The Conservative Party has warned that Labour’s proposed tax increases on banks could lead to higher mortgage rates for homeowners and businesses. The caution comes ahead of Chancellor John Healey’s upcoming Budget, where he plans to raise billions of pounds by imposing additional taxes on major banks, citing their substantial profits as justification.

Shadow Chancellor Andrew Griffith voiced concerns on Times Radio, stating that while raising taxes on banks may seem appealing, it would ultimately increase costs for consumers. He explained that banks would likely pass on the tax burden through higher mortgage rates, which are already elevated, potentially exacerbating financial pressure on borrowers.

The criticism is echoed by Richard Walker, former Labour cost-of-living tsar and head of the Iceland supermarket chain, who urged the government to reconsider further tax hikes on businesses, including banks. Walker described the current business environment as complex, costly, and challenging, emphasizing that government policies should focus on facilitating business growth rather than imposing additional financial strain. He cautioned that businesses are not inexhaustible sources of revenue for the government.

Further adding to government challenges, Alex Depledge, Treasury entrepreneurship lead, announced her resignation, citing dissatisfaction with the government’s approach to supporting innovative enterprises. Depledge, a tech entrepreneur, described her experience at the Treasury as difficult, comparing her initial reception to “organ rejection,” where her role was marginalized in favour of traditional industries like automotive and steel sectors. Her departure draws attention to criticisms that government policies may overlook emerging sectors critical to future economic growth.

Mr. Healey has stated that his Budget will prioritize support for “bloody-minded entrepreneurs” and aim to stimulate both business development and the wider economy. However, Depledge’s exit and opposition warnings underline the challenges facing the government as it seeks to balance fiscal objectives with the economic implications of increased taxation.