Chancellor Dines on Bank Profits: Is the Budget a Buffet or Just a Busy Lunch Hour?

Senior bankers have told the BBC they expect to be “on the menu” when the chancellor serves up Healey’s Budget later this month. The sector is taking this with the calm of a lamb who has just noticed the oven door is open. Industry sources describe a banking system that only wants to lend money at a sensible margin, until it discovered Whitehall had already pulled up a chair.

Here is the mechanism, for anyone not invited to the Feast of Finance. A windfall tax is a one-off levy on profits the government judges to be unusually large. Banks tend to earn more when interest rates are high, because they charge borrowers more than they pay savers. The chancellor, eyeing those figures the way a hungry man eyes a carvery, sees money already sitting on the plate.

The banks, naturally, see themselves as guests who brought the wine. Their profits, they insist, were earned honestly, through the ordinary business of lending to people with mortgages. Nobody at the bank requested higher interest rates. They simply arrived, like an unexpected bill at the end of a long meal.

So what does this mean for you? Probably nothing you will feel directly this autumn. The exception is if you bank with one of the lenders on the menu, in which case expect a few earnest emails about their commitment to customers, and possibly a slightly stingier rate on your savings. Keep your appetite modest. The chancellor has a long table, and everyone sitting at it is hungry.