On Wednesday, July 17, the new Labour government made a bold entrance with its first King's Speech. This monumental address wasn't merely a laundry list of legislative proposals; it served as a powerful declaration of the government's intentions, offering a glimpse into a bold and innovative vision for the future of the United Kingdom. The speech resonated with a sense of purpose and direction, setting the stage for a new era of governance that prioritises progress, sustainability, and accountability.
Notable Omissions
Despite the comprehensive agenda, some expected proposals were notably absent. The AI Bill, for example, was left out, as the Department for Science, Innovation, and Technology prioritised other urgent legislation related to digital information, smart data, and cyber security. Other missing elements included proposals for extending voting rights to 16 and 17-year-olds, new town developments, and establishing an Integrity and Ethics Commission.
A Clear Break from the Past
The speech marked a definitive shift from the previous Tory government's strategies. Stability was the new mantra, introduced with the Budget Responsibility Bill. This bill empowers the Office of Budget Responsibility (OBR) to scrutinise any major tax or spending decisions, addressing past fiscal missteps and setting a high bar for financial oversight.
Labour’s legislative proposals stuck closely to their election promises, emphasising trust and accountability. The tone was unmistakably interventionist, moving away from a mere 'tax and spend' approach. Legislative highlights included the Sustainable Aviation Fuel Bill and the Passenger Railway Services (Public Ownership) Bill, signaling a hands-on approach to economic management.
Prioritising Economic Stability
Two major proposals stood out for their focus on economic stability:
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Audit Reform and Corporate Governance: The creation of the Audit, Reporting, and Governance Authority (ARGA) will replace the Financial Reporting Council. ARGA aims to enhance scrutiny of large companies, holding all directors accountable for their financial reporting duties, not just those in accountancy bodies.
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Bank Bail-Out Funding Reform: Instead of relying on taxpayer-funded bailouts, the proposal suggests using Financial Services Compensation Scheme (FSCS) funds for bank bailouts and recapitalisation. Inspired by the recent transfer of Silicon Valley Bank UK to HSBC, this measure seeks to protect taxpayers from the financial repercussions of bank failures.
Driving Economic Growth
Labour’s strategy for economic growth was front and center, focusing on directed investments rather than leaving everything to market forces. Key proposals included:
- National Wealth Fund Bill: Designed to boost growth and unlock investments within the UK.
- Planning and Infrastructure Bill: Aimed at accelerating house building and renewable energy projects.
- Great British Energy Bill: To oversee clean power projects directly.
- Sustainable Aviation Fuel Bill: Targeting energy independence and attracting energy infrastructure investments.
These initiatives underscore Labour’s commitment to steering investment into specific areas to stimulate economic growth.
Conclusion
Labour’s first King's Speech heralds a significant policy shift, particularly in the realm of financial services. With a clear focus on directed economic growth and robust measures to ensure stability, the new administration is poised to reshape the financial landscape. While some proposals were left out, the ambitious agenda promises transformative changes, making this a pivotal moment to watch how these initiatives unfold and impact the sector.