Banks ‘remain target for Osborne’s attacks’

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CHANCELLOR George Osborne announced an increase in the Bank Levy in his Budget speech, because he wants the banks to make a bigger contribution to repairing the UK’s finances.

Mr Osborne described financial services as one of Britain’s most important and successful industries, “employing people in every corner of the country”.

He added: “The banks got support going into the crisis; now they must support the whole country as we recover from the crisis.”

Simon Gray, a partner at Hentons, the Leeds-based chartered accountants, said: “The banks continue to be the target for Osborne’s attacks and today’s Budget included announcements on two bank levies.

“The first being an increase to the levy on their balance sheet assets, a move which is expected to raise an extra £900m; and the second being a restriction on the banks claiming corporation tax relief on the billions they have had to pay out in compensation payments for various miss-selling.”

Malcolm Small, senior financial services policy adviser at the Institute of Directors, said: “The increase in the Bank Levy will make headlines, but we need to be wary of the downsides.

“This levy risks decreasing bank profits, potentially meaning less money to lend to growing businesses. Lower profits will also reduce the value of bank shares making the sale of Government-owned bank shares that much harder.”