21 September 2015

Government's legislative programme announced in Queen's Speech

Details of the first Conservative-only legislative programme in nearly 20 years were unveiled in this year's Queen's Speech, made at the State Opening of Parliament on 27 May. More than 20 new bills were announced, including four focused on devolving powers away from Westminster. 

A number of these will impact on small businesses. The planned Enterprise Bill (following on from the Small Business, Enterprise and Employment Act that came into force earlier this year) aims to support small businesses by cutting red tape and reducing regulatory costs. The Bill aims to cut red tape for British business by at least £10bn. A new Small Business Conciliation Service will be established with the aim of resolving business-to-business disputes, notably around late payment. 

The Government's proposals on tax reform will affect both sides of the balance sheet. Tax rates, VAT and National Insurance will be frozen for the next five years through a new National Insurance Contributions/Finance Bill, while the personal allowance will rise to £12,500 by 2020. This will undoubtedly help stimulate consumer demand (and potentially help to tackle deflation) across the economy, as consumers enjoy higher disposable income. It will also mean smaller businesses won't have to absorb the impact of higher VAT rates.  However it will leave the government's deficit reduction strategy much more dependent on departmental spending cuts and welfare savings. 

The Childcare Bill aims to give 30 hours a week of free childcare for three and four-year-olds for 38 weeks a year. With skills shortages growing as the economy expands, this will be of benefit to many businesses. Given the vital role investment in skills plays in boosting productivity, proposals for creating a further three million apprentices though the Employment Bill are also to be welcomed. However these should focus on quality employer-led apprenticeships rather than hitting target numbers, and need to be supported by better careers advice and guidance in schools. Meanwhile the Full Employment and Welfare Benefits Bill promises a reduction in the welfare cap and confirms an "earn and learn" model for young people out of work. 

Britain's place in Europe will be the subject of a referendum, with an EU Referendum Bill legislating for one to take place before the end of 2017. While this creates further uncertainty for business, this Bill at least provides some clarity on the timetable and process. 

The changing balance of power across the UK and the pressure for devolution is to be addressed through three Bills: the Cities and Local Government Devolution Bill, the Scotland Bill and the Wales Bill.  The first gives the national government the right to impose Mayors on cities. These Mayors would enjoy powers over transport and regeneration. But while the idea of greater local democracy may appeal to some local businesses - particularly if it presents an opportunity to stimulate the local economy and increase local business funding - there is some concern that these changes may lead to greater local bureaucracy. The Scotland Bill carries out the recommendations of the Smith Commission, enabling the Scottish Parliament to alter rates of income tax, and giving it greater control over VAT. The Wales Bill gives the Welsh Assembly further powers, including over ports and energy developments.

On the labour relations front, a Trade Unions Bill is expected to deliver the Conservative manifesto promise to curb the right of workers in "essential public services" to take industrial action if fewer than 40% of eligible union members back such a move. Under the plans, ballots will also require a turnout of at least 50% for their result to be deemed legal.

You can view Queen's speech in full at https://www.gov.uk/government/speeches/queens-speech-2015