Andy Burnham is facing calls to impose a tax hike on major banks as projections indicate that the largest lenders in Britain are on track to generate profits of approximately £55 billion this year.
Critics argue that banks stand to benefit significantly from the current cost of living crisis, attributed to higher interest rates and earnings from reserves held in the Bank of England. With mounting pressure, there are efforts to persuade the new Prime Minister, Andy Burnham, and Chancellor John Healey to take decisive action.
The upcoming half-year financial results from banks are expected to reinforce the demand for action, with projections indicating another round of substantial profits. Barclays is set to kick off the reporting season, with analysts anticipating a £700 million increase in profits for the first half of 2026, reaching £5.9 billion compared to £5.2 billion the previous year. Following Barclays, Lloyds Banking Group and NatWest are also expected to report significant profit gains.
Collectively, the top four banks are projected to rake in profits totaling £55.3 billion for the year, a substantial increase from the previous year, equivalent to approximately £1,750 per second.
Advocates, including Sara Hall, co-executive director at Positive Money, are calling for a tax on banks’ windfall profits to address the cost of living crisis and support households across the country. The Trade Union Congress (TUC) proposes an increase in the 3% surcharge on banks’ profits, suggesting that raising it to 8% or even 16% could generate substantial revenue to alleviate the cost of living burden.
TUC General Secretary Paul Nowak emphasized the need to tax banks’ profits to alleviate financial pressures on households, especially in light of rising energy costs. However, Lord O’Neill cautioned against imposing additional taxes on businesses, arguing against potential negative impacts on economic competitiveness.
Recent data revealing that banks distributed £16.4 billion in bonuses in the first quarter of this year has further fueled the debate surrounding bank profits and taxation. While banks’ trade body UK Finance highlights the sector’s significant tax contributions, advocates continue to push for measures to address the cost of living crisis and support struggling households.