Financiers owe their windfalls and bonuses to higher interest rates. Britain should reclaim more for the public and resist City lobbying
John Healey is planning to tax British banks, the Guardian revealed, in the forthcoming budget. It’s about time for the chancellor to act. Banks have been raking it in. The campaign group Positive Money reported this summer that Britain’s four biggest banks made £29bn in the first half of this year, up a fifth on 2025. These windfalls owe more to higher interest rates than better products or services. Households and businesses pay more to borrow. Meanwhile, the Bank of England pays the banks tens of billions in interest on their reserves, with the Treasury footing the bill.
The chancellor is said to favour restoring the bank surcharge from 3% to 8%, which could raise around £2bn a year. This would recover a very modest share of the sector’s bonanza. Louis XIV’s finance minister, Jean-Baptiste Colbert, said that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”. Britain’s banks have plenty of feathers. That hasn’t stopped them hissing. The banks say that they already face higher taxes than other companies, that they won’t be able to lend as much, and that their profits won’t last.