In the heart of Manchester, where the cost of living crisis bites hardest, a bold proposal is gaining traction. Trade union leaders are pressing Mayor Andy Burnham to champion a new levy on banks, arguing that the proceeds could deliver a much-needed energy bill cut for households across the region. The idea, rooted in a simple principle of fairness, has sparked a conversation about who should bear the burden of economic recovery.
The Trades Union Congress (TUC) has thrown its weight behind the campaign, estimating that reversing a recent bank surcharge reduction could raise £9 billion over four years. That money, they say, could be redirected to support families struggling with soaring energy costs. It is a figure that has caught the attention of policymakers and activists alike, offering a tangible solution to a problem that has left many households choosing between heating and eating.
Why Unions Are Targeting Banks
The logic behind the proposal is straightforward. In recent years, banks have benefited from a series of tax cuts and regulatory rollbacks, often justified as necessary to keep the financial sector competitive. However, critics argue that these giveaways have not translated into broader economic benefits for ordinary people. Instead, they say, banks have continued to post record profits while public services and household budgets have been squeezed.
Unions see the energy crisis as a prime example of this imbalance. While families face unprecedented rises in their gas and electricity bills, banks have enjoyed a windfall from higher interest rates and increased trading activity. A targeted levy on bank profits, they argue, would not only raise significant revenue but also send a clear signal that the financial sector must contribute its fair share to the common good.
The TUC's £9 billion estimate is based on reversing a cut to the bank surcharge that was introduced in 2023. At the time, the government reduced the surcharge from 8% to 3% on bank profits, a move that was welcomed by the industry but criticised by many economists and social campaigners. Restoring the previous rate, the TUC says, would generate billions that could be ring-fenced for energy support.
Burnham's Role and the Political Landscape
Andy Burnham, the Mayor of Greater Manchester, has long positioned himself as a champion of the North and a vocal critic of Westminster's economic policies. His support for the bank levy could prove pivotal. Burnham has already made waves with his calls for a more equitable distribution of resources, and his endorsement of this proposal would add significant weight to the campaign.
However, the political terrain is complex. While Burnham has no formal power to levy taxes on banks, his influence as a regional leader and potential future Labour leadership contender means his voice carries national weight. By publicly backing the idea, he could pressure the government to act and inspire other mayors and local leaders to follow suit.
The proposal also taps into a broader national debate about windfall taxes. In 2022, the government introduced a windfall tax on oil and gas companies to help fund energy bill support, a move that was initially resisted but ultimately accepted. Extending a similar principle to banks would be a logical next step, unions argue, especially given the sector's resilience and profitability.
How the Money Could Be Used
The TUC's proposal is not just about raising revenue; it is about providing immediate relief to households. The energy crisis has been particularly acute in the North of England, where wages are lower and housing stock is often older and less energy efficient. A targeted bill cut, funded by the bank levy, could make a substantial difference to millions of people.
One option would be to provide a direct rebate on energy bills, similar to the Energy Bills Support Scheme that ran in 2022-23. That scheme gave every household £400 off their bills, but it was funded entirely by borrowing. A bank levy would offer a more sustainable, fairer source of funding, ensuring that the cost of the crisis is borne by those most able to pay.
Another approach would be to invest in long-term energy efficiency measures, such as insulation and heat pumps, which would permanently reduce bills and create jobs. This would align with Burnham's green agenda and his commitment to a just transition in Greater Manchester. The £9 billion could be split between immediate relief and longer-term investment, offering a comprehensive response to the energy challenge.
Arguments For and Against
Supporters of the bank levy argue that it is a matter of basic fairness. Banks have been among the biggest beneficiaries of the post-pandemic economic recovery, yet they have contributed relatively little to the social safety net. A modest increase in their tax burden, they say, would not harm competitiveness or lending, especially given the sector's healthy profit margins.
Opponents, however, warn of unintended consequences. The banking industry has argued that higher taxes could reduce lending, stifle economic growth, and drive financial activity overseas. They point to the competitive pressures of Brexit and the need to maintain London's status as a global financial centre. Some economists also caution that windfall taxes can be distortive, creating uncertainty and discouraging investment.
Yet the TUC counters that these concerns are overstated. Banks, they note, have continued to lend and grow even during periods of higher taxation. The surcharge reversal, they argue, would simply restore a level of taxation that existed until very recently and that the industry had already absorbed without catastrophe.
The Bigger Picture: Fairness in the Cost of Living Crisis
The energy bill proposal is part of a wider union campaign for economic justice. From calls for higher wages to demands for public ownership of utilities, the labour movement is seeking to reshape the economic debate. The bank levy is a concrete, actionable policy that could deliver real benefits to households while challenging the narrative that austerity is inevitable.
For Burnham, the issue is both moral and political. His support for the levy would reinforce his reputation as a leader who stands up for ordinary people and is willing to challenge powerful interests. It would also put pressure on the Labour leadership to adopt a more radical economic agenda, something many party members and voters have been demanding.
As the energy crisis continues to unfold, the question of who pays will only become more urgent. The unions' proposal offers a clear answer: those who have profited most from the current economic system should contribute more to its upkeep. Whether that argument wins the day remains to be seen, but it is a debate that Burnham and others cannot afford to ignore.
What Happens Next?
The campaign is likely to intensify in the coming months. Unions are planning to raise the issue at regional and national levels, and Burnham's response will be closely watched. If he endorses the levy, it could become a key plank of his policy platform and a rallying cry for the wider movement.
There is also the possibility of a broader coalition forming around the idea. Environmental groups, anti-poverty charities, and local councils could all be natural allies, given their shared interest in reducing energy costs and promoting fairness. The more voices that join the call, the harder it will be for the government to ignore.
Ultimately, the proposal is a test of political will. The money is there, the need is urgent, and the mechanism is proven. What remains is the question of whether those in power are willing to act. For the households struggling to pay their bills, the answer cannot come soon enough.
Frequently Asked Questions
What exactly is the bank surcharge and how would reversing it raise £9 billion?
The bank surcharge is an additional tax on bank profits, introduced in 2016 to ensure banks paid a higher rate than other corporations. In 2023, the government reduced it from 8% to 3%. Reversing that cut, according to the TUC, would raise an estimated £9 billion over four years, which could be used for energy bill support.
Why are unions targeting banks specifically for the energy crisis?
Unions argue that banks have been major beneficiaries of recent economic conditions, such as higher interest rates, and have not contributed proportionately to public finances. They see a bank levy as a fair way to fund relief for households hit by soaring energy costs, ensuring those with the broadest shoulders bear more of the burden.
Has Andy Burnham actually endorsed this proposal?
As of now, Burnham has not formally endorsed the proposal, but unions are actively urging him to do so. His support would be significant given his influence as Mayor of Greater Manchester and his national profile. The campaign is ongoing, and his response is pending.
Could a bank tax really lead to lower energy bills for households?
If the revenue raised were ring-fenced for energy support, it could fund direct rebates or longer-term efficiency investments. The TUC proposes using the £9 billion to cut bills directly, similar to past schemes, but the final design would depend on government action. The principle is that the money would be earmarked for household relief.
What are the main arguments against taxing banks more?
Critics argue that higher taxes on banks could reduce lending, harm competitiveness, and drive financial activity abroad. They also caution that windfall taxes can create uncertainty. However, supporters counter that banks have absorbed similar tax levels before without major disruption and that fairness should take precedence.