A tax too far for the smaller banks
THE promises of reform and renewal which flowed so easily after the banking crisis are fading fast. One of the key demands was for greater competition in the banking sector and an end to the oligopoly of a handful of big lenders who had dominated our high streets.
To be fair, a lack of competition was not one of the major causes of the crisis, but the extra scrutiny the banks came under combined with the consolidation which saw a raft of them disappear or merge, rightly led to increased competition being seen as an urgent need.
The bank tax announced in the budget – an extra 8 per cent levy on profits – will be a major obstacle to that competition. It will prove a particularly harsh burden on the smaller banks trying to grow. This is doubtless an unintended consequence. The meeting between those smaller banks and the Treasury two days ago has not led to a major change in direction by the Treasury. It should have. U-turns look bad for politicians, but what is at stake is not a principle, it is a technical, pragmatic decision about how to raise tax revenues and make sure banks pay their way.
The smaller banks have been caught up in that. The damaging effect on their growth may be a hindrance to greater tax revenue in the long run. When intelligent reflection indicates that a policy may have unintended consequences, the mature politician makes a U-turn. That is what the Chancellor should do now. MIKE Greene, the one-time star of Channel 4’s Secret Millionaire and the man who has just bought Morrisons’ chain of convenience stores, is right to challenge the stigma of bankruptcy.
He is also right that this country has an outdated knee-jerk reaction to anyone who has suffered a financial collapse. Unfortunately, it will also always be a matter that cannot be ignored.
Many scrupulously honest and later highly successful people suffer a personal bankruptcy or a company insolvency. Like all traumas it can be a valuable learning experience, making the sufferer a wiser person or a better businessman.
On the other hand it might not. Some so-called entrepreneurs walk away from their failures leaving a trail of misery for others and do not seem to learn their lessons at all.
Greene has never shied away from his past bankruptcy and it is clear it was painful for him. His subsequent success suggests it was a valuable lesson and should not be a stain on his character.
A past bankruptcy or company failure should not in itself be the measure of an entrepreneur. Automatic stigma is misplaced. What matters is how honestly they deal with it – and what they do to make their way back.