While households struggle with historically high inflation and eye-watering borrowing costs, Britain’s banking industry is enjoying bumper profit growth. 

HSBC last week posted half-year earnings growth of more than 144 per cent to $16.9billion, following rivals Lloyds, Standard Chartered and NatWest Group, which all revealed double-digit earnings expansion.

The results triggered a torrent of criticism from some politicians and activists who accuse the banking sector of benefiting at the expense of financially-stretched Britons.

Some critics say banks should pay a windfall tax, like that imposed on oil and gas companies last year. 

But Italy’s government was forced to water down such a move this week after the announcement sparked market movements that posed serious financial implications for the country.

Italy’s banks will still fork out more in tax, though – could Britain follow?

What Italy did – and why was it such a shock?

On Monday, Prime Minister Georgia Meloni’s administration declared an ‘extra profits’ tax on its banking sector to fund tax cuts and mortgage support for Italians.

They said a 40 per cent levy would be imposed on net interest income – the difference between income earned from loans and interest paid to savers.

The move led to a meltdown in Italian banking stocks and implications for the country’s borrowing costs.  

Italy was forced to water down the plan just a day later.

The country’s finance ministry has now told lenders their tax bill will be capped at 0.1 per cent of their total assets. Italian banking stocks have subsequently revived. 

How have investors and analysts responded?

Perhaps unsurprisingly, some prominent shareholders in Italian banks have been critical of the plans.

David Herro, the chief investment officer of Harris Associates, a major investor in Italy’s largest bank, Intesa Sanpaolo, called it a ‘tragic’ policy that would punish a sector that has, until recently, struggled with low interest rates.

Cole Smead of Smead Capital, an investor in UniCredit, echoed that theme, tweeting that banks ‘starve on low rates [only] to then be punished for higher rates’.

Analysts at broker Jefferies predict the revised proposal will raise €2.5billion (£2.2billion) from the ten largest publicly-listed Italian banks, about €2billion less than under the original plan, and cause a 12 per cent average hit to annual profits this year. 

However, credit ratings agency Moody’s warned the move would be ‘credit negative’ for Italy’s banking industry, which is already being burdened by weak lending, elevated inflation levels and higher operating costs.

Are there any examples of windfall taxes in the banking sector?

Several European Union countries have introduced extra levies on the financial industry over the past year in response to spiraling inflation and consumer pressure.

Spain and the Czech Republic recently slapped higher taxes on their banks – a 60 per cent levy in the latter country – to fund support for citizens and companies affected by cost-of-living pressures.

Meanwhile, Hungary and Lithuania have brought in banking windfall taxes, partly to boost military spending amid the growing threat posed by Vladimir Putin’s Russia.

The UK last imposed a banking windfall tax in 1981 during Margaret Thatcher’s premiership, when a one-off 2.5 per cent levy was put on banks’ deposits after interest rates were hiked to record levels to combat double-digit inflation.

UK banks also currently face a levy on their balance sheets, most of which applies to their debts. 

Every year HMRC assesses all funds deposited in banks and taxes them accordingly.

The idea, having been conceived in the fallout of the global financial crisis of 2008-2009, is to encourage financial discipline and cut down on overly risky behaviour. 

Who supports introducing a banking windfall tax in the UK?

Neither the Conservative nor Labour Party support extending the windfall tax currently on North Sea oil and gas producers or banks, though many backbench Labour MPs have called for one.

One major proponent has been former Bank of England deputy governor Charlie Bean, who says it could raise tens of billions of pounds to help cut the budget deficit.

Outside Bean’s old workplace last week, campaign group Positive Money staged a protest against base rate hikes while calling for a windfall tax on the financial sector.

The organisation argues that lenders stand to make a killing over the coming years from the BoE remunerating them just for holding reserves at the central bank, which it points out would be partly funded by taxpayers compensating the BoE for losses from its gilt portfolio.

What would a banking windfall tax in Britain look like?

Positive Money has suggested raising the bank surcharge from 3 per cent to 35 per cent, in line with the energy profits levy. 

It claims this would raise at least £20billion from the ‘Big Four’ British banks of HSBC, Barclays, Lloyds and NatWest.

Alternatively, the group says a 4 per cent tax on unreserved deposits would generate more than £50billion per year.

Simon Youel, its head of policy and advocacy, told This is Money that the revenues raised just from the ‘Big Four’ could fund a 2.5 per cent cut in VAT whilst also lowering inflation.

He additionally said a further £2billion raised from other lenders could finance free school meals for all primary and secondary school children in England.

What are the arguments against a UK banking windfall tax?

Britain’s financial services sector already contributes a significant amount of tax: £28.8billion in 2021, according to HM Revenue & Customs.

Putting up taxes too much would drive business to other markets, piling further pressure on an industry already struggling with Brexit and a growing international preference for Wall Street over the City.  

Michael Hewson, chief market analyst at CMC Markets, said the Energy Profits Levy has already caused some oil and gas companies to shelve investment.

The North Sea’s largest energy producer, Harbour Energy, is cutting jobs and shifting spending away from the UK after barely scraping a profit last year due to the levy.

On the banking sector, he said it played a vital role during the Covid lockdowns in keeping the UK economy ticking over, which given their role in the financial crisis was the ‘least they could do’.

He added: ‘Politicians need to be aware that profits not only go to shareholders, of which the government is one in NatWest, but they also help the bank funding lending to businesses, and consumers.

‘Remove the incentives to take risks, and banks will take less risk with all the damage that could with regard to funding new business and start-ups.’

Eamonn Holmes has said he doesn’t think Holly Willoughby will return to the This Morning sofa and called on her to follow Phillip Schofield ‘close out the door’.

He blasted his former co-stars as he weighed in on ‘toxicity’ claims at This Morning, saying that Phillip was ‘so rude’ and ‘Holly doesn’t know people’s names either’.

Predicting that he Holly will not return to the show – from which she is taking a half-term break – he told Dan Wootton: ‘I don’t think you will ever see Holly Willoughby back on the couch.’ 

He also took aim at Willoughby who he claimed would be battling to protect her brand, telling GB News: ‘There are people who are financial experts who will say this is about brand protection for her company and her advertising deals.’ 

It comes amid reports that Willoughby is determined to fight on to keep her spot on the sofa, despite the ongoing chaos at the programme caused by Schofield’s revelations that he lied about his affair with a much younger man.

ITV has been contacted for comment.

Willoughby is paid £730,000 a year for her presenting gig on This Morning but has a growing business empire, estimated to be worth £10 million. 

She has amassed the huge fortune not only through her television portfolio, from presenting I’m A Celeb to Dancing with The Stars, but a series of lucrative brand deals from Marks and Spencer to Diet Coke. 

And in 2021, she launched her own wellness and lifestyle brand Wylde Moon, akin to Gwyneth Paltrow’s Goop. 

When Schofield announced he was living, Willoughby wrote on Instagram that ‘the couch will seem so empty without him’.

But Holmes blasted this statement, adding: ‘She should be dancing on the couch, because that’s what she was looking for forever.

Others have called for Willoughby to go, including former culture secretary Nadine Dorries who said the presenter ‘has questions to answers’.

She has currently been off-air since Schofield’s sudden departure; however, this was due to a planned holiday for the school half term break. The presenter of 14 years is expected to make a return to the programme on June 5.

One source told the Mirror yesterday: ‘Holly wants to stay at This Morning as long as she can and hopes to ride out the scandal. Other stars like Stephen Mulhern are being approached to fill in for Phil when she returns. Some are reluctant to go in and face angry viewers.

‘Holly is determined to stay put – the only reason she would leave now is if This Morning is axed. She has absolutely no plans to leave.’

Throughout Holmes’ interview he made a series of allegations surrounding the ongoing Schofield scandal, which has plunged ITV into a crisis in which sponsors have pulled out of multi-million-pound deals.

Holmes, a GB News presenter, said Schofield, 61, had allowed his ‘fame and power’ to ‘corrupt’ him.

He also told how his wife Ruth Langsford is still in touch with Schofield’s ex-lover, who was described as a ‘lovely fella’, and ‘life is tough’ for him.

On Schofield admitted on Friday that he had lied about his relationship with the man, plunging ITV into meltdown losing millions of pounds in sponsorship deals.

Holmes told his fellow GB News presenter Dan Wootton tonight he had decided to stand up for ‘people who hadn’t got a voice’.

Speaking of the scandal engulfing ITV, he said: ‘It’s a total cover up. Those in authority had to know.

‘They had to know what was going on and they thought they would dodge the bullet which they did and they do constantly.’

Holmes claimed that Phillip and his young lover would go out and enjoy ‘playtime’ on Thursdays, with the man staying overnight at his £1 million London flat.

The following day, the pair would arrive at ITV Studios in separate cars from Schofield’s home, he added.

‘All I’m here to do is to speak for people who hadn’t got a voice… I’m speaking on behalf of them,’ he added.

Holmes said: ‘Usually on a Friday morning, because Thursday was playtime when he and Phillip would hit the town and then he obviously stayed overnight. There are records to show that he was brought in the next day separately in cars paid for by ITV.’

ITV’s managing director of media and entertainment Kevin Lygo refused to answer questions about Schofield after being pursued on the street by a GB News producer.

He was asked outside a station whether there had been a ‘cover up’ of the affair, but Mr Lygo walked away, telling the producer: ‘We really have no more to say.’

ITV has continued to insist that it carried out an investigation in 2020, after rumours of Schofield’s affair with a younger male employee began to circulate.

But last night, while ITV maintains both party’s were interviewed, sources close to his former lover said he was never quizzed on the matter.

Leeds United have sacked director of football Victor Orta after their 4-1 defeat to Bournemouth on Sunday.

Orta – who joined the club from Middlesbrough in 2017 – has received heavy criticism from supporters in recent weeks after their dire run of form under Javi Gracia.

Leeds confirmed the Spaniard had left the club in a statement on Tuesday. 

Leeds have picked up just one point from their past five games, conceding 18 goals in the process as they have been plunged deep into relegation trouble, with the club only outside the bottom three on goal difference.

Manager Javi Gracia has also followed in departing with Orta, with Sam Allardyce agreeing to make a shock return to management in a dramatic shake-up of the club’s football operations.

Orta was brought in by owner Andrea Radrizzani in the summer of 2017 after the Italian took over the club from the controversial Massimo Cellino.

‘I am deeply saddened by the way that this chapter closes as Victor has been responsible for some of the best moments of my time as owner of Leeds United and I thank him and his people for all they have done in the past six years,’ Radrizzani said.

‘However, it is clear that it is time to change direction and therefore we have agreed that Victor will leave the club.

‘I understand supporters are hurt and upset, but now is a time for unity.

‘We have four cup finals left to play this season and working together, I believe we can survive.’

Orta was widely credited for his initial work that saw Marcelo Bielsa appointed in 2018 as Leeds returned to the Premier League two years later after a 16-year absence. 

However, the decision to bring in Jesse Marsch as the Argentine’s replacement in February 2022 ultimately didn’t work out. Leeds then brought in Gracia in February this year in an attempt to save their season but Leeds look in significant danger of relegation.

Several big-money signings this season under Orta such as Brendan Aaronson (£22.4m) and club-record addition Georginio Rutter (£35.5m) have failed to make an impact, with striker Rutter yet to even score a goal.

Mail Sport understands the dressing room was lacking motivation under Gracia, which resulted in a dire performance at the Vitality Stadium against the Cherries after an initial positive start. 

Mail Sport also understands that Orta wanted to keep Gracia while Radriazinni didn’t – which resulted in both leaving the club following talks on Monday.

Orta’s role had been under mounting scrutiny following the club’s slide down the Premier League table.

Mail Sport first revealed uncertainty over Orta’s position at Elland Road on February 10 following the club’s difficulties in replacing the sacked Marsch.

Orta tried to appoint Andoni Iraola from Rayo Vallecano and Arne Slot from Feyenoord, but failed to lure both.

Having been turned down by a number of managers, Orta eventually appointed Gracia – who has now been dismissed after just two months in charge.

Gracia’s arrival didn’t prevent the club’s slide towards relegation danger, with the Spaniard confronted by irate fans during Sunday’s 4-1 loss at Bournemouth. 

There has been disappointment behind the scenes at Gracia’s appointment and Orta has faced difficult questions as a result.

The uncertainty over Orta’s future, however, has been an issue at Elland Road for a significant period of time.

Leeds’ squad are in at their Thorp Arch training ground on Tuesday for a recovery session before they return to action with a trip to Manchester City on Saturday.

They then host high-flying Newcastle the following weekend and end the season with a trip to West Ham and a home game against Tottenham.