Calculations by the Trades Union Congress (TUC), which represents unions with more than 5.3 million members across England and Wales, shows that the public purse is billions of pounds worse off as a result of tax cuts introduced under the Tory chancellor Rishi Sunak in 2023. The then government agreed to slash the bank surcharge – an additional levy on lenders’ profits – from 8% to 3% that year. The move was meant to offset a rise in corporation tax from 19% to 25%, after the industry argued higher taxes would put them at a competitive disadvantage compared with other big financial centres such as New York.
However, the cuts came just as lenders started reaping handsome earnings, thanks to rising interest rates. The UK’s four largest lenders – HSBC, NatWest, Barclays, Lloyds Banking Group – have now generated £200bn in pre-tax profits over the past five years. The TUC says the 2023 cuts ultimately robbed the UK purse of tax revenues.
Its analysis of HMRC corporate tax receipts shows the UK public lost out £2.3bn in 2023-24, a further £1.7bn in 2024-25, and £2bn in 2025-26 – totalling £6bn over three years. With banks pocketing record profits, the TUC said the surcharge should now be increased beyond its pre-2023 level at the 28 October budget. That could raise up to £60bn, which could be used to cover rising household bills as part of prime minister Andy Burnham’s drive to tackle the cost of living.
It’s time to end it and to make sure banks pay their fair share,” the TUC’s general secretary, Paul Nowak, said. There is a mountain of evidence to suggest that banks can afford to pay more tax – not least the record £25bn bonus pool they paid out last year. Jamie Dimon, chief executive of the largest US bank, JP Morgan, warned Burnham and Healey against further levies during a meeting last month, saying it could put investment and jobs at risk.
Earlier this year, Dimon warned that he could scrap plans for a new £3bn London headquarters if the UK government became hostile to banks. The TUC have said raising the surcharge to 16% – double the rate prior to Conservative cuts – could raise £24bn in tax revenues over the next four years. Meanwhile, a 35% bank surcharge, which would match the windfall tax rate that Conservatives imposed on energy companies, would deliver £60bn over four years.
Even reversing the surcharge cuts and setting it at 8% would raise £9bn over that same period, the union body said.
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