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Prime minister tells G20 that taxpayers must be protected from bearing cost of failure by banksThe prime minister, Gordon Brown, has called for a new "economic and social contract" with the world's banks to ensure that the cost of their failure would never again be borne by taxpayers.Addressing a G20 meeting in Scotland, Brown said 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 set up, possibly paid for by a tax on banking transactions.Brown told the meeting in St Andrews of finance ministers from the world's 20 richest nations that there should be a "just distribution of risks and rewards". 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. This is a unique sector that, when it fails, imposes such a high cost to the wider economy and damage to society that government intervention becomes essential. So the taxpayer had no real choice but to step in to keep the system afloat."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. There must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards."Max Lawson, Oxfam senior policy adviser, said: "Gordon Brown today signalled that pay-back time for banks could be just around the corner. A tax on banks would be a major step towards clearing up the mess caused by their greed. The G20 has a responsibility to act. Every minute around the world 100 people are forced into extreme poverty as a result of the economic crisis. Money raised by a financial transaction tax on banks could make a massive difference to the lives of ordinary people."Brown also repeated his warning that it was still too soon for countries to consider withdrawing the one-trillion-dollar "stimulus" package which they agreed to support their economies. Some G20 nations, including the US and Germany, want to debate ending the measures."While recent indications of economic expansion give cause for cautious optimism they are not a reason to end economic stimulus prematurely," he said. "It would be dangerous to put recovery at risk by suddenly cutting off the funding and investment that is supporting families and businesses through the most challenging times in a generation."He added that, when the time came, it was important that countries were able to co-ordinate their "exit strategies".As well as discussing how and when to withdraw the huge taxpayer support they have given their economies over the past two years, finance ministers at the two-day summit are expected to focus on climate finance ahead of next month's United Nations conference in Copenhagen.The International Monetary Fund will tell the G20 that the global economic recovery is uneven and the timing of any exit strategies should err on the side of supporting demand."The pace of recovery is uneven, particularly in advanced economies, with consumer confidence remaining subdued; the waning of temporary fiscal measures such as the cash-for-clunkers programme in the US and similar programmes elsewhere is slowing production," an IMF paper said.BankingGordon BrownG20Global recessionDavid Battyguardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
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