Burnham's first budget should raise taxes on banks substantially, resisting industry threats
Source: https://www.theguardian.com/profile/pollytoynbee. "My advice for Burnham’s first budget? Hit the banks – and hit them hard | Polly Toynbee | The Guardian." October 27, 2026. www.theguardian.com
The Gist
Polly Toynbee argues the new government should raise taxes on banks, because the banks never really paid for the damage of the 2008 crash and are now making big profits. She says their threats to leave are mostly bluff, as shown when they backed down in 2009, and that standing up to them would be popular and send a strong message.
Conclusion
Andy Burnham's government should raise taxes on banks significantly in its first budget (at least restoring the corporation tax surcharge, and ideally more), refusing to be intimidated by bankers' threats.
Premises
- Banks have barely repaid the public for the 2008 crash: the official bailout cost was £23bn, and the wider economic damage was far larger, estimated at 7.5% of GDP or more.
- Banks are currently very profitable (about £13bn in H1 for the big four, up 16% on last year) while their taxes were cut by the Tories and left in place by Reeves.
- Bank lobby threats that higher taxes will drive banks abroad are unreliable: the claim that London has the highest bank taxes is false, since only Ireland's rate is lower among western European countries, and Paris's is far higher.
- Precedent shows the threats are bluffs: when Darling imposed the 2009 bonus levy despite Dimon's threats, JP Morgan still built its London office and kept buying UK debt, and the levy raised an estimated £2.3bn in four months.
- Taxing banks is popular with the public (TUC polling) and can be linked to popular spending, which makes it politically easier.
- Standing up to bank bullying, even modestly, signals a self-confident government and a positive direction.
Assumptions
- Banks' costs to society from the 2008 crash create a moral obligation to compensate the public through higher taxation.
- Past threats by bank executives (Dimon) are a reliable guide to how they would behave now.
- Higher bank taxes will not meaningfully reduce investment, lending, or jobs in the UK.
- Public popularity and symbolism are legitimate considerations in setting tax policy.
- The tax burden will fall on banks and not be passed on to customers or staff, or such pass-through is acceptable.
- Current UK conditions (growth, employment, investment) are strong enough that a bank tax rise will not harm the economy.