Andy Burnham is facing growing pressure to introduce a “social tariff” on energy bills as unions call for higher taxes on banks, wealth and investment income to help cut costs for millions of households.
The Trades Union Congress is urging the government to use additional tax revenues to fund discounted energy bills for low and middle-income families, arguing that ministers must show “some ambition” at next month’s Budget despite higher borrowing costs.
Paul Nowak, general secretary of the TUC, told the Financial Times that the government should impose a fresh surcharge on bank profits alongside higher levies on capital gains and dividends.
“We feel our tax system is much better at taxing work than it is wealth,” Nowak said ahead of this weekend’s TUC Congress.
At the centre of the union body’s proposals is a “social tariff” under which energy discounts would be linked to household income, with the largest reductions going to those facing the greatest financial pressure.
Under the emergency scheme, the poorest 17 per cent of households, defined as those earning below the relative poverty line, would receive a 30 per cent reduction in their total energy bills, worth up to £517 a year.
A further 33 per cent of households earning above the poverty line but below median income would receive a 20 per cent discount, saving as much as £345 annually. Another 15 per cent, with incomes between the median and mean, would receive a 10 per cent reduction worth up to £172.
In total, the TUC estimates that about two-thirds of households would benefit. The emergency scheme would cost about £6bn, while a permanent tariff would require just under £4bn a year.
The TUC wants the money raised through the bank surcharge, which applies to profits above £100mn. The levy currently stands at 3 per cent after being cut from 8 per cent by the Conservative government in 2023.
Restoring the surcharge to 8 per cent would raise an estimated £8bn over four years, according to the TUC. Increasing it to 16 per cent could generate £20bn, while a 35 per cent rate, matching the level previously imposed on energy companies, could raise £50bn.
Energy bills have already risen by £221 a year since July, with the conflict in Iran blamed for much of the increase, while a further £79 rise is expected in October.
The proposal faces strong opposition from the banking industry. Jamie Dimon, chief executive of JPMorgan, is understood to have warned Chancellor John Healey that higher taxes could threaten investment and jobs in the UK.
Nowak rejected claims that rising taxes were driving wealthy individuals out of Britain, despite the departure of Chris Rokos, the country’s third-biggest taxpayer, to Greece this week.
“There’s no evidence at all that this is leading to a flight of the millionaires,” he said. “There is a real danger that what we end up doing is setting tax policy by anecdotes.”
“We want that, but we also want people to pay their fair share,” he added.
Nowak is also calling for capital gains, dividend and rental income to be taxed at rates aligned with earned income.
“The previous chancellor started down that road and we want John Healey to finish the job,” he said.
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