Budget: Bank levy to raise £2bn

A NEW levy on banks, which aims to raise £2bn a year, was announced by the Chancellor in today’s Budget.

George Osborne said the levy, which will also apply to foreign banks with UK operations, will be introduced from January 1 next year.

Mr Osborne said the recession had been “a crisis started in the banking sector” and promised to clamp down on profits and remuneration within the sector.

The levy will be placed upon the balance sheets of banks although it will take 0.07% from all UK bank balance sheets, though it will initially be levied at 0.04% in 2011.

Mr Osborne said that the failures of the banks “imposed a huge cost on the rest of society”.

He said that, in future, banks should make a more appropriate contribution, reflecting the risks that they generate.

The UK will be the first within the international community to announce a banking levy, but Mr Osborne said that the UK would not be alone in doing so.

Both the French and German governments are supporting Britain and will introduce banking levy proposals of their own.