That Starmer fella...

Why shouldn't a lender make a fair return?

Not to get all woo woo about it, but that's been a fairly big moral question in various societies throughout history, and any interest whatsoever has been outlawed quite a few times.

If you have a look at the wiki pages on usury and riba, it's quite a fun rabbit hole if you're into that sort of thing. It gives a nice but weird philosophical background to why a state might be seen as a preferred provider of finance.

In many historical societies including ancient Christian, Jewish, and Islamic societies, usury meant the charging of interest of any kind, and was considered wrong, or was made illegal. During the Sutra period in India (7th to 2nd centuries BC) there were laws prohibiting the highest castes from practicing usury. Similar condemnations are found in religious texts from Buddhism, Judaism (ribbit in Hebrew), Christianity, and Islam (riba in Arabic). At times, many states from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change).