David Prosser: It's time for a 'Robin Hood tax', Mr Darling


Outlook Having made the decision that he would personally approve or veto bonus payments at Royal Bank of Scotland, Alistair Darling cannot have been surprised yesterday when his political opponents sought to make capital from the £1.3bn the state-controlled bank is paying its star performers.

Still, the Conservatives' attack is straightforward opportunism. In talking about reducing the "ridiculous levels" of pay in banking, is George Osborne really suggesting that a Tory government would move against the City? Assuming he is in the hot seat this time next year, will Mr Osborne promise to veto all bonuses at RBS if it is still loss-making? Or will he go further, by legislating for pay caps, say, or by taxing the bankers into moderating their behaviour? It is scarcely imaginable.

As for the Liberal Democrats, who seem more disappointed about RBS's failure to hit lending targets than its losses, how do they suggest we force these banks to loan more? The targets have been missed because customers, both corporate and individual, are desperate to deleverage. Very sensibly, inconvenient though it may be for our chances of escaping recession, Britons are paying back debt faster than they are taking on new borrowing. Do the Lib Dems really want our banks to lend so aggressively and irresponsibly that the private sector's stock of debt rises to even more unsustainable levels?

None of this should be taken as accepting the behaviour of RBS. Whatever the level-headed arguments of its chief executive Stephen Hester about his need to retain the best staff, a country in the throes of the worst recession in living memory – and anticipating more pain to come from tax rises and spending cuts – should not be expected to stomach these payments. Especially from an institution saved and now predominantly owned by taxpayers.

Mr Hester knows this. It is why he has waived his own bonus this year. And if he can see the moral imperative in not claiming his own contractual entitlement, how does he defend the payment of £1.3bn worth of discretionary bonuses to his staff?

There will be those who believe that Mr Darling should simply have vetoed any bonuses at RBS. Doing so might even have been a vote-winner. It would also have torpedoed the bank's future. Not because star performers would jump ship, but because RBS must be managed as a commercial concern, free, as much as possible, from political interference. If we really want ministers to run this bank, let us nationalise it completely and see how it fares with the Chancellor and his colleagues saying yes or no to our mortgage or small business loan applications. It is not a happy thought.

If the Chancellor is not to become the next chief executive of RBS, how should he have responded to the furore over bonuses? He must make the best of a bad situation. And what better way to do that than at a time of fiscal crisis than to make hundreds of millions of pounds worth of tax from the banking sector?

We often forget what a crucial source of tax revenue the financial services industry has become. Much of that revenue has gone missing since the credit crunch. RBS, for one, isn't going to be paying much corporation tax this year. The one-off super-tax on bankers' bonuses will help.

In its original objective, to deter the payment of large bonuses, the charge looks to have largely failed, though it has had an effect at the margins. Goldman Sachs scaled down bonuses to London staff, for example, while RBS originally wanted to hand over more than £2bn. The compensation is what is likely to add up to more than £3bn of extra tax revenue. RBS alone will pay the Treasury £208m.

Having scored this one-off hit, the Chancellor needs to go further. Gordon Brown is right to support the international tax on banking transactions and he should be working harder to overcome US resistance to the idea, rather than going quiet in the face of such opposition. The campaign of the TUC and others for this charge – they describe it as a "Robin Hood tax" – is popular. More importantly, this is a realistic way to ensure that the international banking sector continues to show gratitude for the support it has had.

Mr Darling has mostly made the right calls on bonuses, balancing public anger with practical considerations. The next right call is the Robin Hood tax. Let's hear what Messrs Osborne and Cable think, too.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis