May this year. One of the issues he raised was tax paid (which, I have little doubt is because tax is now on the CSR agenda due to the pioneering work Sustainability and I have done). But this is what he said before doing so:

“Our top three ranking (in the Business in the Community CSR rankings) reveals something important: a strong performance as a responsible corporate citizen does not conflict with strong financial performance.”

And he went on to say:

“CR attaches to every facet of our business: our strategy, our product development, the way we treat our employees and the way we serve our customers. It covers everything from: treating customers fairly to playing our part in addressing climate change, to championing equality and diversity, to using our skills and resources to address issues such as financial and social exclusion. We can't (and shouldn't) separate our corporate responsibility activity from our daily business.”

Then he got to tax:

“Because we are successful we pay large amounts of tax: if I add the tax we paid last year on employee compensation to the tax we paid on our profits, it totalled more than £3bn. I know we are a big company, and big companies pay tax. No news there. But think again of that figure, and imagine how many schools and roads and hospitals you can build for £3bn.”

So, let’s be clear. In 2005 Barclays paid tax of £1,092 million (data from their accounts cash flow). It’s true, the current tax charge was £1,524, but I suspect that will be downgraded a bit before it is paid (as was the previous year’s, by £59 million). And, although I can see no earthly reason why Barclays should claim that the tax paid by it on employee compensation, whether as payroll taxes or as employer’s social security charges is actually a cost to it when all economists agree that this is a burden that really falls on employees who suffer reduced wages as a result, it doesn’t anyway come anywhere near squaring the circle of John Varley’s claims. The total such liability owed by Barclays in 2005 was just £412 million according to its own accounts.

If I add up £1,524 million and £412 million that comes to a total of £1,936 million that might have been due .

And if I add up the tax paid it comes to no more than £1,504 million.

The first of those figures is 64.5% of £3 billion. The other is almost exactly 50% of £3 billion.

So perhaps Barclays would like to say where £3 billion comes from, because on the basis of their accounts the number looks to be wildly inaccurate.

Almost as wide of the mark in fact as their claims about their attitude towards social responsibility which I cannot square with their provision of banking services in the Channel Islands or with their attitude to tax arbitrage, into which they are willing to invest billions to avoid their liabilities, as I noted here recently.

Put simply, Barclay’s CSR does not add up, by maybe £1.5 billion. Which as John Varley notes, is a lot of roads, schools and hospitals, except in this case they’re not being paid for by his bank.