Key facts
- The Trades Union Congress estimates that tax cuts for UK banks have cost the public purse £6 billion over three years.
- The TUC analysis shows a loss of £2.3bn in 2023-24, £1.7bn in 2024-25, and £2bn in 2025-26.
- The bank surcharge was reduced from 8% to 3% in 2023 by the then Conservative government.
- The UK's four largest lenders generated £200bn in pre-tax profits over the past five years.
- The TUC suggests increasing the surcharge to 16% could raise £24bn over four years.
- Jamie Dimon warned against further bank levies, citing risks to investment and jobs.
Tax cuts implemented by the previous Conservative government have cost the UK public purse an estimated £6 billion over three years, according to the Trades Union Congress (TUC). The union body is urging Chancellor John Healey to raise taxes on banks in the upcoming budget to recoup these revenues and help address the cost of living crisis.
The TUC's analysis indicates that the reduction of the bank surcharge from 8% to 3% in 2023, intended to offset a rise in corporation tax, has resulted in significant revenue losses. These losses are estimated at £2.3 billion in 2023-24, £1.7 billion in 2024-25, and £2 billion in 2025-26.
This comes at a time when the UK's four largest lenders – HSBC, NatWest, Barclays, and Lloyds Banking Group – have collectively generated £200 billion in pre-tax profits over the last five years, partly due to rising interest rates. The TUC argues that banks can afford to pay more, citing a £25 billion bonus pool paid out last year.
Campaign group Positive Money supports the TUC's call for higher bank taxes, stating that banks are making substantial profits without significant effort. They believe reversing the tax cuts is a necessary step to recover lost billions.
However, banking lobby group UK Finance, represented by CEO David Postings, argues that a strong banking sector is vital for the UK economy. They contend that profitable banks invest in services, loans, and returns for savers and pensioners. Postings also stated that UK banks already face a higher total tax rate than in other financial centers and that further increases would harm competitiveness, investment, and job creation.
Jamie Dimon, CEO of JP Morgan, has previously warned UK officials against further levies, suggesting they could jeopardize investment and jobs, and even threatened to scrap plans for a new London headquarters if the UK government became hostile to banks.