Prime Minister's question asked in the House of Commons, by Alan Simpson (Labour). It was answered on Wednesday, 11 November 2009 on behalf of the Prime Minister.

Engagements

Question: Despite the robust rejection that he received from the United States, may I congratulate the Prime Minister on his attempt to advocate the case for an international application of the Tobin tax on speculative capital transactions? At a time when nation states are manifestly failing to meet the funding obligations that they have made on the eradication of poverty, the delivery of food security and climate change mitigation, will he go back to the international community and again make the case that we should tackle speculators, if we are to deliver the programmes that will save the planet and transform the prospects for our future?

Answer: This is a first: it is the first time that my hon. Friend has supported my economic policy. Even though the Leader of the Opposition opposes this, we will have to face up to the social responsibility of the banking system. We will have to face up to the responsibilities that financial institutions have at a global level, in a situation in which we have global financial markets and not national financial markets. Therefore, we will have to consider measures that bring the financial institutions in line with the values that are held by the vast majority of people round the world. That means that we will have to consider an insurance fee against banks collapsing and our having to pick up the bill. We have to look at contingent capital liabilities and whether there should be a resolution fund in case of crises to resolve or a financial levy, such as has been discussed before. These measures are now on the table and have to be discussed. I make no apology for putting them on the agenda: in the long run, it is the only way that we can solve the problem of the social responsibility of world banking to the community.

Secondary information