Queen’s Speech 2015: Let’s hope the Tories are saving the radicalism for the Budget
We were told we’d never see such a sight again. Majorities were a thing of the past, they said, and coalition politics was here to stay. And yet there it was yesterday – resplendent in all the finery and pageantry that the British state can muster – a legislative programme for a majority Tory government. We haven’t seen one for 20 years, and now that it’s back in vogue, with a hint of mid-90s retro, what did we learn?
With a slim majority and some significant set piece challenges on the horizon, it is perhaps understandable that the Queen’s Speech had something of a “steady now” feel to it. This follows a Tory election campaign that was criticised by many for lacking in emotional appeal. Given that such an approach delivered the Tories an unexpected victory, it stands to reason that the party’s legislative agenda would retain the same supposedly dry focus on jobs and growth.
Job creation was one of the outstanding successes of the economic recovery, so efforts to build on this with a carrot and stick approach certainly make sense. The carrot is aimed at employers, with promises to slash red tape to spur employment growth, and the stick is reserved for the unemployed in the form of a lower welfare cap of £23,000, albeit a cap which remains around the level of post-tax median earnings.
And what of that pledge to rip up red tape? It can be found in the new Enterprise Bill, of which the new business secretary Sajid Javid is rightly proud. Few governments pledge anything other than a reduction in red tape, and even fewer achieve it. To give Javid his credit, he has some pretty solid plans to extend the “one in, two out” principle to regulators as well as government departments. This means that any new regulation that comes with a £1 cost burden to business will have to contain plans to cut £2 of costs elsewhere. During the election, the Tories made much of their claim to have cut red tape and, indeed, they pledged to go even further. The question now concerns the extent to which European regulations will be on the table (they haven’t been in the past) and how much the efforts to disentangle British business from EU directives will feature in the looming renegotiation.
A Finance Bill will prevent any rises to the rates of income tax, VAT and national insurance over the next five years. As a headline, this is pretty good news. However, the risk is that it limits the government’s room for manoeuvre when it comes to radical tax reform. Since the chancellor’s new rules mean he can’t touch the rates of taxes that generate 70 per cent of all revenue, his scope for reforming other taxes (such as capital taxation) remains restricted.
Overall, however, the new tax environment could be described as one designed to “share the proceeds of growth.” That’s a phrase last used by the Tories when they committed to Labour’s spending plans before the crash. Taking the low paid out of income tax is a welcome step, and moves towards engineering a link between inflation and tax rates is better than nothing. But it’s not as bold as the Institute of Directors’ plan for a triple lock on tax bands, which would see them rise in line with the highest of consumer price index inflation, average wage growth or 2.5 per cent. The battle for radical tax reform will continue.
There are elements of the Tory manifesto that ought never to have seen the light of day. Plans for mandatory volunteering (in effect, an additional three days of leave) were cobbled together in response to attacks on the Tory election campaign for being nasty. Privately, senior Tories profess little love for this particular policy. Let’s see if it rears its head in the coming months, but don’t expect it to be high on anyone’s agenda. Immigration reform is, at this stage, largely synthetic. Clamping down on “rogue employers” and “upskilling the domestic workforce” is all well and good but it won’t matter a jot to the net migration figures. It’s in the renegotiation with the EU that the meat of this particular meal is to be found.
A new parliamentary session gets underway and, after a majority Tory legislative agenda, we await a majority Tory Budget and hope that it will be a bold one, with deficit reduction centre stage and with continued emphasis on job creation. Much of the implementation will, of course, take place within the context of a post-renegotiation in/out EU referendum. Given the passions that is likely to inflame, no wonder they settled on a “steady as she goes” Queen’s Speech.