Opposition parties set out economic priorities as Queen’s Speech finally approved
MPs finally concluded debate on the Queen’s Speech on Monday (January 20), more than a month after the Speech was delivered and the Government’s legislative programme for the coming session published.
The traditional motion “That an humble Address be presented to Her Majesty” thanking her for the Speech was passed by 334 votes to 247, but only after Labour, SNP and Liberal Democrat amendments regretting various measures included in or omitted from the government programme had been voted down.
The final day of debate, Monday, saw discussion focus on the Government’s economic plans.
Shadow Chancellor John McDonnell opened the debate by moving an ultimately unsuccessful amendment that regrets that the Queen’s Speech fails, in his view, to put an end to a decade of austerity and fails to clamp down on tax avoidance, tackle insecure work or end in-work poverty.
McDonnell remarked that the Government has the historic distinction of being the first modern government to break the link between securing work and being lifted out of poverty. Wage rises are at a 10-year record high because his government have kept wage growth so low for the last decade, he said, adding that real wages are still lower than they were before the financial crisis. When tax thresholds are raised, the highest gainers are largely the highest earners, and raising them and national insurance contributions is the least effective way of tackling poverty.
According to the IFS, only three per cent of the gains from raising the national insurance threshold would go to the poorest 20 per cent in our society, McDonnell said. A £3 billion cut in the national insurance contributions of employees and self-employed people—which, at one stage, was promised by the Prime Minister—would raise the incomes of that group by 0.1 per cent, ‘which pales into insignificance in comparison with the losses endured from benefit and tax credit cuts since 2010’.
McDonnell complained about the lack of investment not just in capital but in human capital, saying over the past decade productivity grew at its slowest rate in 60 years. Investment in R&D in the UK is now 11th in the EU, he bemoaned. (Labour wants to scrap R&D tax credits and put direct investment into R&D). We need a longer schedule than just a five-year parliamentary process for capital investment, he said.
McDonnell said the Chancellor’s idea to split the Treasury and send some of its officials to work in satellite offices outside London is a ‘pale imitation’ of Labour’s plans not just for regional offices but to move whole sections of the Treasury to the north, to move the Bank of England to Birmingham and, similarly, to locate a national investment bank outside London.
SNP’s Chris Stephens intervened to complain that HMRC’s wealthy unit had 1,046 full-time equivalents 18 months ago but now has 961. John McDonnell replied that cuts in HMRC over the years had been self-defeating, removing the expertise needed to ensure a fair taxation system and to tackle tax evasion and avoidance.
Rachel Reeves said too much of the growth we have seen is premised on unsecured household debt, which now stands at more than £15,000 per household. Some one in four workers aged over 25 earning about the legal minimum report that they were underpaid two years ago, yet only seven firms have been prosecuted in the past 10 years for underpayment of the national minimum wage (NMW), despite violations being in their thousands, she said. She wants the Government to look seriously at the recommendations of her BEIS Committee from the previous Parliament, which called for workers to be granted worker status as a default, rather than having to take their case to the courts. Two other changes not in the Queen’s Speech would also be useful: an actual right to a contract reflecting hours worked, not just a right to request one, and, as the TUC has argued, two weeks’ notice of shift. We need much stronger action to deal with ‘gig economy’ companies getting out of paying full taxes, national insurance, the national minimum wage, and holiday and sick pay, she said. Separately, she worries that audit firms are too powerful.
Beth Winter said austerity has led to her local authority, Rhondda Cynon Taff, losing £90 million of funding in the last 10 years. That means not just a squeeze on public services but job losses.
Jack Dromey said some 3.7 million people now work in insecure jobs, and eight million work in relative poverty. The Government should bring forward the Taylor proposals, which do not actually go far enough, he pleaded. He also spoke about ‘tax dodging’, citing the PAC, which found that ‘Amazon has a reported turnover of £207 million for 2011 for its UK company (Amazon.co.uk), on which it has shown a tax expense of only £1.8 million, however it shows a European-wide turnover of €9.1 billion for its Luxembourg based company (Amazon EU Sarl) and a tax of €8.2 million’.
Justin Madders said it was a fundamental characteristic of a zero-hours contract that all the power is in the hands of the employer.
The Government have no plan to address the crisis of the race, gender and disability pay gap, claims Marsha De Cordova. The current disability pay gap for all employees stands at 15.5 per cent, meaning that disabled people effectively work for free for 57 days—or eight weeks—of the year. That is scandalous and unacceptable, she said. Analysis also found that disabled workers earn on average £1.65 per hour less than non-disabled workers, which is a gap of around £3,000 a year, based on a 35-hour week. Under the Tories, the disability employment gap has stayed stagnant and the pay gap continues to widen, she said.
Shadow Work and Pension Secretary Margaret Greenwood complained that the Government does not require employers to give employees a minimum period of notice of their shifts and compensation if they are then cancelled, despite the EU introducing a directive on transparent and predictable working conditions. Universal credit was supposed to lift people out of poverty and smooth the transition into work, but ‘it is failing on both counts’. She also complained that public funding of adult skills training is set to be cut by half between 2009-10 and 2020-21.
Virendra Sharma is concerned that in London alone, 400,000 children are food-insecure, which affects their educational, physical and social development.
The Labour amendment –
- Regretted the Government’s failure to end austerity, invest in public services or scrap universal credit;
- Notes the damaging impact of the four-year freeze in working-age benefits;
- Calls on the Government to reverse the damaging impact of austerity;
- Calls on the Government to tackle the climate emergency;
- Calls on the Government to reshape the economy to work for everyone by clamping down on tax avoidance, tackling insecurity in work by extending full employment rights to all workers, ending in-work poverty, and introducing a real living wage.
It was defeated by 342 votes to 236.
Chancellor Sajid Javid said the UK economy has grown in each of the past nine years and ‘our jobs miracle continues’. At the Budget he will publish a new fiscal framework that will keep borrowing and debt under control while allowing for new investment in levelling up and spreading opportunity throughout the country, and the OBR will hold the Government to account for it. Javid said the rise in the national living wage (NLW) of more than six per cent, starting on 1 April, is the largest increase since it was introduced. That is a pay rise for 2.3 million of Britain’s lowest-paid workers, he exclaimed. He claimed an increase in the national insurance threshold next year is a tax cut for more than 30 million people.
Harriett Baldwin said that the UK has a lower percentage of people in low-paid work than ever. The UK must get Brexit right because about £1 in every £10 of tax revenue comes from financial services, she added.
Sir Edward Leigh asked if the Chancellor has got the courage in this Budget to do what Nigel Lawson did, to be a visionary and to start simplifying our tax system and rewarding enterprise. Given that 30 per cent of all income tax receipts come from the top one per cent of income tax payers, ‘it will be impossible’, probably, to ever achieve the dream of a truly flat-rate tax system, but we can simplify it and gradually ‘flatten taxes’. Businesses are employing thousands of accountants to help them avoid taxation. Why can we not simplify our taxation system? The Conservative Party has an historic opportunity to build on its alliance with working people to improve standards, workers’ rights and the ability of those big companies to pay taxes, he charged.
Jack Brereton said the Government should seriously consider removing taxes that disincentivise the redevelopment of our town centres. Creating business rate relief zones that cover town centres is an excellent way of supporting innovation and viability, he argued.
Felicity Buchan said the Conservatives have produced 3.8 million more jobs, have taken 32 million people out of taxes and have increased the NMW to £10.50 by 2024.
Mark Menzies said if we help to transform towns and cities throughout the country but particularly in the midlands and the north, there will be a huge economic dividend, and also a social dividend.
Increasing the business rate discount to 33 per cent ‘really is a big deal for smaller businesses’, said Marcus Fysh, but he added that the Government needs to reform the whole system and try to use that to devolve the ability to invest locally raised taxes in our local economies and have them compete with each other.
Richard Fuller asked the Government to review the primacy of shareholder value as the sole mission for companies. The Government should simplify the governance code, yes, but also give oversight more clout so that excesses are more effectively curtailed and companies are more accountable for the externalities of their actions. Reviewing our corporate tax breaks is also a must, he said. He argued for compelling tax incentives that support local community investment in local free trade zones.
SNP economy spokesperson Alison Thewliss said Javid has absolutely no mandate to preach to Scotland on his austerity plans. The Scottish Government and local government in Scotland now face the prospect of writing a budget blindfold, she said. If the non-domestic rates order or the income tax resolution were not passed on time, Scotland could face having to take millions of pounds out of public services. It would be catastrophic, and the blame would lie squarely at the door of this UK Government and this Chancellor. Even if everything does go as smoothly as it can through this process, Scottish councils are being left in the unprecedented position of providing the vital services that the public rely on, without having certainty about their budgets. Should the council tax need to go up, for example, the very practicalities of issuing the necessary direct debit notifications will add time and difficulty to the process for councils across Scotland. The SNP needs to know exactly what is going to happen with this Green Book process and how the Scottish Government will be involved in it.
For years after Brexit, businesses will find it more attractive to take their investment monies to other countries—to Germany, to the Netherlands, to Denmark and to Sweden, Thewliss said. All the investment lost since 2016 will have an impact on wage growth and job creation for years to come. She complained that the gap for young people who will not fall into the Government’s ‘pretendy’ living wage is growing. She added that the SNP want to see reform of Companies House to uncover the beneficial ownership of Scottish limited partnerships.
Drew Hendry intervened to say more than six months after the Government said that they would hold a review, Marie Curie and the Motor Neurone Disease Association reckon that over 2,000 people have died before accessing the benefits they should have had through being classed as terminally ill.
Richard Thomson called for North Sea oil and gas corporation tax receipts to be ring fenced and spent on the transition to the low-carbon industries of the future.
Peter Grant reiterated SNP’s calling for all the £8.5 billion the Treasury expect to get from oil and gas to be reinvested in helping the industry to prepare for a carbon-free future.
Chris Stephens said the groans from government back benchers when the 1950s-born WASPI women were mentioned in the debate were ‘pretty disgraceful’. Separately, Stephens suggested we are seeing unravelling of the HMRC Building our Future programme. All the assurances we were given that jobs would be protected in HMRC are not being delivered as its staff are being asked, on some occasions, to travel more than 100 miles to go to their new workplace, he told MPs. To those who think that zero-hours contracts are voluntary, he suggested that we need to tackle the universal credit sanctions regime, which allows for someone who has given up or refused a zero-hours contract job to be sanctioned. Where is the social security Bill to fix our broken social security system, he asked.
The SNP amendment –
- Regretted the Government’s intention to use the Immigration Bill to end freedom of movement within Europe, and said freedom of movement should be maintained irrespective of the UK’s future EU membership status;
- Noted the absence of (among other things) bills to expand parental leave and increase the minimum wage to an equal wage;
- Called for an end to the freeze of social security benefits and scrapping of the two-child limit attached to child tax credits;
- Rejected the Government’s proposals for leaving the EU and said the withdrawl bill should not become law without Scottish Parliament and Welsh Senedd approval.
It was defeated by 341 votes to 59.
Lib Dem contributions
Do we want close alignment with the EU to smooth the path of our exports, or do we want to take control of our own destiny and set our own rules? The Queen’s Speech, ‘alas, gives us no indication of the path that the Government plan to take’, said Sarah Olney, the Lib Dems’ business spokesperson. We cannot transition trade agreements smoothly if we wish to renegotiate the terms on which they are agreed, she argued, saying that, again, there is no clarity on what the Government have chosen. She welcomed the Government’s commitment to conducting a fundamental review of business rates, but regretted that they do not use their substantial majority to commit to a more radical change.
Olney said she was disappointed that there had been no mention in the Queen’s Speech of reforming either the loan charge or the IR35 regime. She said: “The Loan Charge is causing intense distress to innocent taxpayers up and down the country that is unlikely to be alleviated by the recent recommendations from Sir Amyas Morse, and the IR35 legislation—a looming disaster for the self-employed in the private sector—is not mentioned either.”
The Lib Dem amendment –
- Regretted the absence of more ambitious plans to tackle the climate emergency;
- Regretted the absence of measures to tackle poverty and inequality, such as scrapping the two-child limit and increasing in-work benefits;
- Argued that proposals for a Constitution, Democracy and Rights Commission would curtail human rights, strengthen the executive and limit the role of the courts, rather than strengthening the voice of citizens;
- Calls for the introduction of proportional representation.
It was defeated by 341 votes to 59.
Government response to the debate
Secretary of State for Work and Pensions Dr Thérèse Coffey closed the debate by saying this ‘proactive, pro-business’ government have reduced taxes for employers and allowed businesses and employees to keep more of what they earn, which actually leads to increased tax revenues to support our public services. We have lifted more than four million people out of income tax altogether, and have increased the national living wage, she said. In the last six years, 1.3 million disabled have joined the labour market, she added. And we now have wages increasing ahead of inflation consistently, and record low number of children in workless households.
On WASPI women, she said the legislation was passed in 1995, and MPs would know this is still under legal processes. The Employment (Allocation of Tips) Bill shows that ‘we are the party of the worker’ and, on zero-hours contracts, we are going further with the Employment Bill, she said.
The full session is here.
By Hamant Verma