Osborne announces bank levy increase
Feb 08 2011
The revenue brought in by the levy will increase to £2.5 billion from £1.7 billion
Chancellor George Osborne has announced an increase in the bank levy of £800 million to be charged in 2011.
The change will increase the revenue brought in by the levy to £2.5 billion from £1.7 billion.
It is not yet known whether the move will jeopardise Project Merlin, the initiative to make banks agree to new lending targets for UK businesses.
Edward Rimmer, UK chief executive at Bibby Financial Services says, ‘Even if the proposed terms of Project Merlin come to fruition, whether the banks will actually commit to lending this sum is another question altogether.’
Adds Rimmer, ‘Despite good intentions, previous experience would suggest that other government initiatives to support funding for small businesses have not been successful.’
Andrew Murray, partner at Bargate Murray Solicitors adds, ‘The government has been desperately trying to persuade the banks collectively to finance small businesses and thereby power the growth the economy needs. The banks say they are doing a lot of SME finance business, but they are not convincing enough.’
Comment by Stephen Grice
Sunday 13th February 2011Project Merlin will not work. For a start, it based on the gross lending numbers rather than net figures. More importantly, SMEs will not get the support they need until decision making is back at the local level rather than in the centre. Whilst I agree that banks should not be forced to lend to failing businesses, too often decisions are made on a blanket basis without detailed local knowledge - this leads to whole sectors of the economy being written off. As an example, most SME balance sheets have little weight (mostly through the good advice of the accountant) but banks still place an inordinate amount of emphasis on balance sheet value for firms turning over <£1M. Until local discretion returns, UK SMEs will continue to have a tough time accessing credit. Steve Grice www.stevegrice.wordpress.com
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