Why Barclays can’t take the moral high ground

It’s a myth that the bank didn’t benefit from state support.

The Barclays chief executive, Bob Diamond, attempted to seize the moral high ground today when he told the Treasury select committe that those banks that get into trouble should be allowed to fail. The man once described by Peter Mandelson as the "unacceptable face of banking" told MPs: "It is not acceptable for taxpayers to bail out banks."

Barclays, of course, did not receive any direct state support during the financial crisis, a fact that Diamond has often cited in his favour. But, as my colleague Mehdi has previously pointed out, although Barclays did not receive a pound of taxpayers' money, it benefited immensely from the emergency measures introduced by the government to prevent a sector-wide collapse.

As John Varley, the outgoing chief executive at Barclays, conceded in 2009:

There are two ways I would say the system as a whole benefited generically.

One was in the injection of liquidity undertaken by the Bank of England and a new structure put in place in March 2008.

And the other was the making available of guarantees from government for funding undertaken by banks. It is important to recognise that in each case the banks were encouraged to use these new structures that were put in place and we did.

It is also important to recognise that we were required and we did pay a price for these things, but I'm not trivialising the importance of the intervention. It was important.

And remember, too, as the Labour MP Chuka Umunna pointed out during the hearing, that Barclays narrowly missed out on buying the Dutch bank ABN Amro – the deal that brought Royal Bank of Scotland to its knees. Had history turned out differently, it would have been Barclays, not RBS, that required a £20bn bailout from the government.

As Umunna said to Diamond today, "You could have been the Fred Goodwin of the financial crisis . . . do you see why people don't think you are a suitable person to be running one of Britain's biggest banks?"

George Eaton is political editor of the New Statesman.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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