“Banks occupy a unique position in our economy and enjoy privileges that other industries can never hope for.â€
The claim comes from the New Economics Foundation (NEF), which argues that the UK’s large banks are benefiting hugely from lower borrowing costs, which are only possibly because an implicit taxpayer guarantee means the markets view lending to them as low risk.
Putting aside the bail outs of Northern Rock, RBS and Lloyds, the NEF estimates the “too big to fail†subsidy to the UK’s big five banks at £46 billion in 2010, with Barclays, Lloyds, RBS, HSBC, and Nationwide enjoying subsidies of £10 billion, £15 billion, £13 billion, £7 billion, and £1 billion respectively.
The total is 62% higher than in Germany and is paid for indirectly by the Government’s own borrowing costs which, according to the think tank, reflect the risk of the implicit guarantee.
In addition, banks and other financial institutions benefit from exemption from VAT and subsidised deposit insurance, with the Financial Services Compensation Scheme having paid out £19 billion during the financial crisis.
The UK’s banks also have access to the Bank of England as lender-of-last-resort, unlike any other industry.
Meanwhile, PricewaterhouseCoopers calculates the total amount of taxes borne by banks for the year to April 2010 to be only £15.4 billion.
The NEF is therefore calling on the Government to claw back the subsidies the banking industry enjoys by ensuring it pays its fair share of tax.
The claim comes from the New Economics Foundation (NEF), which argues that the UK’s large banks are benefiting hugely from lower borrowing costs, which are only possibly because an implicit taxpayer guarantee means the markets view lending to them as low risk.
Putting aside the bail outs of Northern Rock, RBS and Lloyds, the NEF estimates the “too big to fail†subsidy to the UK’s big five banks at £46 billion in 2010, with Barclays, Lloyds, RBS, HSBC, and Nationwide enjoying subsidies of £10 billion, £15 billion, £13 billion, £7 billion, and £1 billion respectively.
The total is 62% higher than in Germany and is paid for indirectly by the Government’s own borrowing costs which, according to the think tank, reflect the risk of the implicit guarantee.
In addition, banks and other financial institutions benefit from exemption from VAT and subsidised deposit insurance, with the Financial Services Compensation Scheme having paid out £19 billion during the financial crisis.
The UK’s banks also have access to the Bank of England as lender-of-last-resort, unlike any other industry.
Meanwhile, PricewaterhouseCoopers calculates the total amount of taxes borne by banks for the year to April 2010 to be only £15.4 billion.
The NEF is therefore calling on the Government to claw back the subsidies the banking industry enjoys by ensuring it pays its fair share of tax.
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