The Government’s latest Queen’s Speech was seen by many as an opportunity for the Johnson administration to reset following a turbulent start to the year, both economically and politically. On the whole, it has attracted as much attention for what was left out as for what was included – but there were some clear indications of the Government’s intentions for financial services.
Ripping up red tape
The Financial Services and Markets Bill is intended to break down regulatory barriers for the City and promote London’s position as a global leader and capitalise on the opportunities of Brexit. The Bill will encourage regulators to create a new culture built on international competitiveness. Rules around capital markets will be reformed to encourage investment, and this empowerment certainly sets the scene for radical changes. However, the proposed bonfire of red tape has been met with mixed feelings, including from the head of UK Finance.
There are important commitments to taking advantage of the opportunities presented by technology and to increasing consumer protection from scams. Where responsibility finally rests between regulators and legislators in practice will likely determine how quickly and effectively any changes are implemented, as will the levels of oversight from the Treasury and Parliament.
Sharing the wealth
Levelling up has been a key part of Boris Johnson’s agenda since he took over as Conservative leader and Prime Minister in 2019. But the combination of COVID-19 and a lack of ideas has meant that we are yet to see any clear plans for spreading more wealth and opportunity throughout the UK.
This Queen’s Speech looks set to change this though, with a new Bill carrying 12 legally enshrined targets to push the plan through.
Financial services have already made inroads into other parts of the country, with Leeds, in particular, emerging as the financial capital of the north and Birmingham doing the same in the midlands. Key to sustaining any continued and wider proliferation of jobs and opportunities will be the regeneration measures at the heart of this bill. Infrastructure will be needed to sustain growing workforces, and development will have to happen alongside to convince both businesses and employees to leave London and the south behind.
Keeping quiet on the environment
Government sources have briefed the media that ministers made a last-minute call to remove from the speech plans to force big UK companies and asset managers to report on their environmental impact.
Expected in the Financial Services and Markets Bill, were that provisions would have increased transparency around sustainability, but the Government appears to have blinked when it comes to putting rules down on paper. This is in stark contrast to the promises made by the Chancellor last November at COP26.
There were plans for audit reform, which do impose quite heavy regulatory burdens on the biggest private companies, but this move is situated within wider reluctance to tighten corporate governance at a time when investment and growth are badly needed – in a choice between tightening controls and leaving the market to find its own path to growth, Johnson has put his faith in businesses to largely do their own thing.
Cost of living still emptying pockets
The biggest issue facing the UK this year is the growing cost of living fuelled by high levels of inflation. The Queen’s Speech did little to assuage consumer fears or tackle them directly, and attention is beginning to turn to the financial services sector to take on an active role in filling the gap left by the Government’s lack of action – and a question which still remains to be answered is how they do so, and whether they will.
A new energy security bill will make little short-term impact, and a further increase in the energy price cap is expected to hit in October. There were very few additional measures announced to help households, suggesting that it’s not a priority right now. In fact, Treasury minister Simon Clarke told the BBC that the Government wouldn’t be focusing on addressing the cost of living until the autumn, and policy minister Kit Malthouse said that a budget is a place for addressing the required spending measures.
Both seem to indicate that the can is being kicked down the road, and even the most impartial of commentators can see that the Government seems to be doing so to the detriment of those who will struggle the most – watch this space for an emergency budget before we get to Autumn.
Alex Eyre, Senior account manager.
