Cable says UK may go it alone on banks levy

Britain is prepared to press ahead alone with a tax on banks to insure against future collapses, new Business Secretary Vince Cable said.

He was speaking in Brussels yesterday on the eve of the launch of European Commission proposals for an EU-wide levy to form a multibillion-pound bailout fund.

Mr Cable said support for such a scheme was already part of the coalition Government agreement, adding: "The more countries that join, the better."

But during his first trip in the new job to attend a meeting of fellow EU ministers on competitiveness, he said the exact way the revenue from such a levy should be used was "still up for grabs".

Mr Cable said the Government would have reservations if such a fund were to be collected in a centrally-managed fund.

But the provisional commission ideas suggested that the proceeds of a bank tax would be collected and administered by national governments.

Officials are doubtful about the effectiveness of such a scheme unless accepted across Europe and beyond, including in America, to ensure a level playing field.

But Mr Cable said the Government had "an open mind" about the scope of the scheme and was prepared to press ahead with a national tax in any case. It could be raised on bank profits "or other denominators," said the Business Secretary, adding: "How you use the revenue is still up for grabs."

A pledge to introduce the levy was included in last week's coalition deal, although the issue was not mentioned directly in yesterday's Queen's Speech.

Today's preliminary commission plans envisage legislating on a levy by 2011 - and including provision to prevent banks simply passing on the cost to customers.

During his Brussels visit Mr Cable had talks with Internal Market Commissioner Michel Barnier, who will present the draft plans, as well as with Irish Commissioner in charge of Research, Innovation and Science, Maire Geoghegan-Quinn.

Mr Cable said the new government was fully behind measures to extend the EU single market which was "clearly incomplete", and to cut EU regulation.

"The single market is not in trouble, but we are in a period of financial retrenchment, with a danger of paralysis and protectionism and we must fight it - and the single market has an absolutely key role to play in that."

Asked if the Government was interested in changing the Lisbon Treaty, Mr Cable said: "We feel strongly about making European procedures work in a less cumbersome way, rather than reopening treaties."

The coalition agreement speaks of taking back sovereign powers ceded to Brussels, but Mr Cable insisted: "We are not at the moment specifying powers that need to be repatriated."

A statement from Ms Geoghegan-Quinn after her meeting with Mr Cable said the pair had agreed that research and innovation were central to boosting growth and jobs in Europe and ensuring a sustainable recovery.

It said the pair had discussed a new EU "Research and Innovation Strategy" the commissioner will launch in the autumn, aimed at "translating more of the bright ideas generated in Europe's universities and research institutes into world-beating products and services."