John Healey was urged by union chiefs to hike tax on the “enormous profits” of banks in Britain to raise billions to fund measures to ease the cost of living for millions of struggling households.
Paul Nowak, General Secretary of the Trades Union Congress
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Paul Nowak, General Secretary of the TUC, told The Standard: “Households up and down the country are up against it - and with no end in sight to Trump’s illegal war in the Middle East, they are facing an energy bill crisis this winter with prices set to soar further still.
“The government has to act.
“With the big four banks enjoying profits of over £1bn a week between them, it’s time to tax those enormous profits to cut energy bills for the majority of households.”
* Reverse the cuts to the bank surcharge, increasing it from 3% back to 8%, to raise £9bn over four years.
* Raise an extra £24bn over four years by hiking the surcharge to 16%.
* Raise an additional £60bn over four years by increasing the surcharge from 3% to 35%, the same level as the windfall tax the Conservatives imposed on energy companies.
The City of London faces higher levies on banks
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The biggest four banks - HSBC, NatWest, Barclays and Lloyds Banking Group - collectively made around £15bn profit in the first half of this year and believe they will be “on the menu” as the Chancellor seeks to raise some £2 billion a year.
However, UK Finance, which represents the banks, warned that "further increases in bank taxes would weaken competitiveness, discourage investment and job creation, and work against the government's ambition to deliver growth in every postcode".
CBI chief executive Rain Newton-Smith said: “Businesses stand ready to invest, innovate and create jobs, but they need the right conditions and confidence to do so.”
In its submission for the Budget, the CBI warned against “further sector-specific taxation – including on a banking sector already facing a higher tax rate than competing international financial centres”.
However, the Left-leaning Institute for Public Policy Research (IPPR) urged Mr Healey to raise an extra £16 billion to help struggling households, including by reforming capital gains tax, ending taxpayers footing the bill for Bank of England losses, and taxing the windfall profits of commercial banks by a further £1 billion a year.
The think tank said the measures would also help to rebuild the Chancellor’s fiscal buffer which it estimates has dropped by up to £15 billion since the spring.
Shadow Chancellor Andrew Griffith
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But Shadow Chancellor Andrew Griffith stressed: “Britain needs growth. But a raid on the financial services sector will stifle it.
“Labour should be backing businesses and wealth-creators, not making their lives even harder.
“Rather than hiking taxes yet again, Labour should cut spending.”
The IPPR’s proposed reforms include raising some £10 billion by bringing capital gains tax rates into line with income tax, while introducing a new “super-exemption” for start-ups.
However, Mr Healey has reportedly ruled out equalising the levy on the profits made after selling investments or assets with income tax.