Andy Burnham has been urged to launch a tax raid on UK banks, as Barclays revealed a 30% increase in its half-year bonus pool after a rise in profits.
Fresh corporate filings released on Tuesday showed the bank put £1.3bn towards its bonus pool for the first half of the year. That figure, which includes annual and deferred bonuses, was up from £1bn last year.
That bonus pot will continue to accumulate through the second half of this year, and could lead to more generous payouts for high-performing bankers when Barclays makes final pay decisions by the end of February next year.
The increase in the bonus pool follows a rise in pre-tax profits for the second quarter to £3.3bn, up 31% on the year and bringing Barclays’ half-year profits to £6.1bn, up 17%.
That also allowed the bank to announce new payouts for shareholders, including a £1bn share buy-back and £800m in dividends.
The strong results further emboldened calls for a tax raid on UK lenders, with the Trades Union Congress (TUC) saying that Burnham’s plans to tackle the cost of living crisis required “more support in the months ahead”, particularly from big banks.
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.
“This is not a ‘hard choice’. Barclays’ bonanza profits show that banks can easily afford to pay more tax. This is a chance for the new prime minister and chancellor to show whose side they’re on. It’s time to increase the bank surcharge and tax banks to bring down energy bills.”
Barclays executives used a conference call with journalists on Tuesday to stress that they were taxed much higher than their foreign peers, pointing to statistics from the lobby group UK Finance showing that UK banks were taxed 46.4% when employment taxes and VAT were taken into account. That compares with a 38.9% rate in Frankfurt and 27.9% in New York.
“We think that the track record that we and the other banks have, in terms of supporting UK growth and indeed leaning into UK lending in the way we have … is really important for the health of the economy,” said the chief financial officer, Anna Cross. “We hope that that that will be considered.”
She also defended the growing banker bonus pool, saying the increase was “purely mechanistic”.
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“We approve the compensation amount through the year as we progress: the higher revenues and returns are, we somewhat mechanistically increase that accrual. That’s all that’s happened this quarter. We don’t make any decisions until the end of the year,” Cross added.
The Barclays chief executive, CS Venkatakrishnan, said he met the new chancellor, John Healey, alongside a small group of bosses, as Burnham’s cabinet took shape last week. “I was very pleased to hear his commitment to growth in every postcode,” Venkatakrishnan said. “He also said that he wants businesses to be successful, that he wants British businesses to be successful, for the government to buy goods and services from British companies.”
While the UK “has been doing well in the context of Europe”, Venkatakrishnan said, bank loans would be crucial to supporting UK growth, suggesting any constraints on their finances could weigh on the funding available from lenders.
“I want to make the point that for every pound of capital that’s retained in the banking system, we lend £8 to £10 into the economy … So we very much want to use our capital to lend into the economy and to support investment and to support growth.”
