MPs debate government programme after King's Speech
Following the King’s Speech, MPs debated the government’s programme for five days in the House of Commons. Some of the key issues discussed included economic growth, the Budget Responsibility Bill, VAT on private schools and devolution. The topic of scrapping the two-child limit was also frequently raised. Conservatives accused the government of ‘downplaying’ the inherited economy to justify raising taxes, while the government argued that they would keep taxes ‘low’.
We summarise some of the contributions covering tax, economic and business topics below, grouped by party. The measures in the programme are summarised separately here.
At the end of days four and five of the debate MPs voted on amendments to the motion to welcome the King’s Speech. Given the government’s large majority it is unsurprising that none was successful.
Monday’s Conservative amendment focused on economic policy, speaking of the “improved economic conditions the Government is inheriting” and “regret[ing] that there is no mention of how to make necessary savings on welfare; urg[ing] the Government to meet the commitment set out in the Labour Party’s manifesto not to raise taxes on working people; regret[ing] that the Gracious Speech fails to make a commitment not to use changes to reliefs to raise taxes; and call[ing] on the Government to increase income tax thresholds to prevent income tax from being charged on the State Pension.”
It was rejected by 111 votes to 390.
The other motion of note was the SNP’s which called on the government to abolish the two-child limit to Universal Credit. Seven Labour MPs joined the SNP, Lib Dems and other smaller parties and independents in backing the amendment but it was defeated 103-363. The seven rebels were suspended from the Labour Parliamentary Party for six months as a consequence.
Prime Minister Keir Starmer said the King’s Speech was “a marker of our intent: not only a certain destination for the future of this country, but a new way of governing; a government of service guided by clear missions, with a long-term plan to fix the foundations; a plan that starts, as it must, with our economy”.
He said Labour would “take the brakes off Britain and go further and faster on measures to generate higher economic growth — workers and business united in the cause of wealth creation. We will reform the planning rules… level up rights at work… create a new industrial strategy; invest in cleaner, cheaper British energy; harness the power of artificial intelligence; improve our public transport; confront our historic challenges on technical education; transform our skills agenda in partnership with business; and push forward devolution… A plan for wealth creation that will finally lead us out of the pay more, get less doom loop that is the last Government’s legacy.”
Rachel Reeves, the Chancellor of the Exchequer, argued that the last Parliament had the highest tax burden in 70 years and said that the Conservatives ‘crashed’ the economy. She said she had warned “that whoever won the general election would inherit the worst set of circumstances since the Second World War”. Reeves added that the government’s No. 1 mission is to “secure sustained economic growth” and that they would “keep taxes, inflation and mortgages as low as possible”.
In an intervention, Lib Dem Andrew George challenged the Chancellor to take action on the misuse of public funds, citing alleged corruption in Covid aid distribution and tax loopholes. Reeves replied: “We need to get value for money for all tax incentives. I will ensure that the Treasury and the Ministry of Housing, Communities and Local Government look at the changes that he suggests.”
The Chancellor said that the Pension Schemes Bill will boost pension pots by over £11,000 through a new and improved value for money framework. Additionally, to ensure that the Bill is as strong as possible, the government is launching a pensions investment review. The Secretary of State for Work and Pensions, Liz Kendall, said these measures could “help improve incomes in retirement” and unlock investment in British businesses and improve outcomes for British pensioners.
A number of Labour MPs called for scrapping the two-child limit in their speeches during the debate. These included Rebecca Long-Bailey, Imran Hussain, Zarah Sultana and John McDonnell, who went on to vote for the SNP amendment (see above) as well as Kim Johnson, who didn’t. While they welcomed the establishment of the taskforce to look at this issue they argued that to lift children out of poverty the government needed to act without delay. Sultana suggested a 1% wealth tax on assets over £10 million “could raise the funds needed to pay for the policy three times over”.
In addition, McDonnell urged his party to be ‘honest’ about taxation and the distribution of wealth and said: “we need to grasp the nettle of levelling capital gains tax with income tax, making sure that our tax reliefs and the corporate welfare that is going on is effective and not simply subsidising profits”.
Dame Meg Hillier, chair of the Public Accounts Committee in the last Parliament, welcomed the government’s commitment to “kickstart growth” in the economy.
Derek Twigg highlighted the high tax burden and suggested that the government should be ‘patient’, focusing on long-term goals.
Olivia Blake and Sir Mark Hendrick praised the government’s plans to expand the windfall tax with Hendrick arguing that taxing oil and gas companies' excess profits more highly will benefit the entire nation.
Paula Barker, Rachael Maskell and Ruth Jones welcomed Labour’s Employment Rights Bill. Maskell also used her speech to urge the government to regulate Airbnb and short-term holiday lets.
Marie Rimmer called on the government to reform adult social care, highlighting that, “even with the additional social care levy, local authorities are struggling to cope”.
Clive Betts touched upon devolution and financial challenges that local authorities face and made a case for reforming the council tax system.
Andy McDonald said the UK’s taxation system is “grossly unfair” and welcomed the government's focus on devolution.
Conservative speeches
Conservative leader Rishi Sunak challenged the government’s claims that they had a poor economic inheritance: “With inflation at 2%, unemployment at 4% and the fastest growing economy in the G7 so far this year, the Labour Party has inherited an economy that is already on an upward trajectory.”
On strengthening the role of the Office for Budget Responsibility (OBR), he observed that “the work of the OBR already means that Labour Members had the full details of the public finances when they set out their manifesto… that has also taken away from Oppositions coming into government the ability to say that they did not know the true state of the public finances”. This means, he suggested, that were Labour to breach their promises of no tax rises on working people and no plans for tax rises beyond what is in their manifesto, “it would be difficult for them to claim that [this was justified because] things are worse than they thought”.
On employment rights, Sunak said the UK had low unemployment thanks in part to a flexible labour market. He warned the plans could have unintended consequences — “they could lead to firms being less likely to invest and less likely to hire, so increasing unemployment in the long term”.
Jeremy Hunt, now the Shadow Chancellor, also challenged the government’s claim that they have inherited the “worst economy” since the Second World War. He suggested that this ‘nonsense’ claim is “a pretext for long-planned tax rises”. Hunt quoted the Institute for Fiscal Studies Director Paul Johnson who had said that, thanks to the OBR, the nation’s books are “wide open” and “fully transparent”, so pretending things are worse than expected “really won’t wash.”
Proposing the Conservative amendment (see above), the Shadow Chancellor urged the government not to raise taxes on working people. He praised the Conservative government’s record on tax, including full expensing. He suggested that if Labour increases business taxation, they will risk the UK’s attractiveness to foreign investors. While “keeping taxes down is hard work”, lower taxes, when funded properly, can boost growth, he maintained.
On the Budget Responsibility Bill, Hunt said: “We all understand the politics of a Bill that allows the government to make endless references to the mini Budget, but if the right hon. Lady is really committed to fiscal responsibility alongside growth, I hope that she will today confirm that she will not fiddle with the five-year debt rule to allow increased debt through the back door”.
An intervention from a Labour MP accused Hunt of having backtracked on tax cut promises made at the election. The Shadow Chancellor said this was not the case: “We offered… fully funded tax cuts… to be brought in over time over the next Parliament… not immediately”.
Mel Stride, Shadow Secretary of State for Work and Pensions, accused the Chancellor of “rolling the pitch to raise taxes. Against all the commitments she made during the general election, she will be raising those taxes in the autumn,” he predicted.
Saqib Bhatti enquired about the government’s attack on their economic inheritance, asking: “If the Chancellor didn't use the OBR forecasts”, what did she use to make those “fully funded” promises?
Dame Harriett Baldwin, former Chair of the Treasury Committee, suggested some of the government's measures mirror things called for by the International Monetary Fund (IMF). She said the IMF also wanted to see tax increases. She told the House that during her committee’s private session with the IMF, they proposed setting capital gains tax rates in line with income tax rates, subjecting the sale of primary residences to capital gains tax, ending inheritance tax loopholes for pensions, family businesses and farms, revaluing all of England’s homes for council tax and introducing road pricing. Baldwin hoped that the government would rule out these proposals, saying: “the tax rises that the government admit to already—the pensioner tax, the tax on education, and regulatory costs galore — are bad enough”.
Priti Patel highlighted the Conservatives' achievements including, she argued, the expansion of renewable energy generation, saying that “technology, rather than taxation, is the path to a much more sustainable future”.
Robert Jenrick – like Patel expected to be a contender in the forthcoming Conservative leadership contest - also praised the previous government, arguing that the Conservatives have delivered on their promises, including delivering Brexit and providing a stronger economy. He acknowledged, however, that they did not deliver the “lower taxes” that were promised and expected by the public.
David Simmonds, Dr Ben Spencer and Alicia Kearns expressed their disagreement with the government's intention to charge VAT on independent school fees. Kearns highlighted that in her constituency (Rutland and Stamford) there are over 1,000 children with special educational needs who attend these schools and asked: “Why are the government punishing parents who want the best for their children”. A newly elected MP, Bradley Thomas, called the government’s proposal “an ill-conceived affront” to the children and families who currently exercise choice in education provision.
Andrew Rosindell was unhappy with the Budget Responsibility Bill, saying it would give the OBR “a veto over the rights of this Parliament to decide economic policy”. He also argued that high taxes disincentivise work and put people off from investing in the country.
In a contribution which surprised some MPs, Suella Braverman urged the government to scrap the two-child benefit cap. She also suggested that for families on middle and higher incomes “we should change our tax regime so that they are incentivised to have children”.
Liberal Democrat speeches
For the Liberal Democrats, party leader Ed Davey welcomed the government’s focus on getting the economy growing strongly again. He agreed that building more homes is an essential part of that, but added that had to be done by properly engaging local communities.
To help restore trust in government and politics Davey welcomed the proposed statutory duty of candour on public officials and devolution of power to local communities, and argued for a number of further measures including stronger protections for whistle- blowers.
Sarah Olney, Lib Dem Treasury spokesperson, welcomed some measures in the King’s Speech including the introduction of an industrial strategy council. She said the Liberal Democrats “want to see more direct support which will impact local community businesses. We believe we need swift action specifically to tackle high energy costs and we continue to call for business rate reform”.
Olney also applauded the government’s acknowledgement of the need to reform the apprenticeship levy. However, she urged them to “go further and replace the current scheme with a broader and more flexible skills and training levy”. She asked the government to support Lib Dem calls to guarantee that young people get paid at least the national minimum wage by scrapping the lower apprentice rate.
Daisy Cooper emphasised the important role that small businesses play in the economy and urged the government to reform business rates. She argued that “the business rates system is broken, crippling high streets—particularly heritage pubs—while Amazon warehouses are being given a tax break”.
Helen Morgan welcomed the government's commitment to devolve power away from Westminster and argued that “funding must reflect the cost of delivering services in rural areas”.
Scottish National Party (SNP) speeches
The SNP’s leader in Westminster, Stephen Flynn, highlighted the amendment to the King’s Speech motion that his party had tabled (see above). The cap “retains children in poverty—hundreds of thousands of children across these isles… but it was not mentioned in the government’s programme… Instead, all we have heard is that a taskforce will be created, with no timeframe for that taskforce and no indication when it will conclude.”
Seamus Logan and Graham Leadbitter supported their colleague's remarks on the two-child benefit cap. Leadbitter also hoped the new government would work closely with the Scottish government on the green freeport.
Kirsty Blackman recognised the importance of economic growth, but also emphasised the significance of “what we do with the extra tax take generated from the growth we have created”. She added: “There is no point in having growth for growth’s sake. We need to ensure that the economic growth and the increase in the tax take that the Labour party is hoping to deliver involves a benefit for all those who live in these islands”.
Pete Wishart criticised the previous government's attitude toward the Scottish tax system and said: “They tried to tell us that people would not come to Scotland from the rest of the United Kingdom, because apparently they are put off by our lower council tax… Most of all, they said that people would not come to Scotland because we had asked them to pay just a few more pounds of income tax.” However, as National Records of Scotland has shown that there is net migration into Scotland, “let us not hear any more about that rubbish”.
Other parties and independents
Plaid Cymru’s Westminster leader, Liz Saville Roberts, called for measures to “reform Wales’s fiscal framework to provide consistency, transparency and fairness—replacing the Barnett formula with a needs-based formula, introducing multi-year funding settlements, and restoring the Welsh budget to 2021 spending review levels”. She also argued for tax rises to fund progressive policies, such as equalising capital gains tax with income tax. Furthermore, she supported the idea of scrapping the two-child limit and argued that the move would help lift 65,000 affected children out of poverty in Wales.
The Democratic Unionist Party (DUP) leader Gavin Robinson said that public services in Northern Ireland “are constrained because the Barnett formula has not served us well and we have been getting less than what the Independent Fiscal Commission for Northern Ireland and the Northern Ireland Fiscal Council have accepted that we need”. He asked for “earnest engagement on public services and public funding in Northern Ireland”. Similarly, Jim Shannon (DUP) urged the government to ensure that that £600 million gaping hole in Northern Ireland’s finances is addressed.
Sammy Wilson (DUP) challenged the government’s commitment to economic growth by saying “economic growth depends upon cheap energy, and I am fearful that some of the policies that have already been implemented, and the promises made in the King’s Speech, will make it difficult to achieve economic growth”.
Jeremy Corbyn (Ind) called on the government to ‘immediately’ end the two-child benefit cap, highlighting that “if the government do not deliver on improving living standards for the very poorest in our society…then the alternative is a turn towards the far right in politics”.
You can read:
Speeches on day one of the King’s Speech debate
Speeches on day two of the King’s Speech debate
Speeches on day three of the King’s Speech debate