Lead

UK banks are facing renewed pressure to pay more tax after reporting strong half-year profits, with campaigners and unions arguing that the sector can easily afford to contribute more to help with the cost of living crisis.

Barclays revealed on Tuesday that it had increased its banker bonus pool by nearly 30% after a rise in second-quarter profits. The bank put £1.3bn towards its bonus pool for the first half of the year, up from £1bn last year. The figure includes annual and deferred bonuses, and is likely to lead to more generous payouts for high-performing bankers when final pay decisions are made by the end of February next year.

The bonus increase follows a rise in pre-tax profits for the second quarter to £3.3bn, up 31% on the year, bringing Barclays' half-year profits to £6.1bn, up 17%. The bank also announced new payouts for shareholders, including a £1bn share buy-back and £800m in dividends.

Meanwhile, HSBC reported that its profits rose 60% year on year in the three months to the end of June, reaching $10.1bn (£7.5bn). The bank's chief executive, Georges Elhedery, said he would consider increasing banker bonuses on the back of the strong results and planned to restart a share buy-back programme that had been on pause since last year.

Coverage Comparison

Both reports from The Guardian focused on the implications of the banks' profits for taxation. One report highlighted Barclays' bonus pool increase and the TUC's call for a tax raid on UK lenders to fund Andy Burnham's spending plans. The other report centered on HSBC's profit rise and renewed campaigner calls for a windfall tax that could raise £19bn.

The two articles use similar language, describing banks as "raking it in" and referring to "mortgage misery" for borrowers. Both quote the TUC general secretary, Paul Nowak, and one also quotes Positive Money's co-director, Sara Hall.

Key Claims

  • Barclays increased its banker bonus pool by nearly 30% after a rise in second-quarter profits, according to corporate filings released on Tuesday.
  • Barclays' pre-tax profits for the second quarter rose to £3.3bn, up 31% on the year, contributing to half-year profits of £6.1bn, up 17%.
  • The bank announced new payouts for shareholders, including a £1bn share buy-back and £800m in dividends.
  • HSBC's profits rose 60% year on year in the three months to the end of June, helped by fees from wealth management and insurance business, as well as higher interest rates.
  • The collective profits for the four largest UK banks – HSBC, NatWest, Barclays and Lloyds – were £29.2bn over the first six months of the year, according to HSBC's report.
  • Positive Money proposed a windfall tax on UK banks that could raise £19bn, calculated to cover the cost of Andy Burnham's proposed VAT cut from electricity bills, the £2 cap on bus fares, and the business rates cut for pubs, clubs and music venues more than 13 times over.
  • The TUC called for a tax raid on UK lenders to help fund Andy Burnham's spending plans to tackle the cost of living crisis.
  • Positive Money said bank bosses had pledged nearly half of their profits – a total of £13.7bn – to shareholders through dividends and share buy-backs, proving they could easily shoulder a tax.

Perspectives

Trades Union Congress (TUC)

The TUC general secretary, Paul Nowak, said: "Big banks like Barclays are raking it in while working people and local businesses are struggling. High interest rates have been a boon for banks but have meant mortgage misery and higher bills for the rest of us." He argued that banks can easily afford to pay more tax and called on the new prime minister and chancellor to increase the bank surcharge and tax banks to bring down energy bills.

Positive Money

The campaign group Positive Money proposed a windfall tax on UK banks that could raise £19bn, calculated to cover the cost of Andy Burnham's proposed VAT cut from electricity bills, the £2 cap on bus fares, and the business rates cut for pubs, clubs and music venues more than 13 times over. The group said bank bosses had pledged nearly half of their profits to shareholders through dividends and share buy-backs, proving they could easily shoulder a tax. They suggested replicating Spain's levy, targeting any UK revenues above £800m with a 38% tax, in line with the energy profits levy introduced for oil and gas companies in 2022.