Calls for UK bank tax to fund cost of living help as HSBC profits hit £7.5bn
Campaigners have renewed calls for a windfall tax on UK banks after HSBC reported second-quarter profits of $10.1bn (£7.5bn), a 60% rise year on year. The push comes as Prime Minister Andy Burnham looks to fund cost of living measures, with pressure group Positive Money and the Trades Union Congress arguing that the banking sector's soaring earnings mean it can easily absorb a new levy to help households and businesses struggling with bills.
Combined profits at the UK's four biggest banks – HSBC, NatWest, Barclays and Lloyds – reached £29.2bn in the first half of the year. Positive Money has proposed a Spanish-style levy taxing UK bank revenues above £800m at 38%, which it says could raise £19bn ahead of the October budget, enough to cover Burnham's VAT cut on electricity bills, his £2 bus fare cap and a business rates cut for hospitality venues more than 13 times over. Bank bosses, including HSBC chief executive Georges Elhedery, have been cautious about the proposal, stressing lending capacity is vital for economic growth, while campaigners and unions insist the banks are "rolling in it" thanks to higher interest rates.
- HSBC's quarterly profit jumped 60% to £7.5bn
- Campaigners want a windfall tax to fund Burnham's cost of living plans
- Levy on big four banks could reportedly raise £19bn for the budget
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Banking profits and the cost of living have become linked in Westminster politics, with campaigners arguing that the two should be more directly connected through taxation. UK banks make much of their money from the gap between what they pay savers and what they charge borrowers, and this gap has widened since interest rates rose. HSBC, NatWest, Barclays and Lloyds are the country's biggest lenders and between them have been reporting some of their largest profits in years.
The idea of a windfall tax is not new in Britain; it has previously been used on energy firms when their profits jumped sharply, and some now want a similar one-off or additional levy applied to banks. Positive Money and the Trades Union Congress are among the groups pushing for this, saying the extra revenue could help pay for support with bills for households and businesses. Banks themselves have generally resisted such proposals, arguing that keeping capital available to lend is important for the wider economy.
This debate matters because it feeds into wider decisions about how the government raises and spends money, particularly around the annual budget process in the autumn. Prime Minister Andy Burnham has set out cost of living measures that need to be funded, which is part of why bank profits and taxation are back in the spotlight.