Government plans to increase bank levy to £2.5bn



Bank levy to increase

Bank levy to increase

 

The government is to increase the levy on banks to £2.5bn this year –raising an extra £800m.

George Osborne suggested the tax was being brought forward before banks announced their bonus payments.

However, leaders of the four biggest UK banks were “livid” at the move.

It has not yet been finalised whether a deal with banks, to increase business loans and limit bonus payments on the wide-ranging Project Merlin stalled.

The heads of HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds are rumoured to have a conference call on Tuesday afternoon, in order to decide whether to go ahead with the scheme or not, a specialist said.

“The question the bank bosses will discuss is whether it remains sensible to sign up to Project Merlin, if they can’t be certain that the government will resist the temptation to periodically bash them when the political heat is on,” he added.

The change in the banking levy would have usually been set out in next month’s Budget.

Shadow chancellor Ed Balls said the announcement had been “panicky” and was “a damp squib”.

He added that the chancellor’s “delay and prevarication” in agreeing a deal with the banks was “further undermining confidence in economic recovery”.

The two later clashed in the House of Commons, with Mr Balls referring to the announcement as “this morning’s rather hurried mini Budget”.

Mr Osborne hit back by calling Mr Balls a “deficit denier”

“We have had to deal with his economic legacy,” he said. “He was the City Minister who knighted Fred Goodwin.”

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