Inflation too high, says Pitman

Sir Brian Pitman, chief executive of Lloyds Bank, yesterday attacked government policy and claimed Britain's inflation was out of control at the current level of more than 3 per cent.

Sir Brian, not known for public outbursts, has previously praised the Government for its tough stance on inflation and has urged industry to adapt.

But yesterday, he made his support for the Bank of England's monetary policy crystal clear and left no doubt that he thinks interest rates should rise.

Attacking what he saw as the Government's laxity over rising prices, Sir Brian said: "Over the last three months, inflation has moved up to more than 3 per cent, and it is moving up, not down. We regard controlling inflation as absolutely key to our [Britain's] success. I hope everyone is absolutely committed to that.

"I certainly haven't seen quite as much action as I would have liked to keep it down."

Sir Brian said perceptions were everything, and the UK now needed a signal similar to that which Alan Greenspan, chairman of the Federal Reserve, gave in February last year when he raised interest rates by a quarter of a per cent.

"I don't like inflation above 3 per cent. It changes perceptions. You have to take action before inflation takes off," said Sir Brian. He acknowledged the Government's predicament, but stressed: "You have to take the bottle away before the party starts. You're unpopular when you do that."

A Treasury spokesman responded last night: "The Chancellor and the Governor of the Bank of England have both said repeatedly that they are committed to keeping inflation down. The Chancellor has put in place the overall framework to hit inflation targets - less than 2.5 per cent by the end of this Parliament. These targets are the basis of their monthly meetings."

Sir Brian's attack came as he unveiled a 21 per cent rise in profits to pounds 735m for the first half of the year to the end of June.

This came despite a surprise pounds 120m general provision against future losses. The provision balanced a pounds 193m one-off gain from Lloyds' sale of stakes in 3i and Standard Chartered. Lloyds shares rose 13p to 677p.

Lloyds kicked off the bank half-yearly reporting season with a bang. Sir Robin Ibbs, chairman, rejected union accusations that Lloyds' latest strategic review, Project Martini, would result in 10,000 job cuts, branding it a "scare story".

The chairman said the project would improve customer service and involved "nothing like the change" banking union Bifu had indicated.

Sir Brian Pitman added that intense competition meant staff numbers would continue to be cut, but "in a natural way, not with sudden redundancies".

Lloyds rejected a Bifu suggestion that Sir Brian stood to make pounds 1m from cashing in share options. A Lloyds spokeswoman confirmed the chief executive had 443,645 share options priced on average at pounds 3.93, compared to yesterday's closing price of 677p. He had not exercised any options yet, she said.

The spokeswoman added: "All Lloyds staff are entitled to share options. Staff receive 6.92 per cent of their basic salaries in share options or cash this year. Sir Brian became chief executive in 1983. He is a long- term shareholder. He has no directorships elsewhere. He has dedicated himself to Lloyds Bank."

Analysts generally welcomed Lloyds' results, which included a 15 per cent increase in the half year dividend to 8.6p. They questioned whether this dividend growth would be sustainable following the pounds 1.8bn purchase of Cheltenham & Gloucester, which becomes effective on Monday.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most