The Queen’s Speech
Tuesday 11th May 2021
The State Opening of Parliament took place this morning with the Queen setting out the government’s legislative agenda for the next session of parliament. It was a much less grand affair, due to the coronavirus pandemic, with the Queen going without her usual robes, and travelling to Parliament by car instead of in a horse-drawn carriage.
This was the first Queen’s Speech following the onset of the Covid-19 pandemic and the UK’s exit from the EU’s regulatory system. Much of the narrative was centred on a return to normality, the economic recovery, grasping the opportunities presented by Brexit and doubling down on the government’s “levelling up” agenda, which was boosted by the Conservative’s strong election results last week.
The Headlines
The government continued in its efforts to curry favour with “Red Wall” Tory voters by addressing issues perceived to resonate with their priorities and included bills to: give adults the opportunity to retrain, build more homes, tighten up the asylum system, invest more in public services and crackdown on crime.
The formal announcement of the repeal of the Fixed Term Parliament Act will increase speculation the UK’s next general election will come in advance of 2024. The Electoral Integrity Bill, which will introduce new rules around voter ID, will be vigorously opposed by the Labour Party who view it as an attempt to suppress their vote.
Of note was the continued lack of detail surrounding the long promised reform of social care which was only briefly referenced. This remains a complex and controversial policy issue which the government has again avoided bringing forward detailed proposals for reform. The closer we get to the next general election the more politically risky unveiling significant reforms become.
Investment Management
Of primary importance to our industry in this Queen’s speech was the announcement of an Online Safety Bill. This aims to make internet giants, such as Google, do more to tackle illegal content on their services. The IA has been campaigning over the past year to ensure that financial scams are included within the scope of the Bill, and we are extremely glad to see that today’s announcement leaves open the door to do this. We are now expecting a period of pre-legislative scrutiny on the Bill, perhaps even before the summer recess, and we will be pushing hard to ensure that financial scams are explicitly included.
The government’s Environment Bill, carried over from the last session, will be the centrepiece of the green legislative agenda as the Prime Minister seeks to highlight his environmental credentials ahead of COP26. It will overhaul environmental regulations, create a new green watchdog and set fresh biodiversity targets. The legislation to set Carbon Budget 6 at the level recommended by the Climate Change Committee, which aims to reduce greenhouse gas emissions by 78% by 2035, was also included.
Investing in jobs and infrastructure across the UK was a key theme of the speech and it is worth noting the Chancellor’s recent comments in the press on the “enormous amount of excess savings both in the household sector, approaching £140bn, and £100bn sitting on corporate balance sheets”. The government will be looking for the backing of the investment management industry to get this capital deployed productively to secure a rapid and sustainable economic recovery which supports their “levelling up” agenda.
Aside from the points above, the speech was a relatively light one for financial services. Much of the government’s current work on issues such as the listings regime, the Future Regulatory Framework and the UK Funds Regime is currently at an earlier stage of development.
Bills of interest
After months of work across Whitehall and beyond, some 24 new bills and three draft bills were announced today and maybe viewed by clicking here. The following inclusions are likely to be of most interest to IA members:
- Draft Online Safety Bill (DCMS)
The Online Safety Bill will make online platforms responsible for their users’ safety online and designates Ofcom as the independent online safety regulator. Platforms will need to ensure there is no safe space for criminal content and activity online and require them to tackle illegal content on their services. Bringing forward the Bill in draft appears to confirm pre-legislative scrutiny will be carried out and provides an important opportunity to influence the scope of the Bill. Working ensure online scams are included within the scope of the Bill will remain a priority area for the IA.
- Dormant Assets Bill (DCMS)
The expansion of the Dormant Assets Scheme into the insurance and pensions, investment and wealth management, and securities sectors is something the IA has been supporting DCMS on closely. It is hoped it will unlock around £880 million for social and environmental initiatives across the UK. The Bill should also further protect dormant asset owners and participating businesses.
Housing and infrastructure
- Building Safety Bill (MHCLG)
The Bill will include provisions to support the removal of unsafe cladding, including through a financing scheme to pay for costs and a levy to ensure the development industry pays a share of the costs for remediating unsafe cladding.
- Leasehold Reform (Ground Rent) Bill (MHCLG)
The government is legislating to require that ground rents in new residential long leases will have no financial demand. These will be set in law as a ‘peppercorn rent’ level (the legal term), meaning that nothing more than a literal peppercorn can be sought from leaseholders.
- Planning Bill (MHCLG)
The aim is to create a simpler, faster and more modern planning system to ensure homes and infrastructure – like schools and hospitals – can be delivered more quickly across England. It will change local plans so that they provide more certainty over the type, scale and design of development permitted on different categories of land. It will aim to decrease the time it takes for developments to go through the planning system and replace the existing systems for funding affordable housing and infrastructure from new developments with a reformed levy.
Constitution
- Dissolution and Calling of Parliament Bill (Cabinet Office)
This will deliver on the Conservative manifesto commitment to repeal the Fixed-term Parliaments Act, enabling the Prime Minister to decide when to call an election. It will also restore the link between confidence and dissolution, enabling critical Parliamentary votes to once again be designated as matters of confidence - which, if lost, trigger a general election.
Skills
- Skills and Post-16 Education Bill (DfE)
This will enable people to access flexible funding for Higher or Further Education and deliver the Prime Minister’s new Lifetime Skills Guarantee, which is designed to ensure everyone can gain the new skills they need to progress in work. It introduces the Lifelong Loan Entitlement, which will give individuals access to the equivalent of up to four years’ worth of student loans for level 4-6 qualifications that they can use flexibly across their lifetime, at colleges as well as universities. Employers will be involved through the Skills Accelerator, which will enable them to collaborate with education providers to develop skills plans aimed at ensuring local skills provision meets local needs. Most provisions will apply to England, however some also apply to Wales, Scotland and Northern Ireland.
Post Brexit reforms
- Subsidy Control Bill (BEIS)
This will create the UK’s own subsidy control system now it is no longer bound by the EU’s State Aid rules. It will permit public authorities to deliver subsidies that are tailored and bespoke for local needs to support the UK’s economic recovery and deliver government priorities, such as increasing UK R&D investment and achieving net zero. It aims to provide certainty and confidence to businesses investing in the UK, by protecting against subsidies that risk causing distortive or harmful economic impacts, including to the UK’s internal market. The Bill will establish an independent subsidy control body to oversee the UK’s bespoke, modern subsidy control system.