Bad news. If Martin Taylor gets his way, Barclays will soon be allowed to merge with National Westminster Bank, destroying 20,000 jobs in the process, many of them low paid and unskilled. Margaret Beckett doesn't much like the idea, and nor does Gordon Brown, if the truth be known, but Mr Taylor is reported to be working on them.
Is there not just the faintest hint of a difference between what Mr Taylor preaches and what he practices? Next month, Mr Taylor will be producing a review for the Government on reform of the tax and benefit system - again, all designed to get people off benefit and into work. Indeed, this is to be the central theme of the Budget itself. And it is Mr Taylor who has been advising Gordon Brown on it all. Meanwhile, back in the day job, Mr Taylor is shedding labour as fast as he can sign the redundancy cheques.
How does he manage to sleep at night? To be fair on Mr Taylor, there's nothing wrong or unreasonable with aspiring both to public-interest tax and benefit reform while at the same time pursuing the supposed competitive needs of his own business. The problem is that the two things pull in different directions.
Getting the long-term unemployed back into work requires more than reform of tax and benefits. It also requires job creation and since the long- term unemployed tend to be unskilled, that means primarily at the lower end of the pay scale. Unfortunately, this is also where the extreme competitive pressures placed on companies by the process of globalisation and technological advance are at their most brutal.
With his heart Mr Taylor wants to create more jobs for the benefit-dependent to fill. Reality is meanwhile destroying them at breakneck speed. So with his head, Mr Taylor is ensuring that he keeps his bank competitive by playing the fullest possible part in the process.
Growth in service sector activities like catering and leisure is to some extent easing the pain but the big demand in developed economies these days is for skilled, knowledge-based labour. Even Mr Taylor is being forced to recruit IT specialists as fast as he is shedding his clerks, as amply demonstrated by the big jump in underlying costs that Barclays recorded last year. As fast as Barclays cuts its labour and other overheads, it is forced to give it all back on extra IT spending. Outgoings on the millennium bug and preparations for the single currency come on top.
Though he was refusing to say anything about it yesterday, Mr Taylor wants to take the process of change much, much further. He wants to merge with NatWest to create a national champion capable of punching its weight in Europe and beyond. If we don't do this, his emissaries claim, we'll get left behind. Europe after the advent of the single currency will become the plaything of a small number of dominant national players, they argue.
Think of Britain now, with its relatively small number of retail banks, some of them with very high market shares. That's what the European market will look like 10, 20 years from now, the argument goes. Those countries that prevent this process of consolidation from happening will end up with their banking market overrun by those who do.
Are ministers going to buy this? Are they really prepared to allow big job cutting mergers even as they are trying to promote policies that create employment and force the benefit dependent back to work? Tony Blair seems to have become so beholden to the forces of big business that anything seems possible. Who knows, Mr Taylor may even be right. It may indeed be the case that a small number of dominant national players are more capable of competing abroad than a larger number of less dominant ones.
But is such hegemony also capable of creating a more prosperous, vibrant and competitive national economy? All the evidence is the other way. Think back 15 years to the overpriced, low-quality service that was the British Telecom monopoly. Dismantling it has been a long and hard fought process but few dispute that the end result has been anything other than overwhelmingly positive. We now have Europe's most competitive telecommunications market. That's been good both for jobs in telecommunications and related services, and for the general competitiveness of the British economy. Do we really want to go the other way in banking?
The stock market may have been disappointed by Barclays' profits yesterday but in fact retail banking profits are now reaching levels which everyone else can legitimately regard as excessive. The way for policymakers to address such excess is not through the crude mechanism of a windfall tax, but by protecting and nurturing a properly competitive environment. Britain has too few banks, not too many. Mr Taylor is a persuasive character but, in the end, good economics and sound judgement will win the day. Maybe.Reuse content