Speaking on BBC Radio 4’s Today programme, George Osborne announced that the levy had been increased because the banks’ performances had been stronger than anticipated. He also stated that he was acting in “good faith” with the hope that the move would encourage banks to pay more tax, limit their bonuses and to increase loans given to small businesses.
Although a deal for banks to increase loans to businesses and to limit their bonuses has not been finalised, Osborne did speak of the importance for banks to have a “commitment to lending”.
The rise of the bank levy was to be announced during next month’s budget, but the Chancellor decided to bring forward the announcement.
The bank levy was originally announced in June 2010 with the idea of the process being slowly phased in; however, because the banks’' profits were healthier than expected the levy was set in full this year.
With the government's continued efforts to get the banks lending more, it will be interesting to see if there will be a positive outcome for smaller businesses, with the hope that it will improve financial support from the banks.
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