Why Osborne is wrong on the Robin Hood Tax

The Chancellor has framed the debate as an EU attack on British prosperity. This does not stand-up.

George Osborne ripped back his well maintained veneer of ambivalence towards the Robin Hood Tax this week, revealing his true identity as the protector of the privileged few in City.

Having been given the advice of the IMF, Bill Gates and the European Commission who have all shown Financial Transaction Taxes (FTTs) are feasible, Osborne chose to ignore them, declaring instead it would be "economic suicide". But while his attempt to frame the debate as an EU attack on British prosperity may have superficial appeal -- John Major has made a similar attack today, claiming in the Guardian that an FTT would fan the flames of Euroscepticism -- it does not stand-up to economic scrutiny.

Let's start with the growth argument. Earlier this year, Osborne increased VAT (the transactions tax we all pay in the real economy) by 2.5 per cent to 20 per cent. VAT increases push up prices and are certainly not good for growth and they hit the poorest twice as hard as the rich. Yet now Osborne is casting a 0.05 per cent tax on the financial transactions of investment banks and hedge funds as bad for growth. The irony is of course, that as the IMF pointed out, financial transactions are VAT exempt.

The fact that a Robin Hood Tax would raise billions to protect jobs, services and the poorest was handily ignored. So too was the fact it would rein in rogue elements of the financial sector responsible for a crisis that will, according to the Bank of England, ultimately cost the UK at least £1.8 trillion and as much as £7.4 trillion in lost GDP. The biggest threat to our long term growth is surely an unrestrained financial sector and not a 0.05 per cent tax on their transactions. Any job losses are likely to occur in the exclusive corners of the investment banks a million miles away from high street banking.

Osborne's claim that not a single bank would pay this tax is plain wrong. The bit he did get right is that banks as intermediaries would not pay the tax, but the parties initiating the trades would. So who are initiating the trades? Er, it's the banks. And other financial institutions such as hedge funds who represent high net worth individuals and the richest segments of society. It's why the IMF has said an FTT would in all likelihood be "highly progressive": being paid by those most able to afford it.

More surprising than Osborne's offensive has been Vince Cable's amazing transformation. Cable himself has on a number of occasions supported the Robin Hood Tax, it's even in the Liberal Democrat manifesto. Until Wednesday that is, when he described it as a "tax on Britain", seemingly conflating the financial sector with the UK as a whole.

Worse still, Cable resorted to citing the infamous Swedish FTT from the 1980s. Focusing on this example, unique in its bad design, whilst omitting to mention the Stamp Duty on UK shares which successfully raises the Exchequer more than £3 billion a year, is disingenuous at best. It's a bit like showing us a picture of a square-wheeled bike as evidence that all bicycles are flawed, having just arrived by bike. The key to the Stamp Duty's success is the way it is levied; wherever in the world a UK share is traded - London, New York or the Cayman Islands - the tax still has to be paid.

Osborne and Cable were right about one thing however; no one wants all this money to disappear into the European coffers. A Robin Hood Tax has received such massive support -- from the UK public (who back it by two to one), the Archbishop of Canterbury, the Vatican and millions around the world -- not just because it would curtail casino capitalism but also because it would help tackle poverty and climate change at home and abroad.

Thankfully, the threat of co-option into a "Brussels tax" is overblown. As the Germans recently pointed out, each country would collect the tax nationally. Our campaign wants to see half the money spent helping poor countries and half (that's billions of pounds) spent protecting schools and hospitals, teachers and nurses at home. So, far from the size of the UK's financial sector meaning we have the most to lose from an FTT, we have the most to gain.

By ignoring the positives and exaggerating the negatives the government is compiling themselves a dodgy dossier of reasons not to back the Robin Hood Tax. In doing so they risk putting themselves at odds with public opinion and international momentum behind ensuring the financial sector pays its fair share.

Simon Chouffot is the Robin Hood Tax campaign's spokesperson

Simon Chouffot is a spokesperson for the Robin Hood Tax campaign and writes on the role of the financial sector in our society.

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Collaboration is the key to coalfields regeneration

When the last shift ended at Kellingley Colliery, North Yorkshire, in December 2015, it marked the end of deep coal mining in Britain. Since the early 1980s, over 250,000 jobs were lost in the industry and whilst regeneration efforts over the last 30 years have reclaimed sites, creating new housing and the infrastructure for new businesses and jobs, the scale of these losses was huge, and deep-seated social and economic problems remain.

The Coalfields Regeneration Trust was established in 1999. When we launched our first grant programme we were overwhelmed by the demand, however, this was simply a reflection of the need out there in the coalfields. Our name resonated with people who were incredibly proud of their communities and the contribution made by the coal industry to Britain’s prosperity.

Our independence meant we could be more flexible and responsive, and this helped us direct resources into communities where other funders struggled. Over the last 17 years our programmes have evolved and we have achieved some fantastic results for the 2,000,000 people who have benefited from our support. We have also gained a better understanding of the underlying issues that still impact on the quality of life in the coalfields. There are 5,500,000 million people living in Britain’s former mining communities and many do not enjoy the opportunities afforded in non-coalfield communities. While this inequity exists, we still have a job to do.

The key challenges

The greatest challenge is the fact that there are only 50 jobs per 100 workingage people in the coalfields. when you compare this figure to London (79), and the South-East (68), it doesn’t take much to recognise that there is a major problem here. The key factor is the number of businesses; the coalfields have significantly fewer businesses than non-coalfield communities. Unless this fundamental problem is addressed at scale, we will continue to see high levels of unemployment in our communities.

We also need to raise skill levels, or at least align skills to the local labour market. There are significant numbers of people who don’t have a qualification or are low skilled and this is a major barrier to competing for jobs. If new jobs are created we want our communities to be able to access them. For many people, it means an introduction to learning again and to do this they need to be engaged. It takes time to develop these relationships and build this confidence in people and the resources to make this happen are often lacking.

We also have a real issue with health in our communities. We have significant numbers of people experiencing long-term health problems that limit their day-to-day lives. It’s a major barrier for some people in accessing a training course or attending a job club but there are often low-cost solutions, such as ‘social prescribing’, that can make a real difference to the health of a person.

What the Trust can offer the coalfields

Right now we’re delivering an ambitious range of activities across England, Scotland and Wales. Everything from safeguarding community assets, developing community plans, engaging people through sport, helping people into work, supporting community organisations and creating new industrial space. I can’t remember a more exciting time in terms of how we want to work with our communities and we’ve got some fantastic partnerships with the private, public and voluntary sectors in the mix to help us. All our future activities will be geared to address our strategic themes of employment, skills and health and we will continue to collaborate to leverage additional resources into the coalfields.

We know we could do more and welcome the continued support of the Scottish and Welsh governments. We do, however, have a new and compelling proposition. Our aim is to create a £40 million investment fund for the coalfields, and we are inviting the English government to become a partner with us and contribute £30 million to match our commitment of £10 million. This will enable us to build 400,000 square feet of new industrial and commercial space, creating 1,000 jobs. Over 25 years this will generate £50 million in income, which we will invest in social impact projects generating £500 million in wellbeing value. We see this as a real legacy project for a generation to come.

We know this might seem an ambitious proposition in the current climate, but it’s a truly enterprising approach. Collaboration is at the heart of this and is the essential ingredient for all our future work. Without it we will not achieve the results we want for our communities.

About The Coalfields Regeneration Trust

The Coalfields Regeneration Trust is dedicated to supporting and improving the quality of life for the 5.5 million people living in the former mining communities of Britain. We have worked at the heart of many of these communities since 1999 and have a track record of delivering targeted programmes that have reached over two million people helping many thousands; back into work; to develop new skills and participate in activities that have improved their health.

There is compelling evidence that recognises the significant challenges that still remain and shows how coalfield communities lag behind national averages on multiple indices of deprivation. Our enterprising and innovative responses will address these challenges but we need the support of government and regional stakeholders to help us achieve the scale of impact required.

Employment
The employment rate in the largest UK coalfields is consistently lower than the rest of the country. On average, 14 per cent of adults in the coalfields are out of work on benefits, which is 40 per cent higher than the national average and double that of south-east England. The Coalfields Regeneration Trust has helped more than 25,500 people into work and created or safeguarded more than 5,500 jobs.

Skills

The proportion of the working-age population with low or no qualifications in the English coalfields is roughly 60 per cent higher than in London and 40 per cent higher than in south-east England. Thanks to the programmes The Coalfields Regeneration Trust has
supported, 1.3m people are now more highly skilled.

Health

A worrying 11.7 per cent of people living in the coalfields report long-term health problems, compared to 8.6 per cent nationally. Incapacity benefit is claimed by 8.4 per cent of adults of working age in the coalfields, which is 35 per cent higher than the national average and almost double south-east England. The Coalfields Regeneration Trust has invested in projects that have improved the health of over 250,000 people

The proportion of
the working-age
population with low or
no qualifications in the
English coalfields is roughly 60 per
Employment
The employment rate
in the largest UK
coalfields is consistently
lower than the rest of
the country.
On average, 14 per cent of adults
in the coalfields are out of work on
benefits, which is 40 per cent higher
than the national average and double
that of south-east England.
The Coalfields Regeneration Trust has
helped more than 25,500 people into
work and created or safeguarded more
than 5,500 jobs.

For more information, visit www.coalfields-regen.org.uk