Business · 2026-10-28 · Afternoon briefing

UK raids bank profits to fund £2.6bn energy relief plan

In his first budget, Britain's Chancellor John Healey announced a £2.6bn package to address the cost of living, funded partly by a new levy on banks. Around 20 million households will receive a £100 payment to help with winter energy bills. To help pay for this, the government will increase an existing surcharge on bank profits by three percentage points to 6% for a 15-month period starting in January.

The measures, which also include scrapping standing charges on gas bills, come as annual household energy bills are forecast to rise by around £450 in January. Mr Healey, serving under Prime Minister Andy Burnham, justified the spending by citing the war in the Middle East as a driver of rising costs. The budget represents a policy shift, reducing the scale of tax rises planned by his predecessor, Rachel Reeves.

While the tax on lenders was increased, the final 6% figure was lower than the 8% that had been rumoured. The pared-back nature of the tax raid initially buoyed shares in major British banks, including Lloyds and Barclays.

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• Chancellor 'considering Budget raid on bank profits' in bid to stave off sky-high borrowing costs
• Demands for Budget banks raid mount as HSBC reports 32% rise in profits

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