Find a Way to Tax Bankers without Alienating Banks ; City Institutions That Had a 'Good' Financial Crisis May Tire of Osborne's Continuing Levies and Decide to Relocate

By Ashton, James | The Evening Standard (London, England), December 1, 2011 | Go to article overview
Save to active project

Find a Way to Tax Bankers without Alienating Banks ; City Institutions That Had a 'Good' Financial Crisis May Tire of Osborne's Continuing Levies and Decide to Relocate


Ashton, James, The Evening Standard (London, England)


[broken bar] T LEAST George Osborne dresses properly. As befits a member of the infamous Bullingdon Club, the Chancellor is right at home in the black tie demanded by the Lord Mayor of London's Mansion House dinner.

It is a sharp contrast with Gordon Brown, who alarmed City burghers when he flouted tradition by turning up for his first Mansion House event as Chancellor in 1997 in a lounge suit.

Bankers should feel right at home with Osborne. The heir to a baronetcy, he makes little attempt to conceal his privileged background, which derives primarily from a stake in an upper-crust wallpaper firm. In the moneyed surroundings of the Square Mile, the 40-year-old fits in with ease.

Yet appearances can be deceptive. Although he dresses like them to suit the occasion, bankers can't be sure whether Osborne is a wolf in sheep's clothing. In one breath he praises them, in another he taps them for money to prop up the Government's troubled finances.

In Tuesday's Autumn Statement, Osborne said: "It is this Government's policy to ensure we remain the home of global banks and that London is the world's pre-eminent financial centre."

That's as it should be. For all the talk of rebalancing the economy, a lack of growth means it will take far longer than expected. And when it does happen, it should be about growing manufacturing, pharmaceuticals and creative industries, not taking a hammer to financial services, however much the sector remains in the doghouse with the public.

But Osborne's words need backing up with deeds. Moments later, at the despatch box, the Chancellor confirmed plans to hike a levy on banks' balance sheets for the third time in a year.

It isn't the absolute sum that has set bankers' teeth on edge. The Treasury still hopes the levy will bring in Pounds 2.5 billion annually. However, it needs to increase the percentage charge because some banks have shrunk their balance sheets, such as Lloyds and Royal Bank of Scotland.

The levy covers the worldwide deposits of banks that chose to call London their home, as opposed to just the UKbased liabilities of big international lenders. It is effectively a tax on keeping a headquarters here. In addition, overseas lenders have the flexibility to transfer business abroad to escape the charges, when such a move will have no effect for banks that are British.

Why shouldn't they pay? After all, billions of pounds were poured into propping up the banking industry when the credit crunch struck. Thanks to the turmoil inflicted by the eurozone crisis, the Government's stakes in Lloyds and RBS are heavily under water. Any hope of getting back taxpayers' money in time for the election has been extinguished.

Turning the screw is not going to get the money back any quicker - - not least because it is hitting those that had a good financial crisis. HSBC and Standard Chartered could both conceivably quit Britain as the cost of staying here escalates. Analysts think it could sting them for Pounds 450million and Pounds 200million respectively, with Barclays paying Pounds 400 million.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Find a Way to Tax Bankers without Alienating Banks ; City Institutions That Had a 'Good' Financial Crisis May Tire of Osborne's Continuing Levies and Decide to Relocate
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?