The state opening of Parliament today was a stripped back affair, with no horse drawn carriages or royal ceremonial robes. The political and legislative agenda set out in the Queens Speech was also stripped back, dropping much of the Conservative party election manifesto and the strategic ‘giant challenges’ this identified.
It set an agenda with two objectives; deliver Brexit and ensure the government stays in power for the duration of the Brexit negotiations. The limited agenda means that business and other organisations probably have less to cheer and less to fear from new legislation than is usually the case after an election.
On Brexit, eight Bills will put in place the practical details needed to enable Brexit. As expected, these include:
- Repeal Bill: designed to allow for a smooth legal transition as the UK leaves the EU, by converting EU law into UK law; and creating temporary powers for Parliament to make secondary legislation, enabling corrections to be made to the laws that do not operate appropriately once we have left the EU.
- Customs Bill: to ensure that changes can be made to the UK’s VAT and excise regimes to ensure that the UK has standalone regimes on EU-exit. Note that this allows the UK to leave the customs union but it is the Brexit negotiations with the EU that will determine whether we do need a stand-alone regime.
- Trade Bill: to allow the UK to operate its own independent trade policy and negotiate trade agreements with third countries upon exit from the European Union.
- Immigration Bill: this will allow for the repeal of EU law on immigration (primarily free movement) and make the migration of EU nationals subject to relevant UK law once the UK has left the EU. Again, it does not in itself introduce new controls; it merely creates the framework that would enable the UK to do so.
These are mainly ‘enabling’ legislation, which do not necessarily determine the policy that will be adopted. That may take some of the controversy out of the parliamentary debate on these. Nonetheless, we can expect the debate to prompt discussion about future trading relations with the EU and immigration policies. Indeed businesses and other organisations may well wish to contribute to the debate where these link to key business issues (like workforce skills or impact of customs on supply chains and import-export).
Perhaps the most important sentence in the Queen’s Speech was right at the start: “My Ministers are committed to working with Parliament, the devolved administrations, business and others to build the widest possible consensus on the country’s future outside the European Union.” If that commitment to consensus is matched by deeds as well as words then business will have greater confidence of an orderly Brexit that supports the economy.
Impact on employers and business
The rest of the legislative programme is relatively low key and uncontroversial, designed to avoid defeat for the government in Parliament. These legislative proposals focus on some relatively limited consumer rights, albeit ones that will affect specific sectors and consumers:
- A draft tenant’s fees bill - This will ban landlords from charging tenants “letting fees”.
- A civil liability bill - This will tighten the rules on whiplash claims, and the government says this could save motorists £35 a year through cheaper car insurance as a result.
- A data protection bill - This will update data protecting laws (implementing the new EU Data protection Directive), and including giving people the right to force social media companies to delete information held about them at the age of 18.
- A travel protection bill - This will update travel protection law involving ATOL (the air travel organisers’ licence) so that it applies properly to the online travel market.
- A goods mortgage bill - This will modernise the law on goods mortgage lending.
The remainder of the Bills largely cover things that require legislation to enable existing government decisions to be implemented – for example building HS2 from Birmingham to Crewe and continuing to roll out smart electricity meters.
The Queens Speech does confirm the Conservative manifesto commitment to increase the national living wage (formerly known as the adult national minimum wage) so that it matches 60% of median wages by 2020 (by my calculation that would be around £8 at 2016 median wages).
What was abandoned?
The Conservative manifesto stated, “We do not believe in untrammelled free markets”. That pledge looks weaker now, with no legislation proposed on energy prices and no mention of manifesto commitments to introduce new employment rights (the right to time off for carers, bereaved parents and for training). The government also appears to have abandoned its commitment to corporate governance reform (with no mention of manifesto policies on executive pay, new reporting on gender and ethnicity pay gaps, and employee representation on the boards of listed companies). This leaves the government’s consultation on a green paper on corporate governance in something of a limbo.
Is austerity over?
One of the most intriguing things in the government’s briefing document on the Queen’s Speech is the following in the section on Public Finance: “We will reflect on the message voters sent at the General Election – while always remembering that we have to balance the books and eliminate the deficit’. This follows other Ministerial hints over the last week of a possible relaxation of austerity measures. Most likely is some form of ‘austerity light’ or slight relaxation – do not expect a huge swathe of new spending commitments. The Chancellor has, in his last Budget, put aside some reserves for a fiscal stimulus in the event of an economic downturn and we can expect further investment in infrastructure with perhaps some relaxation of wage controls for key public sector workers.
In his Mansion House speech yesterday the Chancellor warned that increased spending can only be funded by increased tax, borrowing or economic growth and he favoured the latter. I have previously pointed out that taxes always rise in the first Budget after an election (the first year after each of the last six elections has seen net tax rises of more than £5 billion per year) but this may be politically more difficult than in the past as the Chancellor will have to introduce a Budget which can command a majority vote in the house of Commons and that may mean avoiding controversy. We will have to wait until November or December to find out in the next Budget.
The government has given itself two years to deliver this, rather than the customary 12-month parliamentary timetable. That does reflect the volume of legislation needed to deliver Brexit, and the reality of how time consuming any legislation can be in a hung Parliament; but it also gives the Government two years before it faces another parliamentary vote of confidence on the next Queen’s Speech.
The narrow scope and uncontroversial nature of this Queens Speech reflects the fragile position the government now finds itself in after the election. Never has a government seen such a sudden draining of power. With further resignations today, the Prime Minster has now lost nearly the whole of her Number 10 team of advisers. An agreement with the Democratic Ulster Party has still to be agreed, to provide support in key votes in parliament (though we may be seeing brinkmanship and when the vote comes next Thursday, the DUP will support the Conservatives, or at least abstain – which is all Theresa May needs). Any proposals that might fail to secure support from Conservative backbenchers or the DUP were dropped, leaving a set of fairly technical and minor Bills other than those that will enable Brexit.
We are in for a bumpy ride in politics and government over the next two years. Anything could happen, at any time. All bets are off. The Government will be hoping that whilst the election result may not provide the basis for strong and stable leadership, this Queens Speech may enable a holding pattern and could provide the basis to stabilise the government for the next 2 years – maybe just enough to get us through the Brexit negotiations?