The leader of Britain's trade unions has urged Prime Minister Andy Burnham to establish a "social tariff" scheme funded by raising taxes on banks, arguing the measure would deliver energy bill relief to millions of low and middle-income households.
A social tariff operates as an income-based discount on energy bills. The Trades Union Congress estimates that approximately two-thirds of households could benefit from such a scheme. The TUC proposes reversing the bank surcharge reduction implemented by the previous Conservative administration in 2023, when the rate fell from 8% to 3%. According to the union body, restoring the surcharge to its previous level would generate roughly £9 billion over four years.
TUC General Secretary Paul Nowak outlined the proposal during a wide-ranging interview ahead of the union's annual congress in Brighton scheduled for 12–16 September 2026. He framed the policy as essential to addressing inflation and household anxiety about winter heating costs.
"I think it will appeal to the prime minister. These are policies that make a difference in the real world and people can see a value in them,"Nowak stated.
The TUC chief presented energy support as his top priority for the upcoming Budget, alongside a series of other demands directed at Burnham and Chancellor John Healey. He emphasised that controlling energy costs was critical to reducing inflation, which he identified as a driver of household financial stress.
Burnham has already introduced temporary VAT relief on electricity bills beginning in October, a measure he describes as providing "breathing space" on living costs. This step will save a typical household approximately £45 annually.
How detailed is the TUC's social tariff model?
The union movement has since developed a more comprehensive social tariff framework. According to TUC briefings on the emergency model, the lowest-income 17% of households could save up to £559 annually, while a further 33% of households below the median income could save up to £373 per year. An additional 15% of households between the median and mean income would save up to £186 annually, bringing total coverage to 65% of households.
The TUC has framed this as a permanent social tariff for low and middle-income households rather than a temporary crisis response. The union argues that rising bank profits, boosted by higher interest rates, create fiscal space for a larger surcharge. Later TUC analysis suggested that a 16% bank surcharge could raise approximately £24 billion over four years, while a 35% surcharge could raise up to £60 billion.
What is the political support for a bank tax?
Nowak indicated that Labour MPs would likely support the social tariff proposal. The Liberal Democrats and the Greens in England and Wales have also called for a windfall tax on banks. However, UK Finance, the industry body representing major banks and lenders, has warned that heavier levies would undermine the government's growth agenda and damage international competitiveness. The organisation contends that UK banks face a heavier tax burden than their American counterparts.
Nowak dismissed concerns that banks would relocate in response to a restored surcharge.
"I can't believe banks would leave the UK just because we are restoring the surcharge to where it was in 2023. Bank share prices have risen faster here than in New York,"he said. Industry analysis noted that TUC research suggested bank bonuses had risen 16% year on year to £25 billion in the year to March 2026, strengthening the union's argument that the sector has capacity to absorb higher taxation.
What other tax measures is the TUC demanding?
The TUC's revenue-raising agenda extends beyond banking. Nowak argued that the UK maintains
"a tax system that's good at taxing income but not good at capturing wealth"and called for a windfall tax on social media companies and equalisation of Capital Gains Tax rates with income tax rates.
Economist and former minister Lord O'Neill, who has advised Burnham, recently suggested that wealth taxes were counterproductive to growth objectives. Nowak rejected this framing.
"With respect, I think he is wrong. I'm interested in a growing economy but a growing economy that works for everybody. It is right to ask those with broader shoulders to pay a fairer share."
What does the TUC want on borrowing and investment?
Nowak contended that achieving the government's re-industrialisation and housing targets would require easing restrictions on borrowing for investment. While Chancellor Rachel Reeves adjusted the fiscal rules governing debt and borrowing, Nowak argued the government had not fully exploited the flexibility these changes provided.
"John Healey should leave no stone unturned in allowing us to invest in our economy, in our public services and in our national security. He should think about the flexibility he has got within those rules to make investments in the long term."
What is the TUC's position on migration policy?
Nowak raised concerns about the Home Secretary's announced changes to migrant settlement rules. Under the new policy, most migrants in the UK would wait 10 years rather than five before achieving permanent settlement, with some care workers facing a 15-year wait. Before returning to government, Deputy Prime Minister Angela Rayner had characterised such changes as
"unBritish"and accused the government of moving the goalposts for those already working in Britain.
A consultation on the proposed measures concluded six months ago, but the government has not yet released its response. Nowak, whose family background includes grandparents from Poland and Hong Kong, called for reconsideration of the rules across the workforce, not only for care workers.
"There are 111,000 staff vacancies in social care at the moment. It's important the rules aren't changed arbitrarily. I would hope and expect this and it needs to be the beginning of a grown-up conversation on immigration."
TUC delegates will debate immigration during the congress in Brighton and are expected to echo calls for the government to moderate its changes for existing migrants.
What is Nowak's assessment of Burnham's leadership?
Nowak acknowledged that Burnham had made a positive start as prime minister following Labour's change of leadership after poor local election results in May. The TUC chief noted a measurable improvement in polling, describing it as a
"Burnham bounce."However, he cautioned that the prime minister must deliver tangible results to maintain public support and counter the electoral threat posed by populist movements.
"The onus is on Andy Burnham to show he can deliver what he promised. If he fails to do it, there are people with glib answers who will turn this country into a more divisive place."
What happens next?
The TUC Congress in Brighton, scheduled for 12–16 September 2026, will provide a near-term forum for the union movement to debate and refine the social tariff proposal. The government's upcoming Budget represents the key fiscal decision point where these recommendations could be implemented. Coverage of energy policy developments indicates the TUC continues pressing for a bank-profit tax to fund a social tariff ahead of expected October energy bill increases.
