Yes, Rachel Reeves is channelling Thatcher - but not in the way we want

Last week Rachel Reeves launched a new wave of deregulation meant to spur on growth in the financial sector, while giving the Chancellor’s annual Mansion House speech to a room full of well-dressed bankers in the heart of the City of London.  

In response, Scotland’s First Minister John Swinney accused her of “channelling” Margaret Thatcher - and he’s right. Loosening rules on mortgages and investment firms and expecting the resulting growth from the financial sector to ‘trickle down’ to the rest of us is right out of Thatcher’s playbook. But there’s one crucial - and surprising - difference: Rachel Reeves refuses to tax the windfall profits of banks. 

Since December 2021, higher interest rates have sent our rent, mortgage, and debt payments soaring, while banks have raked in huge profits without having to lift a finger. The big four UK banks (Barclays, HSBC, Lloyds, and NatWest) made a record pre-tax profit of £45.9 billion in 2024 - and are on track to surpass this with the release of new half yearly profit figures later this month. Introducing a 38% levy, in line with the Energy Profits Levy on oil and gas companies who also profited from the cost of living crisis, could bring in over £11 billion.

It was in very similar circumstances that Thatcher introduced a windfall tax on banks back in 1981. As she recounts in her memoir: “Naturally, the banks strongly opposed this; but the fact remained that they 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” - and the same is true today. 

For decades successive governments working in Thatcher’s shadow have let Big Finance write (and bend) the rules of the game to benefit them at a direct cost to the rest of us, and it’s in home ownership where Rachel Reeves’ recent mimicry is most dangerous. 

By increasing the loan-to-income ratio for mortgages to 4.5 times income, the Chancellor is acting against advice from the Bank of England and evidence which shows in reality, more financing pushes house prices up more, pulling the housing ladder further out of reach for first time buyers and saddling households with even more debt. To tackle the housing crisis we need bolder solutions like council led buy-backs of social homes, rent controls and more taxes on second homes - not another housing bubble. The last financial crash of 2008 was driven by a subprime mortgage bubble bursting, we can’t afford a repeat of that now, especially when the economy is already being hit by Trump’s tariffs and an ongoing cost of living crisis. 

Right now, people want better public services, they want their bills to come down, and neither of these things are going to happen as a result of stock prices going up. Following Reeves’ u-turn on the welfare Bill, even she’s admitting she can’t rule out tax rises in the autumn budget - and this is the only way we recommend she follows in Thatcher’s footsteps - because a tax on banks would be the perfect place to start. 

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