The Chancellor Rachel Reeves has been warned that she cannot achieve her planned reforms whilst continuing with plans to raise taxes. The warning came from Charlie Nunn, the chief executive of Lloyds Banking Group, who told Reeves that enhanced taxes will negatively impact the UK’s competitiveness and offset any gains made by reducing red tape.
Addressing the plans laid out by the Chancellor in her Mansion House speech, Nunn warned that they “wouldn’t be consistent with tax rises”. He said: “It’s important when looking at the competitiveness of the City of London that we have a competitive tax regime. We already have the highest tax regime in the financial services sector of any major economy.”
The banking boss sought to urge Reeves from taxing the industry more than they currently do as he revealed that the high street bank had enjoyed a 17% jump in second-quarter profits.
He claimed in a briefing to journalists that the financial services sector had a huge role to play in turning around the fortune of the UK economy, something it would find harder to do if taxes were to increase.
He pointed out that the UK already had “the highest tax regime on the financial services sector of any major economy,” with the industry subject to a 25% headline rate of corporate tax, combined with a 3% bank surcharge and an additional bank levy.
He added: “We’re proud of being one of the or the biggest taxpayer in the UK.
“So we are completely comfortable with that. But it is important when you look at the competitiveness of the City of London and the financial services sector that we remain a competitive tax regime.”
The Lloyds boss welcomed plans to deregulate the finance industry as he called for the government to “revisit” regulations drawn up in the wake of the financial crash of 2008.
He said: “There is a real opportunity to align regulation increasingly with competitiveness and growth.
“We really believe that regulation has constrained our ability to provide advice to those who most need it. There’s a real opportunity to invest in the long term.”
His comments come after Lloyds raised its interim dividend by 15% as it paid out more than £730m to shareholders.