The banks are an easy target when it comes to stories of corporate greed. And I’m not particularly inclined to defend them; like nearly everyone else I’m well aware of the role played by banking incompetence in the global financial crash and the seeming amorality of the bonuses paid to undeserving staff. But, even so, if you’re going to bash the banks, it helps if you can add up. These are a couple of examples of what I mean.

Firstly, there’s this story on the BBC website about the amount of tax paid by Barclays. The first two paragraphs read

Barclays has revealed it paid £113m in corporation tax to the UK in 2009, 2.4% of its £4.6bn global annual profit.

Labour MP Chuka Umunna, of the Treasury Select Committee, who requested the detail, described it as “shocking”.

Take a look at that first sentence again. Notice what the figures relate to: £113m paid in tax in the UK, out of a global profit of £4.6bn. On the face of it, that’s a very small percentage of profit. But hang on – that’s global profit, and UK tax. Like every multinational, Barclays pays tax in every country where it operates. So that £4.6bn is being taxed in countries all around the world. The figure of £113m in the UK relates to tax on UK earnings, not to global earnings.

So, is Barclays paying too little tax? Futher down in that article, we read

According to Barclays’ financial results, the bank paid an “effective tax rate” on its gross profits – which comprises corporation tax paid in all parts of the globe – of 25% in 2010 and 23% in 2009.

Corporation tax in the UK is 28%, so, globally, Barclays is paying a bit less in percentage terms than if all their operations were UK-based. But, since UK corporation tax rates are a bit higher than the global average, pretty much any multinational will be paying a slightly lower tax rate than a purely UK company. Taking that 23% “effective tax rate” and applying it to the global profit, Barclays will have paid £1.06bn in tax in 2009. Of that, we already know that £113m came to the UK. That’s a tad more than 10% of the total.

So, Barclays pay around 10% of their global tax payment to the UK. Is that the right amount? I don’t know, and neither can anyone else without detailed knowledge of their accounts. But it certainly looks to me to be in the right ballpark. Maybe Chuka Umunna should have done the same simple maths before describing the figures as “shocking”. To me, it’s rather more shocking that someone can be on the Treasury Select Committee with such a lack of the basics.

The second bit of banker-bashing is even more bizarre. Lobby group UK Uncut released a statement yesterday that

Islington Council recently threatened to axe dozens of vital services in a £52 million budget reduction including the Sotheby Mews Day Centre for old people in Highbury, Police Community Support Officers (PCSO) for primary schools, advice services for troubled teenagers, and help with shopping, laundry and cleaning for the elderly.

UK Uncut’s answer to that is

Seeing as RBS has so much extra cash from the bail-out and is mostly owned by us the public, it’s time RBS gave something back to the community…

So bring your dirty washing, buckets, soap, washing lines, clothes pegs, clothes horses and lets clean things up a bit. If Islington council has to cut laundry services for the elderly, then we will have to take the laundry to RBS , after all were all in this together! 😉

Apart from the extremely strange decision to take it out on RBS, the figures here don’t add up either. Islington’s government grant is being cut by 12%, which works out at a reduction in cash terms of £36.6m, not the £52m reported by UK Uncut. There are two possibilities for the discrepancy: either UK Uncut have simply misread something, or Islington council is deliberately exaggerating the effect of the cuts. Again, I have no idea which is the actual cause, but, either way, someone at UK Uncut should have done some simple maths before releasing their statement.