Brussels is determined to exact revenge on the UK for what is seen as a financial crisis spawned by London-based bankers.
So regardless of David Cameron’s refusal to sign up for a Financial Transactions Tax the European Union is casting a trawler-net to extract 30billion euro a year from banks, including those in the City.
The FTT rests on the misguided view that euroland’s problems can be blamed on the evils of Anglo-Saxon capitalism. In truth, the greater culprits are the failed European social model and the ultimately unworkable single currency.
Tax raid: The European Union is casting a trawler-net to extract 30billion euro a year from banks, including those in the CityThis view also conveniently ignores the reality that, amongst those up to their necks in reckless behaviour were little local institutions on the continent, including German Landesbanken and Spanish cajas.
One of the biggest attractions of the FTT, from a European viewpoint, is that it would hit London hard, since it is by far the biggest financial centre. As the proposals are currently formulated, deals done in the City could be caught in the net if any party to them is within the tax zone. The end result being, of course, that British investors and pensioners get hurt.
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It is not clear what the EU intends to do with the money it raises in this way, but the suspicion must be it will turn into a cover bailout for bankrupt eurozone nations. The idea of an FTT is not a bad one in itself. It has an illustrious intellectual pedigree dating back to Keynes, via Nobel laureate James Tobin.
The UK already has a transactions tax in the form of stamp duty on shares, our oldest tax still in existence, dating back to the late 17th century. The idea that society should exact reparations from the banks is a very good one, and that is what the Chancellor has tried to do with his Banking Levy. Arguably, he could do more.
But an FTT will only work with the co-operation of all major financial centres. It is completely unacceptable for the EU to seek to punish the City by the back door.
Halos and horns
Eric Daniels, the former boss of Lloyds, was asking for trouble by saying this week that his bank was ‘on the side of the angels’ when it has had to earmark £5.3billion for PPI redress.
That was about as tactful as Bob Diamond telling us the time for remorse is over, and Goldman Sachs’ boss Lloyd Blankfein insisting that investment banking is God’s work.
But I have some sympathy with Daniels on the subject of people submitting dodgy PPI claims: he is absolutely right to say a large proportion are utterly bogus.
The wave of false claims has been fanned by cold-calling vulture firms, who disturb family life by ringing at all hours of the day or night and over the weekends to encourage people to seek PPI money.
It is the same story with insurance, where fake whiplash injuries and inflated claims on household cover push up the bills for other policyholders.
The financial services industry has left itself wide open to this type of behaviour from disillusioned customers.
Insurers often dismiss genuine claims on the flimsiest of pretexts, and the banks have indulged in corruption, deception and mis-selling on such a grand scale that they are in no position to throw stones. Customers feel ripped off, so they retaliate in kind. That still does not mean it is morally acceptable to wring money out of companies under false pretences. It is plain theft at the expense of honest customers. Most of us aspire to behave better than bankers.
Toxic brands
A scare about horse meat masquerading as beef would have been mild by 19th century standards.
A fascinating book by the American historian James Whorton. The Arsenic Century: How Victorian Britain Was Poisoned At Home, Work And Play, gives an account of how our great-great grandparents risked ingesting lethal doses with every mouthful.
Attempts to stop this were opposed by commercial interests, on the basis that banning deadly toxins from food would be an interference with the workings of free capitalism. Interestingly, that argument is today more often heard from the financial services sector to defend its toxic products than from the food industry.
Thanks to one of this country’s great unsung heroes, a doctor named Arthur Hill Hassall, a crusader known as ‘the Apostle of Anti-Adulteration’, legislation was finally passed in 1860, though only after 21 people in Bradford died from eating peppermint lozenges laced with arsenic.
It is forgotten now, but modern food brands and modern supermarkets grew out of people’s need for reassurance that their food was not adulterated. The horse meat scandal strikes them at their core.
Ruth Sunderland is Associate City Editor of the Daily Mail