Where did our local Labour MP stand on pubic interest test?

Liberal Democrats have been proposing a public interest test for some time – the issue is not whether there is a foreign bidder, it is about whether it is in the interests of the British economy.   The Labour Government removed this provision in 2002 and we are now seeing the damage done by opening up a complete free-for-all.

Vince Cable, the Lib Dem Shadow Chancellor,  led Liberal Democrat support for two amendments to the Enterprise Bill in June and October 2002 that would have compelled the Office of Fair Trading (OFT) to take into account the damage to the public interest and employment levels when determining competition policy on mergers and acquisitions.  Our local Labour MP voted against this amendment.  Also of interest the eight Tory MPs that voted on this issue, supporter the Labour Government position.

Back in January this year, Vince wrote to Lord Mandleson about the Cadbury/Kraft takeover.  In his letter he said: “Would you agree that there is now a strong case to review issues of share ownership and corporate governance to ensure that short term shareholders looking for very quick returns do not damage the long term stability of publicly listed companies and, with it, the longer term growth of the British economy?”

Again, back in January, at Prime Minister’s Question Time, Nick Clegg, asked: “…  Last month, Lord Mandleson declared that the Government would mount a huge opposition to the Kraft takeover of Cadbury’s, so why does the Royal Bank of Scotland (RBS), which is owned by this Government, now want to lend vast amounts of our money to Kraft to fund that takeover?    Nick Clegg further stated that while tens of thousands of British companies are crying out for money to protect jobs, RBS wants to lend to a multinational with a record of cutting jobs.  When British taxpayers bailed out the banks, they would never have believed that their money would be used to put British people out of work.

The full exchange can be found on link:   http://www.publications.parliament.uk/pa/cm200910/cmhansrd/cm100120/debtext/100120-0003.htm#10012070002828.

Robin Hood Tax

Liberal Democrats have proposed creating an immediate new levy on bank profits at a rate of 10%.  This would be a direct recognition of the beneficial and explicit taxpayer support which banks have received: the UK banks owe their very existence to the British taxpayer.  Some banks such as RBS, Lloyds-HBOS and Northern Rock have received direct taxpayer bailouts.  However, all have benefited from the explicit guarantee that none of them will be allowed to fail.

The Governor of the Bank of England has estimated that the UK banks have received the equivalent of £1 trillion in taxpayer support.  Further, the banking industry is unique in having the taxpayer acting as its safety net and the Liberal Democrats believe that this should be recognised. Our banking levy would be expected to yield around £2bn next year and this revenue would be used for the moment to tackle the UK structural deficit – thus ensuring that the banking sector helps to pay for the problems it has in part created.

The concept of a financial transaction tax is a good idea in principle and is something which the Liberal Democrats would be happy to pursue.  Although I am told that it would be technically possible to levy a small transaction tax on sterling transactions alone, it would be much better to have a common approach by leading financial centres including the US, German, French and Swiss governments. The proceeds from such a tax could provide a modest source of revenue to be used for funding overseas development.

The ʻTobin Taxʼ concept has been advocated for many years and progress has been hampered by a number of issues.  These have included technical problems with its implementation as well as competing and sometimes conflicting claims from its proponents over how to use the revenue raised. Demonstrating that the tax can work, by securing the co-operation of Europe and the US, should have priority over elaborate plans which are unlikely to be realised.