Chris Pilling, chief executive of YBS, is expected to say at a members’ meeting today in Manchester that the surcharge will mean that the lender will pay £65m in tax over the course of this parliament. This is approximately £13m extra in tax each year based on the firm’s 2014 results, he will add.
Announcing the changes in July, Chancellor George Osborne said the surcharge would replace the bank levy from 1 January 2016 to ensure a “fair contribution” is made by the banking sector. Over the next six years, the bank levy will be cut from the current rate of 0.21% to 0.1%.
Pilling will explain that as a building society, its profit is vital to maintain financial security and reinvest in the business to provide for customers and members.
“By paying the surcharge we are literally taking value away from our members,” Pilling will say.
“To give an example of the scale of impact, £65m could allow us to provide £2bn in mortgage lending, that’s about 15,000 first-time buyer mortgages that we potentially can’t do. It’s ironic that at the same time the government is providing support to incentivise the provision of lending to first-time buyers, with schemes such as Help to Buy.
“To protect savers from any reduction we will need to curtail some of our future investment plans, which ultimately affects our competitiveness and stifles competition and diversity, with the biggest loser being the consumer.”
This is not the first time Osborne’s surcharge has come under fire from lenders. In August, Nationwide said the replacement of the bank levy would cost it an estimated £10bn in lending over the next five years.
Treasury Select Committee chairman Andrew Tyrie also waded in on the debate in October. In a letter to the Prudential Regulation Authority, Tyrie questioned whether the surcharge would open up competition among lenders, or instead strengthen the position of the banking sector’s main players.
