Healey Expected to Raise the Bank Surcharge in the Budget
The chancellor has decided to tap the financial sector for extra revenue on 28 October to offset the damage the Middle East war has done to the public finances. Reversing a cut to the surcharge banks pay on their profits is among the options understood to be under discussion; that alone would raise upwards of £2bn a year. Speaking in Bangkok he called banks “hardwired into the economic fabric of this country”.
No figure has been announced and none of this is confirmed policy; what is reported is a decision in principle, with the mechanism still open. The arithmetic behind it is not in doubt. HSBC, NatWest, Barclays and Lloyds have generated £200bn in pre-tax profits between them over the past five years, earnings lifted by the same high interest rates that have cost mortgage holders an average of £9,034 since 2021. Paul Nowak of the Trades Union Congress put it bluntly: “Britain’s big four banks are making a billion pounds a week, while bonuses have hit a post-crash record. These are bumper profits — driven by high interest rates and households’ mortgage misery.” The measure was considered and rejected by the previous chancellor, who feared deterring investment, which is the argument the industry will make again. The International Monetary Fund, meeting in Bangkok this week, has praised Britain’s progress on the deficit and urged him to “stay the course” — advice that cuts both ways thirteen days out.