Osborne: Banks must contribute to recovery

Chancellor George Osborne explained the increase in the bank levy on the Today programme:

“Its economics and the need to make sure that the banks make a fair contribution to closing the budget deficit. And because of the measure we just announced, and we announced it now before the markets opened, means that there’s an extra £800 million coming into the Treasury this year and I think that is fair, that’s a fair contribution from the banks to our economic recovery.

“I’m still confident that we can secure the deal with the banks to see an increase in lending to small businesses and see that bonuses are lower this year than last year, to see the banks make a bigger contribution to society. But I also want the banks to pay more tax, that’s why I’ve introduced a permanent [levy] every year, tax on banks.

“I was originally going to phase this in but when I made that announcement in June most of the world thought the banks were weaker than they’ve turned out to be, so we can move more quickly to the full rate and that’s exactly what I’ve just announced.”