The sound of stable doors being slammed firmly shut....

Well, it's a topsy-turvy world. Apparently the Tories are proposing a new tax on banks, which has in turn been slammed by Alastair Darling because it could cause severe damage to the City of London. On that question, I can only quote George Monbiot's excellent riposte on the subject of the 50p top rate of income tax:

"It’s a bitter blow. When the government proposed a windfall tax on bonuses and a 50p top rate of income tax, thousands of bankers and corporate executives promised to leave the country and move to Switzerland. Now we discover that the policy has failed: the number of financiers applying for a Swiss work permit fell by 7% last year. The government must try harder to rid this country of its antisocial elements."

..which was pointed out to me by a Green Party colleague.

But coming back to the point, we should get a couple of things in perspective. We may imagine Dave donning his polo-necked sweater and making off with his mates to a bender in Glastonbury where they are about to plot the downfall of world capitalism - but we should also bear in mind that the Tories fully support the great bank bailout in 2008 - indeed, George Osborne actually called for it before Alastair Darling approved the idea. In my view, this is where the most profound mistake was made.

Let's take RBS as a case in point. In 2007 a consortium involving RBS gained control of ABN AMRO, an investment bank. Like most other investment banks, ABN AMRO was very hard hit when the financial crisis occured, and when RBS reported a £28n loss in January 2009, £20bn of this was down to its partial acquisition of ABN. By its nature, investment banking is a risky business, and it's very unclear why so much taxpayer's money was put into bailing out this operation - except for the fact that years of regulatory failure allowed it to become so heavily entwined with the more basic parts of the financial system that its collapse could have had unpleasant ramifications.

Those unpalatable problems should have been faced in 2008, when the affairs of the insolvent banks should have been wound up in an orderly manner. That doesn't mean there wouldn't have been a charge to the taxpayer - the branch network should have been nationalized and those ordinary RBS savers who had deposits should have been compensated - but this would have cost a fraction of the amount that was actually spent shoring up the whole rotten system. In fact, there are investment banks, hedge funds and other bodies in the appropriately named "shadow banking system," mainly based in tax havens, who should thank their lucky stars for the generosity of British, and other taxpayers - not that they pay any tax in the UK themselves, of course. Still, if you happen to be passing the Cayman Islands any time soon, I'm sure they might be civil enough to offer you a dry Martini in exchange.

Going back to the "bank tax," one should remember that in its original incarnation, it was billed as a sort of insurance fund in case the banks had to be bailed out again. In my view, this gives the worst possible message to the risk takers. However, given that we are where we are, I would support the bank tax so that ordinary people can claw back some of their money that has been so unwisely invested. The question is whether we can really look forward to a reduction in jobs in the City as a result.

The dominance of the financial sector has actually been like a powerful and unhealthy drug to the British economy. Successive chancellors have found it convenient to rub along with their mates in the city because of the money that it brought in for the Treasury - until 2008, of course, when a lot of it went back again. But it has also gradually but profoundly distorted the economy - destroying manufacturing because of the overvalued pound, making us dependent on cheap imports and the retail sector and increasing the disparity between the economy of the south east and other regions. The large bonuses so gleefully handed out have also helped to drive a ten-year housing boom, which at its height meant that many homeowners were making more money on paper from the appreciation in the value of their house than they were earning at work; all these things were symptoms of the "money for nothing economy."

That's why I put in my latest leaflet that we need to be supporting science, innovation and manufacturing for the 21st century. This is partly about dealing with climate change and creating "green technologies," but it's also about back to basics - earning our brass by producing goods and services that people want to buy. If that means that some bankers leave the country, then goodbye and don't forget to send us a postcard.