Sunak announces tax cut for banks: Positive Money response

London, 27 October 2021

Responding to the Chancellor’s announcement in the Budget that he will be cutting the surcharge tax on bank profits will be cut by 60%, from 8% to 3%, Simon Youel, head of policy & advocacy at Positive Money said:

“At a time when ordinary workers are facing a cost of living crisis – with cuts to universal credit, hikes to national insurance, and rising household bills – tax cuts for bankers is a worrying sign of the government’s priorities.

“The cut to the bank surcharge will mean the government losing out on more than a billion pounds in tax revenue in a typical year – enough to ensure free school meals are provided all year round several times over.

“While so many households and small businesses are still struggling, banks have been posting hugely increased profits on last year. If the government is serious about ‘levelling up’ and ‘building back better’, it should be making those with the broadest shoulders bear the heaviest burdens, and ensuring banks play their part in supporting a fairer and greener recovery.”

Notes

1. The 8% bank surcharge, calculated on the same basis as corporation tax, raised £2bn for the government in the 2019-2020 financial year. A cut to 3% would therefore see the government lose £1.2bn https://www.gov.uk/government/statistics/paye-and-corporate-tax-receipts-from-the-banking-sector-2020/paye-and-corporate-tax-receipts-from-the-banking-sector-2020

2. Meanwhile it would cost just £370m to provide free school meals during holidays: https://ifs.org.uk/publications/15148

3. Barclays saw their profits double in their most recent earnings report: https://www.theguardian.com/business/2021/oct/21/barclays-doubles-quarterly-profit-to-2bn

4. A National Audit Office investigation in October forecast that banks would receive £1bn from the first year of interest payments from the government on 100% guaranteed Bounce Back Loans https://www.nao.org.uk/wp-content/uploads/2020/10/Investigation-into-the-Bounce-Back-Loan-Scheme.pdf

5. Positive Money is a research and campaign organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org.

6. For more information from Positive Money or to arrange a briefing/interview with a spokesperson, please contact press@positivemoney.org.uk or Anna Pick on 07948802104.