Energy & Climate
A windfall tax
TUC calls for windfall tax on banks to cut bills as new energy price cap announced.
26 August 2026
The TUC has renewed its call for a social tariff to bring down energy bills for the majority of households in the UK – funded by a windfall tax on banks’ enormous profits.
The call comes as new Ofgem figures show that the number of accounts in debt with no plan to repay has gone up for both electricity and gas.
1.2 million customers have electricity bill debt with no plan to repay – a 52% increase since 2021.
Around a million (955,000) have gas bill debt – a 51% increase since 2021.
The TUC acknowledged Andy Burnham has been ‘quick out of the blocks’ with policies aimed at giving people some breathing space – including scrapping VAT on energy bills.
But the new data show the government has to go ‘further and faster’, as millions of working people are ‘left to scramble for things to cut back on’, the TUC says.
‘Energy costs are crushing households up and down the country – with many getting into debt just to keep the lights on.
‘The government are rightly prioritising help for households with the cost of living. But with energy prices set to rise in October as a result of Trump’s reckless warmongering – and no end in sight to war in the Middle East – ministers will need to go further and faster to protect households.
‘That’s why the government should cut household energy bills with a social tariff – paid for by taxing banks’ enormous profits.
‘It’s the right thing to do. Banks are enjoying bonanza profits while many up and down the country are struggling to get by – they can well afford to pay more tax.’
PAUL NOWAK
TUC General Secretary
Recent TUC polling conducted by YouGov in the three months up to late June shows that more than a third (35%) of adults had cut back on hot water usage for baths and showers at least several times a month to reduce their spending – and 15% say they do this on most days. This is despite the fieldwork being complete in warmer months of the year.
More than a third (37%) regularly did not use electrical appliances as often as needed to reduce their spending, with 15% doing this every day or most days.
While working people are struggling, banks are enjoying bumper profits.
The big four banks are making more than £1bn in profit a week, based on the first half of the year.
Across the banking sector the bonus pool paid out last year reached a record £25bn.
While Trump’s illegal war in Iran has seen households hammered by further jumps in energy bills, costs have been stubbornly high since Russia’s illegal invasion of Ukraine.
TUC analysis shows that average annual payments for energy bills have gone up by £437 compared with May 2021 – costing households a total of £2,500 in the time since (up to May 2026).
The situation is set to get even worse, as energy costs for domestic use are set to go up by 4% for a typical household in England.
A social tariff funded by taxes on banks would reverse this trend by cutting energy bills for the majority of households by up to £517 per year.
Currently the bank surcharge is an additional 3% corporation tax on the profits of banking companies above £100 million, which was reduced from 8% in April 2023 by the Conservatives – just as bumper profits kicked in alongside higher interest rates.
The TUC is calling for the government to increase the surcharge to raise up to £60 billion over the next four years – and help cover the cost of the social tariff.
A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £24bn over four years.
A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60bn over four years.
Even the bare minimum of reversing the Tory cuts and setting it at 8% would raise £9bn over four years.
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