Healey Meets Banks Amid Tax Hike Fears
Chancellor John Healey engaged in crucial discussions with banking leaders as concerns mount over potential tax increases in the upcoming Budget to address the nation's fiscal deficit.
Chancellor John Healey held discussions with banking executives on October 6, 2026, amid warnings against raising taxes on the financial sector in the upcoming Budget. The meeting comes as Healey prepares for his first major fiscal event on October 28, where he must secure nearly £5 billion for the Government's Defence Investment Plan.
The Chancellor's fiscal flexibility has reportedly diminished, with headroom halving to approximately £12 billion. This reduction is attributed to the economic impact of the Iran war and increased public borrowing costs.
Trade union leaders have advocated for a tax increase on banks to fund potential energy bill relief for the winter. However, banking chiefs have reportedly intensified their opposition to any new levies ahead of their meeting with Healey.
While Treasury sources did not confirm all attendees, the heads of major institutions including Lloyds Banking Group, Barclays, HSBC, and NatWest Group were expected to participate in the talks. Earlier in the week, reports indicated that leading business groups were drafting a letter to the Chancellor expressing concern about increased taxation on the banking sector.
A draft of the letter, seen by Sky News, stated that the industry already faces a higher tax burden compared to international competitors. It warned that further sector-specific tax measures could hinder the channeling of finance and liquidity to businesses aiming to invest and grow in the UK. The letter also cautioned that higher taxes might not necessarily increase receipts if capital, personnel, and businesses relocate.
Jamie Dimon, CEO of JP Morgan, has previously cautioned that increasing the surcharge on bank profits could lead to investment shifting to other countries. Some Cabinet ministers are also reportedly concerned that a tax raid on the sector could undermine Prime Minister Andy Burnham's commitment to economic growth.
According to HMRC figures, the banking sector's tax contributions rose by 8.5% to £39.1 billion in the 2025-26 tax year. Receipts from the surcharge on bank profits saw a significant increase, largely due to a rise in industry profits. The current surcharge rate is 3%, but the Trades Union Congress has proposed increasing it to at least 8%, estimating this could generate £9 billion for the Treasury over four years.
A Treasury spokesperson stated that decisions regarding taxation are the prerogative of the Chancellor and will be announced at fiscal events, declining to comment on rumors or speculation.