Key facts
- HSBC's second-quarter profits reached £7.5bn, a 60% increase year-on-year.
- The collective profits of the four largest UK banks (HSBC, NatWest, Barclays, Lloyds) for the first six months of the year totaled £29.2bn.
- Campaigners propose a windfall tax on bank profits, potentially raising £19bn.
- The proposed tax could fund cost-of-living measures such as a VAT cut on electricity bills and a £2 bus fare cap.
- HSBC's CEO, Georges Elhedery, suggested considering increased banker bonuses and restarting share buy-backs.
Campaigners have reignited calls for a windfall tax on UK banks, proposing it could generate £19bn to fund cost-of-living support measures, following HSBC's announcement of a 60% year-on-year profit increase to £7.5bn in the second quarter.
HSBC attributed its strong performance to fees from wealth management and insurance, alongside higher interest rates that boost lending margins. Chief Executive Georges Elhedery indicated that the bank might increase bonuses and resume its paused share buy-back program.
This surge brings the combined profits of the four largest UK banks—HSBC, NatWest, Barclays, and Lloyds—to £29.2bn for the first half of the year. This has drawn the attention of groups like Positive Money and the Trades Union Congress, who are advocating for a new tax on the sector.
Positive Money suggested a tax structure similar to Spain's, targeting UK revenues above £800m with a 38% rate, potentially yielding £19bn. This revenue, they argue, could more than adequately cover initiatives such as Andy Burnham's proposed VAT cut on electricity bills (£850m), a £2 cap on bus fares (£500m), and business rate reductions for pubs, clubs, and music venues (£100m).
Sara Hall, co-director of Positive Money, criticized past governments for succumbing to banking lobby pressure against taxing record profits, despite public support. She urged Andy Burnham to resist lobbyists and implement a windfall tax to fund essential support for struggling households and businesses.
Banking executives have been cautious, emphasizing their crucial role in economic growth and lending. Elhedery stated that strong banks are necessary for UK growth. However, advocates remain firm. TUC General Secretary Paul Nowak asserted that banks can easily afford higher taxes, noting their substantial profits while the public faces mortgage misery and increased bills.
Joanne O’Neill of ActionAid UK also called for banks to be held accountable for their environmental and human rights impact, citing HSBC's significant financing of fossil fuels and industrial agriculture. She proposed a 'polluters pay tax' to address the financial and environmental harm caused by such financing.