A Speech made by Molly Scott Cato to Stroud District Council:
One of the hardest things about being engaged in local politics right now is that so often we are faced with difficult choices and so often we are told that there is no alternative to reductions in services. Many councils are in a worse position than we are. Because of some natural advantages combined with skilful financial management we are not having to make the devastating cuts that some other authorities are, but we are still prevented from investing in our local community as much as we would wish because of the reduction in our central government grant.
On a national basis the cuts to local government funding are massive. As we say in motion, local government will see real term cuts in central grant of 28% over the 2010 Comprehensive Spending Review period, meaning a cut of £6bn in annual grant by 2015.
Although the reduced power of local government spending is portrayed as unavoidable this is far from the case. The cuts we are living with other consequence of financial mismanagement on a grand scale and over many years, by financial institutions that were inadequately regulated. Yet those who took the risks that we’re paying for are still profiting from the same activities, guaranteed by the taxpayer, while the vulnerable pay the price. The IMF has calculated the total cost to the UK of the financial crisis in terms of lost output at 27% of 2008 GDP: more than a quarter of our economic product was lost as a result of the banks’ risk-taking.
Tonight we can do something to shift the balance so that we are no longer in a situation where the costs of finance are socialised while the benefits are privatised. We can take a step that will challenge the idea that our only job as councillors is to implement the cuts that austerity politics imposes upon us. The tax would be charged on financial transactions between financial institutions at a rate of just 0.1% on the exchange of shares and bonds and 0.01% on derivative contracts.
At least 11 European nations including France, Germany, Italy and Spain are moving ahead with FTTs on shares, bonds and derivatives estimated to raise £30bn a year.
While I was preparing for this evening’s council meeting I found a lovely video on YouTube. It’s set in 2024 and has a business journalist interviewing three European politicians and a representative of the city of London about how the financial transactions tax has worked. What it makes so obvious is that the British banker is on the wrong side of history. The rest of the world is moving on from an era when it was respectable for a tiny number of people to profit at the expense of the rest of us. You don’t need to be a radical to support the financial transactions tax. All it does is take a tiny proportion of the massive profits being made by financial industries and send them in the direction of some of the most vulnerable in our society. It’s not radical; to be honest its not even fair, but it is taking a step towards redressing some of the gross inequalities we are living with today. For this reason I hope all councillors in the chamber today will feel able to support this motion.
Molly Scott Cato
Professor of Strategy and Sustainability
Lead Green candidate in the south-west