Jeremy Hunt Warns John Healey Against Raising UK Bank Taxes

Former Chancellor Jeremy Hunt issued a warning to John Healey that raising bank taxes risks reducing investment, lowering growth, and resulting in fewer jobs. Ahead of the forthcoming Budget, the intervention highlights growing friction between fiscal policymakers and financial sector leaders over the country’s competitive standing.

Hunt Warns Healey Over Tax Increases

Hunt argued that capital remains highly mobile in global markets, meaning financial institutions will shift resources elsewhere if levies climb too high.

The former Chancellor noted that the UK banking surcharge currently sits at three per cent, following a reduction from eight per cent in April 2023. Combined with standard corporation tax, this places the effective tax rate for banks at 28 per cent. Lobbyists and political figures have pressed to lift that rate back up, with Housing Secretary Angela Rayner urging former Chancellor Rachel Reeves to hike the charge to five per cent last year.

PwC Data Highlights UK Bank Tax Burden

Defending the sector, Hunt pointed to PwC figures showing that total taxes on UK banks consume 46 per cent of profits. That outpaces competitor financial hubs across Europe significantly.

Comparative tax burdens on bank profits across major financial centres stand as follows:

Activists at Positive Money have advocated for an even harsher approach, suggesting a windfall tax on top lenders like NatWest, Lloyds, Barclays, and HSBC could raise £19 billion. Hunt countered that UK lenders have already largely repaid public bailouts from the financial crisis while continuing to shoulder outsized tax rates.

International Bankers Voice Concern Over UK Competitiveness

International banking executives have echoed these warnings from the City of London as the Budget approaches. JP Morgan boss Jamie Dimon spoke with John Healey in August to stress the necessity of getting public policy right.

Dame Jane Fraser, a Scot credited with turning around Wall Street’s Citibank, also voiced apprehension regarding additional charges on British operations during an August statement. “Money votes with its feet… It’s already one of the most expensive centres in the world,” Fraser said.

David Postings, head of the industry body UK Finance, wrote directly to Healey to outline the broader economic stakes. In a letter seen by City AM, Postings warned that banking touches every region of the country by supplying credit to households and small-to-medium enterprises while anchoring global market access.

Pre-Budget Summit Scheduled for Tuesday

The debate reaches a critical juncture as top bank executives prepare to meet with John Healey for a pre-Budget summit on Tuesday.