Nationwide says George Osborne's bank surcharge will cost it £300 million

The chief executive of Britain’s biggest building society has hit out at Chancellor George Osborne’s decision to impose a tax surcharge on banks in his summer Budget, saying it would cost his business £300 million over the next five years.

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The Independent Online

“That is the equivalent of the capital to support an extra £10 billion of lending,” said Graham Beale, chief executive of the Nationwide.

“It’s a pity the Chancellor didn’t use his revisions to the bank levy to recognise the difference between banks and building societies. During the financial crisis it was Nationwide and the other building societies who played a vital role looking after homebuyers and savers when the banks could not.”

Osborne, under pressure from banks like HSBC and Standard Chartered who are based in London but have most of their assets on which the levy is charged overseas, said he will roughly half the bank levy over the next few years but impose an 8% surcharge on bank taxes in its place.

For Nationwide that will mean a rise from a levy charge of £28 million last year to a combined levy and surcharge of around £100 million next year.

 “We are owned by our members and operate under a constrictive regime which means we can’t speculate and we can’t operate an investment bank,” said Beale.

“But over the last four years building societies together provided £48 billion of the £58 billion of total mortgage lending in this country.”

Nationwide saw its profits rise 52% to £400 million in the three months to end-June driven by a 17% rise in gross lending to £6.8 billion.

It added 115,000 new current account customers with a large number using the new easier account switching system and others attracted by technological innovations like Apple Pay and a Nationwide app for the Apple Watch.

Beale said the financial year had started “strongly” and unusually demand for mortgage had continued into the summer.

He said: “The housing market has remained unusually strong for the summer months. Things have been quite active but the market is more stable and not running away with itself.

“It’s a more mature market than a year ago although there are signs of increasing competition. We have seen particular flurries around the last two Monetary Policy Committee meetings with people on variable mortgages looking to fix as they anticipate interest rates rising.”

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