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Brown urges new banks 'contract' Brown urges new banks 'contract'
(10 minutes later)
UK Prime Minister Gordon Brown has called for a new "social contract" with the world's banks to make them more responsible to society.UK Prime Minister Gordon Brown has called for a new "social contract" with the world's banks to make them more responsible to society.
Mr Brown told a G20 meeting in Scotland it was not acceptable that banking success was reaped by the few but failure was "borne by all of us".Mr Brown told a G20 meeting in Scotland it was not acceptable that banking success was reaped by the few but failure was "borne by all of us".
He called for a fund for future bank bailouts to be considered, possibly paid for by a tax on transactions.He called for a fund for future bank bailouts to be considered, possibly paid for by a tax on transactions.
He also said it was "essential" there was progress on funding climate change.He also said it was "essential" there was progress on funding climate change.
Taxpayers' burdenTaxpayers' burden
Mr Brown told the meeting of G20 finance ministers in St Andrews that there should be a "just distribution of risks and rewards".Mr Brown told the meeting of G20 finance ministers in St Andrews that there should be a "just distribution of risks and rewards".
AT THE SCENE Joe LynamSt Andrews Gordon Brown's intervention has come as something of a surprise to the delegates here and even to some of his government colleagues. His suggestion of a transaction levy on banks could be seen as a verbal cruise missile thrown into the debate over the relationship between society and the financial institutions which dragged the wider economy into recession. Downing St has been stressing that the Prime Minister's words were carefully chosen and measured so as not to unduly spook the markets, but the proof for that may be in the reaction on Monday morning. For now though Mr Brown is stressing that Britain would not be going it alone on this proposal. Should there be no global agreement under the auspices of the G20 - then the plan would die a swift death. The key barometer of whether this new "social contract" will be accepted will be in the response in North America, where many of the rivals to London as a financial hub are based. The initial feedback here in St Andrews suggests the response to the transaction tax idea may at best be lukewarm.
"I believe we should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," he said."I believe we should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," he said.
Alistair Darling urges his G20 colleagues to make progress on climate change
Mr Brown said the financial sector was so key that governments had no choice but to step in when it failed.Mr Brown said the financial sector was so key that governments had no choice but to step in when it failed.
He added: "And it cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us."He added: "And it cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us."
Mr Brown repeatedly stressed the need for "global" action on reforming the world's banking system.Mr Brown repeatedly stressed the need for "global" action on reforming the world's banking system.
He insisted: "Britain will not move unless others move with us."He insisted: "Britain will not move unless others move with us."
Mr Brown admitted there would be "enormous and difficult practical and technical issues" but a "better social contract" was needed with banking systems to make them more responsible.Mr Brown admitted there would be "enormous and difficult practical and technical issues" but a "better social contract" was needed with banking systems to make them more responsible.
He said it could be funded in a number of ways, including a global levy on transactions.He said it could be funded in a number of ways, including a global levy on transactions.
Other options, he said, were an insurance scheme, a global "resolution fund" or a contingent capital arrangement.Other options, he said, were an insurance scheme, a global "resolution fund" or a contingent capital arrangement.
The UK has in the past been opposed to transaction levies, known as Tobin taxes, believing they could damage the interests of the City of London.The UK has in the past been opposed to transaction levies, known as Tobin taxes, believing they could damage the interests of the City of London.
Timothy Geithner of the US talks with France's Christine LagardeTimothy Geithner of the US talks with France's Christine Lagarde
The BBC's Joe Lynam, in Saint Andrews, says Mr Brown's calling for an insurance levy or transaction tax is the verbal equivalent of a cruise missile being thrown into the debate.The BBC's Joe Lynam, in Saint Andrews, says Mr Brown's calling for an insurance levy or transaction tax is the verbal equivalent of a cruise missile being thrown into the debate.
The call took many delegates by surprise, and sources close to the Canadian and American delegations suggest their response could be lukewarm, our correspondent says.The call took many delegates by surprise, and sources close to the Canadian and American delegations suggest their response could be lukewarm, our correspondent says.
The British Bankers' Association quickly cast doubt on the effectiveness of such financial transaction levies.The British Bankers' Association quickly cast doubt on the effectiveness of such financial transaction levies.
Chief executive Angela Knight said: "[They] don't work as they require perfect or near-perfect global implementation."Chief executive Angela Knight said: "[They] don't work as they require perfect or near-perfect global implementation."
But a senior policy adviser for Oxfam, Max Lawson, said he would welcome a tax on banks as "a major step towards clearing up the mess caused by their greed".But a senior policy adviser for Oxfam, Max Lawson, said he would welcome a tax on banks as "a major step towards clearing up the mess caused by their greed".
Mr Brown also told the G20 finance ministers it was not the right time to end stimulus packages that many governments have introduced to bolster their economies.Mr Brown also told the G20 finance ministers it was not the right time to end stimulus packages that many governments have introduced to bolster their economies.
Some G20 nations, including the US, Japan and Germany, want to debate "exit strategies" to end the measures.Some G20 nations, including the US, Japan and Germany, want to debate "exit strategies" to end the measures.
But Mr Brown said: "It would be dangerous to put recovery at risk by suddenly cutting off the funding and investment that is supporting families and businesses."But Mr Brown said: "It would be dangerous to put recovery at risk by suddenly cutting off the funding and investment that is supporting families and businesses."
Earlier, UK Chancellor Alistair Darling urged the finance ministers to work towards agreeing on how to finance climate change reform ahead of the key summit on the issue in Copenhagen next month.Earlier, UK Chancellor Alistair Darling urged the finance ministers to work towards agreeing on how to finance climate change reform ahead of the key summit on the issue in Copenhagen next month.
"I think it really is imperative that when we reach the end of the day that we have shown that we have made some real progress," he said."I think it really is imperative that when we reach the end of the day that we have shown that we have made some real progress," he said.
However, there has been disagreement with some representatives about whether this is the right forum for detailed discussion of the issue.However, there has been disagreement with some representatives about whether this is the right forum for detailed discussion of the issue.