<\/p>\n
Today\u2019s advocates of a windfall tax on the UK\u2019s highly profitable banking sector detected a whiff of familiarity in Peter Mandelson\u2019s suggestion, back in 2009, that JP Morgan should \u201cmildly threaten\u201d the chancellor.<\/p>\n
Feeding a Wall Street financier market sensitive titbits was an extraordinary breach of trust \u2013 perhaps even illegal, it seems<\/a> \u2013 but for Labour veterans of the financial crisis, Mandelson\u2019s collusion with the banks against his own colleagues was the worst betrayal.<\/p>\n The then business secretary told Jeffrey Epstein by email that he was \u201ctrying hard\u201d to change government policy on a bankers\u2019 bonus tax; and appeared to recommend a fresh round of lobbying, suggesting the JP Morgan boss Jamie Dimon press the then chancellor, Alistair Darling<\/a>.<\/p>\n The economic backdrop today is dramatically different from the depths of the banking crisis. But the clash between progressive policies and the powerful financial sector laid bare in the Epstein emails is still evident \u2013 and as in the case of Dimon, even some of the characters are the same.<\/p>\n Labour insiders from that time expressed outrage and disgust at Mandelson\u2019s behaviour. One senior figure in Darling\u2019s Treasury said the late chancellor would have been \u201cshaking with rage\u201d if he had known of Mandelson\u2019s disloyalty.<\/p>\n \u201cThere was a lot of anger in the Treasury at the time about the bankers,\u201d they recalled, underlining the fragile nature of the situation. Extraordinary sums of taxpayers\u2019 money had been pumped into the ailing banks<\/a> to prevent the complete collapse of the financial system.<\/p>\n Amid public fury about the role of bank bosses in driving the sector \u2013 and the British economy \u2013 to the brink of disaster while lining their own pockets, Darling had decided to slap a one-off 50% supertax on bonuses above \u00a325,000<\/a>.<\/p>\n Darling recalled in his book about the crisis that Dimon \u2013 whether or not prompted by Mandelson\u2019s email to Epstein \u2013 rang him up, \u201cvery, very angry\u201d about the plan.<\/p>\n \u201cHe said that his bank bought a lot of UK debt and he wondered if that was now such a good idea,\u201d Darling recalled. \u201cI pointed out that they bought our debt because it was a good business deal for them. He went on to say they were thinking of building a new office in London, but they had to reconsider that now.\u201d<\/p>\n The apparent outburst made no difference to Darling\u2019s position, and he continued to implement the bonus tax as planned.<\/p>\n More than 16 years on, and another Labour government, in a different era, opted not to risk alienating the titans of finance.<\/p>\n It was the self-same Dimon who issued an upbeat statement welcoming Rachel Reeves\u2019s budget and announcing plans for a new UK HQ, after she confirmed there would be no bank windfall tax. The \u201cUK government\u2019s priority of economic growth has been a critical factor in helping us make this decision,\u201d he said.<\/p>\n Carsten Jung, author of an Institute for Public Policy Research (IPPR) paper calling for an \u00a38bn a year tax on the banks<\/a>, which hit share prices when it was published last summer, said Labour\u2019s anxiety about being seen as \u201canti-business\u201d had stood in the way of sensible proposals. \u201cWe would do well putting a bit less emphasis on business sentiment and a bit more emphasis on economics,\u201d he said.<\/p>\n In the run-up to Reeves\u2019s critical second budget, with the finance sector lobbying intensively against a bank tax, Labour\u2019s business envoy, Varun Chandra, whose role is to smooth over relations with the corporate sector, attended a party hosted by Dimon in New York<\/a>. The Goldman Sachs boss David Solomon reportedly used a meeting with Reeves to push<\/a> her personally on the issue.<\/p>\n The executive director of Tax Justice UK, Faiza Shaheen, who was a leftwing Labour candidate at the 2024 election before being blocked by the party\u2019s national executive committee<\/a>, said: \u201cI think they\u2019re impressed by those sorts of executives, and they\u2019ve been very wary about being anti-business or anti-growth, which for them is the same thing.\u201d<\/p>\n Reeves\u2019s allies reject the idea that she is a pushover in the face of corporate lobbying. One senior government figure pointed out, for example, that she insisted the apprenticeship levy be spent on younger workers, when big business was pushing hard for it to be freed up to spend however they wanted. \u201cThese people lobby very hard indeed and it needs resisting,\u201d they said.<\/p>\n Other emails in the Epstein data dump, as well as revealing Mandelson\u2019s role in pushing against the bonus tax, appear to show him aligning with banks as they resisted re-regulation after the crisis that aimed to prevent such a catastrophic collapse ever happening again.<\/p>\n