The Green MEP said they should adopt a European Commission proposal to adopt a common definition of tax havens, blacklist these havens and revise tax agreements with all non-EU states.

Ms Lambert, speaking after a debate on stamping out tax avoidance, said: “Adopting a common strategy to deal with international loopholes and tax havens must be an absolute priority for David Cameron.

“Instead of trying to save public money by privatising public services and shaving the benefits bill he should be concentrating on making sure profitable corporations pay their fair share towards the exchequer.

“The European Commission has set out ways in which this can be done – international co-operation at EU level is the only realistic way to achieve this and I hope he follows the EU proposals quickly.”

The Greens also called for a common EU approach for addressing the harmful effects of tax evasion in the developing world, and more transparency in the often-murky world of offshore investments and overseas ownership of companies operating anywhere in the EU.

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Speaking at ‘Making Banks Work For Us’ a discussion of how to reform the banking and financial sectors yesterday, she said:

“The City of London Corporation is a mediaeval institution – and it helps to protect many of the banks and finance houses that have driven the latest worldwide economic meltdown: in that sense it’s a tax haven on our shores.

“We need to ensure that the banks are motivated by what’s good for society and the environment – not just their bottom line.

“This means radical reform of the sector, starting with the Government reviewing all the legal permissions by which banks lend money in the first place – and encouraging diversity in the sector: with local banks, credit unions and complementary currencies all plating a significant role.

“Abolishing an anti-democratic symbol of all that has gone wrong with banking in the UK is a useful place to start.”

Ms Lambert, who hosted the discussion at her Hackney office, was joined by the Philippe Lamberts MEP , the spokesperson on banking for the Greens / EFA group in the European Parliament, and Tony Greenham , Head of Finance and Business at the new economics foundation.

Mr Lamberts, who has spearhead EU action on limiting bankers’ bonuses and transparency in the sector, said reforming the banking sector was essential if we are to diffuse the ‘two time bombs sitting under all societies: worsening social inequality and environmental collapse’.

Mr Greenham, himself a former investment banker, said that fully 97% of the UK money supply was created by private banks – mostly operating in The City – for profit: “The social and environmental dimension is just missing from the debate over banking reform.

“The City does indeed create jobs, but only in the sense that thieves and pirates have jobs.

“The financial sector should work for our economy, which should work for people: not the other way round.”

‘Making Banks Work For Us’ took place on the eve of a European Parliamentary debate on tax avoidance and breaking up the banking sector. Both will be considered by the Economic Affairs Committee in Strasbourg on Monday.

The debate was the first in a series: the next will take place this autumn.

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