Missing measures: MPs unhappy about windfall tax and employment rights absence from Queen’s Speech

MPs debated the Queen’s Speech – which sets out 38 bills and draft bills that are expected to be put before Parliament in this session – for six days. Below are summaries of the key debates that relate to our work in tax and welfare. The debates are supposed to be on specific subjects each day, but MPs often use give their general gripes with the Government, such as the lack of an Employment Bill and the state of Brexit.

Key comments from party leaders

Speaking on the first day of the debate, Prime Minister Boris Johnson said his government has got the big calls right since 2019, which means it has the ‘fiscal firepower’ to help families with all the pressures that they face now. Johnson said his government is ‘giving back’ £150 to people in their council tax, cutting fuel duty, increasing the warm home discount, creating a tax cut for 30 million workers by raising the national insurance threshold and delivering the ‘biggest ever’ increase in the national living wage. And his Brexit Freedoms Bill will ‘put the interests of British business and British families first’.

Responding, Labor Leader Keir Starmer said the Queen’s Speech was bereft of ideas or purpose and without a guiding principle or a road map for delivery on Brexit, zero-carbon industries, and generating high-skilled and high-wage jobs across the UK. Starmer slammed the Government for ‘tax rise after tax rise on working people’, claiming the UK is the only country in the G7 to be doing this during a cost-of-living crisis.  He said Labour would improve leadership and teaching standards at state schools, funding it by ending tax breaks for private schools.

Starmer said the Government should finally abolish business rates and replace them with a fair system that creates a level playing field with online giants, he said, so that our businesses can ‘compete, invest and grow’. And the country needs a plan to revive our town centres with new businesses, providing finance for a new generation of start-ups in our town centres and giving councils the power to take over empty shops and fill the space with workshops and offices ‘offering the jobs of the future’.

Ian Blackford, SNP Westminster Leader, said the Brexit Freedoms Bill represented a race to the bottom on standards. “As for the idea that Westminster will be able to strike down devolved legislatures’ retained EU laws, that would be only the latest in a ‘long line of Tory power grabs.”

People desperately need more help from the Government, but what have they received instead? Tax rises, broken election promises on pension rises, and wages rising far more slowly than inflation, said Ed Davey, Lib Dem Leader. What everyone really needs is an ‘emergency tax cut’, such as an immediate cut in VAT, he argued. (A Lib Dem amendment proposing this and other measures was defeated 315-59.) Last year, the Government promised to reform social care but all we got instead was an ‘unfair tax hike’, he said. He is disappointed that the Queen’s Speech did not include his party’s proposal for tough new laws to end the dumping of raw sewage and a new sewage tax on water companies.

‘Where is the windfall tax?’

Labour has been calling for a windfall tax on oil and gas companies in the North Sea to help households and energy-intensive industries cope with higher fuel bills. Many Opposition MPs and a few Conservative ones showed some support for the policy, although the Government remain opposed, at least for now.

Shadow Secretary of State of Climate Change and Net Zero Ed Miliband (photographed below courtesy of Parliament UK) moved an amendment which regretted that the Queen’s Speech had failed to announce a windfall tax, but it was defeated (310 -248). He said the cost-of-living crisis was driven most of all by what is happening to energy bills. He went through the Government’s excuses for not having a windfall tax: in January the oil and gas companies were, in the words of the Education Secretary, ‘struggling’; then they said a windfall tax would hurt investment even though BP’s chief executive said such a tax will not stop investments proceeding; and he said the least convincing excuse was that it is anti-business to levy a windfall tax even though these profits are unearned and unexpected.

Shadow Chancellor Rachel Reeves (photographed below thanks to Parliament UK) moved Labour’s unsuccessful amendment (defeated 312 - 229) that regretted that the Queen’s Speech had failed to bring forward immediately an emergency budget to tackle the cost of living crisis or to set out a new approach to the economy to end 12 years of slow growth and high taxation under successive Conservative governments.

Reeves said Labour’s emergency budget would introduce a windfall tax, use that money to reduce VAT on gas and electricity bills from five per cent to zero, and expand the warm home discount from the measly £140 that people get today to £400. This would be funded through the windfall tax, through the additional VAT receipts that the Government are getting in at the moment because prices are so high, and through receipts from the additional corporation tax that the oil and gas companies are paying. Other things she would like in such a budget include a discount on business rates for high street firms funded by a tax on the ‘online giants’ and ‘abolish the unfair, outdated and unjustifiable non-dom tax status, and use that money to keep taxes on working people down’.

Labour MP Zarah Sultana put forward an amendment along with colleagues on the Labour backbenches, but this was not pushed to a vote. As well as a windfall tax on oil giants to slash energy bills they want to  bring energy companies into public ownership, implement a real-terms public sector pay rise and a real-terms increase in social security and pensions. They would pay for this by ‘raising taxes on the richest, not on ordinary workers, including an end to the tax-dodging loopholes that Conservative Members are so fond of, including the non-dom status’.

An SNP amendment was also defeated (313 - 59). The amendment regrets ‘that the Gracious Speech fails to include bills that protect workers’ rights, tackle the cost of living crisis, or the climate emergency; further regret that the Gracious Speech does not contain provision to uplift benefits and implement a windfall tax on companies which are benefiting from significantly increased profits as a result of impacts associated with the pandemic or the current international situation; and reject the proposals both for a Brexit Freedoms Bill, which will undermine devolution, and the Bill of Rights, which will weaken human rights protections.’

Alison McGovern said it is ‘universally accepted now, by everyone from the chairman of Tesco to most of this House, with the exception of Ministers, that we need a windfall tax on oil and gas companies, in order to put money into people’s pockets to deal with energy bills’. Matt Western said a windfall tax could allay so much of the financial crisis for households throughout the country. Toby Perkins said this is a government of high taxation because they are a government of low growth, allowing oil and gas producing firms to enjoy obscene profits while raising taxes on working people.

Caroline Lucas, Green Party, called for a windfall tax on the ‘obscene’ profits of the energy giants, but said it should not stop there; instead, it should pave the way for a carbon tax levied on every tonne of CO2 released, no more subsidising of fossil fuels and no new oil, gas or coal licences. Lucas also called for a street-by-street, local authority-led retrofit revolution and a  transition to abundant homegrown renewables.

Setting out the Government’s position, Chancellor Rishi Sunak said oil and energy companies must invest increasing profits back into ‘British jobs, growth and energy security’, otherwise no options, such as a windfall tax, would be ‘off the table’.

On the Conservative backbenches Robert Halfon said a windfall tax could be used to cut taxes for the lower paid or to cut energy bills, and called for a pump-watch monitor to make sure that there is fair competition and that consumers get a fair deal at the pumps. Treasury Committee chair Mel Stride was pleased the Chancellor has not ruled out a windfall tax. Mike Wood said he was for a windfall tax as long as the benefits of such a tax outweighed the costs.

However more Conservative MPs were opposed to the idea of a windfall tax. Sir Christopher Chope said that instead of windfall taxes, the Government should talk about paying back to taxpayers some of the windfall receipts of tax revenue. Scottish Conservative Andrew Bowie claimed former Labour and Conservative governments, Chancellors and Prime Ministers have introduced windfall taxes but every single time, investment in the North Sea went down: “It is a funny plan: supporting working people by putting the very jobs that they rely on at risk.” Harriett Baldwin said there is already a windfall tax on the oil and gas sector: whereas most corporations in this country pay 19 per cent corporation tax, those in the oil and gas sector pay 30 per cent corporation tax and 10 per cent windfall tax on top of that.

Another Conservative, Laura Trott, said it was unorthodox to suggest that price reductions in a sector are best served by whacking a tax on the producers. She worries about smaller players and the discouragement to competition that such a tax might result in, and we cannot do under any circumstances give up UK’s reputation for being a stable, low-taxation economy. Trott suggested a new measure to make it illegal to disconnect the energy supply, similar to that for the water supply. Currently, energy suppliers cannot disconnect households over the winter months in some situations, but the Government should extend this, she said.

On the SNP benches Alan Brown said a windfall tax should not just be a cash raid on the North Sea; rather, it should be a wider pandemic profit levy. Tax Justice UK has identified that just six companies made an excess profit of £16 billion in the financial year 2020-21, he said. A 10 per cent additional levy on them would realise £1.6 billion for the Treasury. A much wider pandemic profit levy of 10 per cent across the board would raise even more money.

His colleague David Linden made a similar point, supporting a windfall tax on energy companies but saying it should also apply to the ‘Amazons of this world’. We should be serious about understanding the changes to retail and how our high streets operate, he said. The reality is that Amazon is the big beneficiary of that, so let us look at a windfall tax on it. There are other things we could do, such as reduce VAT on energy bills and reinstate the £20 to universal credit.

High tax? Low tax? Reform tax?

The debate over whether levels of taxes are too high ran through Conservative contributions to the Queen’s Speech debate. David Davis said taxes today are too high: “High taxes do not deliver growth, they stifle it.” Low taxes deliver investment and higher productivity, and therefore growth, and they are the pre-emptive answer to stagflation. He said the argument for windfall taxes was ‘self-defeating’.

Another former minister, Robert Jenrick, also thought taxes on working people were too high and said we need a ‘more competitive’ tax system. That means work now, when household incomes of any level are under strain, rather than in a year or two, when, potentially, inflation will start to ease and the need for tax cuts will be somewhat diminished.

Richard Drax warned the Treasury that high taxes stifle enterprise, aspiration, risk low growth, stagnation and unemployment: “This is the time to be radical and to return to our vote-winning philosophy of less state, low taxes and sound public finances.” Theresa Villiers said it is imperative that we have a clear, long-term economic plan to grow the economy, raise living standards, repair the public finances after covid and bring down taxes.

Sir Edward Leigh said that, given that families are suffering, and people are lying awake at night desperately searching for a way to pay their bills, and that we are in such a crisis, we have to move in a far more radical direction on the overall tax burden.  Miriam Cates said we might not be able to reduce the overall tax burden significantly, but we can reform our taxation system to share the burden more fairly. Our system of individual income taxation takes no account of how many people each income supports, for example.

Kevin Hollinrake said we need to focus on competition, making sure that the environment is very attractive to new businesses starting up and growing. All our policies should focus on small businesses, not on big businesses, which can generally look after themselves, he argued. Anthony Browne said in the Spring Statement the Government had outlined their ambition to use tax cuts to promote business investment. Ben Bradley welcomed the Chancellor’s commitment to move towards a lower-tax, small-state kind of economy where we can promote growth.

Bernard Jenkin said the abolition of VAT on domestic fuel would abolish a regressive tax that hurts the poorest households the most. We can do that now we are outside the EU. The Government should abolish the green levies on energy bills and fund them from the Exchequer, as recommended by Professor Dieter Helm, said Jenkin.

For Labour, Shadow Business Secretary Jonathan Reynolds said the UK was crying out for a serious plan to break the cycle of low growth, low productivity and high taxes. Reynolds said the UK needs greater investment in net zero, a real reform agenda on such things as business rates and a modern industrial strategy that provides a route for every business and worker in this country to fulfil their true potential.

Stephen Kinnock criticised the Chancellor for presiding over a high-tax economy, saying it was because, for more than a decade, the Conservatives have presided over a low-growth economy, based on insecure work and chronic underinvestment, driving a productivity crisis. Another Labour MP, Geraint Davies, said the four-year freeze on personal allowances and tax thresholds means a creeping increase in tax as people sink into tax thresholds and allowances go down in real terms.

Some Labour backbenchers called for a wealth tax. Jon Trickett said it was time to introduce a wealth tax because wealth in the UK is in the hands of a very small group of people and a tiny group of corporations. Why is money earned from wealth or property taxed less than money earned from work, he asked. Mick Whitley said we need a progressive wealth tax and we need to close the loopholes that enable the rich and the corporations to evade the taxes they rightfully owe. Fair taxation can pay for the uplift and reform of the benefits system, he argued.

Tony Lloyd asked why the Chancellor to increase the national minimum wage by 50p to £10 to help people pay for increased energy costs. Separately, why should those on higher incomes not be paying national insurance pro rata, he asked.

‘Where is the Employment Bill?’

Shadow Chancellor Rachel Reeves was among the MPs bemoaning the absence of an Employment Bill from the Queen’s Speech. She said there was a ‘real world price’ for the lack of an Employment Bill, ‘allowing scandalous threats of fire and rehire to continue to drive down conditions at work, not just in the appalling P&O case, but in other sectors’. She criticised the lack of growth in the economy under this government, claiming average earnings are £11,000 less than if growth had stayed at the same rate as under the last Labour Government.

Labour’s Deputy Leader Angela Rayner complained that 20 times government ministers had promised an Employment Bill that would protect workers and ‘put an end to warehouses run like Victorian workhouses’ – yet three years on the bill has not appeared. Rayner said this Government is presiding over a ‘bonfire of workers’ rights’. Within the first 100 days of a Labour Government, it would legislate to introduce fair pay agreements, which would bring together workers and employers to agree terms in each sector, starting in social care. Labour will scrap qualifying time for basic rights such as those on unfair dismissal, sick pay and paternity pay, scrap business rates to help our high streets flourish, all workers have the right to flexible working as a default from day one, extending statutory maternity and paternity leave and introduce the right to bereavement leave, said Rayner (photographed below thanks to Parliament UK).

Other Labour MPs echoed this call. Siobhain McDonagh said the next scandal after P&O is just around the corner and the absence of an Employment Bill plants the responsibility ‘clearly at the Government’s feet’. Dr Rupa Huq said two years on since the promise of an employment Bill, employment rights, flexible working and carers’ leave have also disappeared from the Queen’s Speech, despite the P&O scandal. Andy McDonald lamented that lack of a single enforcement body, offering greater protections for workers, provision to make flexible working the default and the extension of redundancy protection to prevent pregnancy and maternity discrimination, ‘have all since fallen by the wayside’.

Another Labour MP, Nia Griffith, said the union, USDAW, had shown that there can be workable solutions that give employers some flexibility without using zero-hours contracts; they have negotiated guaranteed minimum hours per week or per month with some employers so that at least workers know that they will get regular pay.

Kirsty Blackman, SNP said there are so many reasons why we need an Employment Bill, such as to have a proper living wage and the removal of the age discrimination within it, see flexible working requests available from day one and redundancy protections for women. Why did the Government bother doing the Taylor review? she wondered. On the action on fire and rehire of ferry workers, she wonders how government will indemnify ports having to act against large boats and large companies. The Brexit Freedoms Bill will undo progress on workers’ right made in our time in EU, she predicted.

Chris Stephens, also SNP, said: “Let us only allow zero hours contracts where there is a collective agreement with a recognised trade union, and then we will find out how many people actually want them.” Stephens said we really need to sort out the status of workers in this country, partly because there are far too many workers who are bogusly self-employed.

On the Conservative benches former Prime Minister Theresa May said she was disappointed that we do not have an Employment Bill, particularly to put through the policy of ensuring that tips that are left for waiters actually get paid to those individuals. Another Conservative, Dean Russell, urged the Government to push forward with his Tips Bill, because it is a great opportunity to tackle the cost of living and help people on low incomes.

Business minister Paul Scully said the Government will introduce an Employment Bill and a right to unpaid carer’s leave ‘when Parliamentary time allows’. Scully said the Government has ‘made good progress’ to extend the right to a written statement of core terms of employment to all workers (a day one right).  He also said he was committed to producing a statutory code on fire and rehire practices and was keen to do something to ensure that employers could not keep tips given to staff, waiters and hospitality workers. It is important to support businesses that are playing fairly with ‘zero hours contracts’, he said and agreed to meet with Labour’s Kate Green to talk about the potential to use the Economic Crime Bill to address the misuse of compulsory strike-off.

Scully also told the House that Conservative MP Matt Warman will conduct a review on the ‘future of work’. According to a government statement he will “work with experts on labour market policy, including across government, parliamentarians, academia and think tanks, to develop this year a detailed assessment on key issues facing the labour market and provide a set of recommendations for Government to consider.”

On unemployment levels, Chief Secretary to the Treasury Simon Clarke said that, far from the dire forecasts about unemployment in 2020 being realised, unemployment has fallen back to just 3.7 per cent, which is below pre-pandemic levels and the lowest since 1974. Labour’s Geraint Davies intervened to say that, according to the ONS, there are 444,000 fewer people in work than before the pandemic and not half a million more.

Harriett Baldwin (Conservative) said the plan for jobs has worked well, as has the help the Chancellor gave throughout the pandemic, so today, as we face this high inflation rate, we are in a position to say that we have a strong job market. Peter Aldous (also Conservative) supports the Learning and Work Institute recommendation that smaller businesses should be able to deduct 230 per cent of the cost of accredited training from their tax liability.

This year’s increase in the national living wage will benefit millions of people, particularly those on a low income, said Chancellor Rishi Sunak.

Conservative John Redwood said if we get growth and inflation right, the debt and the deficit will come closer to taking care of themselves. The Government needs a policy that deals with supply-side shortages and a policy based around lower taxes, because we need to give something back now to start to lift the cost-of-living crunch.

For the SNP, Alison Thewliss said the UK Government should scrap the regressive national insurance tax hike, which is a tax on jobs at the worst possible time; reverse the £1,040 cut to universal credit; and support those on legacy benefits, who have seen very little from this Government. They should also introduce a real living wage.

Maria Miller (Conservative) said the Modern Slavery Bill addresses a weakness in the current system and proposes to increase the accountability of companies and organisations driving modern slavery out of supply chains.

Brexit burdens

The Minister for Brexit Opportunities and Government Efficiency Jacob Rees-Mogg said the cost of business regulation is too high. Too much EU regulation has been written at the expense of consumers and entrepreneurs with new ideas, he argued. He claimed that many of the EU’s regulations, such as Solvency II or the rules on general data protection regulation, benefit big incumbents rather small competitors and deprive consumers of new technologies or better products and services.

For Labour, Hilary Benn said our goods trade with the EU since January 2021 has had to contend with red tape, bureaucracy and costs, including transport costs, which the Government have dumped on British business via the deal that they concluded. We know that we have small and medium-sized companies that are struggling to export to the EU, he said. While businesses are having to cope with all that cost, the Government have for the fourth time postponed checks on EU businesses exporting into the UK, so they face less of the checks and costs that the Government have just dumped on to British businesses. According to HMRC, the number of UK businesses exporting goods to the EU fell by an ‘astonishing’ 33 per cent last year compared with the year before, he said.

The Northern Ireland Protocol was raised by a number of Conservative MPs. Theresa May said the Government need to consider not just some immediate issues, but the wider sense of what such a move would say about the UK and its willingness to abide by treaties that it has signed if it disregards the Northern Ireland Protocol. Crispin Blunt said we should not play quite so fast and loose with powers to overturn the protocol. Now that we are renegotiating the Northern Ireland protocol and looking at talking to Brussels, it cannot be right that the VAT on residents across the UK is not under the Government’s control, said Anne Marie Morris.

Dame Andrea Leadsom wants a freeport that could encompass the whole of Northern Ireland which ‘makes sure that Northern Ireland is integrally joined to and feels part of the UK’. Northern Ireland could be considered as a freeport to have a beneficial corporation tax rate and other regimes to encourage more jobs and growth, she said.

On the Labour side, Hilary Benn that threatening to disapply the Northern Ireland Protocol will result in retaliation. If retaliation results in further obstacles to trade or, ‘heaven forbid’, a trade war, that will make the cost-of-living crisis even worse, he argued.

The SNP’s Alison Thewliss said there has been a lot of talk about the Northern Ireland protocol, but the reality is that Manufacturing Northern Ireland has found that the issue is largely with GB suppliers that are unwilling to send to Northern Ireland, while EU supply chains have recovered. There has been a 28 per cent  increase in sales with the EU and manufacturing jobs in Northern Ireland are now growing four times faster than the UK average, said Thewliss.

Lib Dem Sarah Olney said the Government really need to get on with solving the issues thrown up by Brexit red tape and customs checks.

Tahir Ali (Labour) said the new Brexit Freedoms Bill threatens to further undermine parliamentary scrutiny of important legislation – yet another attempt by this Government to avoid accountability.

Liz Saville Roberts, Plaid Cymru, said three years into this Parliament and six years on from Brexit, this Government cannot articulate or deliver any clear benefits to Wales. We need an honest funding settlement, devolved engagement and a focus on delivery rather than glossy announcements, she said.

Welfare and income support

Chancellor Rishi Sunak said he will not increase universal credit by £20 because he wants ‘to make sure that we get support to everyone in a way that suits them’. Sunak told MPs he has cut the universal credit taper by the ‘biggest amount ever’. The Secretary of State for Work and Pensions Dr Thérèse Coffey talked of the ‘magic of universal credit’, contrasting it with the cliff edges of tax credits, which stop people progressing the amount of time and skills they get in work

Conservative Sir Bernard Jenkin suggested that the £20 uplift in universal credit should immediately be restored.

Work and Pensions Committee chair Stephen Timms, a Labour MP, complained that the Queen’s Speech provided no help at all to people dependent on benefits and pleaded for the Chancellor to revisit the universal credit uprating immediately.

Navendu Mishra argued for an urgent and fundamental overhaul of universal credit, and also a reduction in VAT from 20 per cent to 17.5 per cent.

Patricia Gibson (SNP) called on the UK Government to convert the £200 energy loan into a more generous and substantial grant, scrap the ‘regressive’ national insurance tax hike, reverse the £1,040 cut to universal credit, match the Scottish child payment UK-wide, introduce a real living wage to boost incomes, reduce or remove VAT on household energy bills, and follow the Scottish Government’s six per cent uprating of benefits.

Calling for reinstatement of the £20 universal credit uplift, Alan Brown (SNP) said people on universal credit are more likely to be on prepayment meters and are therefore further penalised with a higher energy tariff. Those people will be forced to self-disconnect this winter, as they simply will not have the funds to put in the meter.

Other comments

Dr Liam Fox (Conservative) called on the Treasury Committee to investigate why the Bank of England so comprehensively underestimated the inflationary threat.

Kate Green (Labour) emphasised the need to strengthen the approach taken by Companies House to compulsory strike-off, which is too often used by ‘unscrupulous’ directors to avoid complying with their obligations. She would like to see a much more ‘proactive approach’ from Companies House where it ought to be aware of numerous and repeated failures by companies with common directors to file the legally required documents.

Dame Angela Eagle (Labour) said this Government have let fraud run riot even as they under-resource and fragment any serious police response to it, while millions of our fellow citizens fall victim to scams and con merchants.

Through their Financial Services and Markets Bill, the Government could instruct the Financial Services and Markets Authority and give it a clear remit on financial inclusion by including an aspect called ‘must have regard’, said Emma Hardy (also Labour). That would be a cost-free way to make a difference to some of the families struggling the most, she said.

By Hamant Verma, Senior External Relations Officer