Darling to hit banks with 'super-tax'

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Chancellor Alistair Darling is expected to announce a controversial one off "supertax" on bankers' bonuses in his pre-Budget report today.

The tax is to be targeted at reigning in the large bonuses given to investment bankers, rather than those who work in high street bank branches.

The BBC reports that the tax is to be a one off windfall levied against the banks themselves, rather than against individual banker's pay packets.

And the tax will apply to all banks operating in the UK, rather than just those based in British.

The move is potentially designed to be a deterrent against excessive pay, rather than to actually raise a large amount of revenue.

But business secretary Lord Mandelson told the BBC that the move was not a punitive measure designed to teach the banks a "lesson" for the financial crisis.

"We want the banks to build up the capital on their balance sheets, we want them to become profitable again, we want them to function normally because the rest of the economy depends on that," he said.

"But, equally, they do have to understand that people will be very disconcerted, and disapproving, to see a return to the excesses, the bonus culture that we have seen in the past.

"It is just that message which I think it is important for the chancellor to deliver."

The chancellor is expected to unveil a series of measures designed to raise revenue, and admit that public borrowing will rise even higher than the previous estimate of £175bn.

Cutbacks in spending will see local authorities hardest hit - although schools, hospitals and police will be partially 'ringfenced' - and there will be tax hikes for high earners.

But the Telegraph reports that delaying the cuts until after the election signals Labour's intention "to spend its way out of the recession".

Amidst the cuts, the chancellor is expected to announce the creation of a new infrastructure agency to co-ordinate the funding and delivery of future projects, reports the Guardian, with the aim of attracting investment from pension funds.

Meanwhile the Independent says that Darling will delay plans to allow 11 million workers to have personal pensions as part of his "go-for-growth" strategy.

The Conservatives have criticsed the measure as being more about pandering to public anger at the City in advance of a general election, rather than a serious attempt to tackle the recession.

David Cameron told Sky News: "This ought to be a day of reckoning, but I fear it will be a pre-election report, not a pre-Budget report."