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  1. Election 2024
28 September 2015

Labour figures warned John McDonnell over Robin Hood tax

London mayoral candidate Sadiq Khan and Angela Eagle expressed concern at possible unilateral version. 

By George Eaton

John McDonnell excited Labour activists and journalists last night with his comments on the “Robin Hood tax”. The shadow chancellor told a Unite fringe meeting: “The position is straightforward: either we introduce a financial transaction tax unilaterally in this country, or Europe or globally.” Labour has long supported a global transaction tax (also known as “the Tobin tax” after economist James Tobin) but has never advocated a unilateral version for fear of harming the City of London. McDonnell’s comments lead to speculation in today’s papers that the tax would be a centrepiece of his conference speech.

But his address this afternoon contained no mention of the policy, leading to speculation that it had been dropped. But an aide to McDonnell told me that he had never planned to include it in the speech and that the party’s position was merely under “review”. As the shadow chancellor himself told the Today programme: “Robin Hood tax at the moment is Labour Party policy on the basis of if we can introduce it globally, and that’s been Labour Party policy for some time now.

“However, what we are saying is today we are going to launch a review of our taxation system, we are going to bring the greatest economic minds in the world to bear on that issue, we are going to consult with the British people and then we will arrive at a decision on the way forward.”

Given the divisions within Labour over the policy, McDonnell’s decision not to reference it in his speech was tactful. I hear that Labour figures, including London mayoral candidate Sadiq Khan, expressed their unhappiness to the shadow chancellor over his comments last night. As Khan recently told the FT, he is opposed to any new taxes on business. Shadow business secretary Angela Eagle has also warned against introducing the measure without global agreement. Should the review conclude that a unilateral version is desirable, the issue will become a test of McDonnell’s radicalism. 

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