Saturday 1 January 2011

Charity tax on bankers

An interview I have done for The Times makes it to the front page. Then the ACEVO call for a banker bonus tax gets strong airtime on BBC , ITN and Sky. I have highlighted the growing threat to charities and the third sector by cuts. What we have seen so far are merely the first signs of a growing tsunami of Ill considered cuts I argue. They use my comment that, " if charities are hit today,the old and disabled will pay tomorrow " to head up a full 2 pages of commentary highlighting what the cuts actually mean on the ground, together with my interview. The great Today programme used the interview and so a lot of people who hadn't actually read yesterday's List discovered my new appellation!

But the key point was the ACEVO call for the tax to go straight to the Big Society Bank. The Darling tax on bonuses raised over £ 3 billion. The current pot for bonuses is estimated at a cool £7million. So a tax at 50% would raise sufficient to start the new Bank off with a sensible amount to he capitalise the sector , to help third sector organisations to bid for contracts and so to grow, and to encourage merger and rationalisation among sector bodies. Currently it is estimated that only £60m will come from dormant accounts. I'm afraid this won't even voucher half the amount we will loose from Tuesday , let alone make up for the cuts.

It is clear that the rich pay less as a proportion of their income than the poor and so it seems appropriate that a bankers bonus tax be used to support the charitable sector. Indeed we know that the banks were in discussion with Governmnet on how they would put money into the new Bank. But then we heard the banks had gone quiet on that. Well , here is an opportunity for them to recognise the debt they owe the
British people by supporting the vulnerable and excluded. It was interesting to get an email in response to my interview from an expat in Switzerland who has worked in banking. He wrote,

"In the (now distant) past, philanthropy meant that a lot of charitable purposes were financed by the generosity of above-average earners. Nowadays the top earners are getting paid tens - even hundreds - of times as much as their predecessors of yore, but philanthropy has gone
out of the window, and charities have had to take the strain, even as middle-class earners' ability to donate has ebbed away .In part this latter phenomenon has arisen through the top earners grabbing a larger slice of the cake. What a vicious spiral we are in: in the 1980s, the top 1% of earners in Western societies took 8% of the income cake, now they devour 24%, down from 30% immediately before the crisis broke. That of course leaves 76% for the other 99% of us, instead of 92% ). "

So ACEVO is seeking a meeting with the Chancellor and Danny Alexander. We also want to see Nick Clegg , who has publicly called for a new tax on bankers bonuses. I'm sure that this idea has traction. The banks don't seem to understand we all have long memories and a big splurge in bonuses will cause outrage. So we are also writing to the CEOs of the big banks asking them to support the " charity tax". I'm sure we can persuade the British Bankers Association to support us on this. I shall be contacting Angela Knight to discuss this..

So far the Government have been timid in reacting to the coming storm. That is not to say we do not fully support the work that has gone on. The transition fund was a great piece of news in a bleak budget. And people like Greg Clark MP , Nick Hurd MP and Eric Pickles MP have been warring councils they risk underminig the Big Society project. Their warnings are not being heeded. So the idea of a bonus tax could transform the prospects for our sector. Action is needed now.

I have been much on the blackberry over the last 2 days. I have been really touched by the vast number of emails and texts from people saying congrats. I have even heard from an old primary school friend as well as people I have worked with over the last 30 years. I had a
charming note from my Knightly colleague Sir Stuart and the new NCVO Chair sent me a fantastic note , Suzi , Nick Hurd and Baroness Angela Smith texted.and lots and lots of members emailed. One email asked , " does this give you licence to adopt new airs? You could travel between meetings in a sedan chair! ". Steve Whyler, who runs the DTA and is a member who also got honoured in yesterday's list said , " I have every confidence you will let it go to your head ". But the prize goes to Mike Baker who wrote me a Limerick ( get it ? ) .

There was a young man named Bubb
Who went to the Palace for a Dub
When the Queen gave him Bolly
Stephen asked for more lolly
She said "I'll tell Cameron to give you a su

One I really appreciated was ,

" It is an truly fitting tribute to all that you amd your work at ACEVO have achieved over the years through a combination of splendid initiatives, steely persistence and your own deep personal commitment and relaxed style."

And my local paper , the Oxford Mail reported ,

" A WEST Oxfordshire man has been knighted for services to the voluntary sector.

Stephen Bubb who has lived in Charlbury for more than 20 years, is chief executive of the charity leaders’ body the Association of Chief
Executives of Voluntary Organisations (ACEVO).

Conservative MP Damian Green praised the former Oxford University student and chairman of the City of Oxford Orchestra.

He said: “In 10 years Stephen has applied his unique brand of enthusiasm, flair, and sheer bull-headedness to driving ACEVO forward. At a time when the voluntary sector is more important than ever, this is hugely important work. He is a great contributor.”

Now that is quite enough self congratulation Bubb. Still , Robin Bogg will no doubt keep me cut down to size!


Jeremy Moodey said...

I am astonished that ACEVO has jumped on the banker-bashing bandwagon. First, because this is political grandstanding of the worst kind, and unworthy of any charity (and exactly why I cancelled my direct debit to Christian Aid when they signed up to the ludicrous Robin Hood tax idea); second, because high marginal rates of income tax are economically illiterate since they nearly always end up producing lower tax revenues. Further confirmation, if any was needed, that ACEVO has lost its way, despite the enoblement of its CEO. My decision to cancel my ACEVO membership was absolutely the right one.

Sir Stephen Bubb said...

How very ungracious of you. Do read my more recent Blog. Happy New Year.

Unknown said...

I have to say I totally agree with Jeremy. Now I know it is very easy to blame the recession solely on bankers but I think we know this is a gross over-simplification. Also, the reason the bonus tax worked last time was because it was a one off and the cost was shared around the banks global bonus pools. They are unlikely to do this again IMHO. What you would succeed in doing is putting UK financial services at a competitive disadvantage globally.

*Some* bankers may be paid what you consider an obscene amount but so are some footballers. Why are you not calling for a 50% tax on footballers/pop-stars etc? I voluntarily give money to charity. As do many, many people in financial services. But what you are proposing is to forcibly take people's earnings if they work in a particular profession for your cause. I note that you do not include on this site a list of the charities you represent. I will be contacting all charities I currently donate to and if they are associated with your organisation I will be cancelling/switching my regular donations. You may consider this "ungracious" but I will not voluntarily support an organisation that seeks to impose a forcible tax on me and my profession, even if you believe this is a populist policy at the present time.

Toby said...

Tax on bankers bonuses in Ireland is, I believe, 90%. hasn't helped them much. However if banks want to continue to ignore public opinion and the damage their risk taking has had on the vulnerable, then something must be done.
But Stephen, don't forget the benefit Community Reinvestment legislation would have...creating incentives for banks to behave more responsibly & invest/operate in more socially productive ways. We can all have our cake and eat it!

Best wishes & congratulations (but remember the knight of the round table! ;)

Toby Blume
Ps Nick Aldridge & I have decided we will change our names to Stephen and wait for our gongs!
pps it's £ billions in bonuses, not millions :)

Toby said...
This comment has been removed by the author.
Unknown said...

For all you bankers and other people who are getting huge salaries and bonuses, and don't know what to do with them, how about a tax break? Give some of your bonus to help poorer people, harassed by social security bureaucrats and creditors (like banks), and do it tax efficiently using Gift Aid. Get back some of the affection and trust of the citizens of your country and others, crippled and resentful under the burden of their own and their governments' debts. Salve your own consciences and feel better about yourselves. Take control of your own tax deductions and use them for good.
Invest in social projects that teach people how to stay out of debt, how to start and run enterprises that make money so that they don't have to depend on social security. Invest in ethical and environmentally beneficial projects instead of enterprises that plunder the earth to make a quick profit, and leave destruction in their wake.
Share some of your expertise and knowledge about making money with others. Use some the money for direct support payments to poor people - an alternative, less bureaucratic, benefit system - and especially to write off debts they cannot afford to pay.
A few million in an endowment investment fund could go on generating income for ever to fund a charity, even one that could help support you when your luck changes.
Think about a system whereby banks would charge little or no interest on personal consumer loans, giving people time to pay them off without increasing them continually.
You could work with ACEVO charity heads and the Big Society Bank on a way to do this cost-effectively via tax, or set up your own, voluntary charity fund to do this.