The other day shares in big UK banks fell a bit on chatter they could be subjected to a windfall tax in the upcoming Budget.
This was a terrible idea, it was generally agreed, by the people in the City who set the news agenda more than they should.
The shares are now back where they were, making the headlines on the day they fell look rather over dramatic.
This is one of those areas where the banks' PR is done for them. The notion that taxing banks just hits economic growth is taken as read by most of the press.
A counterpoint, not usually made, would be that if the banks are responsible for economic growth, they aren’t doing a very good job of it.
Today, Sky News reports that UK Finance boss David Postings has written to the Chancellor to warn her not to step out of line.
He writes: “As many of our members have recently noted, efforts to boost the UK economy and foster a strong financial services sector would not be consistent with further tax rises on the sector, which already makes a substantial contribution to the public finances.”
Hmm. Can anyone remember a time when banks destroyed the public finances by going completely haywire, requiring bail outs to stay alive since they were deemed too big to fail? I’m sure I remember reading something about that.
My point is that the banks owe us and taxing them a bit more here and there isn’t obviously wrong. It might raise the tax the government says it needs, or it might not.
But it is at least worth a reasonable debate. Some say it could raise £11 billion, enough to pay for all sorts of goodies.
Since profits of the big four banks are likely to reach around £50 billion this year, it’s not like they are struggling.
The banks are very successful at setting the narrative around them, more so than any other part of the economy.
The wailings of trade bodies and bank chief executives are taken as solid points, rather than just the musings of special interests.
Expect the weekend press to return to this topic…and take the side of the banks.
What does the public think?
Find Out Now asked the following question: “Shares in UK banks fell this week after proposals for the Government to introduce a ‘windfall tax’ on bank profits. Supporters say this would raise revenue and help recover public money previously used to support banks.
Opponents say banks already pay various taxes and this would make Britain less internationally competitive. Which comes closest to your view?”
The results are that most people don’t know, which is reasonable given the complexities of the issue, but they aren’t against the idea.
Those who have an opinion are 3-1 in favour of it, suggesting the banks messaging hasn’t penetrated down to voters.
So Reeves wouldn’t lose any votes by pushing an extra bank tax through. And if it is true that she has already lost the City anyway, she might as well just crack on.
Other notable findings are:
- The majority of Labour voters are in favour.
- Reform voters are split down the middle (is that linked to their wider crisis of identity on economic issues?)
- Men are far less likely than women to say 'Don't know'. But that is true of all polls on anything.
You can see the full results here.
Please send candidates for press release of the day to:
Simon.english@roxhillmedia.com
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