Windfall tax on bank profits could raise £15bn in 2024

London, 29 October 2024 - A windfall tax on the profits of Britain’s biggest banks could bring in nearly £15bn for public spending, according to new analysis from research and campaign group Positive Money. 

The analysis suggests that Britain’s ‘Big Four’ - Barclays, NatWest, Lloyds and HSBC - are on track to make an estimated £44.7bn profit in 2024, based on their recent results, and Positive Money’s calculation that, for the last five years, full year profits have on average totaled an 18% cumulative increase on profits banked for the first nine months of the year.

This is more than four times the profit the Big Four made in 2020, before interest rates started rising, and follows record profits of £44.3 billion last year. Last year these four banks paid £26.8 billion (60%) of that profit to shareholders. 

Banks currently pay a special surcharge on profits, which was introduced after the last financial crisis in recognition of the risks banks’ activities pose to the wider economy, though the last government slashed this surcharge by 60%, from 8% to 3%. If the Bank Surcharge was raised to 35%, in line with the Energy Profits Levy on the windfall profits of oil and gas companies, the Treasury would receive an extra £14.8bn from the 2024 profits of these four banks alone, based on Positive Money’s profit estimate.

Even just reversing the last government’s cuts to the Bank Surcharge and Bank Levy would bring in more than £3.5bn for the Exchequer, Positive Money estimates.

Positive Money will be outside the Treasury today, arguing that the government should not let the financial contributions of the banking sector - such as the £175,000 which HSBC, Barclays and Lloyds spent sponsoring the government’s International Investment Summit this month - let representatives of that sector gain privileged access to government ministers, which they clearly use to lobby for lower taxes and looser regulation.

Fran Boait, Co-Executive Director at Positive Money, said: 

“The good times just keep on rolling for banks. Not only are they still profiting off the public thanks to higher borrowing costs, but their share prices are soaring off the back of those profits.

“But the size of bank profits will wane as rates start to come down, and so the longer the government waits to place a windfall tax on banks, the less money it will be able to claw back for the public.

“If the government insists on claiming there’s a “black hole” in public finances, then bank profits are a popular, uncontroversial, and frankly sensible place to find the money it needs to support households still reeling from the higher rates which have enriched banks.”

Notes:

• For more information or to speak to a spokesperson, please contact chloe.musto@positivemoney.org.uk

• Positive Money will be protesting outside the Treasury at 1 Horse Guards Road between 12pm and 1pm today, calling for a windfall tax on bank profits with signs reading “bought by bankers” and depicting Keir Starmer and Rachel Reeves in the pockets of big banks. 

• HSBC was the last of the “Big Four” banks to announce its year to date Q3 profits of $30bn (£23.1bn) today: https://www.hsbc.com/investors/results-and-announcements 

• Our calculations on a windfall tax can be found here: https://docs.google.com/document/d/1oIxcI658HSv9c4FlOBq3jv8AVBNpn1j8xbMUmMsFJwU/edit?usp=sharing 

• Barclays shares soared to a 9-year high after posting a 23% profit rise last week: https://uk.finance.yahoo.com/news/barclays-profit-growth-ftse-100-063319197.html

• NatWest shares also soared after it posted a 26% boost to Q3 profit last week: https://www.cityam.com/natwest-profit-up-by-26-per-cent-as-lender-reports-solid-growth/ 

• Labour’s relationships with the City have been covered extensively here: https://www.opendemocracy.net/en/author/ethan-shone/page/1/ and they took hundreds of thousands from banks for the International Investment Summit: https://news.sky.com/story/reeves-to-meet-bank-chiefs-as-investment-summit-and-budget-loom-13230124 

• Positive Money finds that representation of the financial sector in Treasury ministers’ meetings has been steadily growing over the last couple of years: https://positivemoney.org/press-release/finance-sector-scores-two-fifths-of-treasury-meetings/ 

• Calls for a windfall tax on banks have been echoed by MPs, including Angela Eagle, John McDonnell, Clive Lewis, Diane Abbott and Richard Burgon

• Polling commissioned by Positive Money in September 2023 found the majority of the public supports a windfall tax on banks: https://positivemoney.org/2023/09/uk-public-support-windfall-tax-on-banks-polling-shows/ 

About:

Positive Money is an international research and campaign organisation working to redesign our economic system for social justice and a liveable planet. 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 supporters. Find out more: positivemoney.org