Labour attacks Cameron and Osborne over £2.1bn bank levy shortfall
Chancellor accused of handing banks yet more concessions after government takings fall far below predictions.
Labour has accused the chancellor George Osborne of handing the banks another tax cut, after it emerged his levy on financial institutions will have raised £2.1bn less than the government promised over the last three years.
Cathy Jamieson, a shadow Treasury minister, said the government should admit that the bank levy was not working, after official estimates showed an even deeper shortfall in funds when the autumn statement was published earlier this month.
Back in 2011, David Cameron repeatedly said the bank levy would raise £2.5bn every year.
However, in 2011 it raised just £1.6bn, last year it raised £1.6bn, and this year it will have raised £2.2bn.
“David Cameron and George Osborne have repeatedly failed to stand up to the banks and they’re now set to pay billions less in tax than was promised,” Jamieson said.
“This is completely unacceptable at a time when the deficit is high and families across Britain are facing a cost-of-living crisis.
“That’s why Ed Balls [the shadow chancellor] has said we will increase the bank levy and use the additional funds raised to expand free childcare for working parents of three and four-year-olds from 15 to 25 hours per week. This will help to make work pay and give mums and dads more choices as they juggle work and family life.”
Ministers had already admitted the bank levy was falling short of its target, but figures published by the Office for Budget Responsibility are even worse than predicted in March at the budget by around £800m. Osborne raised the rate of the levy – a tax on bank debt – this month and hopes it will eventually raise £2.9bn a year.
Labour argues that its bank bonus tax would have been better at raising money from the City of London.
However, a Tory aide accused the opposition of hypocrisy. “They didn’t even have a permanent levy on the banks and opposed us when we introduced one,” he said. “In any case we made changes at the autumn statement to compensate for this lower forecast.”