Bankers' bonus tax failed, admits Darling

Former Chancellor says 50 per cent tax on bankers' bonuses failed to change attitudes towards pay.

Alistair Darling has admitted that the 50 per cent tax on bankers' bonuses brought in by the last Labour government failed to change the industry's attitude to pay.

The former Chancellor, who introduced the levy last year, said he thought it was unlikely the tax would be retained by the current Con-Lib coalition government.

"I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and... will find all sorts of imaginative ways of avoiding it in the future," Mr Darling told a financial services conference sponsored by Nomura, the Japanese investment bank.

"But what I wanted to do was send a message to them that we all live in the same world together."

Darling, who is stepping down from Labour's shadow cabinet next month, said that it would be difficult for the government to take "rational decisions" as long as there is public anger over pay.

"You just need to be sensitive," he said. "Otherwise I fear that it holds the risk that someone is going to do something which, in the cold light of day, a few years down the line, maybe wasn't such a good idea."

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.