When Hedgehog caught up with David Davis at a Vestra Wealth breakfast event about Capital Gains Tax, he was in pugnacious mood (his normal state, one might guess).
Everyone with a pen or a soapbox is taking a pot-shot at the banks these days, so most slings and arrows can be deflected. There are (to continue the military metaphor) some rather larger guns, however, whose words carry more weight. The Future of Banking Commission, chaired by MP David Davis and fellow commissioners including St Vince of Cable, former Treasury Select Committee chairman John (now Lord) McFall and Roger Bootle, has taken aim at the banks and pulled its trigger.
It went far beyond most current proposals, recommending not just that the Volcker Rule – banning banks from proprietary trading – be enforced but that it should be extended, separating corporate advice from investor advice. When Hedgehog caught up with David Davis at a Vestra Wealth breakfast event about Capital Gains Tax, he was in pugnacious mood (his normal state, one might guess) about this: ‘It’s going to happen to them whether they like it or not!’ Several bankers had called him privately to say that they agreed with this conclusion, though they’d never say this in public.
What about his fellow MPs – and their banker-backers? ‘Most MPs are confused about this, and they’ll admit it themselves. All the debate comes covered in technical terms.’ He pointed out of the internal window in Green’s on Cornhill to the floor below, where Lloyds Bank started centuries ago: ‘The problem was banks moved from places like this to offices to start making virtual money.’
In his speech afterwards, Mr Davis discussed the problems with increasing ‘dynamic’ CGT – the more you increase it, the less the wealthy pay – which he said was true of all taxes; witness Sir Ronald Cohen’s remark about paying less tax than his cleaner. The Liberal Democrats, about whose policy on CGT Spear’s had been warning before the election, were to blame, Mr Davis declared, somewhat out of the coalition spirit.
The Future of Banking Commission, whose other recommendations included living wills for the easy dismantling of distressed banks, a derivatives register, longer-term bonus structures and guaranteeing all deposits, was not set up by the Government, but it does have some of Parliament’s biggest beasts as commissioners – one of whom is now the Business Secretary. Time to start making those wills, then.