Bank levy rate to be cut, announces Osborne

Osborne said:

"The new remit I am issuing today for the Financial Policy Committee highlights the importance of productive investment, innovation and competition in finance.

"Our bank levy was introduced to raise revenue and increase the stability of balance sheets, and it’s worked – but now it risks doing harm unless we change it.

"So I will, over the next 6 years, gradually reduce the bank levy rate – and after that make sure it no longer applies to worldwide balance sheets.

"But to maintain a fair contribution from the banks, I will introduce a new 8 percent surcharge on bank profits from the 1st January next year.

"By getting this balance right, it means we’ll actually raise more from the banks this parliament, but at the same time make our country a more competitive place to do business."

It has been speculated that the move has come in response to Standard Chartered discussing moving its headquarters from the UK after the Chancellor increased the bank levy by a third. In April, HSBC also announced plans to move its headquarters out of the UK as a result of 'regulatory and structural reforms', after announcing it would seperate its UK retail arm from its global operations.

At the time, the bank's chairman Douglas Flint said:

"It is [...] essential that we position HSBC in the best way to support the markets and customer bases critical to our future success. In this regard, we also have to take fully into account the repositioning of our industry being driven by the regulatory and structural reforms which have been put in place post crisis."