Prior to this year’s Queen’s Speech, Theresa May said in a press notice issued by Number Ten: “This Government will respond with humility and resolve to the message the electorate sent”.
The Queen’s Speech itself responded with concessions and acknowledgement that ideas unpalatable to the opposition had to go.
A delayed Queen’s speech (which visibly lacked the customary pomp and circumstance) announced 27 bills as she revealed a much-weakened Government agenda. Given this is a two-year Parliament, Theresa May must be lamenting the notable absences from her once grand plan.
It came as no real surprise that the agenda as laid out contained little on tax and dropped key Tory manifesto pledges including:
- Expanding grammar schools
- Dementia Tax
- Revisiting the foxhunting ban
- Scrapping free school meals
- Means testing for winter fuel payments
- Dispensing with the pensions triple lock.
It’s all about the “B-word”
As pre-announced, the focus was on delivering Brexit. Instead of setting out a vision for the country in this period of uncertainty and turbulence, she laid bare the challenges ahead for this Parliament.
The government’s intention is to deliver eight bills necessary for Brexit. These include legislation allowing Britain to determine its own immigration, customs and trade arrangements.
The Repeal Bill
This is a huge piece of legislation that aims to replicate all existing EU law into British law by the time of Britain’s departure from the EU. The Bill will repeal the European Communities Act 1972, and enable Parliament to make secondary legislation to address the laws that do not operate appropriately post Brexit.
It will also allow changes to be made to domestic law to reflect the content of any withdrawal agreement under Article 50. In addition to replicating the common UK frameworks created by EU law, it will maintain the scope of devolved decision-making powers immediately after Brexit.
A transitional arrangement will provide for certainty and allow for discussion and consultation with the UK’s devolved administrations over lasting common frameworks.
The Customs Bill is intended to ensure the UK has a standalone UK customs regime on exit, and an ability to have future trade agreements with the EU and others. This is vital to enable the flow of goods across Britain’s borders.
By leaving the Customs Union, Britain will be allowed to sign free trade deals with non-EU countries. Therefore, there will be a Trade Bill put in place, which will act as a framework to allow the UK to sign any new deals.
No more dementia tax
Plans to scrap free school meals, means-testing winter fuel payments for pensioners, dispensing with the pensions triple lock and amendments concerning social care (widely known as the “dementia tax”) were conspicuous by their absence. However, we have been promised a Social Care Consultation.
The government also appears to be willing to take another look at the proposed changes of the school funding formula. The Guardian quoted a Prime Minister’s spokesperson as saying: “The point is the current funding formula is unfair, we stand by that position. A consultation has taken place and we will reflect on the findings of that consultation before we can bring forward proposals which would carry the support of the whole house.”
The parliamentary programme includes a Summer 2017 Finance Bill with a range of measures to tackle avoidance, but there was no reference to an emergency Budget.
The publication of Finance Bill (No 2) 2017 was stripped of most of the March Budget proposals, leaving uncertainty for tax advisers and taxpayers. Legislation relating to Making Tax Digital and Corporation Tax was removed.
The government has until 20 July 2017, just 20 sitting days, to introduce the Summer Finance Bill.
Making Tax Digital
Perhaps not to be unexpected, due to its history of being caught up in a succession of purdahs and post-purdah periods, the speech did not contain any direct reference to the Government’s Making Tax Digital (MTD) plans to revolutionise the UK tax system and bring an end to self-assessment.
Many industry pundits are agreed that MTD is the way forward. After all, if it achieves its objectives, the way that we all interact with HMRC will be moved irrevocably into the digital age.
However, it is coming perilously close to the April 2018 launch for MTD to continue as previously planned.
John Cullinane, CIOT’s tax policy director said in a recent interview:
“Nobody is seriously challenging the move to digitalisation of the tax system, but the timetable remains extremely challenging. The many complexities of tax still need to be translated into functioning software, and the diverse nature of businesses accommodated, not to mention how their agents can support them. This is an opportunity to reconsider whether so many businesses need to be compelled to adopt the system in such a short timescale.”
As Cullinane also pointed out, it should not be forgotten that the underpinning legislation is not currently in place.
A National Insurance Bill will be put forward. It does not, however, relate to the discussion of Class 4 contributions U-turn executed immediately after the Spring Budget 2017. Its purpose is to ‘make the NICs system fairer and simpler’.
Financial Guidance and Claims Bill
The government proposes a single body with overarching responsibility for all public financial guidance, instead of the current position where public financial guidance is delivered by overlapping bodies: the Money Advice Service, the Pensions Advisory Service and Pension Wise.
It also proposed strengthening the regulation of claims management companies by transferring the regulatory responsibility to the Financial Conduct Authority.
Announcement on schooling watered down
Grammar schools did not get mentioned at all, despite a manifesto pledge to consult on opening new selective schools. Instead, the Queen said: “My government will continue to work to ensure that every child has the opportunity to attend a good school and that all schools are fairly funded.”
Promise of a public enquiry for the Grenfell Tower enquiry
The speech included the promise of a judge-led public inquiry into the Grenfell Tower fire, “to ascertain the causes, and ensure that the appropriate lessons are learnt”.
No Trump visit
Traditionally the speech lists upcoming state visits for the parliament, and Her Majesty mentioned the planned visit in July by the King and Queen of Spain. However, there was no mention of US President Donald Trump coming, following reports he might not want to come if there was likely to be protests.
The speech is now up for debate
The House of Common and the House of Lords will now debate the contents of the Queen’s Speech and planned legislative changes over six sitting days, finishing on Thursday 29 June 2017. The first day of the debate is general in tone and the other five days on specific topics.
The Queen’s Speech contained little in the way of tax and even less in the way of surprises. This was a speech driven from the desperate calls of minority government that must now appease all parties if any progress is to be made.
Brian Palmer is the tax policy adviser for AAT.