TUC prices the 2023 bank surcharge cut at £6bn ahead of Healey's budget

"The Tories' tax break for banks has cost the UK public purse £6bn and counting," Paul Nowak, the TUC's general secretary, said ^[14]. The headline rates make that label harder to defend. Before 2023, bank profits faced 19% corporation tax plus the 8% surcharge, 27% in all. After the changes they faced 25% plus 3%, or 28% [c2, c3, d1, d2]. The cut lost revenue only when set against a surcharge left at 8% on top of the higher corporation tax, a combined 33% ^[21]. The Guardian reports that the TUC built its estimate from HMRC corporate tax receipts ^[6].

The TUC's figures for past years and future years match each other. It puts the lost revenue at £2.3bn in 2023-24, £1.7bn in 2024-25 and £2bn in 2025-26, an average of £2bn a year [c1, c6, d4]. Its estimate for restoring the 8% rate is £9bn over four years, about £2.25bn a year [c10, d5]. The larger options are of a different order. By the TUC's figures, a 16% surcharge would raise £24bn over four years, or £6bn a year. A 35% surcharge would raise £60bn, or £15bn a year [c8, c9, d6, d7].

The industry's objection comes from David Postings, chief executive of UK Finance. "Banks also make a major contribution to the public finances and already face a materially higher total tax rate in the UK than in other leading financial centres," he said ^[16]. "Further tax increases would weaken the UK's competitiveness, discourage investment and job creation, and work against the government's ambition to deliver growth in every postcode," he said ^[16]. That competitiveness argument won in 2023 ^[3]. Its weak point is timing. The cut came just as rising interest rates lifted bank earnings, and the four largest lenders made £200bn in pre-tax profit over the past five years [c4, c5]. Nowak pointed to "the record £25bn bonus pool they paid out last year" ^[15].

Jamie Dimon has put a number on the industry's warning. Last month the JP Morgan chief executive told prime minister Andy Burnham and chancellor John Healey that further levies could put investment and jobs at risk ^[12]. Earlier this year he said he could scrap plans for a new £3bn London headquarters if the government became hostile to banks ^[13].

The government's intent is still open. The Guardian contacted the Treasury for comment ^[18]. The pressure on record comes from the TUC, whose plan would spend the money on household bills as part of Burnham's cost-of-living drive, and from the campaign group Positive Money [c7, c17]. Banks narrowly escaped higher levies at last year's budget, the Guardian reported, and have lobbied intensively since ^[11]. We do not know yet whether Healey's 28 October package includes a surcharge change.

For a bank finance team, the choice this quarter is which surcharge rates to build into plans written before 28 October. A plan that assumes only 3% is betting that last year's escape happens again ^[11]. Restoring 8% is the smallest change on the TUC's list, and Positive Money calls reversal "the very least this government can do" [c10, c17]. In my view it is the case a finance director would find hardest to leave out. If the rate rises, next quarter's forecasts have to absorb about £2.25bn a year in total on the TUC's numbers. If it does not, the scenario has cost only the time spent modelling it ^[23]. The higher cases need a chancellor willing to go further. A 16% rate would double the pre-2023 level, and 35% would match the windfall tax rate the Conservatives imposed on energy companies [c8, c9].