Burnham Urged to Increase Tax on Banks as Barclays’ Profits Soar

The news that Barclays has seen a 30% increase in its half-year bonus pool, accompanied by a 31% rise in pre-tax profits for the second quarter, highlights the widening gulf between Britain’s financial elite and the rest of the population. As Andy Burnham’s government grapples with the cost of living crisis, the notion that banks like Barclays can continue to rake it in while working people struggle to make ends meet becomes increasingly unpalatable.

The Trades Union Congress has criticized the banking sector’s windfalls, arguing that high-interest rates have boosted profits for lenders while inflicting mortgage misery and higher bills on the wider public. The TUC’s general secretary, Paul Nowak, notes that banks like Barclays can easily afford to pay more tax, dismissing it as a “hard choice.”

Barclays executives dispute claims that UK banks are already taxed at an exorbitant rate, citing statistics from UK Finance showing that UK banks are taxed 46.4% when employment taxes and VAT are taken into account. However, this figure is a complex calculation that obscures more than it reveals.

The banking sector has become increasingly opaque in its dealings, making it difficult for policymakers to discern what exactly they’re dealing with. The notion of “mechanistic” increases in bonus pools, as defended by Barclays’ chief financial officer Anna Cross, underscores the point.

While banks play a vital role in facilitating investment and economic growth, the idea that every pound of capital retained by lenders is equivalent to £8-10 lent into the economy is a gross simplification. This claim is at best overstated, and it’s clear that banks like Barclays are profiteering from their activities rather than contributing meaningfully to economic growth.

As Burnham’s government navigates its first months in office, it’s clear that the status quo won’t do. Policymakers must take a hard look at the bank surcharge and tax rates levied on lenders like Barclays. This isn’t just about fairness – it’s also about creating a more level playing field for businesses that can actually contribute to economic growth.

The challenge facing Burnham’s government is not simply one of policy, but also of politics. The new prime minister and chancellor must demonstrate their commitment to working people by taking heed of the TUC’s call for increased bank taxation. This won’t be an easy sell – the banking lobby will inevitably push back against any moves to raise taxes.

But it’s a fight worth having. For as long as banks like Barclays continue to thrive while ordinary Britons struggle, our economy and society will remain fundamentally out of balance. The time has come for policymakers to take on the banksters and level the playing field – not just for their own sake, but for the future of Britain itself.

Burnham’s government must now decide how far they’re willing to go in taking on this powerful lobby.