Banks to face £1billion tax levy
THE Chancellor yesterday confirmed plans to introduce a levy on banks while also demanding that the financial sector show restraint on pay and bonuses.
The levy is expected to rake in an extra £1billion a year but banks could be hit with a further tax.
In his first Mansion House speech as Chancellor, George Osborne said there were "real issues of fairness", adding: "That is why we will introduce a bank levy and demand further restraint on pay and bonuses."
And at his first Brussels summit today, Prime Minister David Cameron will be asked to sign up to an EU-wide bank levy to help pay the costs of future financial collapses.
Yesterday Mr Obsorne also handed over powers to the Bank of England to prevent a repeat of the banking excesses which triggered the recession.
He announced the abolition of the Financial Services Authority in a shake-up of City regulation.
Regulatory powers will be returned to Threadneedle Street with the creation of three new bodies within the Bank to deliver prudential regulation of financial firms, financial stability and consumer protection.
He said the "tripartite" system introduced by Gordon Brown in 1997 - which shared responsibilities between the Bank, FSA and Treasury - had "utterly failed to identify, let alone prevent" the rapid increase in debt.
The independent FSA will cease to exist in its current form in 2012.
Savers will not be "punished" with massively higher taxes in the Budget on Tuesday next week, David Cameron said yesterday in his clearest signal yet that the Government will make major concessions on reform of Capital Gains Tax.