Standing up for our financial sector

I was on the Today programme this morning (here) defending bankers, up against Michael Meacher who has drafted a private members’ bill imposing a punitive retrospective tax on bonuses. This, of course, is simply vengeance – the political equivalent of smashing Fred Goodwin’s windows. And for such a bill to be even before Parliament sends a dangerous message about the mood in Westminster.

My argument is simple: Britain does banking phenomonally well, and we profit from hosting this highly mobile breed. I didn’t give statistics on air, but the financial sector generates a quarter of all corporation tax, the richest 1 percent pay 23 percent of income tax.

What happens if we threaten 45p tax rate rates, or have ex-ministers lay down legislation for arbitrary tax raids? The bankers won’t form a union and protest. They will just go: to Zurich, Singapore, Hong Kong, wherever.

They make such decisions not in response to individual measures but by judging the mood. I was against Osborne’s non-dom tax plan because not just because it would lead to a net loss to the Exchequer: it sent a sign that the Tories were up for populist gestures that don’t raise any money. Their endorsement of the 45p tax reinforces this very damaging message. Cameron should bill himself as a great defender of capitalism – and if he wants political “cover” he should seek it in going after the negligent auditors, those guilty of credit rating fraud, and the people who would by now be in handcuffs if they worked in Wall St. If he bears his teeth at the wealth creators, they won’t snarl back. Their next ticket to Singapore will simply be one-way.

The financial sector, which pays so much of government’s bills, has more immigrants than any other sector of the economy. Investment banks have offices worldwide. These people can go anywhere. When Barclays decided to double its investment banking staff in Japan earlier this week it didn’t say in Britain “look what you’ve driven us to”. It just made a quiet announcement in Tokyo.

So to paraphrase Noel Coward, don’t let’s be beastly to the bankers. Because we’ll certainly miss their money when they’ve gone.