There is something deeply wrong with an economy in which millions of people work hard, pay their taxes and still struggle to afford the basic necessities of life, while the banks report enormous profits and award record bonuses.
The contrast has become particularly stark as Britain approaches another difficult winter. Households are worrying about heating bills, mortgage repayments, rent increases and the weekly cost of shopping. Meanwhile, some of the country’s largest financial institutions are enjoying profits measured in billions.
The question is whether the Government should intervene to ensure that some of this extraordinary wealth is used to ease the pressure on ordinary working families.
Solidarity believes there is a powerful case for doing so. Banks provide essential services and should be able to operate profitably. They must also recognise that their prosperity depends upon the wider economy and the people who work within it. When exceptional profits arise partly from economic circumstances that have made life harder for those same people, a greater contribution to the public finances is reasonable.
A banking boom amid a household squeeze
The figures are extraordinary.
According to Trades Union Congress analysis published this year, Britain’s four biggest banks — Barclays, HSBC, Lloyds and NatWest — made around £29 billion in profits during the first half of 2026 alone.
Much of the improvement in bank profitability has been associated with higher interest rates. When borrowing becomes more expensive, banks can benefit from the difference between what they charge borrowers and what they pay savers.
Of course, the relationship is not entirely straightforward. Banks face higher funding costs, competition for deposits and the possibility that borrowers will default. Nevertheless, the interest-rate environment has provided substantial opportunities for increased earnings.
The same circumstances have been rather less welcome for many bank customers.
Families coming to the end of fixed-rate mortgage agreements have faced painful increases in monthly repayments. Small businesses have found borrowing more expensive. Tenants have experienced pressure from landlords seeking to recover higher financing costs.
For someone on a modest wage, an additional £100 or £200 a month in housing costs can mean the difference between managing comfortably and running up debt.
Yet the rewards at the top of the financial industry continue to grow.
In July, the TUC highlighted projections suggesting that bonuses across the finance and insurance sector could reach £25 billion during 2026. Its analysis also showed that average weekly bonuses in the sector had reached £431 during the first quarter.
There is nothing objectionable about rewarding productive work. Bank employees, like other workers, deserve fair pay for their contribution. But these figures concern an industry whose fortunes have been boosted by circumstances that have simultaneously squeezed millions of its customers.
It is reasonable to ask whether the distribution of those gains serves the wider national interest.
The workers who cannot make ends meet
The banking figures become even more troubling when placed alongside research published by Citizens Advice on 14 October.
The charity estimates that 5.6 million workers in Britain are trapped in insecure or precarious employment. These include people working on temporary contracts, zero-hours arrangements and other forms of poorly paid or unpredictable work.
Around a third of workers aged between 18 and 24 fall into this category. Disabled workers are also disproportionately affected.
The consequences are serious.
Citizens Advice found that, over the previous year, more than half of households containing insecure workers had resorted to measures such as borrowing money, selling possessions, using foodbanks or applying for emergency financial assistance.
Consider what that means.
These are not necessarily people who are unemployed or unwilling to work. Many are doing physically demanding, socially useful jobs. They clean offices, serve customers, transport passengers and help keep businesses functioning.
Their problem is that the rewards and security offered by employment are increasingly inadequate.
Tom MacInnes, director of policy at Citizens Advice, has warned that insecure workers cannot reliably predict how much they will receive each month. The charity has called for stronger employment protections and targeted financial assistance for the lowest earners.
Solidarity has consistently argued that work should provide dignity, security and a reasonable standard of living.
A person who fulfils their responsibilities at work should not have to rely upon a foodbank to feed their family.
Nor should employees who regularly work substantial hours be left wondering whether they will receive enough shifts next week to cover their bills.
The Government’s promised reforms of zero-hours contracts and insecure employment must therefore deliver meaningful change. But improvements in employment rights need to be accompanied by policies that tackle the wider cost of living.
That brings us back to the banks.
What would a windfall tax actually mean?
A windfall tax is an additional levy applied to profits considered unusually large because of exceptional circumstances rather than simply the normal growth of a business.
Britain has already applied this principle to the energy industry.
When oil and gas companies experienced extraordinary profits following dramatic movements in international energy prices, the Government introduced an additional tax on those gains.
The justification was straightforward. Companies benefiting unusually heavily from an economic crisis could reasonably be expected to make an additional contribution to addressing its consequences.
There is a strong argument for applying similar reasoning to banking.
Banks already pay corporation tax, and larger banking companies are subject to an additional surcharge on qualifying profits.
That surcharge currently stands at 3 per cent on profits above £100 million, having been reduced from 8 per cent in April 2023.
The reduction was introduced alongside an increase in the main rate of corporation tax, so it would be misleading to describe the change in isolation as a simple five-percentage-point reduction in banks’ total tax burden. Nevertheless, the TUC argues that the lower surcharge has substantially reduced the revenue that would otherwise have been collected during a period of exceptional bank profitability.
Its latest analysis estimates that restoring the surcharge to 8 per cent would raise approximately £9 billion over four years.
Increasing it to 16 per cent could raise around £24 billion over the same period, while a 35 per cent surcharge could generate an estimated £60 billion.
These are forecasts rather than guaranteed receipts. The amounts collected would depend upon future profits, investment decisions and the response of financial institutions to changes in taxation.
Even allowing for uncertainty, the sums involved are significant.
On 12 October, Labour MP Richard Burgon tabled a parliamentary motion calling for a windfall tax on bank profits. The motion cites analysis suggesting that such a tax could raise up to £15 billion annually, with the proceeds directed towards cost-of-living support and public services.
Bringing down household energy bills
One of the most practical proposals is to introduce a social energy tariff.
This would provide reduced energy costs for eligible households, particularly those on low and middle incomes who are struggling to cope with rising bills.
The TUC estimates that such a scheme could save qualifying households up to £559 annually, depending on its design and the level of support provided.
That would make a substantial difference to a family already struggling with mortgage payments, rent and food costs.
The need is particularly pressing as winter approaches.
Research published by Uswitch in October suggested that around 1.7 million households were planning not to turn on their heating this winter because of concerns about affordability.
Its survey also found that people using prepayment meters were especially worried about being cold.
For vulnerable households, inadequate heating is not simply an inconvenience. It can have consequences for health, wellbeing and the ability to maintain a decent home environment.
An appropriately targeted social tariff could provide direct and understandable relief.
There would need to be proper safeguards. Eligibility must be clear, support should reach those who need it, and the system should avoid penalising households just above an arbitrary income threshold.
But the basic idea deserves serious consideration.
Rather than expecting the lowest-paid workers to absorb every increase in essential household costs, the Government could use additional revenue from exceptional banking profits to provide some protection.
Would higher taxes damage Britain’s banking industry?
Opponents of increased bank taxation argue that Britain must remain internationally competitive.
This argument should not be dismissed.
Financial services are an important part of the British economy. They employ large numbers of people, support businesses, generate exports and contribute substantial tax revenues.
London remains a major international financial centre, while financial services employment also supports communities in Edinburgh, Birmingham, Leeds, Manchester and elsewhere.
Solidarity wants Britain to maintain and develop these strengths.
We have no interest in policies that would encourage financial institutions to relocate operations overseas, reduce investment or threaten the jobs of ordinary bank workers.
There is, however, a distinction between reasonable concern about competitiveness and the suggestion that substantial banking profits should be protected from any additional taxation.
The financial sector depends upon Britain having a functioning economy, a skilled workforce, reliable infrastructure and a stable legal and regulatory framework.
All these things require public investment.
There is also a legitimate question about how additional profits are used.
Money distributed in dividends and executive bonuses is not automatically money that would otherwise have funded new lending, improved services or investment in Britain.
Equally, taxation cannot be increased indefinitely without consequences. Poorly designed measures could affect investment, lending decisions and the attractiveness of operating in the United Kingdom.
The answer is careful policy design, not an automatic rejection of higher taxation.
A properly constructed windfall tax should concentrate on exceptional profits, protect ordinary employees and take account of the industry’s long-term contribution to the British economy.
The banks have obligations to their own workers
There is another aspect to this debate that deserves greater attention.
Banking is not an industry consisting entirely of highly paid traders and executives.
Many employees work in branches, call centres, administration, compliance, customer service and technical support. They are ordinary working people with the same concerns about bills, job security and family finances as workers in other sectors.
These employees have contributed to the success of the banks and deserve a fair share of the rewards.
At the same time that major institutions report substantial profits, the industry continues to change through branch closures, automation, restructuring and reductions in staffing.
Those changes can place considerable pressure upon employees who remain.
Bank workers should not be treated as expendable simply because technology has made some operations cheaper or more efficient.
Solidarity believes that profitable employers have particular responsibilities to maintain fair wages, provide decent working conditions, consult properly over restructuring and invest in their employees.
If banks can afford substantial distributions to shareholders and senior executives, they should also be able to demonstrate that their ordinary employees are being treated fairly.
Tax policy and employment policy are separate matters, but both concern the same underlying question: how the benefits of economic success are shared.
Where Solidarity stands
Solidarity is an independent trade union. We are not affiliated to any political party, and our assessment of economic policy is guided by what we believe will benefit working people.
We do not believe that profitability is something to be condemned. Successful British businesses create employment, generate wealth and contribute to national prosperity.
But a successful economy must work for the people who sustain it.
It cannot be considered healthy when millions of workers struggle with insecure employment, when households cannot afford adequate heating and when essential public services are under financial pressure.
Nor should the Government assume that ordinary workers must always bear the greatest burden when additional revenue is required.
Higher taxes on banking profits will not, by themselves, solve Britain’s economic difficulties.
We also need stronger employment rights, better vocational training, investment in productive industries, secure jobs and a serious effort to improve the country’s long-term economic performance.
Britain needs businesses that invest, innovate and create skilled employment. It needs an effective financial sector that supports those businesses rather than simply extracting the maximum short-term return.
A carefully designed windfall tax could form part of that wider approach.
It would recognise that extraordinary gains arising from unusual economic circumstances carry responsibilities.
It would also demonstrate that the burden of dealing with economic pressures need not fall disproportionately upon those least able to afford it.
A question of fairness
The debate over taxing bank profits is sometimes presented as a choice between supporting business and supporting workers.
That is a false choice.
Banks need a prosperous society in which people can afford to save, borrow, invest and buy homes. Businesses need customers with money to spend. Workers need secure employment and sufficient income to participate fully in the economy.
These interests are connected.
An economy in which wages are inadequate, household debt is rising and millions of people are financially insecure is not a sound foundation for sustained prosperity.
The coming Budget offers an opportunity to recognise that connection.
The Government should examine the case for an additional levy on exceptional banking profits, with the proceeds used to provide meaningful assistance with essential household costs and strengthen the services upon which working people depend.
It should do so while protecting Britain’s competitiveness and the jobs of employees throughout the financial sector.
The public deserves more than reassurances that economic growth will eventually improve living standards.
Working people need to see tangible benefits.
When the banks are making billions while some of their customers cannot afford to heat their homes, asking those banks to contribute more is not an attack upon enterprise.
It is a reasonable demand for a fairer distribution of the rewards of prosperity.
By Maria Camara
