The Lib Dems' bank levy: could you save £500 on energy bills?
A windfall tax on the profits big banks made from quantitative easing, ploughed into a new public "Energy Security Bank" offering cheap loans for insulation and solar — reported to be worth up to £500 a year for some households.
What's being proposed
Deputy leader and Treasury spokesperson Daisy Cooper announced a windfall levy on major banks' profits at the party's Bournemouth conference — money the party says banks made from quantitative easing (QE), the Bank of England's post-2008 stimulus programme. The levy is projected to raise an average of £7 billion a year through to the end of the decade. £2 billion of that would seed a new public institution — an Energy Security Bank — offering affordable loans to homeowners and businesses to fund efficiency upgrades: insulation, solar panels and similar.
Where the £500 figure comes from
Coverage of the announcement reported that households could save up to £500 a year on energy bills by using the scheme's cheap loans to fund efficiency upgrades. That figure is a reported ceiling for households with the most to gain — typically older, poorly insulated homes — rather than a guarantee for every household. Newer or already-efficient homes have much less room for improvement, and so much less potential saving.
How it would work
- Banks pay a windfall levy on QE-era profits — this is separate from, and additional to, existing bank taxes.
- £2bn of the roughly £7bn a year raised capitalises a new public Energy Security Bank.
- The Bank offers below-market-rate loans so homeowners and firms can afford insulation, solar and other efficiency upgrades upfront.
- Lower fossil-fuel use from those upgrades is what generates the ongoing bill saving — the loan itself isn't free money, but the interest rate and access are meant to be more favourable than the commercial market offers today.
The case for and against
Supporters argue
- It targets bank profits from a specific, unearned windfall (QE), rather than general taxation.
- Cheap loans for efficiency upgrades address the underlying cause of high bills — leaky, poorly insulated homes — rather than just subsidising the symptom.
- Loans are repaid from the resulting bill savings, so the scheme could be self-sustaining over time.
Critics argue
- UK Finance and the banking industry argue an additional windfall levy risks reducing banks' capacity to lend and could be passed on to customers through pricing.
- The £500 figure is a reported ceiling, not a typical outcome — most households, especially those in newer or already-insulated homes, would see far less.
- Uptake depends on households actively applying for and repaying loans, which historically limits how many people benefit from schemes like this.
Estimate your potential saving
Enter your annual energy bill and how efficient your home currently is, to see a rough estimate of what the reported £500 ceiling could look like for you.
Your home & bill
The estimate scales the reported £500/year ceiling by your selected efficiency headroom, then by your bill relative to a typical £1,663/yr household. It assumes you take out a loan and complete an upgrade — the scheme doesn't hand out cash directly. Not financial advice.
Sources & further reading
- GB News — households could save £500 on energy bills under the Lib Dem bank tax plan.
- LBC — Lib Dems call for tax on big banks to create new energy loans scheme.
- Chartered Institute of Taxation — Lib Dem conference 2025: taxing banks, not pubs and farmers.
- The Conversation — is taxing the banks more a good idea?
Figures are illustrative and based on the party's stated proposals and reported estimates; actual scheme design, loan terms and savings are not yet confirmed. General information, not financial, legal or tax advice.
Frequently asked questions
Does the Lib Dem Energy Security Bank exist yet?
No — it's a Liberal Democrat proposal, not a scheme you can apply to. It would need the party in government and the bank levy legislated before any loans could be offered.
Is everyone guaranteed to save £500 a year?
No. £500 is a reported ceiling for households with the most efficiency headroom — typically older, poorly insulated homes. Newer or already-efficient homes would see a much smaller saving, which the calculator above tries to reflect.
How is the scheme funded?
By a windfall levy on major banks' profits from quantitative easing, projected to raise about £7bn a year, with £2bn of that seeding the new Energy Security Bank.
Would I have to take out a loan?
Yes — the scheme as described offers cheaper loans for efficiency upgrades, not free grants. You'd still need to borrow and repay, ideally from the resulting bill savings.