A financial transactions tax just makes good business sense for Britain

Rather than refusing it to rebuild our casino banks, we should create something new and better.

According to Albert Einstein the definition of insanity is “doing the same thing over and over again and expecting different results”. Yet bolstered by today’s improving GDP figures, David Cameron’s government appears set on rebuilding the UK economy around the casino capitalists of the City of London. The financial crisis may have derailed the economy to the extent that as a country we’re still poorer than we were six years ago but let’s just put the old show back on the road again.

This attitude was exemplified by Boris Johnson’s speech to the British Bankers’ Association this week when he invited European banks to come to the UK to avoid the proposed European financial transactions tax (FTT, also knows as a Robin Hood Tax). Nevermind the fact that moving to London would not actually help them evade the tax, the message was clear: the UK wants the same as the financial sector, a return to business (and bonuses) as usual.

Thankfully, MPs on the Business, Innovations and Skills Committee today intruded into the debate calling into question the Government’s position. In their response to the Kay review of UK equity markets and long-term decision making, MPs not only called for the Government to get on with implementing the professor’s recommendations – including a review of merger and acquisition activity – but also called on Cameron and Osborne to think again about their opposition to the FTT.

Their argument does not rest on the moral imperative that the financial sector should repay the damage it has done – something even the Prime Minister and Chancellor are wary of disputing. Instead the Committee makes hard-headed economic arguments for an FTT - that it would curb damaging high frequency trading, the computer-driven casino capitalism that causes flash crashes. It is an argument I have made here previously.

The business case for an FTT is so strong that Vince Cable told MPs that “I am, in some ways, quite disposed to it”. But given the political capital George Osborne and David Cameron have invested in opposing the plans of 11 European countries to press ahead with an FTT, it is difficult to see this Government changing course.

That provides a real opportunity for Labour. Ed Miliband’s themes of "responsible capitalism" and "one nation" could have been adopted with the Robin Hood Tax in mind. What better way of cracking down on the "wild-west" excesses of the market that he condemned in his conference speech two years ago than by levying a tiny tax that will have negligible impact on long-term investment but make financial gambling via high-frequency trading unprofitable?

And what better way of showing that Labour is truly a "one nation party" than by making the Square Mile pay for the damage it has done to the whole of the British economy and at the same time make it less likely that it will be able to wreak such damage in future?

It is hard-headed economic arguments like these which have led the German finance ministry to champion the tax within Europe. And with 11 European countries – including the major economies of France, Germany, Italy and Spain – set to introduce a wide ranging FTT on shares, bonds and derivatives early in 2014, a future Labour government would hardly be leaping into the dark if they followed suit.

Miliband and his Shadow Chancellor Ed Balls have spoken warmly about the Robin Hood Tax and its potential to raise billions to tackle poverty at home and abroad. But like the Government, they have pretended that such a tax must be global (or at least have the support of the US) to work. Given the UK’s own FTT – the 0.5 per cent stamp duty on shares – raises about £3bn annually this is palpable nonsense. It is to be hoped that today’s dose of economic good sense from MPs will encourage them to be a bit bolder.

Not quite a casino bank… Photograph: Getty Images

Jon Slater is a Senior Press Officer for Oxfam and a spokesperson for the Robin Hood Campaign

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Jeremy Corbyn's won a monumental victory - but it's more delicate than it looks

The need for peace on the left is overwhelming. 

It is perverse, absurd even, that in the aftermath of such a monumental victory Jeremy Corbyn must immediately talk of coalition building and compromise. Previous winners of internal struggles – most notably Tony Blair and Neil Kinnock – certainly did nothing of the sort, and Corbyn’s victory is bigger than theirs. To an extent, this is not the victory of one set of ideas but the establishment of a new party altogether – with a completely different centre of gravity and an almost completely new membership. 

That new Labour party – and core project that has built around Corbyn’s leadership – is itself a delicate network of alliances. The veterans of big social movements, from the Iraq War to the anti-austerity protests of 2011, find themselves in bed with left-leaning cosmopolitan modernisers and the reanimated remnants of the old Labour left. All parts of the coalition have reason for hubris, to believe that this new formation – complex enough as it is already, and filled with ideas and energy – can carry the Corbyn project into Number 10 with or without the co-operation of his Labour colleagues and the wider left. 

That vision is a mirage. Labour has undergone the biggest membership surge in its history, and is now the biggest left of centre party in Europe. As John Curtis has pointed out, the party’s support has maintained a high floor relative to the level of infighting and sniping over the summer, in part because of Corbyn’s strong appeal to Labour’s base. But the bleak electoral outlook, compounded by boundary changes, requires us to do more than read out lines from pre-written scripts. We must all, from a position of strength, stare death in the face.

The terms of peace with the Labour right must be negotiated carefully. There can be no negotiating away of internal democracy in the selection of candidates or national policy-setting; doing so would permanently weaken the left’s hand and allow Corbyn’s detractors in parliament to run riot. And in policy terms, Corbyn cannot compromise basic anti-austerity principles – not just because doing so would be a betrayal that would demobilise Labour’s new base, but because the project of triangulation pioneered by Ed Milliband is a tried and tested electoral failure. 

And yet the need for peace is overwhelming. At a grassroots level, Owen Smith’s support was not made up of hardened Blairites. Many of them, unlike Smith himself, really did share Corbyn’s political vision but had been ground down and convinced that, regardless of the rights and wrongs, there could be no end to Labour’s civil war without new leadership. The left’s job is to prove those people, and the politicians who claim to represent them, wrong. 

Labour’s assorted hacks – on left and right – often forget how boring and irrelevant the search for Labour’s soul looks to a wider public that long ago left behind party tribalism. The intellectual task ahead of us is about framing our politics in a comprehensible, modernising way – not creating a whole new generation of people who know Kinnock’s 1985 conference speech by rote. 

A united Labour Party, free to focus on shifting the consensus of British politics could well change history. But the grim realities of the situation may force us to go even further. To get a majority at the next election, Labour will need to gain 106 seats – a swing not achieved since 1997. 

Add to that the socially conservative affirmation of the Brexit vote, and the left’s profound confusion in terms of what to do about it, and the challenge of getting a Labour Prime Minister – regardless of who they are or what they stand for – looks like an unprecedented challenge. That unprecedented challenge could be met by an unprecedented alliance of political forces outside the Labour party as well as inside it. 

In order for Labour to win under the conditions set by the boundary review, everything has to be calibrated right. Firstly, we need an energised, mass party which advocates radical and popular policies. Secondly, we need the party not to tear itself apart every few months. And yes, finally, we may well need an honest, working arrangement between Labour, the Greens, and other progressive parties, including even the Lib Dems. 

Exactly how that alliance would be constituted – and how far it would be under the control of local parties – could be the matter of some debate. But there is every chance of it working – especially if the terms of the next general election take place in the context of the outcome of a Brexit negotiation. 

The starting point for that journey must be a recognition on the part of Corbyn’s opponents that the new Labour party is not just the overwhelming democratic choice of members, but also – with a mass activist base and a mostly popular programme – the only electable version of the Labour party in the current climate. For the left’s part, we must recognise that the coalition that has built around Corbyn is just the core of a much wider set of alliances – inside Labour and perhaps beyond.