Why Labour should put the Robin Hood tax centre stage

Great government policy rarely enjoys an easy ride. Challenging the status quo will always ruffle the feathers of vested interests. So 11 European countries should be congratulated for taking on the titans of finance and agreeing to implement a financial transaction tax (popularly known in the UK as a Robin Hood tax).

Today, their proposal for a micro tax of 0.1-0.01% on stocks, bonds and derivatives received the thumbs-up from EU member states at the Economic and Financial Affairs Council meeting in Brussels, meaning they can plough on to implementation, possibly as early as next year. Europe’s largest economies – Germany, France, Italy and Spain – are signed up. IMF chief Christine Lagarde recently gave her blessing. It will help ensure the financial sector plays its part for the damage caused to our economies. Yet there is one notable refusenik: the UK. Our government opted out, choosing instead to dance to the City of London’s tune.

The social justice arguments for an FTT are incontrovertible: the City’s financial elite may have sparked the financial crisis, but it is the rest of society, especially the poor, who are paying the price with the harshest programme of austerity since world war two. Yet amid the 2.5 million unemployed and the threat of a triple dip recession, the financial sector has over the past year enjoyed one of the strongest performances of any sector on the FTSE 100. But it is the economic common sense, the potential to raise billions in additional revenue, that has led the centre-right in Angela Merkel’s Germany, Mariano Rajoy’s Spain and Mario Monti’s Italy to back this tax. It will collectively raise the 11 countries involved £30bn a year – no small beer.

The size of the UK’s financial sector means we have even more to gain. Can the government really afford to turn down an additional estimated £8bn of annual revenue? Imagine what could be achieved: we could fund job creation programmes, spreading investment across our regions, giving the million young unemployed the skills to enter (or re-enter) the workplace. We could fund the British Investment Bank (BIB) that Ed Balls and Chuka Umunna have rightly put much emphasis on. In Wales we already have such an institution, Finance Wales, which was set up by the Labour-led Welsh government in 2000 and manages £300m worth of capital to SMEs. Rolled out across the country, it could bypass the bottleneck of banks refusing to lend to cash-starved SMEs, helping them to be the drivers of growth.

This is not about punishing the banks, but about getting Britain back on a stabler footing. The rate is set so low precisely to avoid hitting either the City or longer-term investments such as people’s savings and pensions. Undoubtedly an FTT would reduce certain areas of City trading – high-frequency computer trading that was memorably referred to by Adair Turner as “socially useless” – and this should be seen as a distinct advantage. The process would help rebalance the economy away from an over-obsession with the City’s short-term rewards towards other, less volatile, less geographically concentrated sectors such as manufacturing.

President Obama may support an FTT in his second term and we should actively encourage him to do so, but even without US support, Europe is right to forge ahead. The UK already has an FTT on share transactions. This doesn’t drive business away – on the contrary, London’s stock exchange is one of the most successful in the world. The exchequer benefits by some £3bn a year from this FTT, something George Osborne often seems to forget. Other financial centres also have unilateral FTTs – Hong Kong’s raises £1.7bn a year, South Korea’s £3.8bn and Brazil’s more than £10bn (pdf).

As the Bank of England’s executive director of financial stability, Andy Haldane, said recently, there is no “ideological chasm” that needs to be bridged in order to roll this tax out to other areas of the financial markets such as bonds and derivatives. As Labour continues to articulate its vision of a responsible capitalism, it is time to put the FTT centre stage. Between Europe and our own stamp duty, we have the blueprint to make this happen. In times of fiscal difficulty, tax needn’t be a dirty word – the financial transaction tax could be one of the most popular taxes this country has ever seen.

http://www.guardian.co.uk/commentisfree/2013/jan/22/labour-robin-hood-tax-government

Why Labour should put the Robin Hood Tax centre stage

Guardian

Great government policy rarely enjoys an easy ride. Challenging the status quo will always ruffle the feathers of vested interests. So 11 European countries should be congratulated for taking on the titans of finance and agreeing to implement a financial transaction tax (popularly known in the UK as a Robin Hood tax).

Today, their proposal for a micro tax of 0.1-0.01% on stocks, bonds and derivatives received the thumbs-up from EU member states at the Economic and Financial Affairs Council meeting in Brussels, meaning they can plough on to implementation, possibly as early as next year. Europe’s largest economies – Germany, France, Italy and Spain – are signed up. IMF chief Christine Lagarde recently gave her blessing. It will help ensure the financial sector plays its part for the damage caused to our economies. Yet there is one notable refusenik: the UK. Our government opted out, choosing instead to dance to the City of London’s tune.

The social justice arguments for an FTT are incontrovertible: the City’s financial elite may have sparked the financial crisis, but it is the rest of society, especially the poor, who are paying the price with the harshest programme of austerity since world war two. Yet amid the 2.5 million unemployed and the threat of a triple dip recession, the financial sector has over the past year enjoyed one of the strongest performances of any sector on the FTSE 100. But it is the economic common sense, the potential to raise billions in additional revenue, that has led the centre-right in Angela Merkel’s Germany, Mariano Rajoy’s Spain and Mario Monti’s Italy to back this tax. It will collectively raise the 11 countries involved £30bn a year – no small beer.

The size of the UK’s financial sector means we have even more to gain. Can the government really afford to turn down an additional estimated £8bn of annual revenue? Imagine what could be achieved: we could fund job creation programmes, spreading investment across our regions, giving the million young unemployed the skills to enter (or re-enter) the workplace. We could fund the British Investment Bank (BIB) that Ed Balls and Chuka Umunna have rightly put much emphasis on. In Wales we already have such an institution, Finance Wales, which was set up by the Labour-led Welsh government in 2000 and manages £300m worth of capital to SMEs. Rolled out across the country, it could bypass the bottleneck of banks refusing to lend to cash-starved SMEs, helping them to be the drivers of growth.

This is not about punishing the banks, but about getting Britain back on a stabler footing. The rate is set so low precisely to avoid hitting either the City or longer-term investments such as people’s savings and pensions. Undoubtedly an FTT would reduce certain areas of City trading – high-frequency computer trading that was memorably referred to by Adair Turner as “socially useless” – and this should be seen as a distinct advantage. The process would help rebalance the economy away from an over-obsession with the City’s short-term rewards towards other, less volatile, less geographically concentrated sectors such as manufacturing.

President Obama may support an FTT in his second term and we should actively encourage him to do so, but even without US support, Europe is right to forge ahead. The UK already has an FTT on share transactions. This doesn’t drive business away – on the contrary, London’s stock exchange is one of the most successful in the world. The exchequer benefits by some £3bn a year from this FTT, something George Osborne often seems to forget. Other financial centres also have unilateral FTTs – Hong Kong’s raises £1.7bn a year, South Korea’s £3.8bn and Brazil’s more than £10bn (pdf).

As the Bank of England’s executive director of financial stability, Andy Haldane, said recently, there is no “ideological chasm” that needs to be bridged in order to roll this tax out to other areas of the financial markets such as bonds and derivatives. As Labour continues to articulate its vision of a responsible capitalism, it is time to put the FTT centre stage. Between Europe and our own stamp duty, we have the blueprint to make this happen. In times of fiscal difficulty, tax needn’t be a dirty word – the financial transaction tax could be one of the most popular taxes this country has ever seen.

Neath food bank is now seeing more people in work—many part time and desperate—than out of work

Mr Peter Hain (Neath) (Lab): What assessment he has made of the economic effect on people working in Wales of reductions in tax credits and other benefits for working people.

The Secretary of State for Wales (Mr David Jones): The measures announced in the autumn statement will mean that working households are on average £125 per annum better off in 2013-14.

Mr Hain: Is the Secretary of State aware that Neath food bank is now seeing more people in work—many part time and desperate—than out of work? One hundred thousand working people in Wales are now being hammered by his welfare cuts, some among the 230,000 households in Wales that will be forced by the Government to pay council tax for the first time in April. Will he now take down from the Wales Office website his promise that people will be better off under this Government in work and admit that some cannot even afford to eat?

Mr Jones: Certainly not. In fact, people who are in work are considerably better off. The average earner on the minimum wage who works full time will by next April be paying half as much in tax as he did at the beginning of this Parliament, in the wake of the right hon. Gentleman’s Government. If he is not willing to tackle the appalling legacy of the welfare shambles that he left, we will be prepared to do so.

Economic Policies

Mr Peter Hain (Neath) (Lab): I congratulate the Secretary of State on assuming her post. May I probe her on the link between security and her economic policies? It was no coincidence that Labour achieved the 2007 settlement with record jobs and record levels of growth. Now we have the very reverse, with young loyalists and republicans involved in all sorts of civil disturbances. There is a link.

Mrs Villiers: One reason we need to boost the Northern Ireland economy is that we must do all we can to choke off potential support for terrorism. It is also important that the UK Government, the community across Northern Ireland and the Northern Ireland Executive work on generating a genuinely shared future and on bringing down sectarian barriers. That, too, is an important part of our strategy to choke off support for terrorism.

Peter Argues for Inclusive Development to Tackle ‘Perfect Storm’

Peter spoke at the InnovaBRICS conference at BAFTA on Wednesday, arguing that only inclusive and sustainable development can help humankind steer its way through a ‘perfect storm’ of climate change and food and water insecurity.

Peter argued for radical changes in the way we approach economic development and globalisation, insisting that it must be based upon renewable energy. But Peter also suggested that long-term sustainable development is only possible when it is inclusive, serving and involving the whole of society, rather than an elite few.

A central component of Peter’s vision of inclusive development, laid out at the conference, was the empowerment of women. The exclusion of women from economic development is a key reason for the endurance of world poverty. Peter gave the shocking statistics that sixty per cent of the poorest people in the world are women, owning only 1% of the worlds wealth, despite constituting 40% of the world’s workforce. Women play very important roles in resource distribution at a family level, so whilst women remain excluded from decision-making processes, as they are in many parts of the world, there cannot be an effective resistance to climate change.

Peter concluded that only with a radical change towards a more inclusive and sustainable model of development, can we give ourselves a chance of navigating our way through the ‘perfect storm’.

See the Speeches section of the website for the full text: http://peterhain.org/neath/speeches/inclusive-development-for-a-sustainable-future-a-key-role-for-the-brics-nations/