Tax banks to give some households energy bill cut, unions tell Burnham

The leader of Britain's trade unionists has told Andy Burnham the government should introduce a "social tariff", paid for by a bank surcharge, to help low and middle earners with their energy bills.

A social tariff is a discount on bills based on household income, and the TUC says it believes two-thirds of households could benefit.

The TUC says the bank surcharge, which was reduced in 2023 from 8% to 3% by the then Conservative government, should be reversed - and estimates it would raise £9bn over four years.

TUC leader Paul Nowak said: "I think it will appeal to the prime minister. These are policies that make a difference in the real world and people can see a value in them."

In a wide-ranging BBC interview ahead of its annual congress in Brighton next week, the TUC general secretary said next month's Budget needed to show "the government is back in the service of the British people".

While he said Burnham had got off to a good start as prime minister, he had a series of "asks" of the prime minister and the new Chancellor, John Healey.

Top of his list is more help with energy bills, saying: "We need to drive down inflation – those energy bills are fuelling inflation.

"And millions of families up and down the country are worried about turning on their heating this winter."

Burnham has already offered "breathing space" - as he calls it – on the cost of living by temporarily scrapping VAT on electricity bills from October.

Nowak said the proposal for a social tariff would be popular with Labour MPs; while the Liberal Democrats and the Greens in England and Wales have called for a windfall tax on banks too.

However, UK Finance, which represents well-known banks and lenders, has suggested that heavier levies would undermine the government's ambition to deliver "growth in every postcode" and would damage international competitiveness.

The organisation argues that UK banks face a heavier tax burden than those in the US, for example.

So could the TUC's revenue-raising measure be counter-productive and threaten jobs in finance?

Nowak is sceptical. "I can't believe banks would leave the UK just because we are restoring the surcharge to where it was in 2023. Bank share prices have risen faster here than in New York," he said.