The chief executive of Barclays has said the UK government needs to limit pay rises for public sector workers and resist a further “squeeze” on banks with tax increases.
CS Venkatakrishnan said the government needed to look at its own spending levels as the chancellor, Rachel Reeves, seeks ways to address a fiscal hole when she announces her budget in November.
“We need to curb expenditure at the government level,” he told the Financial Times. “We need to find a way to curb wage inflation.”
Venkatakrishnan said that while the government needed to restrict rising “public sector” wages, the inflationary impact of pay rises was an issue across the UK economy.
The Trades Union Congress (TUC) said Venkatakrishnan had a “brass neck” calling for pay rise curbs when his pay packet doubled to £10.5m last year, the highest for a Barclays boss since Bob Diamond received £17m in 2011.
“It is frankly insulting for him to call on nurses, teachers and paramedics to tighten their belts when he’s just pocketed a bumper pay rise,” said Paul Nowak, the general secretary of the TUC.
“Instead of talking down public sector workers, those with the broader shoulders – including the mega-wealthy like CS Venkatakrishnan, banks and gambling companies – should contribute their fair share to funding our schools, hospitals and local authorities.”
While UK wage growth has slowed in recent months, it is still running at an annual rate of 5.7% in the public sector, excluding bonuses. Private sector wage growth is running at an average of 4.8%.
Luke Hildyard of the High Pay Centre said: “Someone happily accepting a pay package of £10.5m doesn’t really have the moral authority to tell nurses and teachers and local government workers they shouldn’t get a pay rise.
“It would be a lot easier to fund decent wages for public sector workers if the wealth of multimillionaires was taxed more effectively, so if the Barclays CEO is concerned about the sustainability of public finances, he would look a lot less crass and hypocritical if he used his position to argue for a wealth tax on the super-rich instead.”
Venkatakrishnan also said the banking sector should not be a target of further taxation. “UK banks are taxed more than banks anywhere else,” he said. “How much more are you going to squeeze this?”
Banks are concerned that the industry’s reliable profits, fuelled by higher interest rates, could make it one of the targets for tax increases as Reeves comes under pressure to raise taxes to address a hole in her fiscal plans.
Last month, UK bank shares tumbled, cutting the combined market value of some of the biggest companies in the sector by more than £6bn, as fresh calls for a windfall tax on large lenders in the budget spooked investors.
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“I hope it’s an extremely low possibility,” said Venkatakrishnan. “London is a great global financial centre and the path to growth does not lie to taxing the sector even more. I have had the view from day one that this is a government that is pro business and particularly pro the financial industry.”
He claimed the UK banks had, in effect, a total tax rate of about 46% last year, compared with 28% in New York and 29% to 39% in the EU.
Barclays made £5.7bn in pre-tax profits last year in the UK, and paid almost £1.4bn in total tax. Of this, £198m was corporation tax and £154m for the bank levy.
“What I hope and expect is that they will take this time to think through the difficult choices they have to make,” Venkatakrishnan said. “No budget keeps everyone happy, but the object of it is to foster growth in the country.”
Venkatakrishan has been a vocal supporter of Reeves and the wider Labour government’s policies since it took power last summer, but has recently spoken out against proposals to change ringfencing rules that force UK banks to separate their retail and riskier investment banking operations.
