A British parliamentary committee says that the UK government should consider imposing a tax on high-frequency trading (HFT), among other financial industry reforms.

The UK’s Business, Innovation and Skills Committee published a new report Thursday calling on the government to “pick up a ‘regulatory stick’ to drive implementation of” recommendations made in a report earlier this year known as the Kay Review.

The committee calls on the government to immediately publish its targets for implementation of each of the Kay Review’s 17 recommendations, along with a clear measure of success for each target; who is responsible for achieving each target; and a deadline for the targets, along with the action the government will take if the deadline is not met.

“Professor Kay sought to bring about cultural change to improve long-termism in the equity market. We support this aim and his recommendations for bringing it about,” said the chair of the committee, Adrian Bailey MP.

“The cultural change advocated by Professor Kay will not happen without a catalyst,” he noted. “It is not enough for the government to simply say it supports Kay’s recommendations and then leave it to the industry to change of its own volition. The government must set measurable, accountable targets through which reform can be driven and measured.”

The report also considers some of the underlying principles of the Kay Review and outlines how these can be turned into specific recommendations. It also recommends that the government commission an impact assessment of the introduction of a tax on HFT; and, says that it should conduct a feasibility study of the proposal to ban any banks that establish branches in offshore centres that do not adhere to the OECD’s white list of financially compliant economies.

“We found some support for the concept of a Financial Transactions Tax, but concerns about the practicality of its implementation,” notes Bailey. “Something being difficult is not sufficient justification for rejecting it out of hand. The government should assess the likely impact of the introduction of a Financial Transaction Tax and how the obstacles to its implementation can be overcome.”

The committee also calls on the government to examine the take-over regimes of other countries, with a view to determining which aspects should be adopted in the UK; it recommends that a feasibility study be carried out that looks at the risks and benefits of adopting a policy that differentiates between shareholders and voting rights based on the length of time a share has been held; and, says that it should also study the impact on the UK of foreign takeovers of British companies over the past 25 years.

“We heard that the principle of ‘one-share one-vote’ is fairest,” notes Bailey. “But I cannot help thinking back to the evidence that, overall, takeovers detract value from companies. The government should consider the risks and benefits involved in changing shareholders’ voting rights based on the length of time they have held shares in a company.”