Darling: I won't do an Obama and tax the banks

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ALISTAIR Darling has risked angering left-wingers in his party by refusing to copy Barack Obama's plan for a major new tax on Britain's bailed-out banks.

In an interview with The Scotsman today, the Chancellor reveals he will not be imposing a similar levy on UK banks – including RBS and Lloyds, which only survived because of government support, now estimated at 850 million.

In the US, Mr Obama said banks and financial institutions that had turned to the government for backing should pay 0.15 per cent on all liabilities, declaring: "We want our money back and we're going to get it."

With bank executives preparing to unveil major bonuses after a profitable 2009, the move has triggered calls from Labour MPs for a similar deal here. Responding to the plan, a spokesman for Prime Minister Gordon Brown said that Downing Street would "study" the deal.

However, Mr Darling declares clearly that there is no chance of Britain imposing a similar tax. He was speaking after visiting the Edinburgh HQ of the Royal Bank of Scotland which, he said, was showing signs of genuine recovery.

Asked whether he was considering an Obama-style bank tax, the Chancellor said: "No, we are not. The Americans are doing something different."

Mr Darling said the UK government had organised its own bank rescue differently to the US, where the government agreed to buy toxic debts run up by banks through its Trouble Asset Relief Programme (Tarp).

In the UK, Mr Darling said the government had arranged the rescue differently by buying shareholdings, and putting in place a credit guarantee scheme.

He said that rather than getting its money back from a tax, the public purse in the UK would recover loans by selling the bank shares at a later date.

However, he said it would be "some years" before that happened, meaning that the vast sums offered to banks look set to stay on the government's books for now.

The move risks angering those voters and Labour MPs who believe that the banks should have more punitive measures imposed on them. It also comes as the US banks are expected to announce multi-billion-dollar bonuses.

Labour MP John Mann said: "We have the ability now to copy what Obama has done on the principle of taxing bankers' bonuses. Bankers can't now use the excuse that they will go abroad, because if America is doing it – and that's where most of the big investment banks are – then there is nowhere else to go."

Earlier, a spokesman for Mr Brown said: "What the (American] president and Treasury secretary have announced is very much a reaction to the situation that unfolded in the US."

Mr Darling also uses his interview today to hit back at shadow chancellor George Osborne, who declared on Thursday that he would start cutting budgets from day one of a Conservative government, in a bid to curb Britain's huge budget deficit.

The Chancellor said it would be "disastrous" to reduce spending immediately.

However, he said it was necessary to warn voters that cuts would kick in from 2011, as part of his plan to halve the 175 billion deficit in four years, adding that people had become "understandably cynical" about false political pledges.

Mr Darling also insisted that he and Mr Brown were unified on economic policy.

Chancellor on …


"Hester is doing a good job – compared to the last time I met them, people have a real sense of confidence"

No10 v No11

"There is no dispute. Gordon and I are absolutely at one"


"When times get tough, you have to tighten your belt. He seems to be the only person in Britain who thinks that doesn't apply to him"


"The public will choose and they won't choose on who looks nice on a poster"


"We will sell (taxpayers' bank shares] when the time is right. It will be some years, not a long time"


"I've never had any difficulty getting a good night's sleep. I'll judge the job when it's over … I'm not finished yet"