Chancellor raises additional £800m from bank levy

I am comfortable with what I read, but am unsure of how Project Merlin will play out in the near term. It could well be that if banks in general see their tax levels rise, they will be less inclined to 'opt into' the concept. What concerns me even more is the fact that whilst all you say is a (small) step in the right direction, there are huge assumptions from the government based on nothing more concrete than "trust" which could evaporate p.d.q. if the going gets really tough. Personally, I would like to see a firm(er) commitment from the finance industry giving greater encouragement to small and medium-sized businesses, allied to an even more friendly approach to such companies - these are the life-blood of the UK revival. I await the Wednesday announcement with interest.
P.S.

Poor old George Osborne.

If he gets any more flaccid with the banks, we'll be able to mop him up with a sponge. The dear bloke's writing himself into the "in office but not in power" page of history.

George Osborne - the irony chancellor.

This comment was removed because the moderators found it broke the house rules. Explain.

No other business is treated as the government whipping boy and money box. I hope they leave the UK and maybe then the government will start to realise that it is not their right to tax anything and everything to the hilt, but that they work for us and they were elected to do the necessary things for the populace, not things like these grand fancy green initiatives that end up costing us all a fortune.

Government grow up, treat the banks fairly, treat the people and other businesses fairly and we will all get along. Otherwise you'll just be a pain like the government before you and most likely the government after you!
Less tax and more fairness all round please.

Well that means house prices will fall because the banks will argure that they have less money to lend.

I still don't understand why noe of the bankers who got us into this mess were done for fraud! (There got it in first!!!!)

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And whilst we are at it, there is also the question of this - "To us, it's an obscure shift of tax law. To the City, it's the heist of the century" - https://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

Only yesterday the Dark Lord and his followers made it plain that it was better to get tax revenues from Banker's bonuses than to cut them.

Is it really no more Mr Nice Guy or has someone who actually understands economics told him he's going to miss his revenue targets completely?

Now he has to do what he should have done in the first place.

It worries me that if he can miscalculate his revenues this early in his tenure , just how bad are things going to get?

Which is a useful bit of additional revenue, but the £800m increment is a rounding error in respect of the ballooning national debt and would shave considerably less than 0.1 percentage points off the UK's 10 per cent annual fiscal deficit.

The annual deficit is about £150Billion... so £800m is just over 0.5%, not less than 0.1% ???

given the taxpayer is backstopping the entire industry all profits are 'false' because profit comes from risk and no risks are being taken. So at least 70% of all 'profits' should be given back to the 'owners of capital' ie the taxpayer.

"Project Merlin". That sums it up for me perfectly. I can now identify exactly the type of person running the show. In my decades of project management, I've quickly learned to avoid any project where they put serious effort in coming up with a quirky/motivating name. The banks won't take any emotional cues from this move, they'll judge it for what it is: limp.

What a joke!

Some perspective required here.

800 million is 200 million LESS than we wasted on widening a couple of stretches of the M25.

This is hardly worth reporting!

By way of context, the additional £800m of levy for 2011 equates to around 13 per cent of the aggregated value of the big banks' bonuses…

- My word he’s just hitting them SO HARD isn’t he?! A whopping 13 PERCENT OF BONUSES... WOW!
Oh and the wailing and gnashing of teeth there’ll be from the City bonus brigade even over this paltry sum! I can hear them now – I can’t get my new million pound yacht! Oh I’ll have to forgo my second villa in Tuscany! You can't tax me as I'm rich! This is theft! Infamy! Infamy! They've all got it infamy!…

£800 MILLION is just going to make such an enormous contribution to this all important ‘deficit’ isn’t it? Especially considering that it’s coming from some of the primary contributors to the whole economic mess that’s going on.
You have to appreciate the truly astonishing level of disgracefulness in the fact that the taxed money will not even go towards the NHS, Education, essential public services, or even the ‘Big Society’ (tee hee!!) as it’ll actually end up back with the banks anyway quickly enough to pay for the said ‘deficit’!

This government is quickly establishing a record for changing it's mind, or if you like dithering.

To change your mind so often so early after taking office must be a concern to those that believed their election rhetoric.

Damned if he does hit the banks and damned if he doesn't. You'd think he'd get at least some credit from the knockers of wealth-creating bankers for this. Maybe if he were to slay their first born perhaps?

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Lets face it, Bankers are no longer a part of this country.

They belong to the land of NonDom.

It is a mistake to ask them to do anything for the sake of Britain.

Would this work ?

The banks pay out bonuses in cash and shares to its top investment bankers and must pay tax (in cash) exactly matching that, to the exchequer.

This would make the banks more weary of paying out ridiculous amounts, leaving more money to give to shareholders/re-invest in small businesses etc.

Just a thought....

They are hardly hitting the banks, the changes to the law on offshore income will make far more money for the banks than £800m.

"To change your mind so often so early after taking office must be a concern to those that believed their election rhetoric."

Is it not better, in some situations, to re-evaluate the situation & make adjustments, rather than to continue, at full speed, down a path to financial ruin?

What on earth are you going to write about Robert once UBS (last as usual) have paid their 2010 bonuses early March..

If we stopped whipping up vitriol, random taxes, proposals to break up banks and 'flexible' levys then we might even mimic the $12bn (pre-interest) profit from the bail out seen in the US govts sale of their stake in Citi.

Noteworthy that Barrack has still not passed either HR1586 (90% tax on bankers) or his financial responsibility (0.15% levy) fee despite huge support and the Irish have just dropped the same 90% tax proposal

..unlikley Joe Public will go for moving on; true, when its more fun blaming a banker than their own greed in running up thousands in personal credit card debt and their 4 buy-to-let mortgages that they can't afford

How about an article on asset stripping of UK companies? (BP's forced sales to pay US litigation or KDB buying parts of RBS) or multi-nationals engaging in protectionism (Pfizer closing UK development site despite it purportedly being the most profitable of such units) - no one off levies there or general interest ?

"The Chancellor has concluded that the banks are in better shape than he thought less than two months ago"

As most of the public noticed a long time ago how well off the banks were by their ability to pay large bonuses may I suggest we take Cameron's "Big Society" a stage further, fire Osborne and let one of the public take his place.

It might be the only sign of the flagship proposal actually benefiting the country.

Smoke and mirrors again - so what exactly are the banks doing for small businesses that is special. Reads like business as usual to me and a page from the last government who were not inhibited to present old money as new money. Is this face saving on a grand scale - you bet!

Are the political and financial elite drawing greater benefit from those who actually make and do all those things that need making or doing, than they were 50 years ago, 100 years ago or 500 years ago?

I suspect that if I travelled back in time, the story would be very much the same as it is now.

However, we do have the opportunity to change the current system.
We have periodic elections, where we can choose who determines laws, taxes and policy.

And despite having this opportunity, all people have ever done is vote for mainstream political parties, predominantly filled to the gunnels with career politicians. In short Labour, Conservative and Liberal Democrat.

So if you’ve ever voted Labour, Conservative or Liberal Democrat, it is not unreasonable to conclude that the ‘unfairness’ of which you may complain, is your own damn fault, and for the avoidance of doubt, mine to.

I may bleat and moan about the ‘way things are’ but if I mark my ‘X’ against a mainstream political party, I must do so in the full and complete knowledge that it’s a vote for the way things are, rather than a vote against it.

The link below is not a political one, but is a link for change:
https://www.positivemoney.org.uk/

'In other words, the tax rise is probably of more importance from a symbolic point of view - perhaps indicating a touch more iciness in ministers' attitudes to the banks - rather than from a budgetary perspective.'

Agree with the first half of this - its all symbolism but it does not indicate anything other than the government's need to be seen to be doing something about the banks whilst they continue to pay themselves unseemly bonuses.

I don't really see how publishing the names of those earning over XXX benefits anyone in anyway. Anyone care to enlighten me as to how this makes banks more efficient, or increases lending to small business etc?

I think the key problem in the banking is a lack of competition which allows banks to charge excessive rates and limits lending to SMEs. It would be against my judgement as a free-marketeer to try to stop current bansk from doing what they do, but some sort of lowering of barriers of entry/helping smaller regional banks set up or do business would be much more useful than either raising taxes and therefore limiting what people spend in UK, or publishing what people earn so as to only increase jealousy amongst the public.

Great post @ #2
Chuckle of the Day Award already.
You could be right.
Why £800m?
Could have rounded it up and I don't think the banks would have screamed much more.

But the big question is: why no 60% income tax band? We'll have to wait for the next Budget to find out. A new top band is really needed.

It would have pulled in £68m from the Goldman Sachs bonuses alone.

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"Only yesterday the Dark Lord and his followers made it plain that it was better to get tax revenues from Banker's bonuses than to cut them."

Except they won't pay much tax on the bonuses - any high earner in a bank has access to tax accountants and lawyers who know tax law inside out.

BTW this isn't my thought it was said by John Redwood MP as justification for getting rid of the 50% tax rate asap.

It's a start, that's all.

his is the first good news I have heard from the chancellor. But it is little and late. The delays of project Merlin for political reasons is the real story here. The only time the chancellor will get more plaudits is if he introduces real reform to the banking system. This is unlikely to happen.

https://extranea.wordpress.com/

18. At 08:49am on 8th Feb 2011, onebadmouse wrote:
Lets face it, Bankers are no longer a part of this country.

They belong to the land of NonDom.

It is a mistake to ask them to do anything for the sake of Britain.

=======================================================

Since when have multi national global corporations needed to have some kind of home country to which they devote their lives. i mean Apple is an american company (and is doing pretty well for itself) but its not going around giving the government extra money because they love america so much. A company works for itself, thats the way it should be.

fair enough bash the nationalised banks as they are directly linked to the UK people through asset control.

Pathetic levy and will be legally avoided no doubt.
Break them up, I want to see them smashed into a thousand pieces.
All the money in taxes paid by banks in the last 10 years has been given back, they are a leech on societies wealth, other countries manage quiet well, why not us.

4. At 08:17am on 8th Feb 2011, taxpayer2010 wrote:
No other business is treated as the government whipping boy and money box.
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You surely meant to say: "No other business treats the government as whipping boy and money box." If so, I agree entirely.

What a chance we have missed to reform the Global Banking System! Our leaders just dont have the bottle to lead so they tinker! Scared to death by threats from the Global banking elite that they will upsticks to Dubai!

We have so underplayed our hand! Just like North Sea Oil was in the 70's our Financial Services is actually an Albatross.

The 2008 banking collapse was the chance to rid ourselves of that Albatross by a prolonged campaign of massive Quantative easing and investment in hi tech manufacturing. This would have;

-devalued the pound and made us super competitive,
-reduced real debt by inflating it away
-made the bankers irrelavant so that we could have safely dismantled the shadow banking sytem.

instead we have patched up the system and laid the foundations for the next crisis!

If the Chancellor and Banks are looking for a face-saving way to pay bonuses, they should look no further than a Revenue & Customs approved Enterprise Investment Scheme.

If Bankers were to invest just one tenth of each million £ bonus in an EIS, they would enjoy a tax rebate of £20,000. Happy Investors!

Their £100,000 investment could create 4 new jobs at salaries of £25,000 each. Happy Workless!

Tax & NI for those staff would total about £24,000. Happy Tax-man!

Unemployment is reduced. Happy Politicians!

Graduate new employees repay their Student Loans. Happy Treasury!

Banks eliminate 'high cost' small loans to business. Happy Bankers!

After 3 years, EIS shares are repaid from profits earned (free of Capital Gains Tax). Happy Business!

After 2 years EIS shares are exempt from Inheritance Tax. Happy Inheritor! Sad Taxman! Emotion of Deceased...unknown!

Who's to lose? Even if EIS shares become worthless, losses can be offset against future tax.

Everybody wins from an Enterprise Investment Scheme...at no cost to the Treasury.

"16. At 08:48am on 8th Feb 2011, sandy winder wrote:
Damned if he does hit the banks and damned if he doesn't. You'd think he'd get at least some credit from the knockers of wealth-creating bankers for this. Maybe if he were to slay their first born perhaps?"

Can I get a few points for spotting your unintentional joke in there Sandy?

'wealth-creating bankers' my ****

Too little, too late. The banks have ruined the economy, and the futures of their children. I hope they are proud of themselves. Greed is disgusting and thats what our culture and government is based on. The world can't survive for much longer if we all remain capitalists.

More smoke and mirrors from the banks' best friend, multimillionaire George Osbourne.

The banks won't notice the loss, the poorest in society being asked to pay for the banks' greed won't notice the boost.

And through it all are our savings any safer and can banks now be left to collapse when they mess up next time?

Just remember the top 1% earners pay something like 50% of all income tax, and usually work for companies that pay the majority of coropration tax.

Drive them away will put up everyones taxes.

Also remember that 6billion of bank bonuses will raise 2-3billion of income tax.

33. avalanche_invesmtents wrote:

Since when have multi national global corporations needed to have some kind of home country to which they devote their lives. i mean Apple is an american company (and is doing pretty well for itself) but its not going around giving the government extra money because they love america so much. A company works for itself, thats the way it should be.
==============================================================

All companies in there early days were built and supported by a countries infrastructure, when they develop into a monolith such as apple its payback time for the goverment/country that investmented in them, or thats how it should be.

What we have now is, use the countries infrastructure and then bail to the lowest cost base country, no payback for the startup country and this allows the company to gain a monopoly by blocking future investment.

I fully realise that old Etonians stick together but is Osborne really the best the Tory party can come up with. He always looks as though he doesn't know what he is talking about. He hardly inspires confidence. He looks like a scared schoolboy not someone you would trust to understand anything much, let alone the country's future prosperity.

1. Good news to continue whittling away at the deficit (at least one day that means the debt becomes stable) - "A billion here, a billion there ..." - Dirksen
2. Banks are in healthier state - could be a signal to be ready for the 0.5% base rate to at last begin to creep up.
3. I am worried interplays between government polices and banking solutions. When more risk is forced into a system by politicians (e.g. sub-prime mortgages), the system uses its expertise to respond to that risk (e.g. increased use of securitization) etc.

Bank charges on the rise then?

This will run for years. I'm please George Osbourne has revised the levy but there are so many vested interests in this whole saga that change will be terribly slow. Will we have forgotten this mess in 10 years time? If we haven't what will we do to the banks then? No sudden moves with the Govt I fear and no change in a hurry. Business as usual sad to say.

I wish the Govt would use it's stake in the near nationalised banks to inject some real competition.

I cannot for a moment defend the immoral bonuses paid out to people in the banking sector merely for doing their jobs properly but such easy-to-gain bonuses are not just paid out in the banking sector - take a look at many FT100 chief execs. who get huge bonuses for fulfilling their 'personal objectives' which are usually set by their friends on the remuneration committee but never made public. It's true too for a lot of public sector appointments, council managers, mandarins etc.
The good news is that with higher rate tax at 50% and VAT at 20% quite a lot of banker's bonuses will be returned to the state in the form of tax, and if they use their bonuses to put petrol in their Ferraris then the return to the state will be even higher.

About time? a small step in the right direction, now make them start lending to small business at a fair rate 1% and we may get a few proper jobs for young people, and stop them making more familys homeless in the U.K to give all the bank workers a pay rise of 20%.

no doubt Robert, as you say, pampering to politics with the tax message...

however, it is worth pondering on a tax consultation (ending Friday 11th Feb 2011) on taxing carbon.

aimed at forcing changes in consumption, by taxing carbon (and creating a trading mechanism for 'the rich to get richer' and pay some taxes maybe) it has one catch.

there is a 'box' for a levy on carbon (that is not gas/energy/fuel or climate change related)

in other words, the NHS is likely to face higher bills, as carbon is contained in every 'plastic' product in use, from syringes, to nebulisers, to medicine applicators, catheters etc etc.

it should be noted that EVERY plastic product MOULDED, INJECTED or otherwise MANUFACTURED on the PLANET could potentially be impacted by this new tax

so that means, your shirts, ties, shoes, food wrapping, drinks containers, pipes in your homes, cars, toys, gardens etc- which all contain CARBON in the synthetic fibres or plastic parts, could in theory have a TAX levied on them!

lets hope they stop at 'contraceptive' devices - that might be a tax too far - social engineering at its worst!

This comment was removed because the moderators found it broke the house rules. Explain.

"But Mr Balls may have to explain why the previous government, in which he was a cabinet minister (though not chancellor) did not take steps to force through permanent reductions in bankers’ bonuses at the moment when it had maximum leverage over the banks – when it was rescuing the entire banking industry in the autumn of 2008."

He won't be able to explain it (though he may try to explain it away, ie to equivocate). New Labour and in particular Brown who when Chancellor waxed lyrical about the alleged virtues of share option schemes (this, from a "labour" government!) were hoist with their own petard.

They couldn't disavow their self-proclaimed belief in pay/shares-for-performance, and the banks couldn't have stopped these bonus schemes - even had they wished-to, which they didn't - whilst remaining in business, without being sued and taken to the cleaners by smart lawyers for breach of contract. The only way to stop them being paid was to allow the banks in trouble to go into liquidation, which would have defeated the entire strategy they were - rightly or wrongly - pursuing. They were trapped.

So is the present government and so will all governments be, so long as the existing banking system remains unreformed.

The moral is:- reform the system - radically. Don't just tinker with it.

42. At 09:34am on 8th Feb 2011, Mammon1 wrote:

All companies in there early days were built and supported by a countries infrastructure, when they develop into a monolith such as apple its payback time for the goverment/country that investmented in them, or thats how it should be.

=======================================================

i actually chose Apple specifically for the fact that they never needed government money and it was in fact the money from "Angel" investors and the money from Steve Jobs and Steve Wozniack which started the company. The same is true for alot of tech companies...Facebook/Google/Twitter.

most companies receive all their funding from Private equity investors or Banks, yes there are schemes which involve the government supporting entrepreneurs in specific sectors eg. Green science but these are few and far between.

companies therefore should only have an allegiance to their customers as their the ones giving the money.

PS. this isnt me trying to exonerate the banks and i think an increased levy is only the tip of the iceburg but the perception of banks and companies needs to be brought into the 21st century.

I love this notion that it's not the bankers but the people they lent to that are the cause of the global recession! Curse those people for wanting a home!

The system gummed up when the square mile pulled out of their game of chicken. After years of telling everyone about the size of their manhood they suddenly thought it was show and tell time, and funnily enough all quit the game at the same time.

Impertinent of the public to continue to clamour for some sort of change, Govt and banks have had to work hard to ignore them for so long already.

How about the public ask once only, for changes that protect the public savings and so we can allow these banks to fail. And having been asked once, the implementations are made. If the banks want the bashing to stop, they need to fix the problem.

Coming from the Chancellor who believes that to be perfect one has to give 110% (reminds me of the American guy and his potato(e)). How revolting this man is, puts me off my breakfast.
As the banks employ many of the top politicians in advisory roles how can a mp give 100% to his post whilst giving his other interests any percentage whatsoever?
Rest assured the bankers will accept the token charges as a mere pittance to the benefits that they will reap under the Condemons.

It appears that George Osborne is very obviously imposing a small additional tax of £800M on the banks while at the same time giving the Banks a massive tax hand out behind the scenes. Normally companies pay tax on foreign earnings amounting to the difference between tax rates abroad and in the UK, ie if the company tax rate in Bluehaven is 5% against 28% in UK they would have to pay tax of 23% in the UK. Companies will no longer have to pay that tax in the UK, so if Banks massage their earning through tax havens they will be able to avoid a massive amount of tax.

https://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

"41. At 09:34am on 8th Feb 2011, icewombat wrote:
Just remember the top 1% earners pay something like 50% of all income tax, and usually work for companies that pay the majority of coropration tax.

Drive them away will put up everyones taxes.

Also remember that 6billion of bank bonuses will raise 2-3billion of income tax."

Comments on Mr Wombat's sentences;

1) An obscene indictment or our current situation don't you think?

2) Do you believe this levy will 'drive them away'?

3) Do you honestly believe this?

Or are you a WUM?

George is still just tinkering with the banks! If he is worried about them de-camping get agreement with major countries to set controls and if the banks wish to move let them setup in the Sudan or Colombia. Split them into manageable components. If they won't toe the line withdraw tax payer support, hammer them for taxes and let them fail. Jail the incompetent perpetrators for life.

This comment was removed because the moderators found it broke the house rules. Explain.

Could it be "no more Mr Nice Chancellor," at least as far as the banks are concerned?
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No, didn't Osbourne once say that the tories would cherish the city?
I'm sure at some stage the men in grey suits must have tapped Cameron on the shoulder and the banks for that matter, and said look it's a little too much too fast. Just hang back a little while. Chuck the dog a bone.

This gesture is probably too little too late.

Not enough. There should be a personal liability placed upon these bankers.

@4. taxpayer2010:

Your post was ironical, of course.

Wasn't it?

Especially this bit:- "Less tax and more fairness all round please."

Priceless!

'Merlin Project' - you really do have to laugh. It sounds like some Etonian old boys initiation game for Georgie Porgie, Camers, and the Hoorah Henrys of the Bullingdon Club to become Knights of the Round Cabinet.

Who better to find the Holy Grail that will solve our country's economic woes?

Please forgive my ignorance Mr. Osborne, but if my company had been rescued from oblivion by public money then I would expect to (a) be wearing "sackcloth and ashes" instead of saying that "the time for remorse is over". and (b) not expecting to take ANY bonus until I had repaid the rescue loan in full and (c) I would expect the lenders, who now had a controlling interest in my company, to be able to dictate the scale of salary and bonus, I would not expect to have an apparently free hand in setting my own remuneration with borrowed money ! What high finance technical point am I missing ?
The Banks are obviously NEVER going to join the real world so why can't you get moving with separate retail banks now and let the parasites go hang themselves with their continued greed.
Never mind the niceties of the banking World - Joe Public needs to SEE justice done - at the moment salt is being rubbed into the wound and it needs healing NOW !

Another piece of pointless political window dressing.

The Govt and Media continue to BASH the very INSTITUTIONS required to be healthy for economic progress. Meanwhile ordinary shareholders lose out : pension funds, retail investors and many pensioners who relied on dividends for their income. (One I know received 90% of her income through financial company dividends thinking that the Regulators were doing their job. A freelancer who worked hard, very very hard....reduced in circumstances to well below the poverty line.)

It is very probable that there were 'fraudulent' bankers AND 'fraudulent politicians'. But proving such a conjecture in law a difficult, but perhaps not impossible, task. This is a battle against a swathe of INDIVIDUALS from ALL main parties, MOST banks, SOME civil servants, and some professionals on the banking periphery.

Go after the INDIVIDUALS by all means but allow the INSTITUTIONS to flourish.

Build new jails and new debtors' prisons so that punishing INDIVIDUALS for having engaged in moral hazard can act as a deterrent to others.

Why does George Osborne have so much difficulty making the banks disclose details of very high levels of salaries and bonuses when Mr Pickles has no trouble at all proposing that local government should give information about all their employees earning more than £58,200 pa?All in it together? I think not!

A pathetic amount being taken from pathetic men by a pathetic government.

#4. Taxpayer2010

No other business is treated as the government whipping boy and money box. I hope they leave the UK and maybe then the government will start to realise that it is not their right to tax anything and everything to the hilt, but that they work for us and they were elected to do the necessary things for the populace, not things like these grand fancy green initiatives that end up costing us all a fortune.
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It seems to me that if the banks were to leave the UK it would make little difference if their profits already lie in tax havens. If they did leave, we could all feel smug. There would be much less tax for the Government which can only mean less Government - terrific

41. At 09:34am on 8th Feb 2011, icewombat wrote:
Just remember the top 1% earners pay something like 50% of all income tax, and usually work for companies that pay the majority of coropration tax.

Drive them away will put up everyones taxes.

Also remember that 6billion of bank bonuses will raise 2-3billion of income tax.
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I think that says more about the disgusting iniquity of earnings in this country than anything else. Thank god for progressive taxation, though.

But if we take your argument to its logical conclusion. If there were, say 10 families in this country that earned 60% of all earnings and paid 95% of all taxes then you would want to avoid driving them away at any cost?

Personally, I would drive them into the sea.

43. At 09:39am on 8th Feb 2011, Lucy Clake wrote:
"..."

I thought he was only in the job cos call-me-Dave didn't want a repeat of the Bliar-Broon fiasco so put someone in a chancellor who no one would possibly support as a challenger for his job?

Just for interest, how much tax revenue at 40 and 50% will be raised from the bankers bonuses.

It seems to me that still the best way to raise money is to encourage the banks to pay as OTT bonuses as possible, then tax them like crazy.

As long as banks also, in the process, invest to guard against future credit problems, this seems like a far simpler way of dong things. Punishing banks is fine, except what we really need at the moment is cash...

Trying to avoid a kicking this afternoon then!!!! What a government? Managing to annoy just about everyone from the bankers to the disabled with their ill thought out idealogically driven programmes. You'd think after 13 years in opposition they would have had policies in place.

Obviously they believed that Labour was going to be re-elected so are making policy up as they respond in a knee jerk fashion to whichever way the economic winds blow.

Fine increasing the levy on Bankers Bonuses. But can we put a limit on the amount of bonuses paid. If a person on £100000 gets a bonus because the bank says he is worth it of £200000 why is that person not paid £300000 the reason why is because they will pay more tax and NI because it is earnings. At the same time why not look at the bonuses and dividends paid by all registered companies even the small ones. The reason for this is that there are a large number of companies that pay directors a weekly wage equal to the minimum amount required to get NI credits and then at the end of their financial year get a large bonus or dividend that is not classed as income

Wow, that will really make a difference.......

"Chancellor raises additional £800m from bank levy" is the title of Robert Peston's blog.

On Radio 4 (?) this morning, it was suggested, that this announcement, by George Osborne, was brought forward to circumvent uncomfortable PMQs this week?

But Robert, you also mention bank lending - or rather non-lending of banks, to small or medium sized business in UK?

Is there some vague connection?

No more than a nod in their direction. When are we likely to see our PFI (public finance initiative in this case) billions back ? When are the B of E going to stop lending them billions at .5% which they relend at 8 - 12% but only to safe bets these days and then trouser the resulting huge profit as bonus. I could do that gis a job.

You must forgive me if I seem a little naive over this?

The banks lose zillions, the goverment gives them money, which is not the governments money but our money, as of course, the goverment has no money, only our money.

Then the banks make money and keep it, rather than paying it back. Indicating they can then lose some more, and we pay them again.

All very well the chancellor changing his mind about putting a further levy on the banks, I dont have a problem with this but tis will not come out of bankers bonus trough but will be paid for yet again by customers .Remember the banks seem to be run by the yuppies of the 80,s they were weaned on greed and and self indulgence .
Sorry but the Condem government are running scared of the banking industry the same old story of people who have power but no moral responsibility .
The Chancellor has no idea how to deal with banks this weakness will will come back to bite him.

Sadgit

52 .avalanche_invesmtents

Which countries provided an education for Steve Jobs and Steve Wozniack.
Which countries road and phone networks did they use.
Which countires tax subsidised mules did they use to build the company.

All companies owe a loyalty to there country of origin otherwise they are merely a traitor just like Mr G Fawkes and deserve a similar fate.

@22. J wrote:

"no one off levies there or general interest ?"

If you'd've been following previous blogs you'd have seen there's been plenty of interest and hostile comment.

But your real agenda is all too clear:- to deflect attention from the nefarious doings of bankers.

It's true that in proportion to their share of the UK economy they attract disproportionate attention and hostility. But that's because they completely unjustifiably pay themselves disproprtionate amounts of money whilst having their profits underwritten by the rest of us.

Or hadn't you noticed that?

Top earners' salaries is not the problem - people taking on exceptional responsibilities in global finance are always going to be very rich - it's the large numbers below that that is more telling, those earning £500,000 and above for doing decent but not exceptional jobs. It's the unexceptional performers getting paid bucketloads that raises the hackles, because there is clearly a market inefficiency going on - and one suspects it is being allowed to continue because of pure self-interest on the part of bankers. Fat chance of Conservatives ever having the spine to stand up to moneyed interests - they will do the minimum they can get away with without causing public outrage. Osborne's latest move is part of that.

Will City bankers flee if politicians demand a decent service from them? To borrow from Peter Mandelson, I'd be intensely relaxed about it if some did - indeed I think it is desirable, in order to reconfigure the relationship between the British people (in whose interests the economy is supposed to be run) and a City which operates with blatant disregard for its wider obligations to the host country and to long term economic stability.

I personally would be happy to make less money and be less well off in order to live in a rebalanced, fairer country, in which the City's wings are clipped. There is a choice, it involves pain, but the City needs to know that a lot of British people like me are willing to take a hit, if that's what it takes. It is intolerable.

I am still not convinced that these short term taxes (aka levies) are in the best interetsts of this country.

Okay - the amount that that British taxpayers loaned (gave?) to these banks must be paid back. The shares that the taxpayer (government) have in some of these banks must be sold back to British investors when we can make a profit on the deal. But, in the meantime, we cannot punish banks for dishing out bonuses by applying these levies. It will not solve the problems that can arise with bank executives taking short term gambles to boost their annual bonus.

What I suggest is a 90% tax on bonuses on amounts more than 10% of basis annual salary. However, bonuses paid in shares in the bank held in trust over a 10 year period will only be subject to normal tax on the dividends paid. That should encourage long term investment strategies rather than short term gambling and be a win win for all.

64. At 10:04am on 8th Feb 2011, Amused2Death wrote:
Another piece of pointless political window dressing.

The Govt and Media continue to BASH the very INSTITUTIONS required to be healthy for economic progress. Meanwhile ordinary shareholders lose out : pension funds, retail investors and many pensioners who relied on dividends for their income. (One I know received 90% of her income through financial company dividends thinking that the Regulators were doing their job. A freelancer who worked hard, very very hard....reduced in circumstances to well below the poverty line.)
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Emptor caveat.

52. At 09:50am on 8th Feb 2011, avalanche_invesmtents wrote:

i actually chose Apple specifically for the fact that they never needed government money and it was in fact the money from "Angel" investors and the money from Steve Jobs and Steve Wozniack which started the company. The same is true for alot of tech companies...Facebook/Google/Twitter.

-------------

He said the government's INFRASTRUCTURE, not money. The schools that educated the employees, the police that stop the employees getting murdered on their way to work, the hospitals that treat the employees when they get sick, the fire engines that turn up when the office is burning down, the roads that the CEO drives to work on etc etc. Need I continue? You are so entrenched in the world of finance that you cannot see the bigger picture. Multinationals are reliant on the infrastructure of the countries in which they operate, they cannot expect to benefit from those whilst paying their taxes in the Caymans. Is it really so difficult to understand?

"54. At 09:52am on 8th Feb 2011, no-thing wrote:

Coming from the Chancellor who believes that to be perfect one has to give 110% (reminds me of the American guy and his potato(e)). How revolting this man is, puts me off my breakfast.
As the banks employ many of the top politicians in advisory roles how can a mp give 100% to his post whilst giving his other interests any percentage whatsoever?
Rest assured the bankers will accept the token charges as a mere pittance to the benefits that they will reap under the Condemons."


Utilization rates are about the denominator as well as the numerator.

78. At 10:21am on 8th Feb 2011, Mammon1 wrote:
52 .avalanche_invesmtents

Which countries provided an education for Steve Jobs and Steve Wozniack.
Which countries road and phone networks did they use.
Which countires tax subsidised mules did they use to build the company.

All companies owe a loyalty to there country of origin otherwise they are merely a traitor just like Mr G Fawkes and deserve a similar fate.

=======================================================

Their parents both paid for their education so that "debt to society" has be repaid
They pay the telecoms for their phone networks.
they pay their taxes for the road networks.
and as i have already said they didnt use "tax subsidised mules" to buy the company. they received private investment through people like Mike Markkula.

any debt to society that they needed to pay the did and continue to do so through taxation on the companies profits. i cannot say how patriotic steve jobs is and he might not care at all about any company but that is only one example. Why should a company feel the need to favor one country when the company is globalised and may infact get better revenue from elsewhere (Asia, eurozone areas).

I expect to see a delay or abolition in the fuel duty escalator in April - that is what this is all about - money! It isn't coming in as fast as the Treasury predicted so they want some more NOW!

About time, and from my opinion it is far to small amount, lets face facts, it is that industry that got us into this financial mess in the beggining, so to ask them ways to solve trheir problem was rather short sighted, of the political system. Similar to ask the professional theif ways not to practice his habits of a life time.

If only the bankers reinveted their bonus systems back into public revenue, probably the society would have a kinder thought today.

@27. DaveSwede wrote:

"It would be against my judgement as a free-marketeer to try to stop current bansk from doing what they do."

What's "free" about a market that's run by a cartel, presided-over by the (nationalised) central bank which acts as "lender of last resort" whenever the cartel looks like running short of liquidity, in which all the cartel members inflate and deflate credit issuance simultaneously (read "in harmony/collusion"), and in which the taxpayer stands unconditional guarantor against business failure - a guarantee equivalent to the provision of a subsidy worth - according to that selfsame central bank - £100 billion in just one year (2009)?

If you really believe, as you say you do, in free markets shouldn't you be vigorously opposing all this anti-competitive behaviour instead of propping it up? In fact, shouldn't you be propounding the doctrines of the Austrian school:- abolish central banks, force the banks to compete genuinely (and go out of business if they get their sums wrong, like any other business), allow anyone with the necessary capital to start a bank instead of having multiple barriers to entry into the market, go back to gold as the basis of the currency...?

The present banking system is the antithesis of a free market. It amounts to a conspiracy against the public, in which the government is complicit.

@28. Up2snuff wrote:

"Chuckle of the Day Award already."

Seconded.

"But the big question is: why no 60% income tax band? We'll have to wait for the next Budget to find out. A new top band is really needed."

Absolutely right.

The banks and their high paid execs should be hit a lot lot harder - this is small beer, and highly ineffective action from this gonvernment.

Robert,

I just read that from now on big Companies(banks) will not pay taxes on profits made in foreign branches.

Is that so?

21. At 08:52am on 8th Feb 2011, AlanB2903 wrote:

"To change your mind so often so early after taking office must be a concern to those that believed their election rhetoric."

Is it not better, in some situations, to re-evaluate the situation & make adjustments, rather than to continue, at full speed, down a path to financial ruin?
------------------------

Of course it is, but this is not a major change in direction and we'll continue at marginally less than full speed, down a path to financial ruin!

Sounds like a desperate attempt to bolster up public opinion ratings with marginal effect on the Bankers earnings.

In light of this bank levy announcement is it not true that the proposed £7Bn bank bonus payments will be taxed at 40% so the total revenue gained from the banks will be £2.5Bn (levy) plus £2.8Bn (Tax) equalling £5.3Bn. If this is not true then it should be, in fact the levy is still not enough to satisfy public opinion. If my understanding is not correct then the likes of Cameron, Clegg, Osborne and Cable should bow their heads in shame.

There are two things that I want to see from the banks:

1. The return to the public purse of the money that they were loaned as a 'bail out'

2. Lending policies that encourage responsible business growth & development

I am not particularly concerned about how much bankers earn. Indeed, it is a pleasant change to see an employer who values staff enough to reward them well, refreshing when you see how many employers undervalue their employees and pay them as little as they can get away with... to the extent that the 'minimum national wage' is not even enough to live on without recourse to state help.

83. At 10:30am on 8th Feb 2011, davidbrent wrote:

You are so entrenched in the world of finance that you cannot see the bigger picture. Multinationals are reliant on the infrastructure of the countries in which they operate, they cannot expect to benefit from those whilst paying their taxes in the Caymans. Is it really so difficult to understand?

======================================================

and you are so entrenched in your own personal views which clearly state that any decent sized company actively seeks to pay as little tax as possible to their home country. do you have any evidence to state that Apple does not pay every penny of the tax it owes to the US govt. Your calling me ignorant for not looking at the bigger picture, but your so closed minded that you paint all countries with the same crude paint, the one that says "tax evading, scum of the earth capitalists" on it.

Pity the poor banker's... Yeah, in their dreams! The bank's have become far too rich and powerful, well it's pay-back time and this levy doesn't go anywhere far enough.

82. At 10:29am on 8th Feb 2011, Reticent_Trader wrote:
64. At 10:04am on 8th Feb 2011, Amused2Death wrote:

Caveat emptor ! You write that dictum easily. One liners which dismiss hopes of millions of our citizens.

I suppose this would also apply to electrical goods and children's toys ?

Regulations are there to be ignored ? Hurray, let all buyers beware every time and everywhere. If the Regulation and Regulators do not perform it is always the responsibility of the 'emptor' . Not the regulators. Not the auditors, not the BoE, not the FSA...not legislation passed by Parliament. Just the 'emptor'....always and only the buyer.

69. At 10:10am on 8th Feb 2011, allan365 wrote:

43. At 09:39am on 8th Feb 2011, Lucy Clake wrote:
"..."

I thought he was only in the job cos call-me-Dave didn't want a repeat of the Bliar-Broon fiasco so put someone in a chancellor who no one would possibly support as a challenger for his job?
----------------

Well the way that call me Dave is shaping up, I wouldn't bank on it.

Scary thought.

So are we all supposed to be dancing around happy that the banks have to cough up less than 1%? How come no banker is facing prosecution for the banking irregularities that took place leading up to the cash? Is it because those responsible are the same people that sponsor the theater that is our two party dictatorship? The so called ruling class have a lot to answer for.

Perhaps it is the way it is reported, but many people seem to have missed the fact that this change raises an ADDITIONAL £800mn, so the expected tax receipt is £2.5bn instead of £1.7bn ie a 50% increase.

Perhaps if the headline was phrased as "Bank levy increases tax take by 50%" then so much envy, jealousy, misunderstanding, myths and vitriol, amongst other emotions shown here, would not be so great.

Balanced reporting anyone?