Financial Secretary to the Treasury, Mark Hoban MP, today launched a consultation document on the Bank Levy. The document sets out issues around technical aspects of the design and implementation of the Bank Levy. This consultation exercise will help to ensure that the Levy is designed in a way that best meets its objectives, including ensuring the compliance costs faced by firms are minimised.
It is proposed that draft legislation will be published in the autumn to allow for further comments from stakeholders. Final draft legislation for inclusion in the 2011 Finance Bill will be published towards the end of 2010, ahead of implementation of the Levy. The structure of the Levy is intended to encourage the banks to move away from riskier funding models, reducing systemic risk. Once fully in place, the Levy is expected to generate around £2.5 billion per annum.
Copies of the consultation document and consultation stage impact assessment have been deposited in the Vote Office and the libraries of both Houses.
Mark Hoban said:
Excessive risk taking in the banking sector was a significant contributory factor in the recent financial crisis. Alongside the wider financial regulatory reform aimed at increasing the resilience of the financial sector, the Levy is intended to ensure that the banking sector makes a fair contribution that reflects the risks it poses to the financial system and the wider economy, and to encourage banks to move away from riskier funding - problems with risky funding led to serious liquidity problems that played a key role in the financial crisis.
The Chancellor of the Exchequer, George Osborne, announced the introduction of a Levy in the June Budget. It will apply to the balance sheets of UK banks and building societies, and to the UK operations of banks from abroad. At the same time, France and Germany also announced that they would introduce a Levy based on banks’ balance sheets.
Notes for editors
The Chancellor of the Exchequer announced as part of the June Budget the introduction of a Bank Levy from 01 January 2011. The Levy will be based on banks’ balance sheets.
The consultation document published today is available on the HM Treasury website.
A consultation stage impact assessment has been published alongside the consultation document, and can be found on the HM Treasury website and the HM Revenue & Customs website (opens in new window).
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