John Healey’s next tax grab could be pure madness – even Reeves wasn’t this unhinged

Burnham is back from his hols, so the spending pledges will soon be rolling out as rapidly as his Instagram posts. Before Burnham went away, he pledged a VAT cut on electricity bills, a £2 cap on bus fares, a pub business rates cut and plans to end rough sleeping. Combined they’ll cost £1.5billion. He needs another £4.7billion for defence, while council house building and social care reform could cost tens of billions. In total, Burnham has already committed to spending between £46billion and £63billion by the end of the decade, according to Capital Economics. Healey is charged with finding the money.

In total, Labour will spend an extra £650billion this parliament, lifting the national debt from a record £3trillion to £3.5trillion. That’s terrifying, but incredibly, Healey may fiddle the fiscal rules to borrow even more. There’s also talk of a new land tax, a 10% inheritance tax surcharge, huge capital gains tax hikes and plenty more besides. Taxpayers have had enough. But there is one tax that could prove popular and Healey knows this. It’s on his list.

So what’s this popular tax? Don’t worry, you won’t pay it directly. The big banks will. Greedy, bonus-chasing bankers make an easy target. And a lucrative one, because they’re in the money right now. Barclays just posted a £3.3billion quarterly profit. HSBC made £10.1billion. Healey would love a bigger slice of that. Pressure is growing on him to act in the autumn Budget.

The Trades Union Congress is licking its lips. It’s called for Healey to hit the banks with a 16% tax surcharge, claiming that would raise £24billion over four years. It’s even mooted a 35% windfall tax, which could raise £60billion. Millions of Brits would love that.

So, at the risk of being called a banking shill, I’ll stick my neck out and say it would be a stupid thing to do. So stupid, even Rachel Reeves saw the danger and resisted the clamour to do it. If Healey acts, I think his bank job will backfire. Here’s why.

Big banks already pay a 3% tax surcharge, lifting their corporation tax from 25% to 28%. The TUC’s plans would push that to either 41% or 60%.

Incredibly, that’s not the highest marginal tax rate Britain charges businesses. Oil and gas giants BP and Shell pay 78% tax on North Sea profits. We’ve just seen the result. BP is pulling back from the North Sea. BP and Shell could abandon London and shift their listings to New York. They’re two of our biggest companies, we cannot afford to lose them.

Hiking bank taxes could prove even more destructive. UK banks already face a marginal tax rate of 46.5%, once the various levies are added up, PwC says. That’s one of the highest in the world. Last year, they paid £43.3billion of tax, UK Finance says. If Healey does target banks, he could throttle our golden goose.

Savers and borrowers would suffer, as banks fight to protect their margins. Banking stocks would fall. Don’t care? You should. Millions of Britons are exposed through their pensions and Stocks and Shares ISAs. Their retirement pots will grow more slowly and pay less dividend income as a result.

Worst of all, Healey would be sending a message that Britain will fleece any sector that has the temerity to turn a profit. The City of London employs 2.5million Brits, two thirds outside the capital. Many could lose their jobs, just as many lost their jobs thanks to Reeves’s insane £25billion ‘jobs tax’. When will Labour stop?

The big banks are hard to defend. They constantly close branches and pay savers rotten rates unless they regularly switch account. Lloyds chief executive Charlie Nunn was paid £7.4m last year, including £4m in bonuses. HSBC boss Georges Elhedery got £6.6m. They claim they have to fight for global talent. You can decide whether to swallow that.

But Labour’s ceaseless tax war will crush growth, destroy jobs and make us all poorer. Even Reeves saw that. If Healey doesn’t, we’re in trouble.