Downing Street Says » Bank Levy

Asked why the Chancellor had made this announcement now and not as part of the Budget, the PMS said that the Chancellor had set this out himself this morning. He had made this decision and announced it as soon as possible. The Bank Levy was originally designed to be phased in, but since that decision, the Financial Stability Report from the Bank of England had been published, which detailed the improving resilience of the UK banking sector.

The PMS added that the other reason originally given for phasing in the Levy, was that there had been uncertainty over regulatory reforms, but there had since been greater certainty over those reforms, not least because of the extended period of transition for Basle Three. On that basis, the Chancellor felt he was able to introduce the Bank Levy at the permanent rate this year.

Asked if the decision had been anything to do with the Chancellor meeting the new Shadow Chancellor at Treasury PQs today, the PMS replied that he had set out the position as he understood it, which was that things had moved on since the original announcement.

Asked if this would be enough to assuage public anger over bankers’ bonuses, the PMS said that there were talks ongoing; what we wanted to see as a result of those talks was an agreement whereby the banks would be increasing their lending to small businesses, paying bonuses at a lower rate than last year and making a larger contribution to society overall. Those were the objectives of the talks and that was where we wanted to get to, but they were still ongoing.

On whether there was a feeling in the Government that something had to be done, the PMS replied that a lot had happened in regard to banking. We were trying to address the original problem of the banking crisis in a number of ways; we had set up a Banking Commission, we were the first country to introduce a permanent levy on banks, there was a new code of practice for banks bonuses and there was a new code of practice on how they paid their tax.

The PMS said that in addition to those measures, we were also holding discussions with the banks on lending and bonuses.

Asked if the Government was concerned that Project Merlin had not been finalised, the PMS said that those discussions were ongoing and we had clear objectives for those discussions.

Asked if the banks knew about this morning’s announcement, the PMS said that people should speak to the Treasury about the exact process.

Asked when a Chancellor had last made a major tax announcement outside of the Budget, the PMS said he was sure the Treasury could advise people on the history of tax announcements.

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» Tuesday, February 8, 2011

Bank Levy

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