Chancellor Jeremy Hunt could use banks tax to plug black hole
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A windfall tax on banks that could raise up to £90bn could be considered by chancellor, who said all options to balance the books were being explored
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Chancellor Jeremy Hunt, who said yesterday that all options to balance the Treasury’s books, are being considered.
Hunt, who dramatically replaced Kwasi Kwarteng on Friday, met with Treasury officials this weekend and said he would clean the slate for battered public finances.
He urgently needs to restore the government’s credibility after markets were rocked by his predecessor’s unfunded tax cuts.
Hands-on: Chancellor Jeremy Hunt replaced Kwasi Kwarteng. dramatic
Last week, the deputy governor of the Bank of England, Paul Tucker, urged the government to consider cutting the interest paid on some deposits held at the Bank by major lenders. He said this could save the Treasury between £60bn and £90bn in interest withheld from banks such as NatWest, Lloyds and HSBC over the next two years.
The levy would be the equivalent of “about 9 percent of annual health, education and defense spending,” Tucker added.
The interest paid on commercial bank deposits has risen as the base rate has risen. The Treasury has explored the strategy as an easy way to fill a £60 billion gap in public finances. But in response to a report in The Mail on Sunday last week, officials seemed to rule out the option.
But yesterday Hunt told BBC Radio 4: ‘Some taxes will have to go up… I’m leaving all options open. We have to show that we can fund every cent of our tax and spending plans.”