‘Watch this space’: Jenrick refuses to rule out bank tax
Reform UK’s Treasury spokesman refused to rule out a banking tax mooted by the party’s leader Nigel Farage, who said he would hit lenders because he didn’t “like” them.
Speaking at a Reform conference event organised by City industry representatives, Jenrick said the party had not committed to banking taxes.
However, the party’s economic chief warned investors “watch this space” as he refused to say Reform opposed a tax on profitable banks.
“We haven’t set out any plans to increase taxes on banks,” Jenrick said.
He added that he “100 per cent” believes that Chancellor John Healey would target banks at the Budget in order to raise revenue because huge profits across the sector was “low hanging fruit”.
He also explained that Farage was more concerned about the Bank of England’s reserve interest payments on its balance sheet to commercial lenders.
Jenrick said there was “merit” to considering an end to reserve payments. Reform included a proposal to stop the Bank paying interest on reserves in its 2024 manifesto, which it said would save taxpayers £40bn.
Bank tax on the cards?
The Bank pays interest on reserves created during the quantitative easing process, though central bank chiefs are now unwinding their holdings through a bond sell-off. Richard Tice, Reform’s deputy leader, has been a staunch critic of the Bank’s quantitative tightening programme alongside the likes of Labour’s Louise Haigh, the chancellor of the Duchy of Lancaster.
In Davos earlier this year, Farage said he would tax banks due to his past de-banking from Natwest private bank Coutts.
“We are going to do it. Some of the banks won’t like it. Well, I don’t like the banks very much,” he said in an interview with Bloomberg.
“This will be tough for banks to accept, but I am sorry, the drain on public finances is just too great. It’s not a tax.
“They are just not going to get free money anymore. They’ll adjust; business always does.”
Reform UK officials have used their first-ever Business Day to woo City executives and other business chiefs.
Jenrick announced that he had written to top banks to share Reform’s plans for £80bn in spending cuts, mainly through welfare reform. Jenrick said he would hold a budget within the first 100 days of entering government.
Former Chancellor Rachel Reeves declined to hike taxes on banks, which already pay a levy on top of corporation tax than other companies, despite increasing government revenue by about £65bn over her two budgets.
Banking tax speculation ahead of this year’s Budget is flaring up as Healey’s £22.7bn headroom looks set to be slashed due to the Iran war.
Changing the MPC
The former Tory minister, who is attending his first Reform conference since switching parties, added that he would maintain the Office for Budget Responsibility and the Bank of England’s independence although he would consider a number of reforms related to its relationships with the Treasury.
He suggested that the Bank’s Monetary Policy Committee should not be made up of only academic economists and could benefit from appointments from the private sector.
“I think the MPC could have a broader range of views within it, including different perspectives on economics, but also on the economy,” Jenrick said.
“So people perhaps with more experience of the real economy.
“I think having people with perhaps some more practical experience of the economy would be useful to inject into the mix.”