The FT Advisor quotes Philip Booth

Responding to Ed Balls’ speech at the Labour Party conference in Brighton, where he pledged to increase the bank levy by £800m to fund free childcare, the editorial and programme director of thinktank The Institute of Economic Affairs, said the shadow chancellor had forgotten the original purpose of the levy.

He said: “Increasing the banking levy for the purpose of funding new spending commitments will reduce bank lending to both businesses and households. This could severely damage the economy.

“The banking levy was designed to compensate taxpayers for costs imposed on government when banks fail. It should be temporary and not be used to finance new spending programmes.”

Mr Balls’ speech railed against the Tory-led coalition’s handling of the economy and claimed David Cameron had “diminished Britain”, and claimed that Labour had “learned from the past”.

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