March 15, 2023
Today Chancellor Jeremy Hunt presented his Spring Budget to parliament and missed a huge opportunity.
After 12 years of deep public sector cuts and pay freezes, which resulted in strikes in hospitals and classrooms up and down the country, Hunt ignored an easy win to bring in billions of pounds of additional public sector income by introducing a ‘windfall’ tax on banks’ excess profits.
The Bank of England’s recent decisions to increase interest rates have meant big banks have seen their profits soar without having to lift a finger. The big 5 UK banks raked in more than £37,000,000,000 in profits last year off the backs of struggling families – including NatWest, who the government bailed out 15 years ago using public funds, and HSBC, who almost doubled its profits for the end of 2022 in a single quarter. This additional profit was not earned by the banks, and is being paid out by the Bank of England as a result of its interest rate decision.
Ex-Bank of England deputy governor Sir Charlie Bean agreed in November that a tax on banks’ windfall profits could help “fill a black hole” in public finances. Increasing the bank surcharge from 3% to 35% would raise £14 billion in the next year alone.
But instead of taxing these unearned billions, the Chancellor chose to cut the surcharge banks pay from 8% to 3% in his previous Autumn Statement, and failed to reverse that decision today. Last week’s collapse of Silicon Valley Bank proves financial regulators are still asleep at the wheel. Sadly the UK government seems content to continue handing the banks, who are already reaping massive unearned gains in our economy, more still and today was no exception.
The Chancellor, alongside our Health and Education ministers, say we can’t afford above-inflation pay rises for our teachers, nurses and other public sector workers, or more help for those suffering the most. But the government could quite easily recoup the cost of public sector pay rises by introducing a windfall tax on banks. The government and Bank of England could also work together to direct money into the real economy, instead of passing billions to banks as a result of interest rate hikes, which also hit the most vulnerable people hardest. We need more policies that tax excessive private profits, not workers wallets.
If you haven’t yet, please demand Jeremy Hunt #TaxTheBanks by adding your name to the petition here.