Tax and the City: Do banks contribute 20% of all revenue?
“The fact of the matter is the financial services community of the United Kingdom deliver 20 per cent of the entire tax take of the country”. Lord Jones, The World at One, Radio 4, 11 January 2011
It seems that Lord Jones in his eagerness to stress the importance of financial services to the UK economy has overstated their importance to the Government coffers.
Last year, BBC's More or Less examined a similar claim from the former Trade Minister when he put the figure at 24 per cent of all tax revenues.
When Tim Harford and co investigated, they found work an attempt to quantify the figure had been produced by accountants PriceWaterhouseCooper (PWC).
Even taking a very inclusive look at the tax contribution of the City, PWC found that financial services only delivered 12 per cent of Government revenue.
This was, however, six months ago. Have the figures changed enough to back up Lord Jones? It seems not.
Since June, PWC have produced another assessment of the total tax take from financial services. The report, prepared for the City of London Corporation and published in December put the proportion at 11.2 per cent – down slightly from 2009 and a little over half the proportion suggested by Lord Jones.
The report's summary states: "We estimate that for 2010 the financial sector as a whole made a Total Tax Contribution of £53.4 billion, which is 11.2% of total government tax receipts".
Conclusion
Based on the PWC's figures it seems there is little to sustain Lord Jones' take on the numbers.
Of course, 11 per cent is still a reasonable chunk of tax revenues, and is larger than the proportion of UK GDP accounted for by financial services (about 9 per cent).
But it is still just over half the figure used by Lord Jones in his interview.
We put this point to the former CBI chief's office and are awaiting a response lest there be other research that we have not yet been made aware of.
We will update as and when we hear back.
Update
Digby Jones corrected the record this week when Radio 4's More or Less programme took up our factcheck and also called him to ask about his figures.
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