The Trades Union Congress (TUC) has issued a direct challenge to Prime Minister Andy Burnham ahead of the October 28 Budget, calling for a windfall tax on banks to fund a multi-tiered “social tariff” for household energy bills. The proposal, which will be formally put to a vote at the TUC Congress in Brighton starting September 13, 2026, seeks to address a widening gap between soaring financial sector profits and rising domestic energy costs.
The intervention comes as Ofgem confirmed the energy price cap will rise by 4% on October 1, 2026, bringing the average annual bill to £1,723. While the Prime Minister previously announced a VAT cut on energy bills worth approximately £45 per household, TUC General Secretary Paul Nowak stated that these savings would be effectively “wiped out” by the upcoming price cap increase.
The Case for a Bank Surcharge Reversal
The TUC is urging the government to reverse the recent cut to the bank surcharge, moving it from the current 3% back to 8%. Union analysts estimate this adjustment would raise approximately £9 billion over the next four years. This demand is framed against a backdrop of significant financial sector growth; the UK’s “big four” banks—Barclays, HSBC, Lloyds, and NatWest—reported combined profits of £29 billion in the first half of 2026 alone. Furthermore, City bonuses reached a record £25 billion in the financial year ending March 2026.
Union leaders argue that these profits provide ample room for a greater tax contribution to stabilize the domestic economy. TUC leadership has also linked the current urgency for energy reform to global volatility, with Paul Nowak attributing rising energy costs to the geopolitical instability caused by the war in Iran.
Tiered Savings for Households
Under the TUC’s “social tariff” model, the revenue generated from the increased bank tax would be used to provide direct discounts on energy bills. The proposal outlines a tiered system designed to offer the most significant relief to those with the lowest incomes:
- Lowest-income households: Savings of up to £517 per year.
- Middle-income households: Savings of approximately £345 per year.
- Upper-middle earners: Savings of roughly £172 per year.
The TUC argues that this structured approach would provide a more robust safety net than universal VAT cuts, which do not account for the varying degrees of fuel poverty across the country.
Budget Implications and Political Pressure
The proposal places Prime Minister Burnham in a difficult position as he prepares for his first major “cost-of-living” budget on October 28. While the government has emphasized a strategy of fiscal stability, the unions are framing the bank tax as a “common sense” redistribution of windfall gains.
Beyond the immediate energy relief, the formal motion heading to the Brighton Congress focuses on the 8% target as a primary mechanism to fund the social tariff.
For households seeking immediate assistance before the winter hike, the GOV.UK portal provides guidance on existing support schemes, though the TUC maintains that these measures remain insufficient given the scale of the October price increase.
