#TaxTheBanks
Chancellor Rachel Reeves
Call on Chancellor Rachel Reeves to introduce a windfall tax on big bank profits to support households that need it the most and avoid austerity 2.0.
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 a record pre-tax profit of £45.9 billion in 2024. [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, could bring in nearly £15 billion.
Banks are (unsurprisingly) against this. CEOs from Lloyds and HSBC have publicly begged politicians not to, and bankers warned against it in a meeting with the Chancellor. [2] But after deciding not to scrap the two-child benefit cap and slashing disability benefits, it’s time for this government to show whose side they’re really on.
Introducing a windfall tax on banks would clearly signal the kind of change Rachel Reeves and Keir Starmer promised to deliver and that millions of us desperately want to see, and help to prove that Labour aren’t in the pocket of big donors or beholden to corporate lobbyists from the City.
As the cost of living crisis rages on, a tax on banks is a much fairer place to start than raiding the accounts of ordinary savers or the pockets of disabled people.
Notes:
[1] Positive Money: Windfall tax on bank profits could raise £15 billion
[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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To:
Chancellor Rachel Reeves
From:
[Your Name]
We’re calling on you to introduce a windfall tax on big bank profits.
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 £45.9 billion in 2024, 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 - could bring in £15 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 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] Positive Money: Windfall tax on bank profits could raise £15bn: https://positivemoney.org/press-release/windfall-tax-on-bank-profits-could-raise-ps15bn/
[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