The boss of Britain’s biggest building society has hit out at George Osborne’s decision to impose a tax surcharge on banks in his summer Budget, saying it would cost his business £300m over the next five years.
“That is the equivalent of the capital to support an extra £10bn of lending,” Graham Beale, the chief executive of Nationwide, said.
“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.”
Mr Osborne, under pressure from banks such as HSBC and Standard Chartered that are based in London but have most of their assets on which the levy is charged overseas, said he would roughly halve the bank levy over the next few years but would impose an 8 per cent surcharge on bank taxes in its place.
For Nationwide that will mean a rise from a levy charge of £28m last year to a combined levy and surcharge of about £100m 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,” Mr Beale said. “But over the last four years building societies together provided £48bn of the £58bn of total mortgage lending in this country.”
Nationwide’s profits rose 52 per cent to £400m in the three months to the end of June, driven by a 17 per cent rise in gross lending to £6.8bn. It added 115,000 new current account customers; many took advantage of the new, easier account switching system, while others were drawn by technological innovations such as Apple Pay and a Nationwide app for the Apple Watch.
Mr Beale said the financial year had started “strongly” and mortgage demand 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.”Reuse content