#TaxTheBanks

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#TaxTheBanks

Chancellor Rachel Reeves

We're calling on Chancellor Rachel Reeves to introduce a windfall tax on big banks’ profits to support households that need it the most and help fund the NHS this winter.

Years of higher interest rates have sent our rent, mortgage, and debt payments soaring, while banks have raked in huge profits for doing absolutely nothing. The big four UK banks (Barclays, HSBC, Lloyds, and NatWest) made pre-tax profits of £44.3 billion in 2023. Four times higher than in 2020 as a direct result of the Bank of England’s rate hikes. [1]

Increasing the bank surcharge from 3% to 35%, in line with the 35% Energy Profits Levy on oil and gas companies who also profited from the cost of living crisis, would’ve brought in an extra £14 billion - two-thirds of the famed ‘fiscal blackhole’.

Banks are (unsurprisingly) against this. CEOs from Lloyds and HSBC have publicly begged politicians not to, and bankers warned against it in a recent meeting with the Chancellor. [2] But after deciding not to scrap the two-child benefit cap and cutting pensioner’s winter fuel payments, it’s time for this new government to show whose side they’re really on.

Rachel Reeves could use her first Budget to prove that Labour aren’t in the pocket of big donors or beholden to corporate lobbyists from the City. Introducing a windfall tax on banks would clearly signal the kind of change she and Keir Starmer promised to deliver, and that millions of us desperately want to see.

After 15 years of austerity, our schools are crumbling. Our water and transport infrastructure is creaking at the seams, and the NHS is facing another winter crisis. Now more than ever we need big, bold investment, and a windfall tax on banks is the perfect place to start.

Add your name now to tell Rachel Reeves to #TaxTheBanks.

Notes:
[1] Positive Money: Taxing banks’ record profits could raise £14bn for public services
[2] The Times: HSBC boss warns on windfall profits
The Guardian: Lloyds chief urges UK policymakers to keep their hands off banks’ profits
Financial Times: Bankers fear Rachel Reeves is preparing UK Budget tax raid on sector

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Positive Money

To: Chancellor Rachel Reeves
From: [Your Name]

We’re calling on you to introduce a windfall tax on bank profits in your first Budget on 30th October.

For years, millions of people have suffered from soaring mortgage, rent, and debt payments while banks have made huge profits from the Bank of England’s decision to raise interest rates. This choice has forced households, small businesses, and the Bank of England itself to hand billions to banks for doing absolutely nothing. While interest rates are now falling, the cost of living crisis is far from over.

The four biggest banks in the UK (Barclays, HSBC, Lloyds, and NatWest) collectively made pre-tax profits of £44.3 billion in 2023. Four times higher than their annual profits in 2020 as a direct result of the Bank of England’s rate hikes. [1] Increasing the bank surcharge from 3% to 35% - in line with the 35% Energy Profits Levy on oil and gas companies who also profited from the cost of living crisis - would’ve brought in £14 billion to the public purse.

Ex-Bank of England deputy governor Sir Charlie Bean has suggested a windfall tax could raise tens of billions of pounds. [2] If your new government really wants to prevent a return to austerity, help those suffering the most, and boost public investment to fund our vital public services, a windfall tax on unearned bank profits is the perfect place to start.

The previous Chancellor Jeremy Hunt chose to cut the surcharge banks pay by 60% (from 8% to 3%) during his tenure. Reversing this tax cut would not only help address the shortfall in our public finances that you, Prime Minister Keir Starmer, and other cabinet colleagues, say you are constrained by, but give a clear signal of the kind of change you promised to deliver, and that people in this country desperately want to see from your new government. We need bold action now.

Yours sincerely,

References:
[1] Taxing banks’ record profits could raise £14bn for public services: https://positivemoney.org/press-release/taxing-banks-record-profits-could-raise-14bn-for-public-services/
[2] Bloomberg: UK should impose a windfall tax on banks, EX-BOE deputy says: https://www.bloomberg.com/news/articles/2022-11-01/uk-should-impose-windfall-tax-on-banks-former-boe-chief-says