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10 Mar 2010 : Column 132WH—continued
Mr. Allen:
We do not want support for this tax to come and go. Something so significant has to be set up and needs to be kept in existence; it cannot be done in a few weeks or by one Government. I strongly hope that it will be the property not only of all parties but above all-this would be one of its strengths-the property of the public. If the money that we hope to raise is to be spent in the right way, it must have public ownership in
the broadest sense, so that the public can hold the Government to account. We do not want to invent a new tax only for additionality to take away money that the Government would already have spent and use the Robin Hood tax to fill the gap.
Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): I congratulate my hon. Friend on taking this campaign forward. On the question of how the money could be spent, earlier this afternoon, the Environmental Audit Committee raised the matter of the income from such a tax, saying that among other things, it could be used to help tackle deforestation as part of our efforts against climate change, or to help the economies of developing countries. Those would be two uses of the proceeds from such a tax.
Mr. Allen: We do not want to spend the money before we have it. None the less, it is important to define some things relatively early. We are very much still at the beginning, but we need to settle soon those things that could command broad public support both globally-the sort of things mentioned by my hon. Friend-and internally, so that a number of key issues can be seen to develop.
I am probably well known for talking about early intervention, and the need to help babies, children and young people to develop their social and emotional potential. That will take a generation to develop. If the money is tied to a long-term initiative such as an international financial transactions tax, over decades we will see the development of something positive. In the global sphere, deforestation would fall very much into that category.
Dr. Nick Palmer (Broxtowe) (Lab): I am grateful to my hon. Friend, my colleague from Robin Hood land, for giving way. Does he agree that it is essential that any such proposal should be adopted on a global basis, because the money would otherwise simply flee to those areas that do not provide it? I therefore welcome the fact that the Government, particularly the Prime Minister, have been taking it forward, and that there has been a measure of success in securing interest from the European Union and the United States in such an initiative.
Mr. Allen: It is important that the objective of such a tax is international, as there is always the possibility that people could move money, or move the base where they make their transactions. However, we have to start somewhere. We cannot suddenly say that tomorrow it will be global. Someone has to make the move; someone has to show leadership.
My hon. Friend the Member for Broxtowe (Dr. Palmer) was right about the Prime Minister raising this issue early at the Pittsburgh summit last year, and I hope that this Parliament, too, will exercise such leadership. If we do achieve a cross-party effort, I believe that many others will quickly follow. It is one of those things about which people will say, "Why didn't we do this a long time ago?" It will raise large amounts of money and it will cost a minuscule, virtually invisible, percentage of the take on transactions around the globe. One figure mentioned is 0.005 per cent-that is five thousandths of 1 per cent. Because the take is so small and the consequences so large, if we in this country can show leadership I have a feeling that it will quickly become international.
Mr. Andrew Pelling (Croydon, Central) (Ind): I congratulate the hon. Gentleman on securing this debate. I, too, have signed the early-day motion.
Would the hon. Gentleman agree that there might be some merit in debating the type of tax? The Tobin tax can reduce liquidity and the ease of trading. Would it not be better to go down the route suggested by the Conservative party in the distant past of a windfall tax, which taxes the taxpayer paid-for liquidity provided to the banking sector, from which bankers have made excess profits and therefore had excess bonuses?
Mr. Allen: The hon. Gentleman makes a thoughtful contribution today, just as he did at the meeting that set off our campaign on the Robin Hood tax. I hope that he will allow us to bring his expertise into the tent, so that we can see what else can be done. If there are other possibilities, we should certainly entertain them. I hope that we will be able to use the hon. Gentleman's ingenuity to ensure that the technical details of the Robin Hood tax are viable. I look forward to working with him.
John Hemming (Birmingham, Yardley) (LD): I declare an interest, as I am involved in software in the financial services sector. The UK already has a law on tax and stamp duty. Does the hon. Gentleman agree that part of this measure is looking globally at how damaging the long-term misuse of tax havens has been?
Mr. Allen: The hon. Gentleman makes an interesting point, but at the beginning of this process, we should be full of excitement and optimism about what something like a Robin Hood tax, if we could make it work, could do and what it could generate and mean reputationally. If we consider the economic crisis over the past couple of years, we can see that politicians and bankers have probably not covered themselves in glory. It is incumbent on both classes of people to look more imaginatively at how we can raise money, not least for the causes that interest us both internationally and at home. Politicians should use their imagination and work with the bankers, who bear some responsibility for where our economy lies at the moment. By working on something that has such high-level impact and public support and small rates of requesting taxation levels-0.005 per cent. of 1 per cent.-we could, amazingly, go some way towards restoring our reputations.
Mr. William Cash (Stone) (Con): I do not want to cast aspersions on such a great idea, but is the hon. Gentleman aware that there is some doubt about Robin Hood's role as expressed in a recent historical survey? In fact, he was engaged in loaning money rather than taking it. Having said that, does the hon. Gentleman accept that there is a problem in taking money on a treaty footing, then not knowing who is responsible for the expenditure of that money and for the accountability that is necessary to ensure that it is spent properly?
Mr. Allen:
My hon. Friend-if I may call him that-raises several good points and one total lying falsehood. I have lots of other unparliamentary expressions about his account of Robin Hood. One thing that is not in dispute, however, is Nottingham castle, which still exists. There is also a sheriff of Nottingham and none but the most misguided could possibly doubt the fact that there lived in Sherwood forest someone who took from the rich and gave to the poor. The proposal before us is not
so extreme. I am talking about assisting bankers to recover their reputation at a tiny, virtually imperceptible, level of taxation so that they can be seen to be not merely exploiting the financial system but putting in some social good, too.
On the more serious point that has just been made, much work still needs to be done. We are at the beginning of a very long campaign, and I am sure that the issues raised need to be tackled and explained clearly. We are on the way to doing that. Given that the Prime Minister has strongly supported such a scheme, I want to ask my hon. Friend the Minister what work, research and analysis the Treasury is doing to assess whether a Robin Hood tax is workable? The Prime Minister does not throw out such phrases in front of the G20 willy-nilly. He clearly has a wish to see this proposal thought through very carefully, and I would like to know quite specifically from my hon. Friend what the Treasury is doing about it. He may not be able to answer this next question, but will we be in a position to float the idea at the Dispatch Box in the Budget, which I understand is about two weeks away? Can we at least say that the idea is being considered seriously, as we would expect of any announcement by the Prime Minister?
Mr. David Anderson (Blaydon) (Lab) rose-
Mr. Allen: I give way to my hon. Friend, who organised the meeting in Parliament and raised this issue for Members of all parties.
Mr. Anderson: It is a pleasure to be in front of you today, Mr. Benton. I welcome the good work that is being done by my hon. Friend. He talked about politicians using their imagination, but is it not time for bankers to use theirs? I do not mean by imagining ways in which they can avoid making a contribution towards this country and the world, but by helping. The Prime Minister supports that idea, as does Adair Turner who, in his previous existence, would probably never have supported such a move.
Mr. Allen: My hon. Friend pulled together the parliamentary aspect of the Robin Hood campaign. He more than anyone knows that this is a very broad coalition that includes not just the obvious figureheads from the world of entertainment, theatre and celebrity but hard-working third sector organisations such as Barnado's, Friends of the Earth, Oxfam and many, many others. On the point that he raises, there needs to be a new social contract between bankers, on the one hand, and the rest of society. We will need to have international flows of currency-they are absolutely enormous and dwarf the GDP of every country in the world-but some of that can be used for purposes that benefit the whole world and individual nations. Somehow it is incumbent on those in international finance and banking to say, "We cannot go on as we were. We need to restore our reputation and we want to be part of the family." Perhaps this scheme is one way in which they, with all their financial expertise, can move things forward.
I had a speech, but I have given way many times to demonstrate the support and the interest on the issue throughout the House. It is probably more important to demonstrate that than it is for me to put on record some of the key points of the campaign. Those points are available on the Robin Hood tax website, and I ask all those present who are missing out on my gems to access
the website and see some of the basic planks of the campaign and the answers to many of those frequently asked questions.
Derek Twigg (Halton) (Lab): I thank my hon. Friend for securing this debate. He has been as generous as he possibly can be to the banks and financial institutions. At the end of the day, it should be recognised that they bear responsibility for causing the recession, the economic effects of which are felt by constituencies such as his and mine. I refer here to all those who have lost their jobs and suffered greatly. It is clear that the financial institutions, which have an important role to play in the economy by providing lots of jobs, should make good what they have done wrong. However, why should we have to have a campaign to bring this to their attention? Should they not come to us and say, "We agree that we should be doing this. It is the right, moral thing to do"? Does my hon. Friend not agree that that is the case? They should come in themselves and talk about putting such a scheme in place .
Mr. Allen: The campaign itself-I do not speak for the campaign-is a very broad coalition, and it would welcome with open arms the expertise of bankers and of people involved in international finance. It should invite them in to help find ways forward, to answer some of those technical questions and, as I mentioned earlier, to salvage some reputational status, which has been massively diminished over recent years.
I must sit down and let the Minister respond and put the Government's view on record. I have just a couple more things to say. We are aware of the difficulty of starting off such a scheme and starting in one country, but it has to start somewhere and, therefore, perhaps we, with the leadership of our Prime Minister, can do that. Secondly, some people have raised moral reservations about making money from something that some may regard as not being of the highest international standard. If that were the case, we would never raise anything from tobacco or alcohol, and we should consider this as being in the same pot as those things. Financial institutions' trade across exchanges goes on, and we should be taking a tiny slice of it.
I have a lot more to say, but it is probably fairer if I sit down. Many Members are here today, and many more could not come. There is great interest in the issue. The campaign proper is kicking off now with fascinating materials, including clips shown in cinemas and elsewhere. Celebrities have yet to enter the field to raise its profile, but I think that it will be a big issue, like Live Aid or Make Poverty History. All parties should get involved on a non-partisan basis to make it work globally and domestically. I hope that the Minister has listened to colleagues from all parties in this debate and will have news for us. Perhaps the issue will even find a place in the Budget.
4.51 pm
The Financial Secretary to the Treasury (Mr. Stephen Timms):
I congratulate my hon. Friend the Member for Nottingham, North (Mr. Allen) on securing this debate and remark, as he did, on the high level of interest and the large number of interventions, which reflect a great deal of public interest. I commend the Robin Hood tax campaign for drawing attention to an important current public debate, and all those involved for the energy, imagination and enthusiasm that they have invested in
it. I accept my hon. Friend's point that nobody better could speak in the House for the Robin Hood tax campaign than a Member for Nottingham.
As the world begins to emerge from the worst of the global financial crisis, people's minds are, rightly, turning from its immediate and urgent challenges to ways to prevent another, similar crisis in future, or at least mitigate the impacts of such a crisis. As my hon. Friend the Member for Halton (Derek Twigg) pointed out, the impacts have been big and damaging for many people in the UK and around the world. People are asking what went wrong and how we can avoid making the same mistakes again.
In doing so, people are looking for creative new ideas that can help the work being done internationally to reform the regulation of financial institutions. A lot of good work is being done, and there is a sense that we need to go further. That is the background to what the Prime Minister said last year in Pittsburgh, as my hon. Friend mentioned, and at the G20 Finance Ministers' meeting at St. Andrews in November, at which I was present. The Prime Minister set out the need for
"a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards",
and suggested a number of options, including a global financial transactions tax.
Since then, international debate about the idea has grown louder and wider. Various international bodies are considering the issues. The G20 has commissioned work from the International Monetary Fund, which is compiling what I think will be an important report, a preliminary version of which is expected at the G20 Finance Ministers' and central bank governors' meeting next month. That work aims to consider how the financial sector can contribute to the costs that it has imposed on taxpayers and national Exchequers as a result of Government bank bail-outs around the world.
The report will need to cover a lot of territory. It will pick up on many current ideas such as systemic risk levies, resolution funds and bonus taxes, and I certainly expect it to cover financial transaction taxes as well. As with any idea for new taxation, it is important that we are clear about the detail, the upsides and the downsides in order to take a proper, considered view on whether it is worth introducing. A lot of serious consideration of the issues is needed.
We would need to know, for example, the impact of such a tax on the transactions being taxed and what that would mean for the financial sector more widely and for growth in the economy. How would we ensure that financial transactions did not simply evolve into non-taxed forms, which would defeat the purpose of the tax in the first place? We see that in other contexts when taxes are introduced. One key principle set out by the Prime Minister in November involved economic distortion. If we go down the road of imposing such a tax, we must ensure that there are no unintended consequences that might lead to economic distortions with a damaging impact overall on the economy. We must ensure that in attempting to solve one problem, we do not create another somewhere else.
Geographic coverage is also important, as my hon. Friend acknowledged. The Prime Minister made it clear in November, as my hon. Friend the Member for Broxtowe (Dr. Palmer) mentioned in his intervention, that a transaction tax, like the other ideas being discussed, would need to be globally agreed and implemented in order to be effective. We live in an increasingly globalised world and use an increasingly globalised financial system. We in the G20 now have the ability to consider such matters on a worldwide basis, and the G20's work last year under the UK presidency was successful. We have a forum for considering such matters. There are many questions about implementation, collection and design. I hope that the IMF report next month will shine a light on some of those questions and inform the debate on transaction taxes and other ideas being discussed at the moment.
As well as the IMF, we have supported the European Council in asking the European Commission to explore the issues. I understand that the debate in the European Parliament today, to which my hon. Friend the Member for Nottingham, North referred, concerned calling on the European Commission to undertake analysis of financial transaction taxes. I took part in the launch of the French-led taskforce on international financial transactions for development in October, when I underlined its importance in considering the financial and economic implications of a new tax.
With that in mind, I nominated Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, to serve on the expert group commissioned by the taskforce to explore the feasibility of the tax. He has since been elected to chair the group, and he convened a meeting at the ICAEW's headquarters in the City a week or two ago. Work is under way, and the group should report on the feasibility of the proposed measures as a form of development financing in the spring.
Another crucial question that we need to ask ourselves is what exactly the purpose of such a tax would be. We need to be clear that a number of different purposes are being discussed at the moment. Some people suggest that the tax could address a perceived failure in the financial market and act as grit in the machinery by creating a disincentive to speculative or socially useless trading. Evidence of such measures' efficacy for that purpose is unclear at the moment, but some well-informed people have certainly argued that the tax could help.
Mr. Allen: The Minister mentioned the IMF and the European Council. What is the Treasury doing to examine the issues?
Mr. Timms: At the Treasury, we are keeping a close eye on the debate, but we see it inherently and necessarily as an international initiative. That is why we believe that the IMF and the European Commission-particularly the IMF-have a crucial role in assessing the technical questions and advising Governments of the pros and cons of moving in that direction. Until we have that advice at a global level, we cannot do much at the national level. That is inherent in the nature of the measure.
Apart from dealing with a market failure, the other key argument is that the tax would be a good revenue-raiser at a time of fiscal consolidation.
5 pm
Sitting adjourned without Question put (Standing Order No. 10(11)).
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