Lib Dems call for tax on big banks to create new energy loans scheme

The big banks should be taxed to raise cash that will help people to make their homes more energy efficient, the Lib Dems have said.

Daisy Cooper, the party’s Treasury spokeswoman and deputy leader, called for a time-limited windfall tax on unexpected profits the banks made from the quantitative easing programme which followed the global economic crisis of the late 2000s.

The average of £7 billion a year raised from this levy by the end of the decade would be partly ploughed back into a scheme to help homeowners make their properties more efficient and bring down their energy bills “permanently”, Ms Cooper said.

Speaking on the main state at the Bournemouth conference, Ms Cooper told the audience: “You will remember that we were the first party to call for a windfall tax on the big oil and gas companies when they made profits they weren’t expecting due to (Vladimir) Putin’s illegal full invasion of Ukraine.

“Well now conference, the big banks are making similar windfall profits too, due to an unintended consequence of the quantitative easing program that was more than a decade ago.

“We taxpayers are now shelling out billions of pounds to the shareholders of the big banks simply because interest rates have remained so high for so long.

“Banks never expected to receive this windfall.

“They never relied on this windfall, and they never took on any risk to reap this windfall.

“So today conference, I can announce that we Liberal Democrats will raise the capital to underwrite our new energy security bank through a new time limited windfall tax on the big banks.”

“The creation of a new energy security bank” would be propped up by the income from the windfall, Ms Cooper said.

The energy bank “could unleash up to £10 billion of affordable loans to homeowners to invest in their energy security and to bring energy bills down permanently”, she added.

Though the windfall tax on the banks would be time-limited, Ms Cooper told reporters the scheme would eventually “pay for itself” as those who take out loans make return payments.

Some £2 billion from the windfall tax would be used as an initial investment to set up the bank, which would offer loans of up to £20,000 for homeowners and £50,000 for small businesses and community energy groups, enabling them to invest in things like solar panels and insulation.

The Lib Dems estimate this could save some £500 off energy bills each year.

The party said the new bank could also be used to fund the rollout for solar panel arrays which would cover car parks outside of supermarkets.

The party Treasury spokesperson told the conference she would call on Chancellor Rachel Reeves to extend a VAT exemption for energy-saving materials in her autumn budget.

Ms Cooper’s announcement came after Sir Ed Davey branded Elon Musk a “criminal”, as his party called for Parliament to haul in the tech billionaire to answer for his “fight back” or “die” comments at a central London rally.

The Liberal Democrat leader has also called for an Ofcom investigation into X, the social media site owned by Mr Musk, and the businessman personally, for failing to uphold their duties under the Online Safety Act.

Sir Ed is expected to continue his feud with the Tesla and X owner in his speech to the Lib Dems’ conference on Tuesday.

Asked why he and his MPs had not chosen to boycott X over the party’s disagreements with its owners motives, Sir Ed told the PA news agency: “Because actually, we want to make sure that space hears other voices.

“We want to take on Elon Musk and his ilk directly.”