Jeremy Hunt has issued a stark warning to Chancellor John Healey over any plans to raise taxes on UK banks ahead of the forthcoming Budget.
The former Chancellor, who has sat on the backbenches since Labour came to power in 2024, urged Healey to resist pressure from what he called “siren voices” pushing for a banking sector tax raid.
Writing in the Times, Hunt warned: “The problem is that capital is mobile… a more likely outcome would be less investment, lower growth and fewer jobs.”
He added: “Make a mistake on bank taxes and things could easily unravel, generating less not more revenue for the national coffers.”
Hunt, who served as Chancellor under both Liz Truss and Rishi Sunak, cut the UK banking surcharge from eight per cent to three per cent in April 2023, with the charge sitting on top of corporation tax to set an effective bank rate of 28 per cent.
Lobbyists have called for the surcharge to be raised ahead of the Budget, and Housing Secretary Angela Rayner previously urged ousted Chancellor Rachel Reeves to hike it to five per cent as an alternative to welfare cuts.
Some campaigners have gone further still, with activists at Positive Money suggesting a windfall tax on top lenders including Natwest, Lloyds, Barclays and HSBC could raise as much as £19bn.
Hunt pointed to PwC figures showing that total taxes on UK banks amount to 46 per cent of profits, compared to 42 per cent in Amsterdam, 39 per cent in Frankfurt, and 29 per cent in Dublin, making the UK one of the most expensive banking jurisdictions globally.
The Godalming and Ash MP argued that banks had largely repaid their debts to the public following taxpayer bailouts during the financial crisis, yet continue to pay outsized rates rooted in decisions made decades ago.
His warning joins a growing chorus of alarm from City figures, with JP Morgan boss Jamie Dimon meeting Healey last month and emphasising the importance of “getting public policy right” during a phone call in August.
Dame Jane Fraser, credited with turning around Wall Street’s Citibank, said she was “concerned” about any additional charge on banks operating in Britain, warning: “Money votes with its feet… It’s already one of the most expensive centres in the world.”
UK Finance, the banking industry body, has also written to Healey ahead of the Budget, with chief executive David Postings warning that “banking reaches every part of the economy and every region of the country, providing credit to households and SMEs, supporting investment, and acting as the UK’s gateway to global markets.”
Postings added: “The debate needs to recognise both the significant tax contribution already made and the wider economic importance of sustainable profitability.”
The bosses of the UK’s top lenders are set to meet with Healey at a pre-Budget summit, with the sector watching closely for any signals that the government intends to increase the financial burden on banks.