Serious questions remain over how the Government will pay for the legislative programme outlined in the Queen’s Speech.
That is the warning from tax partner Phil Waller at the Birmingham office of international accountancy firm Mazars.
He cautioned: “The new administration has to get down to the important matter of how to meet the cost of the legislative programme.
“The document supporting the speech ran to 103 pages so there is much for them to get their teeth into. However, serious issues remain to the resolved. We may get significant insight into these when the Chancellor stands up to deliver his second Budget this year on July 8, but the financial burdens are going to be great.
“How much is the ‘Long Term Plan’ going to cost? The first surplus is predicted in 2018/19 of £5.2 billion but that is still a long time away.”
A slate of promises would have to be accounted for, noted Mr Waller, including personal allowances of up to £12,500 by the end of the Parliament; ensuring people working 30 hours a week on the National Minimum Wage do not pay income tax; no rises in income tax, VAT or NIC rates for the next five years, the so-called Tax Lock commitment; 30 hours of free childcare per week for 3 and 4 year olds for 38 weeks of the year; plus £8 billion per year extra for the NHS.
In terms of the Government financing these commitments, Mr Waller went on: “We know that welfare cuts are going to happen and the Full Employment and Welfare Benefits Bill will formally start the process – as was stated, ‘young people can earn or learn’, but benefits are no longer an option.
“However, many of the other welfare cuts are not going to need new legislation from the Queen’s Speech. It will be interesting to see how they square the circle.”
And, said Mr Waller, the one thing that was still somewhat of an unknown quantity, not least from a financial perspective, was the European Union Referendum Bill. “Will this be a help or a hindrance, and not simply in respect of allowing the Government to meet its financial commitments. Only time will tell.”