The chairman of an influential parliamentary committee is doubling down today on his efforts to block a new tax on banks.
Andrew Tyrie, who chairs the Treasury Select Committee, has written to Andrew Bailey, deputy governor for prudential regulation at the Bank of England, about the effect of the so-called bank tax surcharge.
The new tax, set to go into effect next year, will take an additional eight per cent of banks’ profits each year for the government, on top of the existing corporation tax.
It will apply to challenger banks and building societies currently exempt from the existing bank levy.
In his letter, Tyrie asked Bailey, who heads up the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA): “Does the new corporation tax surcharge for banks make the retail banking sector more open to competition from new entrants, or does it further entrench the large incumbents?”
Read more: Tyrie warns Osborne over new bank tax
Tyrie has repeatedly criticised the new bank tax since it was first proposed by chancellor George Osborne at the summer budget in July.
Ahead of a meeting involving challenger bank bosses and Treasury officials last month, Tyrie said: “Millions of consumers and small businesses have been getting a poor deal for decades because of inadequate competition and choice in banking.”
Today, Tyrie underscored his concerns, saying: “It is essential that the surcharge does not obstruct parliament’s efforts over the last four years to increase competition in the banking sector. The committee will want an assurance from the PRA that it has assessed its effect on competition in the retail sector.”
Paul Lyman, chief executive of Secure Trust Bank and the head of the British Bankers’ Association’s challenger banks panel, told City A.M. that he welcomed Tyrie’s latest intervention, saying: “Andrew Tyrie is one of the few politicians thus far who are taking a holistic view of the ineffective competition across the UK banking market.”
“Our position as a collective of challenger banks is very straightforward: we don’t mind being on the same tax structure, so long as we create a level playing field for banks of all sizes,” he added.
A Bank of England spokesperson confirmed that Bailey had received Tyrie’s letter, and would reply “in due course”.