Osborne’s bank levy is still a damp squib

The Chancellor hasn’t lived up to his tough rhetoric in opposition.

Ahead of his first Commons bout with Ed Balls this afternoon, George Osborne has moved to shore up a weak flank for the Tories. The Chancellor has announced that the coalition's bank levy will be increased to £2.5bn this year, raising an extra £800m and allowing him to neutralise the charge that the Tories have handed a de facto tax cut to the banks.

Labour's 50 per cent tax on bonuses over £25,000 raised £3.5bn last year but this figure falls to £2.3bn if one assumes that the Treasury lost income tax due to the banks paying lower bonuses (NB: this remains a highly speculative assumption). As the FT's Jim Pickard suggests, Ed Miliband deserves much of the credit for Osborne's move. Had he not raised the issue at PMQs last month, it is unlikely the Treasury would have acted so swiftly.

But with the banks due to announce another round of bumper bonus payments this month, Osborne's announcement does little to bridge the gap between the Tories' tough rhetoric in opposition and their inaction in power. In 2009, Osborne called for a ban on bonuses at banks that had received any sort of government guarantee (including Barclays). He later promised to block all cash bonuses over £2,000.

Even the recent coalition agreement pledged to tackle "unacceptable bonuses in the financial services sector". But the government is set to tolerate a £9m payout to the Barclays head Bob Diamond (once accurately described by Peter Mandelson as "the unacceptable face of banking") and a £2.4m bonus to Stephen Hester, head of the 83 per cent state-owned RBS.

Meanwhile, the IMF, not renowned as a bastion of leftism, has urged Osborne to triple the bank levy to £6m. It calls for the G20 to impose a co-ordinated levy on the undertaxed banking sector to curb industry excesses and guard against "the future failures from which no country can regard itself as immune".

When even the IMF is calling for higher taxes on the banks, it's no wonder that the City is celebrating what it regards as another victory over the British state.

George Eaton is political editor of the New Statesman.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.