The Speaker
Thursday, 13 June 2024 – 08:20

PMQs: Windfall Tax, Cost-Of-Living, and Farmer Subsidies

In the first PMQs of the parliamentary session, the Prime Minister was pressed on what his government is doing to ameliorate the cost-of-living crisis.

Starmer opened by pushing the Prime Minister to clarify his position on a windfall tax for oil and gas companies.

Oil and gas companies’ profits have skyrocketed over the past few months after various factors have caused fuel prices to soar. The increasing cost of energy bills caused by fuel price increases is the main driving force behind rapidly rising inflation, which today reached its highest level in 40 years.

While the Conservative party plans to provide £350 to most families to help with energy bills (£200 of which must be repaid), Labour has, alongside the expansion of the warm homes discount, repeatedly pushed for a windfall tax on oil and gas company profits. A windfall tax is a one-off tax placed on a company bringing in unexpectedly high profits, but critics say such a policy makes businesses and investors nervous about potential unexpected losses to their profits, with the resulting uncertainty hurting investment. In this case, such a blow to investment is unlikely, with BP’s own CEO stating that a windfall tax would not deter his company’s investment.

While the Conservatives have hitherto rebuffed Labour’s suggestion, over the past week the government’s position on the policy has been blurred by uncertainty among cabinet ministers, with different ministers seemingly holding different positions. The Chancellor of the Exchequer, Rishi Sunak, said that he was considering the policy, while other ministers maintained the traditional Conservative line that it would hurt investment. Keir Starmer entreated the Prime Minister to change his position now, claiming that a U-turn was inevitable so he may as well adopt the policy now in order to stop people suffering in the meantime.

The Prime Minister’s response did little to clarify the government’s position, both repeating the old Tory adage about taxes hurting investment while saying that the government would be considering what measures it could enact to lessen the cost-of-living crisis.

The Prime Minister also repeatedly claimed that the economy built by his government was robust and strong, an odd claim considering the record-breaking rate of inflation, rising poverty, and negative growth experienced over the past couple of months.

Keir Starmer accused Johnson of:

“Pretending the economy is booming. [He’s] Still got his head in the sand in the middle of an economic crisis.”

Leader of the SNP in the Commons, Ian Blackford, also raised questions regarding the ongoing cost-of-living crisis, accusing the government of classist attitudes and hurting the poorest in society.

“Families can’t afford food. They can’t pay their bills, and we’re only at the beginning. And, as always under the Tories, the poorest are punished the most.”

“For months people have been crying out for support, but month after month a distracted Downing Street has failed to lift a finger to help.”

“Every day this Prime Minister remains out of touch, people remain out of pocket.”

“The Tories only response to this cost-of-living crisis has been insults and inaction. The Tory backbencher who thinks poor people just need cooking lessons. The Tory minister who thinks that people should just ‘get a better paid job’, and the Chancellor who thinks it would be ‘silly’ to act now. This is the cost-of-living crisis from Westminster.”

Meanwhile, another Brexit thorn-in-the-side was raised by Liberal Democrat leader Ed Davey. Farmers in the UK received large portions of their income from EU subsidies, which sometimes composed as much as half of their income. As a result of Brexit, the UK government has taken over the payment of subsidies. Ed Davey raised concerns that the government had announced that it was intending to make cuts to the scheme, without providing an alternative scheme to replace it. The cuts would come at a time when farming resources are skyrocketing due to the cost-of-living crisis, with Davey reporting that the cost of fertiliser had doubled.

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