Critics slam Labour bank levy plans

ALAN Johnson’s plan to raise at least £3.5bn by clobbering the banks with another levy was roundly dismissed yesterday, with critics claiming it was unworkable and could encourage firms to quit the UK.

In his first major speech as shadow chancellor, Johnson welcomed the coalition’s plan for a £2.5bn levy on banks, but said they should make an even “greater contribution”.

He added: “In terms of scale, the £3.5bn bill from Alistair Darling’s bonus tax was absorbed with ease last year. In a time of rising profits they should be asked to maintain that scale of contribution alongside the existing levy proposal.”

The Institute of Directors (IoD) hit out at the plans, insisting they would force banks to consider relocating overseas. “The chances of banking business disappearing overseas would increase significantly if the bank levy was increased by another £3.5bn,” a spokesperson for the IoD said.

Mark Littlewood, director general of the Institute of Economic Affairs, also warned that “bankers, stockbrokers and hedge fund managers will continue to leave London if the tax burden becomes uncompetitive”.

The Tories were quick to point out that the bonus tax implemented by Darling was only ever meant to be a “one-off” measure. They also claimed Johnson recently said a second levy would need international agreement, something which would be hard to achieve.