There are no branches of Coutts in Sheffield Hallam, Mid-Bedfordshire and Swansea East. In fact, there are no branches of any bank in these and the 14 other parliamentary constituencies that have been at the sharp end of a mass closure programme in the past decade. In all, there have been almost 6,000 branches shut since 2015 and the NatWest Group – the owners of Coutts – has closed more than any other bank.
So the first thing to say about the high-profile row that led to the resignation of Alison Rose, the chief executive of NatWest, is that Nigel Farage is not the only account holder to be debanked. He is simply more famous than your average NatWest customer living in Reading West or Colne Valley.
Nor is Farage by any means the first customer to feel that an account has been closed unfairly. There have been more than 8,500 such complaints to the Financial Ombudsman Service in the past five years.
Rose can expect scant sympathy from these people, nor – judging by the brutal way in which the government used its 39% stake in the bank to oust her – from the wider public. Rishi Sunak thinks voters will side with Farage rather than Rose, and he is almost certainly right. There is little love for the banks, which is understandable.
These are the same banks, remember, whose speculative activities led to the global financial crisis of 2008 – an episode that came close to precipitating a second Great Depression. Banks spent only a short while on the naughty step, but bankers’ pay and bonuses still rankle with those struggling to make ends meet during a cost of living crisis.
Banks are also doing well out of rising interest rates. That’s because the rates they are charging borrowers are going up more quickly than the rates they are paying savers. A widening of the spread between borrowing and saving rates means higher profits, but as the Bank of England raised interest rates from 0.1% to 5%, the gouging of customers became so obvious that Jeremy Hunt called in the bank bosses for a dressing down. It is quite something when a Conservative chancellor feels the need to call on the banks to raise the “measly” rates paid to savers.
Normally, those on the left struggle to find a kind word to say for the banks. They argue – correctly – that the economy has been over-dependent on the City. They say – equally correctly – that much of what the financial sector does is of dubious value other than to the highly paid people involved in all the wheeling and dealing, and that some of what the banks do – funding fossil fuel extraction – is positively harmful. They would support the idea of a windfall tax on excess bank profits.
The fact that it has been Farage having a fight with Coutts and NatWest complicates matters, because the left has to decide who it hates most.
In reality, it should be no contest. On one level, this is simply a freedom of speech issue that requires liberals to stand up for the right of people with whom they disagree to express their views. In part, too, it means calling out Coutts – an elitist institution if ever there was one – for its laughable attempt to brand itself as inclusive.
More than that, though, supporting Coutts against Farage has meant turning a blind eye to the limitations of what has become known as woke capitalism – an attempt to marry the desire of companies to make money with support for all sorts of worthy causes. Despite the good intentions, the real priority – maximising profits – has too often been hidden behind a cloak of ethical humbug.
It is not just the banks. The telecoms regulator, Ofcom, is facing calls to investigate why mobile and broadband companies pushed through price increases of up to 17% this year. The water industry has been shamed into apologising for more than 300,000 incidents of sewage pollution in 2022 after years of underinvestment.
At the same time, all the big companies in the mobile and water sectors regularly issue environmental, social and governance (ESG) reports. Just mentioning one from each: the first line of the Thames Water ESG report says, “We have a long commitment to becoming more sustainable in all areas of the business.” Vodafone’s says, “Our approach to ESG is an integral part of our purpose and strategy to enable an inclusive and sustainable digital society.”
Public limited companies enjoy enormous legal privileges in the UK, and in the past, gains from efficiency savings and higher productivity were shared between a company’s shareholders, its workers and its customers in the form of higher dividends, higher wages and lower prices. Interestingly, Hunt used an article in the Times today to make precisely this point. “Profit is the engine of investment,” he said. “But the other side of the coin is a social contract in which customers get reassurance they are treated fairly.”
The banks say their branch closures are simply a response to the way people manage their money, with more transactions conducted online or by phone. The same argument is wheeled out to justify the closure of ticket offices on the railways. In both cases, those who really suffer are poor and vulnerable people who may not have smartphones, or aren’t tech savvy, or are disadvantaged in some other way.
Sure, there are examples of companies putting progressive policies into practice. Some supermarkets are doing their bit for the planet by cutting down on plastic packaging and sourcing food more sustainably, for instance. But, in truth, there is a massive reality gap between what many companies say they stand for and what they do.
The reason claims of greedflation – companies quietly bumping up their profit margins during the cost of living crisis – resonate is that many people feel as if they are being fleeced in rip-off Britain. And they see corporate inclusivity and diversity policies for the window dressing they often are.
Larry Elliott is the Guardian’s economics editor
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