George Osborne is on the side of the banks and not those who rely on them, John McDonnell, the shadow chancellor, has said, responding to reports that the chancellor cut the bank levy after sustained lobbying from the City.
McDonnell said the reports were “yet another example of how George Osborne dances to the tune of whatever the bankers call for, and everyone else is a second thought”.
Following freedom of information requests, the Evening Standard reported on Friday that the CBI, Royal Bank of Scotland, HSBC and the British Bankers’ Association all called on the government to lower the levy after it was first introduced in 2010 in response to the financial crisis.
In his July budget, Osborne announced that the levy – which has raised over £8bn since 2010 – would be reduced from 0.21% to 0.1% by 2021 and would only apply to the UK balance sheets of banks.
“The chancellor has an ever softer touch on the banks; cutting the bank levy, slashing corporation tax, selling the publicly owned banks off at a loss, watering down the regulations on senior bankers and staying silent when the watchdog he set up watered down its review into the sector,” said McDonnell.
“Customers and taxpayers who bailed out the banks and continue to pay the price for their past actions and excesses will see this as yet more proof that George Osborne is simply on the side of those who run the banks and not those who rely on them.”
Responding to complaints from banks that the levy had frequently been raised without warning, Osborne in July set out a timetable for reductions from 0.21% to 0.18% from January 2016 and 0.17% from January 2017, before reaching 0.1% from January 2021. The levy has previously been based on banks’ global balance sheets, but will be changed to focus only on their UK operations from 2021.
The Conservative manifesto ahead of last May’s general election pledged that the levy – which had been increased nine times – would be permanent. Following Osborne’s announcement to change it, City analysts estimated the changes would save major international banks such as HSBC and Standard Chartered almost £1bn in tax a year.
A spokeswoman for the Treasury told the Evening Standard that “any suggestion of undue influence is wrong.”
This article was written by Frances Perraudin, for theguardian.com on Friday 15th January 2016 18.32 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010