Liberal Democrat deputy leader Daisy Cooper has called for a windfall tax on big banks to fund home loans to install renewable energy systems.
Cooper, the party’s treasury spokesperson, said the policy would allow home owners and small businesses “to do the right thing” by investing in solar panels, heat pumps and insulation.
She said about £7bn a year could be extracted by the end of the decade by taxing what she described as unexpected profits the banks had made as a result of high interest rates.
Speaking at the party’s autumn conference in Bournemouth, she announced the Lib Dems wanted to create a new Energy Security Bank to offer loans of up to £20,000 for households.
The bank windfall tax policy was originally proposed by the Institute for Public Policy Research (IPPR), whose research showed big banks have seen billions in excess profits due to high interest rates, as an unintended consequence of the quantitative easing programme.
Banking sector profits nearly doubled in recent years, from less than £25bn in 2019, to almost £50bn in 2025, according to the latest forecasts.
Cooper said the Lib Dems were the first party to call for a windfall tax on oil and gas giants following the invasion of Ukraine – and the big banks had received a similar unexpected profit boost.
The windfall tax would allow the government to put forward £2bn in capital to guarantee loans from her new Energy Security Bank, which Cooper claimed could then “unleash up to £10bn of affordable loans to homeowners”.
These loans would be available for the “missing middle” of household incomes not currently covered by government grants for low incomes or major infrastructure projects, she said, and would bring energy bills down by about £500 a year for the average household.
Community energy groups and small businesses could also benefit from loans up to £50,000 and “all of these loans should pay for themselves” in the long-term, Cooper claimed.
In addition, Cooper said the Energy Security Bank would be used to roll out solar panels in large supermarket car parks in every major town, a move she said would generate enough energy to power a city the size of Bristol or Nottingham each year.
She said the Lib Dems had to combat “climate myths” about renewable energy driving up prices she said were peddled by Reform UK and the Conservatives.
“We must embrace our responsibility to push back against this rising tide of populism, and we must show that when done well, taking climate action and tackling the cost of living can and must go hand-in-hand.”
Speaking to journalists after her speech, Cooper was asked whether she had spoken to banks about the idea and responded “no, but I will do soon I’m sure”.
She added: “The reality is the banks know this issue is on the table, they’ve seen the IPPR report.”
Challenged on whether a windfall tax could have negative repercussions for banking customers and damage business confidence, Cooper said: “No… We’re really asking for quite a small amount of money out of all money they’ve raised.”
She claimed her proposed Energy Security Bank would enable the big banks to “get lending going again so people have the confidence to take out a loan at a low interest, so we want to work with them [banks] as partners and we think we can do that”.
