Financial services giant Barclays Bank has announced plans to cut the pay rates of 800 IT contract staff by 20%.

Barclays has told IT staff that it needs to make savings in order to meet its long-standing target of reducing costs across the Barclays group by £1 billion by 2003. "We hope that all contractors will remain contractors," Barclays said in an official statement.

But this flies in the face of comments reportedly made by Pam O'Keeffe, a spokesperson for Barclays, to Shout99, a web site for contract IT workers. "It wouldn't be a concern to us if all of our IT contractors walked out over this. Obviously we hope they won't, but if they did, it wouldn't affect the services or products we offer or our infrastructure as a whole," she said.

Barclays is not the only company to be imposing more stringent demands on IT contractors. Pharmaceuticals giant GlaxoSmithKline (GSK) also has plans to slash IT contractor rates by up to 25 percent, according to contract workers' magazine Contractor UK. IT contractors currently working at GSK will undergo rate cuts as the company forces them to change to new ‘preferred' supplier agencies, even before their contracts are up for renewal.