S01:E05
When the Bank of England raises interest rates, a bank does not have to do anything to make more money. What it charges on mortgages, loans and overdrafts goes up on its own. And separately from that, the Bank of England pays interest to private banks on the reserves they are required to hold with it – a cost that is ultimately carried by the Treasury.
That is the argument Hannah Dewhirst makes in this episode: the record profits Britain’s four biggest banks reported this summer were not earned by doing anything differently, and the public is on the other side of the ledger. Positive Money wants a 38% tax on the profits the banks make from the UK public – domestic profits only, not international or investment banking, which takes the competitiveness objection off the table before it is made.
Underneath the campaign sits the thing she says matters more: banks create new money every time they make a loan, which means they, not the government, decide where money in the economy goes. When Positive Money put that to MPs in a poll published in 2017, 85% of them did not know it.
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In this episode
• Why Britain’s four biggest banks made record profits from rising interest rates without changing anything they do
• The interest the Bank of England pays on the reserves banks are required to hold, and why the Treasury carries that cost
• Margaret Thatcher’s 1981 windfall tax on the banks, and why Positive Money reaches for it as the precedent
• What a 38% tax on domestically earned bank profits would cover, and what it deliberately leaves alone
• The point underneath the campaign: banks create new money every time they lend, and so decide where money in the economy goes
• How mortgage deregulation turned homes into financial assets, and what happened to social housing alongside it
• Who gets the meetings at the Treasury, and how working in coalition changes the odds
• Cheshire East, where 21 residents were brought together to write cost-of-living policy and the council adopted most of it
• The public digital pound: what a Citizens Bank of England card would mean, and where Visa, Mastercard and Trump come into it
• Why interest rates are the wrong tool for inflation driven by fossil fuels and climate breakdown
About the guest
Hannah Dewhirst is Head of Campaigns and Communications at Positive Money, the UK research and campaign group founded in 2010 in response to the global financial crisis. She studied economics as an undergraduate at Oxford, and says it was joining the Post-Crash Economics Society in Manchester, part of the Rethinking Economics movement, that introduced her to the analysis mainstream teaching had left out. She went on to work for Rethinking Economics, first joined Positive Money after moving to London, spent the pandemic at Every Doctor, and returned to Positive Money, where she now oversees its public campaigning: the supporter network, the petitions, and the stunts outside the Bank of England.
Links mentioned in this episode
Positive Money (London, UK), the research and campaign group Hannah works for: https://positivemoney.org/uk/
The campaign to tax the banks – Positive Money’s call for a 38% windfall tax, which puts the big four’s combined first-half 2026 profits at £29.2bn: https://positivemoney.org/uk/press-release/windfall-tax-on-colossal-bank-profits-could-raise-pound19bn-in-2026/
Banking on Property (2022), the report on how housing was turned into a financial asset: https://positivemoney.org/uk/publications/banking-on-property/
The Power of Big Finance (2022), on the financial sector’s influence over UK policy: https://positivemoney.org/uk/publications/the-power-of-big-finance/
Who gets the meetings at the Treasury: https://positivemoney.org/press-release/finance-sector-scores-two-fifths-of-treasury-meetings/
The poll of MPs in which 85% did not know where money comes from: https://positivemoney.org/uk/archive/mp-poll/
The People’s Panel on the Cost of Living, run with Cheshire East Council (England) in 2022: https://positivemoney.org/2023/05/a-peoples-panel-on-the-cost-of-living
Greening the Bank of England’s Collateral Framework: https://positivemoney.org/uk/publications/greening-the-bank-of-englands-collateral-framework/
Full show notes and the archive: https://content.changingthenarrative.media/taxing-the-banks-29-billion-in-profit-and-who-is-paying-for-it/
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Chapters
00:00 Cold open: what MPs don’t know about money
00:45 Welcome to Changing the Narrative
01:06 £29 billion in bank profits and the call to tax them
02:31 Hannah’s route into money and economics
04:27 Growing public awareness that the system is broken
05:19 Can the system actually be changed?
06:00 Countering the power of billionaires and vested interests
07:20 Positive Money in the UK, Europe and internationally
08:46 What Positive Money does: the core work areas
10:53 Green central banking and the collateral framework
13:50 Are the institutions receptive?
15:16 Hopes and concerns about the new UK government
16:36 Why decisions about money are never politically neutral
19:11 Policymakers who benefit from the system
21:24 Working in coalition with other organisations
23:42 The Cheshire East citizens’ assembly on the cost of living
26:30 Would the Bank of England ever run a citizens’ assembly?
28:53 Politicians disconnected from the people they represent
30:07 What the assembly achieved, and why it hasn’t been repeated
31:35 Insider and outsider influencing versus the finance lobby
34:10 The press, the status quo, and getting coverage
37:37 Tax the Banks: how the windfall profits came about
41:25 Will the Chancellor act on it?
43:45 What every MP should understand about money
45:48 Why banks make bad lending decisions
47:28 The public digital pound explained
50:13 Trump, Visa/Mastercard and financial sovereignty
53:32 Who Positive Money reaches, and who it doesn’t
56:04 One thing to take away
56:45 Closing
