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Lansons Briefing – Queen’s Speech 2016: Analysis

Overview

The State Opening of Parliament took place at 11.30am this morning, when the Queen took to her throne in the House of Lords to outline the Government’s proposed legislative programme for the coming session of Parliament.

There were three key themes to the Speech:

  • Delivering security for working people
  • Increasing life changes for the most disadvantaged
  • Strengthening our national security

The Queen then went on to explain that the Government will continue to bring the public finances under control so that Britain lives within its means, and will continue to move to a higher wage and lower welfare economy where work is rewarded.

To support the economic recovery, and to create jobs and more apprenticeships, legislation will also be introduced to ensure Britain has the infrastructure that businesses need to grow.

The Queen’s Speech can be read here.

The Government’s briefing pack on the bills can be found here.

Queen Picture

What this means for the Government

The State Opening of Parliament took place today amongst a back drop of disarray and civil war within the Conservative Party, as the rows over the EU referendum continue to rumble on. The Queen’s Speech was therefore a welcome distraction, but what impact will it have on an increasingly un-unified party?

The EU referendum has caused a storm within the Conservative Party, pitting friends David Cameron and Michael Gove against each other and causing high profile rifts between senior cabinet ministers and MPs. Though the vote will take place in 35 days, the debate will continue on for much longer, and this is a fight that will affect the productiveness of the Government with a wafer thin majority for at least the next Parliamentary term.

David Cameron would have consequently been conscious of the need to present a legislative programme that will enjoy the broad the support of his party and, in particular, keep his backbench critics at bay.

It is therefore unsurprising that the bills that were unveiled today did not stray far into new political territory that is unfamiliar to the Tory rank and file. Cameron stuck broadly to his manifesto commitments to deliver security for working people, increase life changes for the most disadvantaged and strengthen national security, all under the wrapper of the Conservative’s “One Nation” politics.

Much of the criticism from the opposition parties has been that, of the 30 pieces of legislation announced, 28 were already known – for example, the plans to legislate for the Lifetime ISA through the Lifetime Savings Bill; further tax raising powers for local authorities through the Local Growth Bill; and, new powers to toughen the UK’s anti-money laundering regime as part of the Criminal Finances Bill.

So far, so good.

In the context of Brexit and the need for party unity, Cameron also made some significant concessions to the right of his party.

Prison reform has been a hobbyhorse of the right ever since Chris Grayling was Justice Secretary. The Prison and Courts Reform Bill will look to address what the Government sees as increased overcrowding, failed rehabilitation services and threats of radicalisation in British prisons. The move is a considerable prize for the current Justice Secretary Michael Gove, a leading Brexiter, who Cameron is desperate to keep on side.

However, it is the prospect of a new British Bill of Rights that will have many on the Tory backbenches giddy with excitement. One of the biggest concerns that Eurosceptic Tories have are the powers that the ECHR has over British law. This was highlighted with the extradition of the radical Muslim Cleric Abu Qatada. This Bill had been spoken about, but until today had not made an appearance as it had been blocked by Liberal Democrats at every stage under the Coalition. A British Bill of Rights is therefore a potentially important appeasement to Eurosceptic MPs as Cameron tries to navigate the unstable waters of the EU Referendum and come out the other side with a Conservative Party in one piece.

Implications for the financial services sector

As far as the financial services sector was concerned, the Queen’s Speech was light on content. The main features are the creation of the Lifetime ISA and the Help to Save Scheme (under the Lifetime Savings Bill) and the creation of two new financial advice bodies, following the review of the Money Advice Service and the conclusion of the Financial Advice Market Review.

The Lifetime Savings Bill is the vehicle for two major reforms aimed at the lowest paid. It creates the Lifetime ISA – the flagship scheme from the last Budget under which individuals saving for either a first home or a pension receive a 25% top-up on annual savings of up £4,000. The other major new reform is the creation on the Help to Save Scheme, under which workers in receipt of working tax credits or Universal Credit who save up to £50 a month would receive a Government bonus of 50% – to a maximum of £600 – after two years. Savers who continue to use the scheme for a further two years could earn up to another £600.

The Pensions Bill implements a number of technical changes to master trust pension schemes (a master trust is a multi-employer occupational scheme where each employer has its own division within the master arrangement) and caps early exit charges to ensure that excessive charges do not prevent occupational scheme members from taking advantage of pension freedoms.

It also creates two new financial advice bodies:

  • A pensions advisory body – out of Pensions Wise, the Pensions Advisory Service, and the pension-related parts of the Money Advice Service
  • A new money guidance body, which would replace the Money Advice Service and be charged with identifying gaps in the financial guidance market to make sure consumers can access high quality debt and money guidance

Taken as a package, these are all clearly pensions and savings-orientated. However, there is nothing in here that was not already known about. Arguably, the reforms in the Lifetime Savings Bill also make limited sense in a world where the current pension tax regime still operates – a legacy of George Osborne’s forced abandonment of pension tax reforms at the last Budget. Indeed, the chances of Osborne revising these reforms is small, given the opposition he faced last time from backbench Tories purporting to be standing up for their, typically, middle class constituents.

A further crackdown on economic crime

David Cameron has been keen to lead the world – and importantly to be recognised as leading the world – on tax and transparency since he became Prime Minister in 2010.

Through his chairmanship of the G8 Summit at Lough Erne in 2013, he put tax, trade and transparency on the global agenda, and sought agreement on a global standard for the automatic exchange of information over who pays taxes and where. At the Open Government Partnership later that year he then announced that the UK would be the first country in the world to introduce a public register of beneficial ownership; a measure that will come into effect next month. His commitment to this cause continued in the Conservative’s 2015 manifesto, which affirmed that: “Tackling tax evasion and aggressive tax avoidance and tax planning is an important part of our long-term economic plan.”

Against this backdrop, the recent release of the Panama Papers and last week’s Anti-Corruption Summit have pushed tax avoidance, criminal finance and corruption right to the top of the national and international agendas. It’s therefore of little surprise that contained in the Queen’s Speech was a new Criminal Finances Bill.

According to the Government’s briefing document, the purpose of the Bill is to: “Allow the Government to recoup more criminal assets by reforming the law on proceeds of crime, including provisions to strengthen our enforcement powers and protect the public.”

The main element of the Bill, to introduce a criminal offence for corporations that fail to stop their staff from facilitating tax evasion, was announced by David Cameron in his Commons response to the Panama Papers last month, where he stated: “Under current legislation it is difficult to prosecute a company that assists with tax evasion, but we are going to change that. We will legislate this year for a new criminal offence to apply to corporations that fail to prevent their representatives from criminally facilitating tax evasion.” This policy had therefore been widely expected.

This measure could act as a significant deterrent to tax evasion, as management will have to take responsibility for the action of their employees. However, to be a truly effective deterrent, the legislation would need to allow for prosecution of activity outside the UK and be backed by sufficient financial resources.

The second and third elements of the Bill, as outlined by the Government, are much more vague, with commitments to improving the operation of the SARs regime, providing the NCA with new powers and improving the ability of law enforcement agencies to recover criminal assets more effectively. However, there is very little detail about what this would look like and how this would work. It’s also unclear about how this fits into the work of the new £10 million cross-agency taskforce set up in the wake of the Panama Papers, if at all.

Notably, though, these measures have all been aimed at the domestic tax agenda and do not appear to be targeted any other jurisdictions, such as the Crown Dependencies and Overseas Territories.

It’s also worth adding that the Investigatory Powers Bill will be continued from the last Parliament, delivering on the Government’s manifesto pledge to strengthen the ability to disrupt terrorist plots, criminal networks and organised child grooming gangs.

Infrastructure remains important

There had been much speculation that the Government would announce a fresh Housing Bill at the Queen’s Speech. In the end it failed to materialise, but what is clear from the bills that were announced is that infrastructure remains a key priority for this Government.

The Neighbourhood Planning and Infrastructure Bill will create a new statutory basis for the independent National Infrastructure Commission, embedding it in the Government’s decision making processes and providing extra weight to its recommendations on exactly what the UK’s infrastructure priorities should be.

New planning powers were widely trailed after the Government released a consultation at the Budget outlining its proposals to make Compulsory Purchase Orders “clearer, fairer and quicker”. This Bill will look to do just that and will build on the work of the newly enacted Housing and Planning Act by further reforming the planning process and speeding it up to minimise delays caused by planning conditions. The measures show that the Government remains committed to its efforts to get Britain building new homes and is fresh recognition of the political sensitivities that remain over the UK’s low housing stock. Indeed, in its explanatory document accompanying the Speech, the Government said that the primary focus of the Bill is to support the Government’s ambition to deliver one million new homes.

Moreover, the Bill also furthers the Government’s devolution agenda by allowing local communities to have a greater say in the homes and infrastructure that they need in their local areas.

Indeed, the continued commitment to devolution is also a central theme that runs through the Government’s Local Growth and Jobs Bill. The Government says the purpose of the Bill is to help grow local areas by incentivising local councils to support businesses and develop their local economies. Applying only to England, the Bill will put in place the framework to allow local authorities to retain the business rates raised from local firms, as first announced at the 2015 Conservative Party Conference.

Both bills therefore show that there is still considerable political appetite for greater devolution powers, which is hardly surprising given the fact that a BBC poll found that 80% of people in England supported having more powers devolved to their local areas.

Finally, although the legislation is in its infancy, the Government has also announced that it will bring forward proposals to respond to the recommendations of the Law Commission’s report on making land work, in order to simplify the laws around land ownership. The fact that the Law Commission’s report is from 2011 suggests that the Government has been impacted by the political opposition, led most vocally by Ed Miliband during his time as Labour leader, who argued that the Government was not doing enough to prevent behaviour such as land hoarding.

Away from housing, the Modern Transport Bill is an attempt by the Government to keep up with a rapidly evolving industry. The Bill contains ambitious measures to kick start the UK’s first spaceport and to encourage investment in driverless cars. The Bill will also provide measures to create a safer commercial and personal drones industry following a number of near misses with aircraft this year.

The legislation has been expected for some time following the release of the Department for Transport’s Individual Performance Objectives for 2015-16, which included the commitment to introduce a Modern Transport Bill following the general election in 2015.

Full list of new bills

Neighbourhood Planning and Infrastructure Bill

To reform planning and give local communities more control to shape their own areas and build more homes

Digital Economy Bill

Measures will be brought forward to create the right for every household to access high speed broadband

Better Markets Bill

Legislation to improve Britain’s competitiveness

Digital Economy Bill

To make the UK a leader in the digital economy

Modern Transport Bill

To put the UK at the forefront of technology for new forms of transport, including autonomous and electric vehicles

Bus Services Bill

Further powers will be devolved in England to directly elected mayors, including powers governing local bus services

Local Growth and Jobs Bill

Legislation to retain business rates, giving greater freedom to invest in local communities

Criminal Finances Bill

To tackle corruption, money laundering and tax evasion

NHS (Overseas Visitors Charging) Bill

Introduced to ensure that overseas visitors pay for any treatment they receive whilst visiting the UK

Children and Social Work Bill

To facilitate swifter adoption processes, improve standards in social work and opportunities for young people in care.

Education for All Bill

To lay foundations for educational excellence in all schools, and a fairer balance between schools through the National funding Formula

Higher Education and Research Bill

Legislation to support the establishment of new universities and promote choice and competition across the sector

Prison and Courts Reform Bill

Significant reform of the courts and prisons system to give offenders a greater chance of successful rehabilitation

Counter-Extremism and Safeguarding Bill

To prevent radicalisation, promote community integration and tackle extremism.

National Citizen Service Bill

The National Citizen Service will be placed on a permanent statutory footing

Investigatory Powers Bill

To modernise the law governing the use and oversight of investigatory powers by law enforcement, security and intelligence agencies

Policing and Crime Bill

To strengthen accountability of the police service in England and Wales

Bill of Rights

Measures to reform the UK human rights framework

Wales Bill

To establish a strong and lasting devolution settlement in Wales

Pensions Bill

To reform the private pensions system

Lifetime Savings Bill

Measures to introduce a new Help to Save scheme and create a lifetime ISA

Small Charitable Donations Bill

To maximise fundraising power through reform of the Gift Aid Small Donations Scheme

Cultural Property (Armed Conflicts) Bill

Legislation to accede to the Hague Convention for the Protection of Cultural Property in the Event of the Armed Conflict

Soft Drinks Industry Levy

There will be legislation to establish a soft drinks industry levy.

Intellectual Property (Unjustified Threats) Bill

To reform the law of unjustified threats of infringement proceedings for patents, trademarks and design rights and to make the UK the best place in Europe for innovation, the patenting of new ideas, and expanding businesses

Draft Law of Property Bill

To bring forward proposals to simplify land ownership law