Cameron Q&A: Yorkshire Bank director seeks assurance of levy exemption

___________

Download David Cameron's question and answer session with Yorkshire Post readers as a podcast Listen now

Or download to your MP3 player (right-click and choose Save Target As...)

___________

Last week's Budget announced plans for an annual 2bn tax on the balance sheets of banks to help repair the national deficit.

Dean Cutbill, a director, said: "We are a small bank. We are a community bank as well. My understanding of the bank levy was that it was really focused on big banks taking big risks.

"We have just read the instruction that's come out and it looks like we might get caught in that.

"I want your assurance that it was to be targeted at big banks and small banks, through fine tuning, won't get damaged through it."

David Cameron said the levy is being introduced to provide insurance against large-scale borrowing from the wholesale money markets.

He added: "When the banks nearly went under and we the taxpayer were pouring money in, we were pouring it in on the basis of the unprotected lending.

"It is only right now to ask the banks to pay something back because the rest of the country had to support the banks during their hour of need.

"Paying a charge in respect of unsecured lending and the size of the balance sheet is actually helpful for the British economy and won't harm our banks.

"You should talk to the Treasury about who is going to qualify and why."

Iain Cornish, chief executive of Yorkshire Building Society, asked Mr Cameron how the coalition viewed the mutual sector and the role it might play in the future.

The Prime Minister said the "connection between getting savings in and making lending out should be a strong and stable part of our financial architecture".

He added: "Many of the building societies had deep roots in their communities so they didn't need to have all the long bureaucratic procedures your bank sometimes has to go through to lend you money because they had more local knowledge.

"They were able to give more local discretion. So we should be looking to regenerate them rather than think they are something to do with the past. They are not."

Mr Cameron added that mutuals and cooperatives also had a role to play in the Government's public service reform programme.