We now turn to the issue of bank taxation. Amendment 2 seeks to commission from the Chancellor a review of the possibility of incorporating a bank payroll tax within the bank levy and the publishing of a report, within six months of the passing of the Finance Act, on how additional revenue raised would be invested—in particular, to create new jobs and tackle unemployment.
Our approach to bank taxation cannot be looked at in isolation from the economic consequences caused by the banking crisis or from the deficit left for the taxpayer as a result of the failures of the UK banking system. Despite signs in 2012 that the recovery was under way, the extreme-austerity path pursued by the Chancellor has led to stagnation and falling living standards, as well as to growth of only 0.8%, compared with the 5.3% that was promised at the 2010 spending review, and to downgraded forecasts for this year and next year. On top of that, wage levels are flatlining at a time of inflation, resulting in real-terms wage cuts for millions of people, and millions more are struggling to find work in the first place. The typical family is worse off by £891 a year as a result of the cumulative effect of the decisions taken since 2010.
Our amendment offers a new route for the economy and a policy decision that the Chancellor of the Exchequer should take, focusing in particular on the bank bonus tax that ought to be implemented. Only today the International Monetary Fund has warned the Chancellor that he should change course and we have learned that unemployment levels are soaring—70,000 more people are now on the dole compared with last month, youth unemployment has risen by 20,000 and long-term unemployment is up yet again. [Interruption.] The Economic Secretary may not have seen the statistics, but the complacency he voices from a sedentary position is appalling.
Despite all those problems, there was little attempt in the Budget to suggest any solutions. The Office for Budget Responsibility considered the cumulative effect of all the Budget’s measures and said that its impact on growth in 2013 would be negative and that growth would retrench.
At the same time that this Government are presiding over a millionaires’ tax cut, ordinary people are being hit from all sides. Middle and low earners will be hit hardest, while those who need it least will get the big payouts. According to the Institute for Fiscal Studies, the average single parent in work will be worse off by £1,225 and couples with children where both parents work will be worse off by £1,869. At the same time, hundreds of bankers earning more than £1 million will get an average £54,000 tax cut, according to some of the latest analysis, which I will come to in a moment. All this is from a Chancellor who said in his 2012 autumn statement that we have to have
“a tax system where the richest pay their fair share”.—[Hansard, 5 December 2012; Vol. 554, c. 877.]
He obviously has a very different idea of what “fair share” means from the majority of people, who recognise that the Budget measures in this Finance Bill will make life more difficult for the vast majority and much easier for the very rich. That is a disgraceful state of affairs.
The Government’s unfairness is not just about the millionaires’ tax cut, so we felt it necessary to table this amendment, which asks the Chancellor to reconsider his approach to bank taxation. The Chancellor has been consistently weak and reluctant to make banks pay their fair share. Despite their promise to the contrary, the Government’s Financial Services (Banking Reform) Bill has failed to implement fully the structural reforms recommended by the Vickers report, which are vital for our long-term economic interests.
On top of that, the Government’s bank levy has raised far less than the £2.5 billion they promised. In the financial year just ended—2012-13—the bank levy raised just £1.6 billion, from which a further £200 million has to be deducted because of the generosity of the corporation tax cut that the Chancellor has lavished on the banks. All in all, the banks have paid £1.1 billion less than they were supposed to pay in the last financial year. This is a tremendously generous Chancellor, but only to the banks.