Lloyds issues warning as mortgage costs could rise after John Healey’s bank tax raid

Mr Chalmers said: “It is ultimately important that we do what we can to reduce the cost of lending in order for the UK to grow, and that travels through into the cost of borrowing.”

He added: “It’s also important that we do everything we can to ensure international competitiveness. To be clear, additional taxes are unhelpful to achieving both of those two objectives UK growth or international competitiveness.”

The Chancellor announced on Wednesday that the surcharge would rise from three per cent to six per cent for 15 months starting in January, with the revenue earmarked “to pay for immediate support on energy bills.”

Mr Chalmers challenged the rationale behind tying the levy to household energy costs, expressing concern that such a link could pave the way for the measure to be extended or increased.

“I didn’t see an obvious linkage between energy prices and bank taxes,” he said. “If anything, it makes it even more important that we’re able to lend into the real economy and secure growth, which is the best defence against energy price impacts that might otherwise prevail on the UK economy.”

He urged the government to honour its pledge that the higher rate would remain temporary, stressing the importance of a “stable and predictable tax regime.”

The backlash extended well beyond Lloyds. JP Morgan branded the tax increase as lacking “principle,” arguing it was unfair for the Chancellor to single out the banking sector.

David Postings, chief executive of industry body UK Finance, said: “Increasing bank taxes is not, in our view, the best way to deliver growth.”

Mr Postings added that the Chancellor’s commitment to keeping the rise time-limited was crucial, given the sector already needed a more internationally competitive tax framework.

The Office for Budget Responsibility estimates the higher levy will generate an additional £1.5billion, but forecasts that around £190million in bank profits will shift overseas as a result.

Senior bankers have privately voiced fears the measure could become permanent, pointing to Spain, where a temporary two-year windfall tax on banks introduced in 2022 was ultimately extended by three years and raised from 4.8 per cent to seven per cent.

The criticism came as Lloyds reported its third-quarter results on Thursday, revealing pre-tax profits had nearly doubled to £2.3billion from £1.2billion a year earlier.

Much of that jump reflected the £800million provision the bank had set aside in the same period last year to cover motor finance compensation claims.

A 10 per cent increase in net interest income, which tracks the gap between what banks charge borrowers and pay savers, also bolstered the figures.

Chief executive Charlie Nunn has been diversifying the group away from its reliance on interest rates by expanding its wealth management and insurance arms.

Lloyds shares fell more than three per cent in early trading. The doubled surcharge, combined with the 25 per cent corporation tax rate, means banks now face a total levy of 31 per cent, the highest since at least 2015.