British banks are unfairly profiting from a taxpayer funded subsidy and should be cut down to size, according to a report published on Thursday.
The study by the New Economics Foundation (NEF) calculates that the 'Big Five' British banks which are seen as 'too-big-to-fail' enjoyed a collective subsidy of £46 billion in 2010.
Lloyds, RBS, HSBC and Nationwide are said to have received £15 billion, £13billion, £7 billion and £1 billion respectively.
Barclays, which was not directly bailed out by the government at the height of the 2008 financial crisis, is said to have received an "indirect" subsidy of £10 million.
The NEF said that the figures were based on the difference between the low interest rates banks now pay to borrow money and what they would have to pay if the market did not believe the government would bail them out if they got into trouble again.
The report said that the banking industry has unfair advantages that allow it to make more profits in good economic times and that protect it from its own mistakes during the bad.
Tony Greenham, head of banking and finance at NEF said: “Banks are still in the casino with our cash and the tables are fixed in their favour. The quid pro quo for the banks’ unique position, and the unique privileges they enjoy, is fair, strong and effective regulation and a fair financial contribution to the British public."
"The longer government dodges reform, the longer the British public and the British economy will continue to pay for the banks’ failure. The time for hesitation is over.”
"Joining Germany and France in calling for the introduction of the Robin Hood Tax on financial transactions would be a good place to start," he said in a blog In a blog for the Huffington Post UK on Thursday.
The report argues that the amount of money received in subsidy far outweighs the amount the Treasury gets back in taxes from the banks.
It estimates the banking industry contributed £15.4 billion in taxes in the year to April 2010, compared to the £46 billion subsidy.
"If the government is to avoid subsidising the profits and pay of major banks and their staff, and achieve a fair deal for taxpayers, it needs to claw back the subsidies the banking industry enjoys by ensuring it pays its fair share of tax," the report concludes.
On Monday the Independent Commission on Banking (ICB) is set to outline its recommendations for the reform of the British banking sector.
The commission is expected to recommend the ring-fencing of high street retail banking from investment banking.
But the NEF said that would not go far enough. The report suggests the government should place a cap on the size of banks to prevent them from becoming 'too-big-to-fail' to begin with.
"Banks have been given an inappropriate level of freedom, and have been allowed to profit at the expense of taxpayers and customers alike. It is time to bring an end to the bankers’ private welfare state," the NEF said.