Ordinary families are paying more so banks’ owners can pay less

It is budget setting time for councils across the country.

Local councils of all types have to decide what rate of Council Tax to set and budget how they will spend their revenue and capital over the coming year.

Everyone in local government knows how tough things are. Local services are under resourced, struggling and sometimes failing. At the same time, ordinary families face a huge cost of living crisis from rising bills that many in Westminster do not seem to understand.

In Kent County Council, where I lead the Liberal Democrat group, the ruling-Conservatives are raising Council Tax by 3% and cutting services by £28 million.  Inflation, such as rising energy bills and increasing need to help a growing but ageing population take their toll and leave gaps in the budget.

Part of what is behind this is a decision last autumn by the Chancellor to cut taxes for the owners of banks.

Bank pay a surcharge on their profits. In October Sunak announced a cut in this which will cost the government about £1 billion per year.  Liberal Democrat leader Ed Davey rightly attacked this at time.

I don’t buy Tory arguments that the government had to do this to help Britain attract banks who would otherwise move to other countries.  If that was a priority for this government, they would not have pursued a hard Brexit that has caused such problems for the banking sector. I believe the Chancellor’s policy is more a reflection of the Conservative Party’s dependence of donations from the mega-rich and his personal ambitions.

If that billion had been put into local government it could make a huge difference.  If it was divided on a simple per capita basis, my county would receive £24 million – almost enough to not need to make the cuts proposed by the Conservatives. Or family bills could be helped by reducing the Tory increases in Council Tax.

The same is true across Britain. The money Sunak decided to give to banks’ owners is money that could have come hardworking families and the local democratic institutions that serve them.

Liberal Democrats are the party that, if we get power at Westminster, will devolve power and resources to a local level. The need for us to do that has never been greater.

* Antony Hook was a Liberal Democrat MEP for South East England (2019) and has practised as a barrister since 2003. He is currently Leader of the Liberal Democrat Group on Kent County Council.

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3 Comments

  • Nonconformistradical 17th Feb '22 - 12:18pm

    https://en.wikipedia.org/wiki/Rishi_Sunak

    “former banker and hedge fund manager”

    I wonder what he might have in common with ordinary people……..

  • I don’t buy Tory arguments that the government had to do this to help Britain attract banks who would otherwise move to other countries.

    Such an argument doesn’t appear to be supported by the evidence either…

    ‘Post-Brexit City booming on rocket boosters’ [January 2022]:
    https://reaction.life/post-brexit-city-of-london-booming-on-rocket-boosters/

    Eat your heart out you doubters: not only has the City of London survived Brexit more or less intact but, according to three reports out over the last week, it is firing on rocket boosters.

    The first survey from EY reports that nearly 90pc of major financial services firms said they will either seek to open up in Britain or boost their current operations. EY also found that investor confidence in the UK financial services sector is at an all-time high following the lifting of pandemic restrictions and that so many of the fears over a Brexit exodus have simply not happened. […]

    In a second paper, entitled The Global City by the City of London Corporation, London held the top spot for financial and professional services in terms of overall offer when compared to other global destinations, including New York, Singapore, Hong Kong, Paris and Frankfurt.

    However…

    Most pertinently, this high-spending government needs to ensure that tax rates are kept fair and competitive as the total tax paid by UK based financial services firms in tax and contributions is relatively high compared to other centres.

  • William Francis 18th Feb '22 - 4:43pm

    The reduction in the bank levy is offset by the rise in corporation tax, however ensuring taxation on banks isn’t higher than other types of enterprises is a waste of £ 1 billion.

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