Lib Dems push bank windfall tax to fund energy loans and solar rollout

The Liberal Democrats on Tuesday unveiled a plan to tax unexpected bank profits to fund a new Energy Security Bank that would offer loans for home energy upgrades, a policy the party said would also back a nationwide rollout of solar panels.

Liberal Democrat deputy leader Daisy Cooper, speaking at the party’s autumn conference in Bournemouth, described the proposal as a way to help homeowners and small businesses make energy improvements such as solar panels, heat pumps and insulation. She said the windfall tax could extract roughly £7 billion a year by the end of the decade, justified by what she described as unexpected profits banks have earned as a result of higher interest rates.

The centerpiece would be a new Energy Security Bank, with loans for households up to £20,000 and up to £50,000 for community energy groups and small businesses. The party said the government would contribute £2 billion of capital to guarantee those loans, enabling up to £10 billion of affordable lending to homeowners and other borrowers. Cooper said the scheme would target the so‑called missing middle—households not covered by existing grants for low incomes or major infrastructure projects—and would help reduce energy bills by about £500 a year for the average household. In addition, the bank could support loans for community energy projects and small businesses that want to install renewables and energy efficiency measures.

Cooper also outlined a broader plan to deploy solar panels in large supermarket car parks across major towns, arguing the scale of the rollout could generate enough power to run a city the size of Bristol or Nottingham each year. She argued the approach would demonstrate that climate action and cost-of-living relief can go hand in hand when done well, and she sought to counter what she described as climate myths that renewables push up prices.

When pressed about engagement with banks, Cooper said she had not yet spoken with lenders about the idea, adding, “no, but I will do soon I’m sure.” She insisted the banks were aware of the policy given the IPPR’s research, which she said shows banks have benefited from higher rates during the energy transition.

The Lib Dems also framed the windfall tax as a small contribution relative to the banks’ overall profits, arguing it would not harm customers and could help unlock lending for energy upgrades. Cooper argued the energy security bank would enable banks to “get lending going again so people have the confidence to take out a loan at a low interest,” suggesting the government could work with banks as partners rather than adversaries. She added that the policy would be financed in a way that allows the market to function with better-targeted government guarantees while increasing household energy resilience.

The proposal comes as the IPPR has argued that big banks have seen billions in excess profits in recent years, a byproduct of quantitative easing and shifting monetary conditions. Lib Dem officials said the windfall tax approach would emulate the party’s earlier stance after the invasion of Ukraine, when they argued for windfall taxes on energy giants as a means to fund relief and investment in renewables. Cooper closed by calling for a constructive, cross-party approach to climate and energy policy, saying the party’s plan shows that energy transition and affordability measures can be complementary rather than competing priorities.