Demonstrators will rally outside the Bank of England today calling for a windfall tax on the record profits UK banks have made during the period of high interest rates.
Think-tank Positive Money said it will unveil a giant cheque showing how much taxing the profits of HSBC, Barclays, Lloyds, and NatWest could raise following the release of all four banks’ half-year profits last Friday.
Recent analysis from the organisation found that if implemented, it could raise £11bn for the Treasury as the “big four” banks are on track to make a record £48bn profit in 2025.
As part of the protest, activists dressed as top bank executives will lie in a bed of money alongside people wearing masks of Sir Keir Starmer and Rachel Reeves – who will theatrically refuse to “get out of bed” with the banks to accept the cheque.
The protest comes amid growing expectations that the Bank will cut interest rates to 4 per cent – their lowest level since March 2023 – on Thursday.
The i Paper spoke to two people attending the protest to hear why they are taking part – and why they think a windfall tax on the largest banks is needed.
‘The window of opportunity is closing – we need Reeves to act fast’
Hannah Dewhirst, who is head of campaigns for Positive Money, said years of higher interest rates have meant banks have raked in billions in profit “without having to lift a finger”.
This is happening at the same time rent, mortgage and debt payments rise across the country, the 31-year-old from north London, said.
“As the cost of living crisis rages on, a tax on banks is a much fairer place to start for the extra revenue the Chancellor says she’s looking for slashing public services even further.
“We want Reeves to hear our message, see the potential revenue a windfall tax on bank profits would bring and then introduce that new tax in the Autumn Budget later this year.
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“As interest rates start to come down, the window of opportunity for this is closing so we need her to act fast.
“But we also want to give a wider message to the Government: that introducing this tax would clearly signal the kind of change Starmer promised to deliver last year, and that millions of us are still desperately waiting to see, to prove Labour aren’t in the pocket of big donors or beholden to corporate lobbyists from the City.”
A windfall tax is a one-off tax levied by governments against certain industries when economic conditions allow those industries to experience above-average supernormal profits.
When asked if she would vote for Labour again, as she did in 2019, Ms Dewhirst said she would not.
She added: “I do not feel represented by the current Labour Party, on issues of financial justice and banking reform or any other. I voted for Labour once in the past, in 2019, but don’t think I will ever again.”
How would a windfall tax work
Positive Money said that, like in Spain, the UK government could introduce a windfall levy on banks’ net interest income and net commissions above a certain threshold (€800m in Spain).
The big four have reported retail net income of more than £16.5bn from their domestic retail operations for the first half of this year.
If this trend continues, a 38 per cent windfall levy (in line with the successful energy profits levy on windfalls from oil and gas companies) on UK retail net income above a threshold of £800m could be expected to raise £11.3bn from Britain’s big four banks alone.
In the 1980s, Margaret Thatcher introduced a windfall tax as in her words, banks “had made their large profits as a result of our policy of high interest rates rather than because of increased efficiency or better service to the customer”.
Ms Dewhirst said: “This rings true today as despite record profits, banks have ruthlessly cut back on services for customers, with 6,443 branch closures since 2015, representing 64 per cent of branches.
“As the cost of living crisis rages on and public services across the country are crying out for investment, there is an easy source of revenue the Chancellor should be turning to to fight rising inequality – the banks.”
‘Our country and its potential is being held hostage’
Protest organiser Ellen Lees, 29, said she will be demonstrating to stand up for those struggling to make ends meet.
Speaking to The i Paper, she said: “We need political leaders that are prepared to stand up to the big banks, fossil fuel executives, corporate landlords, super-rich CEOs and shareholders who are raking in massive profits while ordinary people face the longest hit to living standards on record.”
Ms Lees, who is part of the Green New Deal Rising movement – that looks to fight climate change – and lives in east London, added: “The money to fund our public services and improve living standards exists – it’s just being hoarded by a tiny few.
“Right now our country and its potential is being held hostage by these corporations and the super-rich, who profit from high interest rates, tax loopholes, and loose regulations.
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“If Rachel Reeves and Keir Starmer want to deliver change and have any chance at the next election, they must finally make the richest pay up to fund the investment our communities need.”
The protest will take place outside of the Bank on Thursday at 8am, before it announces its base rate decision at 12pm.
A Treasury spokesperson said: “As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy – which is our focus.
“Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn.
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”