RACHEL REEVES’S decision to protect fat cat bankers has lost the public £15 billion — money that could have saved freezing pensioners and hundreds of thousands of children from going hungry, a damning new report found today.

Campaigners for a windfall tax on banking profits slammed the Chancellor after it emerged that Britain’s four biggest banks made a record £45.9bn in profits for 2024.

Positive Money found that the policy, called for by unions and left MPs, would have brought in an additional £14.7bn for the Exchequer this year after Lloyds Bank became the last of the so-called Big Four to announce its £6bn pre-tax profits for last year. 

The group calculated that increasing the existing surcharge on bank profits from 3 to 35 per cent, in line with the government’s windfall tax on energy companies, could have raised this sum from Lloyds, HSBC, Barclays and NatWest alone.

This would be enough to cover the cost of scrapping the two-child benefit cap — fives times over.

It is also 10 times the cost of returning the winter fuel allowance to millions of pensioners and enough to pay the average salary of more than 430,000 nurses.

Positive Money’s head of policy and advocacy Simon Youel said:  “Bank profits are currently a burden on the public finances as the Treasury continues to foot the bill for the tens of billions in interest that the Bank of England is paying on banks’ risk-free reserves. 

“These windfall profits vastly outstrip pre-pandemic earnings, and are not the result of banks offering greater value to society — rather, they’ve actively cut branches and jobs across the country.

“Spending cuts shouldn’t even be on the table when such an obvious source for improving the public finances stares the government in the face.

“If the Treasury won’t stop covering the Bank of England’s losses, it should at the very least tax back some of the windfalls banks are receiving as a consequence.”

Ms Reeves has refused to undo Tory former chancellor Jeremy Hunt’s decision to cut the surcharge from 8 to 3 per cent in his 2022 Autumn Statement.

The Big Four’s announcements this week show their total pre-tax profit has risen 1 per cent on 2023 — far outstripping the £25.6bn they made on average between 2018 and 2021, before the Bank of England started raising interest rates.

Communist Party general secretary Rob Griffiths said: “This sham of a Labour government allows bank profits and bankers’ bonuses to let rip while punishing pensioners and poor children in order to save what amounts to petty cash in comparison.

“Even a modest 20 per cent windfall tax on banking super-profits would more than fill any so-called black hole caused by fully restoring child benefit to larger families and the winter fuel allowance to all pensioners.”

A spokeswoman for Momentum said: “Bankers are rolling in cash whilst four million children are living in poverty across Britain.

“We need a windfall tax on banks’ soaring profits.

“The Tories were never going to tax their wealthy donors, but a Labour government that stands for people — not profit — would. That is what real Labour values look like.”

As well as higher interest payments from households and businesses, Positive Money warns that much of the banks’ windfall also comes from the interest the Bank of England is paying on their risk-free reserves, for which the government is footing the bill.

Recent figures from the Bank of England suggest that £150bn could be paid by the government to the bank by 2030 — about £30bn a year — to cover losses from quantitative easing, much of which will be paid to banks in the form of interest.

The Treasury was contacted for comment.