Conservative giveaway to big banks set to cost taxpayers £18 billion

17 Nov 2022

Hunt slashes Bank Surcharge while raising taxes on struggling families.
Conservative cuts to Bank Surcharge and Bank Levy to total £18bn over next 5 years.
Liberal Democrat Leader calls for bank tax cuts to be reversed to fund Mortgage Protection Fund for homeowners seeing payments skyrocket.

Liberal Democrat Leader Ed Davey is calling on the Chancellor to reverse Conservative tax cuts for the big banks and fund support for struggling families instead, as new figures show that the cuts will total £18 billion over the next five years.

Jeremy Hunt used his Autumn Statement to confirm Rishi Sunak’s planned cut to the Bank Surcharge from 8% to 3% from April 2023, even as he increased taxes on millions of struggling families by extending the freeze in the Income Tax personal allowance and higher-rate threshold.

It follows Conservative cuts to the Bank Levy every year from 2016 to 2021, and means that the two bank taxes will raise a combined £2.5 billion next year, down from £4.7 billion in 2016-17 – a 56% real-terms cut.

Analysis by the Liberal Democrats shows that banks will pay £18 billion less over the next five years than if revenues from the Surcharge and Levy had been maintained at 2016-17 levels in real-terms.

The party is calling on the Chancellor to reverse these cuts and use the revenue to support struggling families – including a £3 billion Mortgage Protection Fund for homeowners who are seeing their monthly mortgage payments rise most sharply as a result of the Conservatives’ disastrous mini-budget in September.

Ed Davey MP, Leader of the Liberal Democrats, said:

“After all his u-turns, the one thing Rishi Sunak seems determined to press ahead with is cutting taxes for the big banks. He’s got his priorities completely wrong and he is totally out of touch with the British people.

“The Conservatives are handing out £18 billion in unfair and unnecessary tax cuts for the big banks, while raising taxes on struggling families and pensioners and leaving millions to pay a Conservative Property Penalty on their mortgage bills. It’s just not right.

“I urge Jeremy Hunt to listen to the British people and start helping. Reverse these tax cuts for the banks and use a small chunk of the money for a new Mortgage Protection Fund to cover the extra costs for those families seeing their payments rise most sharply.”

ENDS

Notes to editors

Public sector receipts from bank taxes (£bn):

	2016-17	2023-24	2024-25	2025-26	2026-27	2027-28	5yr total
Bank Levy	3.0	1.3	1.2	1.2	1.2	1.2	6.1
Bank Surcharge	1.7	1.2	0.9	0.9	0.9	1.0	4.9
TOTAL	4.7	2.5	2.1	2.1	2.1	2.2	11.0
GDP deflator	95.0	115.7	117.2	117.8	119.2	121.4
Total if 2016-17 levels maintained in real terms		5.7	5.8	5.8	5.9	6.0	29.0
Difference		-3.2	-3.7	-3.7	-3.8	-3.8	-18.0
Real-terms cut since 2016-17		56.0%	63.5%	63.7%	64.1%	63.1%	62.1%

Sources:

2016-17 revenues from ONS, Public sector current receipts

All other data from OBR, Economic and fiscal outlook – November 2022

Liberal Democrat Mortgage Protection Fund proposal:

Under the Liberal Democrat proposal, anyone who sees their mortgage payments rise by more than 10% of their household income could apply for grants to cover the cost of that rise, paid monthly. These payments would be capped at £300 a month.

The Resolution Foundation estimates that roughly 1.8 million households would fall into that category (about 25% of all mortgaged households), and that the average annual cash increase in mortgages will be around £1,800 a year by the end of 2023.

If all eligible households were to apply for these grants, the total cost would therefore be around £3 billion in 2023-24.