Tories defend banks against Barroso, Europe, and reason

Alex Hern addresses the conservative reaction to the agency workers directive and the financial transaction tax, both proposals coming from Europe.

This week has led the Tories to dislike the EU even more than they usually do, with both the Agency Workers Directive coming into force this weekend, and the Financial Transaction Tax receiving a much-needed boost from EU president José Manuel Barroso.

The Agency Workers directive has already been the subject of much wailing from the Tories, uniting, as it does, the anti-Europe and anti-worker wings of the party.

In August, the Telegraph were warning that it would “derail British recovery” and cost almost two billion pounds a year. The issue seems to be that Osborne wants the job of derailing British recovery all to himself, and isn’t fond of sharing.

The change in law means that after 12 weeks in the same role with the same hirer, agency workers will be entitled to the same pay, holiday entitlement and working hours as permanent staff, and they will also receive improved maternity rights.

Far from wrecking British business, this directive, and other labour-friendly rules like the minimum wage, has the potential to buck a worrying trend: Wages of the lowest-paid 50 per cent have made up an ever-decreasing proportion of total earnings over the last 30 years. As we said in August:

“These changes can not only afford some of the most vulnerable workers – the so-called permatemps – some protection, but would have the potential to be part of a wider push to ensure the the UK takes the high road of economic development.”

Meanwhile, despite Osborne’s ongoing campaign against it, the EU looks set to push for a financial transactions tax – the so-called “Tobin tax” or “Robin Hood tax”. This continued opposition leaves the Chancellor increasingly isolated, since the evidence is overwhelmingly in favour of such a tax.

Despite Ian Duncan Smith’s claim that

“A financial transactions tax across Europe … threatens to punish UK banks by decreasing their competitiveness abroad.”

It is in fact the case that an FTT would act as a much needed dampener on the riskier activities of UK banks, and before listening to Cassandra calls it is also worth noting that the UK actually has an FTT of sorts already, on share dealing (the 0.5% stamp duty), which raises about £3 billion a year. The UK, of course, still has a competitive share dealing industry.

The truth is that, beyond claims that UK tax law should be built around ensuring our financial sector can make the most profit humanly possible, the FTT addresses a wider concern in society, which is ensuring that those who got us into this mess, and then took taxpayer money to get themselves out of it, contribute something back.

Between a Robin Hood tax and the much-needed repeat of the bankers’ bonus tax, which Ed Balls called for in his conference speech, the banks might go some distance towards repaying the £497 billion they cost the country. As the Tories themselves have pointed out this week, it is only fair for wrongdoers compensate their victims.

See also:

Bill Nighy wants me in his latest movie. And he asked me to ask you, tooOwen Tudor, September 25th 2011

Osborne increasingly isolated on Financial Transactions TaxOwen Tudor, September 19th 2011

New rights for agency workers point to a better economy for allDaniel Elton, August 26th 2011

Robin Hood Tax would lead to calmer marketsSimon Chouffot, August 6th 2011

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