The Treasury gets £200m for Christmas

Let's hope it doesn't spend it all in one place.

The Treasury is set to receive a spectacular belated Christmas present this year: over £200m in banking fines. Under new regulation introduced last October, the money raised from punishing banks’ misdemeanours, of which there were many in 2012, will not go to the FSA, but to the Treasury. Hopefully, this move will not encourage the government to hand out fines indiscriminately solely for the purpose of boosting its balance sheet.

At present, the debris-strewn financial landscape of 2012 is set to benefit the Treasury to the tune of £312m. But before the end of the financial year in April, this figure is likely to be much higher, with RBS expected to settle over Libor by paying a fine of about £350m.

What is the government going to do with this money, which comes on top of the annual banking levy of £2.5bn? So far, it has promised to hand £35m to armed forces charities; once the FSA’s investigation fees are deducted, around £172m will be left. After it receives its chunk of RBS’s fine, the final figure for the Treasury will far exceed £200m.

Financial iniquity, it would seem, now means profit for the government. At the end of last year, I argued that fines are not an effective way in which to punish banks and bankers for immorality or incompetence. The danger of handing the money they raise to the Treasury rather than an independent regulator is that the government might be less inclined to look at other ways of addressing the City’s misdemeanours.

This article first appeared in Spear's magazine.

The money has been raised from punishing banks’ misdemeanours. Photograph: Getty Images

Mark Nayler is a senior researcher at Spear's magazine.

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The government is abdicating responsibility for the Irish border after Brexit

The invisible border plan is full of holes and only a softer Brexit can avoid chaos.

The Government’s Brexit position paper yesterday on Northern Ireland that included its border proposals has only multiplied the number of questions that need urgent answers.

The questions people in Northern Ireland, particularly those in border communities, have asked me over the past year are in many ways similar to those I'm asked in my constituency in St Helens; what impact will Brexit have on them, their families, their jobs and businesses and their freedom of movement. But one issue looms larger than any other - the border.

These new proposals have now opened up a fresh set of questions on the border that are being asked not just by people in Northern Ireland but across Britain, Ireland and the EU too.  

The most obvious is that if you do not have checks on the border between Northern Ireland and the Republic of Ireland or between Northern Ireland and Great Britain, where do you carry out checks on immigration, goods and services?

The Government talks about an invisible border and using technology to make it work, proposing to have barrier-free access to the EU while negotiating free trade agreements. In that context, these ill-conceived proposals are more a reflection of a fantasy politics where the solution, not the border, is invisible. 

Based on its proposals yesterday, the Government is effectively handing back the decisions over a porous border of 310 miles and over 200 crossings to the European Union and abdicating responsibility for a mess of its own creation.

The Government paper stresses its commitment to maintaining an open border. But their relentless progress towards a hard Brexit raises a number of practical obstacles.

The first is immigration. A majority of my constituents in St Helens North and the UK as a whole voted to leave the EU in the referendum last year. I understand the fact that for many of them their main motivation was to achieve better control of immigration.

The Prime Minister herself has been very clear that her Government’s policy remains to cut annual net migration to the "tens of thousands" - a metric I believe to be artificial and flawed. But the Government’s policy on maintaining the Common Travel Area will create a gaping hole in Britain’s immigration policy.

Yesterday's proposals suggest that when we leave the EU, people wanting to come to Britain from EU countries will have to do no more than to book a flight to Dublin, take the bus to Belfast, and then cross the Irish Sea to enter Great Britain - with no checks at any point.

Far from taking back control of its borders as it claimed, the Government will be giving it away. Far from making our borders more secure, the loss of our place in the Single Market will open up a new route to illegal immigration and people traffickers. This is not what my constituents, or anyone else, voted for in the referendum.

At present, around 35,000 people cross the border between Northern Ireland and the Republic every day to work, study, visit relatives and do business. Over 200 crossing points handle 177,000 lorries, 208,000 vans and 1.85m cars per month.

Any immigration checks on the border whatsoever would be a practical nightmare. They would also be a collective psychological nightmare for people living in proximity to the border on both sides, erecting barriers between people - families and friends - in the North and South and potentially reopening divisions of the past.

This is the appalling Catch 22 the Government has placed itself in. Their position paper contains no evidence that they have a clue how to solve the problems they have created.

On customs, there is currently no barrier whatsoever to exporting and importing goods across the border. Huge numbers of firms rely on this frictionless cross-border trade. However, the Government’s plan raises the prospect that new controls will come into place, introducing additional cost and bureaucracy for companies and hitting the economy.

While they are trying to reassure small firms in particular that this will not be the case, it is inconceivable that Britain could leave the EU’s Customs Union and not impose customs checks.

Besides, Ireland is a member of the EU. Any deal cannot simply be arranged bilaterally between London and Dublin. It will need to apply to all the other EU nations.

The Government is casting around for a workable solution to the problems Brexit presents for Northern Ireland. But the easiest and most obvious answer is staring them in the face.

If Britain stayed within the Customs Union or the Single Market, the Common Travel Area would be mucheasier to maintain, and customs checks of any kind would not be required. To truly rule out a return to the borders of the past, the Government needs to swallow its pride and drop its commitment to a hard, destructive Brexit.

Theresa May made a huge strategic error in caving in to the Tory right-wing by ruling out a customs union or membership of the Single Market. She could have worked with EU partners who also have concerns about freedom of movement and want reform to get a good deal on good terms for Britain.

She has squandered goodwill in Europe and united the other 27 EU nations around a harder position against the UK.  The lack of a viable answer to the pressing questions over the Irish border is just the start of what I fear will be a very painful road ahead.

Conor McGinn is Labour MP for St Helens North.and a supporter of the Open Britain group.