George Osborne set for a grilling over new bank tax
George Osborne is expected to face a grilling from MPs today over the new bank surcharge – set to be introduced next year – when he appears before a Treasury select committee for the first time since the Budget.
Mark Garnier, a Conservative minister on the Treasury select committee, told City PM that while Osborne had done the right thing by bringing an end to the levy, there were a few questions around the surcharge that needed clarity.
“We obviously do not want to find ourselves in a situation where challenger banks potentially find it a problem to challenge,” said Garnier.
The chancellor announced in the Budget that an eight per cent surcharge on the profits of banks would come into force from 1 January and would apply to annual profits over £25m.
The replacement of the levy with the surcharge is seen as an attempt to woo banks such as HSBC and Standard Chartered, which have threatened to move their headquarters out of the UK due to excessive regulation and costs.
However, the move has been criticised for punishing challenger banks which could now find it harder to break through.
“Whereas challenger banks would like to be able to put more money aside to expand, this could affect that. London is a major international banking centre and we have to be mindful of this when implementing new regulation,” said Garnier.
A spokesperson for the BBA said the group was not confident that the government would back down.