Nationwide chief says Osborne's tax changes to cost building society £300m

Nationwide's chief executive Graham Beale has warned that the new tax measures announced in George Osborne's summer budget will hurt the building society.

Proposed changes to the bank levy and a tax on banks would disproportionately hit Nationwide, Beale said, with the company £300m ($470m) worse off because of the measures.

He said: "The proposed changes to the bank levy and introduction of the tax surcharge on banking companies announced in last month's budget may benefit UK-headquartered international banks but will have a disproportionate effect on building societies such as Nationwide."

Beale added that the change "represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular".

In his summer budget on 8 July, the chancellor, after much lobbying by banks, announced changes to the bank levy imposed in 2010, saying the government is "doing harm unless we change it".

The chancellor set out plans to gradually reduce the levy rate over the next few years, abolishing it completely in 2021. He is imposing an 8% surcharge on profit tax so the banks are not exempt from paying their part.

Osborne stated in July: "Banks make a key contribution to our economy, but they also need to make a fair contribution. It's important they help pay back the debt built up in the banking crisis but equally important that they keep on creating jobs."

Results

The comments came alongside positive results as Nationwide reported a 53% jump in underlying profit to £400m in the three months to 30 June 2015.

The building society told investors that the amount of assets managed increased slightly to £198bn. The lender said the 17.2% increase in mortgage lending to £6.8bn was fuelled by its high ranking in customer service and satisfaction.

"Our new financial year started strongly with increased levels of lending to support home ownership, the introduction of new technology to improve service, and underpinned by robust financial results," Beale stated, adding: "Nationwide accounted for more than a quarter of total net lending to the UK housing market."