TUC calls on government to increase windfall tax on bank profits to cut energy bills

The Trades Union Congress is calling for an increase in the tax on profits of banks to fund a cut to energy bills that would save the majority of households up to £559 a year.

This comes as Ofgem today announced that the energy price cap will increase by 4% from 1 October this year. 

This means a typical dual fuel annual bill will go up by £60 a year, hitting £1,723, the highest level in three years.

Andy Burnham announced that the government would scrap VAT on energy bills from 1 October, saving the average household £45 a year. However, the energy price cap increase, will effectively wipe out these savings.

The call comes as new polling, conducted by YouGov for the TUC, shows that the cost-of-living crisis is still hitting people hard.

The polling found that in the three months up to late June more than a third (35%) of adults had cut back on hot water usage for baths and showers at least several times a month to reduce their spending.

More than a third (37%) also said they regularly did not use electrical appliances as often as needed to save money.

The trade union body argues that energy bills have been stubbornly high since Russia’s illegal invasion of Ukraine in 2022 and have gone up again due to Donald Trump’s illegal war on Iran.

Meanwhile, bank profits are soaring, with the big four banks making more than £1 billion a week, based on the first half of the year.

Currently, the bank surcharge is an additional 3% corporation tax on the profits of banking companies above £100 million.

The surcharge was reduced from 8% by the Conservatives in April 2023. 

The TUC is calling for the government to increase the bank surcharge to raise up to £60 billion over the next four years, and save people money on their gas and electricity bills.

A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £24 billion over four years.

Even just reversing the Tory cuts and setting it at 8% would raise £9 billion over four years. 

Commenting on the new energy price, TUC General Secretary Paul Nowak said:  “This bill rise will be another hammer blow for those struggling to get by.

“Households up and down the country are already up against it. Too many are skipping meals, dipping into savings and having to cut back on life’s essentials.  

“The government is going to have to keep going on measures to boost living standards – starting with a tax on banks’ enormous profits to cut energy bills for the majority of households.

“It’s the right thing to do. Banks are raking it in while many up and down the country are struggling to get by – they can well afford to pay more tax.”

Photo credit: Miquel Parera – Unsplash

Olivia Barber is a reporter at Left Foot Forward