Vincent Cable, Liberal Democrat Deputy Leader & Shadow Chancellor, answers your questions.
Q1. Given that all three parties are preaching 'tough love' in terms of increased taxation for banker bonuses, and increased regulation for the City, what incentive is there for bankers to vote for you ?
Our reforms are in the interest of the City as well as the wider economy. The prevailing culture of bonuses and risk-taking brought the industry to the brink of collapse. I know that many fair-minded figures in the City, with an interest in the long-term health of their industry, agree with the Liberal Democrats. No sensible and responsible banker wants to see this crisis repeated or to be responsible for saddling the taxpayer with billions in debt because their industry could not look after itself.
Q2. EC legislation already accounts for a substantial amount of law passing through the UK parliament. What are your proposals to ensure that your government wouldn't merely serve as a rubber stamp for the EU ?
Unlike the other parties - and the Conservatives in particular - the Liberal Democrats actively engage in the European legislative process. There is a great deal of legislation passed in Brussels - some good and some bad - but you achieve nothing by isolating yourself. Lib Dem MEP Sharon Bowles, as the Chair of the Committee on Economic and Monetary Affairs, plays a vital role in scrutinising regulation in the European parliament and is an exemplary example of how British politicians can represent British interests. The European Scrutiny Committee in the UK parliament does sterling work scrutinising European documents and could, no doubt, be better resourced.
Q3. How to you intend to protect the City's position as a main financial centre for hedge funds, given the EU's proposals for regulation that many feel will result in the industry relocating outside Europe ?
Although hedge funds have been painted as one of the main culprits of the financial crisis but they weren’t, by and large, responsible. Opinion may be split on their social value and regulators were right to ban short-selling to provide stability at the height of the crisis but they contrast favourably with the major banks who used other people’s money - not their own - to engage in high-risk ‘casino’ banking.
Specific European proposals to limit hedge fund activity contained within the draft Alternative Investment Managers Directive - with minimum capital requirements, leverage limits and equivalence requirements for domestic regulation appear overly demanding and even protectionist. The draft directive is controversial and has already been held up for a year. Sharon Bowles has consistently called for legislators to consider this legislation more objectively.