Nationwide chief warns over Osborne’s tax hit

Nationwide chief executive Graham Beale was critical of the Chancellor. Picture: PA
Nationwide chief executive Graham Beale was critical of the Chancellor. Picture: PA
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The boss of Nationwide building society has hit out at the Chancellor’s decision to impose a tax surcharge on banks in his summer Budget, claiming it would cost the business £300 million over the next five years.

Chief executive Graham Beale’s comments came as Britain’s biggest building society announced that its underlying pre-tax profits climbed 52 per cent to £400 million in the three months to the end of June.

Beale said of the £300m figure: “That is the equivalent of the capital to support an extra £10 billion of lending. It’s a pity the Chancellor didn’t use his revisions to the bank levy (which he has said he will roughly halve over the next few years) to recognise the difference between banks and building societies.”

He added: “During the financial crisis it was Nationwide and the other building societies who played a vital role looking after homebuyers when the banks could not.”

George Osborne has imposed an 8 per cent surcharge on bank taxes in return for the watering down of the bank levy, the latter most vigorously opposed by major lenders like HSBC and Standard Chartered, which are based in London but have a high proportion of assets – on which the levy is charged – overseas.

Beale said the surcharge would have a “disproportionate effect” on building societies like Nationwide. “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. But over the past four years building societies together provided £48bn of the £58bn of total mortgage lending in this country.”

He added that the housing market had remained “unusually strong” for the high summer months after a robust first trading quarter.