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| Spending Review: Osborne wields axe | |
| (40 minutes later) | |
| A levy on bank balance sheets will be made permanent, potentially raising billions of pounds, Chancellor George Osborne has confirmed. | A levy on bank balance sheets will be made permanent, potentially raising billions of pounds, Chancellor George Osborne has confirmed. |
| The chancellor said he would introduce legislation on Thursday in order "to extract the maximum sustainable tax revenues from financial services". | The chancellor said he would introduce legislation on Thursday in order "to extract the maximum sustainable tax revenues from financial services". |
| He said he wanted banks to make a fair contribution. | He said he wanted banks to make a fair contribution. |
| The banking industry said the move would have an impact, particularly on overseas banks operating here. | The banking industry said the move would have an impact, particularly on overseas banks operating here. |
| The government expects the levy to generate around £2.5bn a year. | |
| "We neither want to let banks off making their fair contribution, nor do we want to drive them abroad," the chancellor said. | "We neither want to let banks off making their fair contribution, nor do we want to drive them abroad," the chancellor said. |
| "Many hundreds of thousands of jobs across the whole United Kingdom depend on Britain being a competitive place for financial services," he added. | "Many hundreds of thousands of jobs across the whole United Kingdom depend on Britain being a competitive place for financial services," he added. |
| The levy is not expected to affect smaller banks and building societies but the UK operations of foreign banks will have to pay the levy. | The levy is not expected to affect smaller banks and building societies but the UK operations of foreign banks will have to pay the levy. |
| The British Bankers' Association said that banks "fully understand they have a role to play in the UK's economic recovery". | The British Bankers' Association said that banks "fully understand they have a role to play in the UK's economic recovery". |
| "Decisions taken today will have an effect on the whole industry and particularly on overseas banks operating in the City," it added. | "Decisions taken today will have an effect on the whole industry and particularly on overseas banks operating in the City," it added. |
| "We clearly need to see the detail of today's announcements to be able to assess their impact on the UK banking sector and our attractiveness as a global financial centre." | "We clearly need to see the detail of today's announcements to be able to assess their impact on the UK banking sector and our attractiveness as a global financial centre." |
| But it added that it was pleased that the chancellor had indicated the government wanted to strike a balance between raising tax revenues and keeping the UK's financial services sector competitive. | But it added that it was pleased that the chancellor had indicated the government wanted to strike a balance between raising tax revenues and keeping the UK's financial services sector competitive. |
| The levy is expected to be introduced in January and differs to the previous government's tax on bank bonuses. | The levy is expected to be introduced in January and differs to the previous government's tax on bank bonuses. |
| It will be a tax on the total size of bank balance sheets, but certain items, including retail deposits covered by insurance and bank capital will be excluded. | It will be a tax on the total size of bank balance sheets, but certain items, including retail deposits covered by insurance and bank capital will be excluded. |
| According to June's Budget documents, the levy will be set at 0.04% in the first year and will then rise to 0.07%. | |
| Code of practice | |
| The chancellor also reiterated that he wanted all of the UK's top 15 banks to sign up to a code of practice on taxation introduced by the previous government. | |
| He said that only four banks had signed up so far and had earlier set a November deadline for the rest to comply. | |
| The code of conduct seeks to deter banks from avoiding tax, and follows reports that many banks have used complex transactions and financial instrument to avoid tax. | |
| The code calls on banks to ensure that their tax and the tax obligations of their customers are observed - and that they do not go out of their way to avoid tax for themselves or clients |