Andy Burnham is under pressure to impose a tax increase on major banks as forecasts indicate that the UK’s largest lenders are poised to generate profits of about £55 billion this year.
Critics argue that banks are reaping significant benefits from the current cost of living crisis due to higher interest rates and earnings from reserves held at the Bank of England. They are now seeking to persuade the new Prime Minister, Andy Burnham, and Chancellor John Healey to take action.
The push for a tax hike is expected to gain momentum as banks prepare to release their half-year financial results in the next two weeks, confirming another round of substantial profits.
Barclays is set to kick off the reporting season on Tuesday, with analysts anticipating a £700 million profit increase in the first half of 2026, reaching £5.9 billion from £5.2 billion a year earlier. Following that, Lloyds Banking Group and NatWest are projected to announce profits of £4.1 billion each. HSBC’s results are scheduled for the following week, with estimates yet to be determined.
Collectively, the four major banks are forecasted to generate a total profit of £55.3 billion for the year, a significant rise from the previous year, equivalent to approximately £1,750 per second.
Sara Hall, co-executive director at Positive Money, emphasized the need to tax banks on their windfall profits to address the cost of living crisis and support households across the country. The Trade Union Congress (TUC) suggests increasing the surcharge on banks’ profits from 3% to potentially 8%, 16%, or even 35% to generate additional revenue for alleviating the cost of living burden.
TUC general secretary Paul Nowak highlighted the fairness in taxing banks to relieve the financial pressure on households, particularly amid rising energy costs and mortgage challenges.
However, Lord O’Neill cautioned against imposing more taxes on businesses, emphasizing the importance of maintaining the UK’s international competitiveness and investment appeal.
Recent data revealed that banks distributed £16.4 billion in bonuses in the first quarter of this year, underscoring the sector’s financial performance.
In response, a spokesperson for the banking industry’s trade body, UK Finance, emphasized the sector’s substantial contribution to the UK’s public finances, citing over £43 billion in taxes paid last year. They cautioned that increasing sector-specific taxes could hinder the UK’s competitiveness and investment attractiveness on the global stage.
