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
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'