Link to this page: https://www.socialistparty.org.uk/issue/514/3567
Charity begins at the bank
BRITAIN'S HIGH street banks have been using charities, particularly children's charities, to benefit from tax breaks and maximise their profits with no obligation to give them a penny.
Twelve well-known British-based banks and finance institutions including Northern Rock, Alliance and Leicester, Standard Life, Lloyds TSB and Halifax raised billions of pounds in funds through complicated financial deals using 'charitable trusts.'
They raised funds on the back of £234 billion worth of home loans over the past seven years, using trusts which have charitable status but rarely do anything charitable.
It all came to light when Northern Rock was found to have raised £71 billion through a trust using the name of a Newcastle-based charity, run on a shoestring budget, for children with Down's syndrome. The Charity Commission is looking at Northern Rock and other banks to see whether they broke charity law.
Halifax set up a similar trust worth £47.9 billion, claiming its profits would go to the NSPCC children's charity, that has yet to see a penny piece.
HBOS, Halifax's owners, say that money would only be paid out when the programme is wound up.
The banks can control trusts without owning them. This isolates any financial risks, and keeps their liabilities off their balance sheets to make them look more profitable.
Trusts with a charitable status can be operated indefinitely with no obligation to make any payments unless they are wound up. Even then the charity would receive a tiny fraction of the sums raised.
The scrooge banks try and excuse the inexcusable by admitting that such cheating actions were an everyday occurrence - which seems another good argument for nationalising the whole banking system!
In The Socialist 13 December 2007:
Socialist Party NHS campaign
Post Office dispute
What we think
Socialist Party news and analysis
International socialist news and analysis
Workplace news and analysis