On 17 July 2024, King Charles formally opened the next parliamentary session, outlining the new Labour government’s plan for the coming months. This included 39 bills, which Prime Minister Kier Starmer intends to pass.
The King’s Speech focused strongly on creating a stable economic environment, but what will this practically mean for businesses?
Budget Responsibility Bill
With stability in mind, one of the more overarching proposals was a ‘fiscal lock,’ meaning the Office for Budget Responsibility must approve any major tax or spending changes.
This can be seen as a direct reaction to the disruption caused by the mini-budget in September 2022, where the government acted independently.
Employment Rights Bill
New rights for employees will include:
- Default flexible working from day one of work (if reasonable)
- Protection from dismissal due to parental leave, sickness and unfair reasons available from day one, with employers offering probationary periods
- Increasing the minimum wage to reflect the national living wage
- Stopping zero-hour contracts and fire-and-rehire practices
If you are an employer, it’s important you stay abreast of these changes, so you remain compliant and understand how this might affect your costs (and therefore prices).
Audit Reform and Corporate Governance Bill
A statutory regulator will be introduced, the Audit, Reporting and Governance Authority, to replace the Financial Reporting Council. This aims to improve the quality of audits, so UK companies are a more attractive prospect for investment, as well as reducing the harm caused by financial reporting errors.
New powers will include the ability to investigate and sanction (large) company directors who have overseen reporting failures. This differs from the current situation, where directors are only accountable if they are a member of an accounting body. Consequently, this will increase liability and pressures to report effectively.
Public Interest Entity status will be extended to large unlisted companies, so they are subject to more rigorous audit requirements. A ‘large’ company will probably be defined by turnover and number of employees.
The National Wealth Fund Bill
This bill is concerned with funding transformations in priority sectors across the country.
In some situations where private investors may be reticent to solely fund infrastructure projects, this fund could fill the gaps. It will aim to generate £3 of private sector investment for every £1 invested.
There is some speculation as to where the £7.3 billion for this fund will be found and how investment will be suitably governed to ensure taxpayers are feeling the benefit.
The Product Safety and Metrology Bill
Prior to the election, Labour outlined plans to readjust the UK’s relation to EU trade and regulations. As part of the King’s Speech the new government announced that advantages opportunities from the EU would not be ignored, but those regulations that would not suit the UK would be ended.
The bill references responding to new product risks (including AI and lithium-ion batteries), sharing data between regulators and market surveillance authorities, as well as clarifying supply chain responsibilities (particularly for online marketplaces).
Labour do not intend to rejoin the single market, but are interested in commercial activities with Europe.
English Devolution Bill
Local leaders, such as elected majors, will be given more power, so they can make decisions based on their contextual knowledge and benefit their communities.
This bill is designed to restore the high street, where local businesses are given greater chance to purchase premises such as empty shops, pubs and community spaces.
Skills England Bill
The aim of this bill is to create a highly trained workforce that best meets the needs of the UK. A new organisation, Skills England, will bring together businesses, existing technical colleges and unions to coordinate learning crucial jobs.
This may increase the availability of capable apprentices, but could require a new system of employing them.
Great British Energy Bill
A state-run power firm, Great British Energy, will be established to lower cost and stimulate renewable energy production (such as offshore wind).
There’s hope that this will reduce the cost of energy in the UK and the strain this has put on businesses. However, it could also mean new (greener) energy regulations that businesses must adhere to.
Planning and Infrastructure Bill
A key target for Labour is to accelerate house building and infrastructure production.
The construction sector has stagnated in recent years due to a number of factors, including a lack of skilled workers and material shortages. There is hope that speeding the planning process will deliver a more positive outlook.
The government want to build 1.5 million new homes in the next 5 years.
Leasehold and Commonhold Reform Bill
For context: If you own property outright, including the land it built on, you are a freeholder. If you own a lease which gives you the right to use the property, you are a leaseholder.
Leaseholders are often charged expensive ground rent, alongside service charges, and must have the freeholder’s (or managing agent’s) permission to make changes to the property. In addition, leaseholders can be threatened with forfeiture, where they may lose their home due to unpaid debts. Extending a leasehold or buying the freehold can be difficult and expensive; leaseholds can also be challenging to sell.
This bill will mean commonhold (indefinite freehold tenure of a multi-occupancy building with shared ownership) will become the default for flats, restricting the sale of leaseholds.
Renters’ Rights Bill
‘No fault’ evictions will be abolished (a target of the previous government), alongside rental bidding wars. People will be given greater facility to contest unreasonable hikes in their rent.
Need some guidance?
The King’s Speech did not announce the date of the Autumn Budget, which certainly won’t be earlier than 13 September. However, Chancellor Rachel Reeves suggested the date would be announced before the summer recess at the end of July.
There has been some criticism that small businesses did not play a greater part in the speech, but it’s yet to be seen how some of these wider changes may affect them.
Earlier this month, we published an article about what business might expect from the Labour government, immediately after they were elected. Whilst some of these details may evolve over time, you may wish to read this information.
You can read the full list of bills contained in the speech here.
If you are concerned about how any of the changes above may affect your business and require some assistance, please get in touch with us and our team will be happy to assist you.
