A windfall tax on bank profits could raise billions. Here's how that cash could help fix Britain

A windfall tax on the record profits of Britain’s biggest banks could bring in nearly £15bn for the public purse, new analysis suggests.

Britain’s ‘Big Four’ banks – Lloyds, NatWest, HSBC and Barclays – made an eye-watering £45.9bn in pre-tax profits last year.

These earnings are not normal: they far outstrip the £25.6bn those same banks made on average between 2018 and 2021, before the Bank of England started raising interest rates. High interest rates allow banks to charge more on loans.

Such bumper profits are currently taxed at a measly 3%. But it doesn’t have to be this way, campaign group Positive Money claims. Countries like Spain, the Czech Republic and Hungary have imposed windfall taxes on credit institutions. If Britain were to do the same – at a 35% rate – it could generate £14.7bn for the overstretched public purse.

Here’s what you could do with that kind of money.

Reinstate the universal winter fuel allowance – 15 times over

Last year, the government started means-testing the winter fuel payment, depriving 10 million pensioners of the annual £200-to-£300 sum. 

The policy will save the exchequer £1.4bn – but plunge up to around 50,000 more pensioners into absolute poverty.

Help actor Michael Sheen pay off the debts of 132 million people

In an interview with the Big Issue published on Monday (10 March), actor Michael Sheen revealed he used £100,000 of his own money to pay off 900 people’s debts.

Presuming that the debt-to-person ratio stays roughly the same, £14.7bn could write off the debts of 132.3 million people.

A year of universal basic income for 765,625 people

Universal basic income means a guaranteed income for everybody in society, designed to cover people’s basic needs by providing them with a minimum income.

It has the potential to lift people out of poverty and turbocharge social mobility; according to one Finnish study, people receiving the basic income “reported better health and lower levels of depression”.

In a 2022 Welsh trial, care leavers were given £1,600 per month each for two years. £14.7bn could provide a year of UBI at this rate to 765,625 people.

Reverse the UK’s planned cuts to international aid – two and a half times over

Keir Starmer recently reduced aid spending from 0.5% of gross national income (GNI) to 0.3% in 2027. The downsizing will save around £6.1bn – but at a potentially terrible cost.

International development minister Anneliese Dodds resigned over the cuts, warning that they will “remove food and healthcare from desperate people – deeply harming the UK’s reputation”.

With £14.7bn, the government could restore the budget to pre-2021 levels of 0.7% of GNI. Labour has committed to do this when ‘fiscal circumstances allow’.

Put the entire cabinet up in London’s most expensive hotel for 67 years

All this fiscal juggling – being a politician is a stressful job. Why not use that extra fiscal windfall to reward the cabinet with a stay in one of London’s most expensive hotels?

According to Luxury London, The Royal Suite at The Lanesborough will set you back £24,000 per night. With £14.7bn, you could put all 22 members of cabinet up in style for – checks notes – 67 years. Room service not included.

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