Yorkshire Building Society said it is optimistic it can persuade the Government to scrap plans for a new tax on mortgage lenders that will cost the building society sector over £125m a year.
Chancellor George Osborne announced plans in the Budget to charge lenders eight per cent on profits above £25m. The new tax will replace the bank levy which is being virtually phased out.
At the moment only the banks and Nationwide, the UK’s biggest building society, pay the bank levy, but six building societies will be caught out by the new tax.
Chris Pilling, Yorkshire Building Society’s chief executive, said the society has had a “positive, open discussion” with the Treasury.
“They are well aware of what we think. Building societies played no part in the banking crisis. We’ve been propping up lending for the last few years and it’s only now that the banks are coming back in,” he said.
“I’m optimistic about the outcome. I like to think we are being listened to and questions are being asked.”
Yorkshire said it has seen good progress this week, with Mr Osborne being questioned about the impact of the new tax on building societies by the Treasury Select Committee.
In addition Shabana Mahmood, Labour’s Shadow Chief Secretary to the Treasury, asked questions about the tax and its effect on building societies in the House of Commons.
“A tax of this magnitude will impact the societies that will have to pay it,” said Mr Pilling.
“It’s a significant proportion of our profitability. These profits go into more lending or better savings rates or technology. That’s £15m our organisation won’t have to spend on these areas so yes it will affect customers.”
He was speaking as Yorkshire announced a jump in half year profits and a £600m increase in mortgage balances to £32.8bn in the six months to June 30. The group said it has helped 3,386 first-time buyers get on the housing ladder.
The UK’s second biggest building society after Nationwide said pre-tax profits fell five per cent to £111.2m following a benefit in last year’s figures from items such as fair value releases relating to its mergers with Chelsea and Norwich & Peterborough building societies.
Taking these out, core operating profits rose eight per cent to £116m.
Savings balances rose more than £200m to £27.5bn and the mutual said it had retained one of the strongest capital positions of UK financial services providers.
“We have continued to deliver on the goals and aims that our organisation was originally established to achieve, which we remain true to today – helping people to become homeowners and save for their futures,” said Mr Pilling.
“We have performed well in our core business areas, completing 15,430 mortgages and opening more than 85,000 savings accounts.“
Yorkshire said it has remained true to its mutual values, helping people save for the future and buy their own home through offering competitive rates, including some of the lowest mortgage rates available to UK borrowers.
The society has pledged to help 150 young people over the next five years to start their careers through a new apprenticeship programme.
In a recent YouGov poll, the society was named the most trusted financial services provider in Yorkshire.
In the UK, it was the third most trusted behind Nationwide and First Direct.
“How we treat our members is vital to us,” said Mr Pilling.
Yorkshire Building Society said its community programme made great strides over the first half of 2015.
The society gave Yorkshire Air Ambulance its biggest-ever single donation of £944,254, which was raised by members choosing to save in the Yorkshire Air Ambulance affinity account.
It also managed to reach £350,000 in the first year of its Hour of Need fundraising campaign for Marie Curie, which helps people with terminal illness.
The aim is to raise £500,000 by the end of 2016.
It donated £149,265 in 254 donations to charities and local good causes through the Yorkshire Building Society Charitable Foundation.
This is largely funded by members through the “Small Change Big Difference” scheme.
Yorkshire has won two awards for its community and charity work, including the Challenge Event Award at the Third Sector Business Awards for its Marie Curie Hour of Need campaign.
The society has doubled the amount of time colleagues can take as paid leave to volunteer for good causes to 31 hours.