Jubilee Debt Campaign Birmingham

Archive for June 2011

 This article  written by our Chairman  John Nightingale has recently appeared  in the June Bulletin of the Ecumenical Council for Corporate Responsibility (ECCR; www.eccr.org.uk/bulletin)’

In the 1950s bankers seemed respectable but dull, like clergy or policemen. As a student in the 1960s I opened a current and then a savings account confident that my money would be secure. When I worked for the churches in Nigeria in the 1970s, I presumed that the largely British-based banks would help with much-needed development. Poverty, political independence and corruption were issues, but hardly banking or international debt.

In the 1980s I joined the Christian Ethical Investment Group, concerned above all that my church should not be supporting apartheid in South Africa. Investment areas off-limits included tobacco, alcohol and armaments, but bank shares were usually regarded as respectable.

International debt

I was also dimly becoming aware of the international debt problem of poor countries. In the 1970s loans were made too readily from oil money suddenly available; they became hard to repay when interest rates rose dramatically during the credit squeeze of the 1980s. Banks had been heavily involved in the lending, but by the 1990s most of their debts to poor countries had been taken over by national governments or international agencies such as the International Monetary Fund and the World Bank.

Debts were rescheduled in one-sided agreements which often forced poor countries to privatise their public utilities or cut social and health programmes. It was clear that the poorest would never be able to repay their creditors, but billions of dollars were being spent each year in a vain attempt to do so.

Hence a campaign began for the cancellation of all poor countries’ debts at the second millennium, based on Jesus’ own promulgation of the year of Jubilee in his sermon at Nazareth as described in the fourth chapter of St Luke’s Gospel. With many others I took part in ‘human chains’ in Birmingham (1998) and Cologne (1999). But I would have been hard put to it to understand how the high street banks have been involved – until now.


The present financial crisis has led to the heart-searching ECCR report The Banks and Society: Rebuilding Trust.1 It has become clear that the deregulation of the 1980s has resulted in virtually unrestricted credit. UK banks no longer have to maintain a safe proportion of liquid assets (cash and central bank deposits) to loans; this was around 20% in 1968 but, according to the Wikipedia entry on ‘Reserve Requirement’, had declined to just over 3% by 1998.

Such a vast expansion of credit or ‘leverage’ was almost bound to lead to unwise loans and asset bubbles. However, few people, whether bankers, politicians or members of the public, complained at the time.

For the banks to have a monopoly in the creation of credit, as a public service, is immensely profitable; they gain interest on it. At the very least they ought to retain some public obligations – such as providing a nationwide banking network even in areas which are not particularly profitable. Some would go further and argue that the state should take over credit creation. But, in any case, the extent of leverage in the last decade has been irresponsible.

Tax havens and dodgy deals

The process has been aided by another aspect of British banking – its connection to an international system of tax havens which, according to Nicholas Shaxson on page 26 of his new book Treasure Islands, account for a quarter of global wealth.2 Tax havens like the Cayman Islands are attractive to investors both for their low taxes and for the secrecy they ensure through ‘blind trusts’, through which named solicitors buy shares within the City of London on behalf of their clients; because the relationship between lawyers and clients is confidential, the clients remain unnamed.

Many banks are involved. Shaxson says Barclays had 315 such subsidiaries two years ago. Many multinationals are able to manage their activities, for example by lending between subsidiaries, so that they pay where the rates are lowest rather than where their commercial activities actually take place. To change this practice is the purpose of the Tax Justice Campaign.3

Finally, banks have been financially involved in the activities of the UK’s Export Credit Guarantee Department (ECGD), or ‘Department for Dodgy Deals’ as described by the Jubilee Debt Campaign; further details can be found on the JDC website.4 The ECGD was originally set up to help small British companies operate in poor countries by underwriting their financial activities. However, in recent years it has been largely involved in export of arms and fossil-fuel technology, often with little regard for human rights, the environment or the risks of corruption.

Effect on the poorest

The classical spaces of Birmingham’s old banks have been turned into pubs and restaurants. Their replacements have the appearance of impersonal units primarily designed for the housing of terminals. Banking has become so specialised that bankers have little sense of the people involved in their borrowing and lending.

It is as if police operations were conducted by computers or drones without thought of international consequences. By contrast, policing today puts much more stress on the officer on the beat and shows much more awareness of the global context. Maybe the banks can follow that lead. I find myself applying to them, as to all of us, Gandhi’s test: Think what effect what you are doing will have on the poorest person on earth.

Canon John Nightingale (johnnightingale@btinternet.com) is a member of ECCR’s West Midlands Group and Chair of Jubilee Debt Campaign Birmingham.


1.      http://www.eccr.org.uk/banksandsociety

2.      Nicholas Shaxson, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens, Bodley Head, 2011.

3.      www.taxjustice.net

4.      www.jubileedebtcampaign.org.uk


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June 2011
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