King Charles delivered his speech to Parliament last month following the election, setting out the priorities of the new Labour Government for the months ahead.
The speech included 40 pieces of legislation that the Government plan to implement. To help you understand what the next five years may hold, here are the details of all the finance-focused announcements.
Budget Responsibility Bill
During their campaign, Labour pledged that their decisions would be made with sound money and economic stability at the forefront.
The Budget Responsibility Bill requires all significant and permanent tax and spending changes to be subject to independent assessment by the Office for Budget Responsibility (OBR).
The Bill aims to reinforce credibility and public trust by preventing large-scale unfunded commitments that have not undergone an OBR fiscal assessment.
Wage boost
The Government has committed to delivering a “genuine” living wage that reflects the issue of the high cost of living.
They also plan to remove the current minimum wage age bands to ensure that all adult workers benefit.
Draft Audit Reform and Corporate Governance Bill
Labour plans to introduce a revamped regulator to uphold standards and independent scrutiny of companies’ accounts and accountability for company directors.
A draft Bill will establish the Audit, Reporting, and Governance Authority, replacing the Financial Reporting Council.
This new regulator will have the necessary powers to address poor financial reporting and build public trust.
It will include important changes such as:
- Removing unnecessary rules on smaller Public Interest Entities, which will be beneficial for small businesses that face disproportionate requirements.
- A regime to oversee the audit market to protect against conflicts of interest and help minimise the impacts of corporate failures.
- Powers to investigate and sanction company directors for serious failures in relation to their financial responsibilities.
Pension Schemes Bill
The Pension Schemes Bill seeks to assist over 15 million individuals, who save through private-sector pension schemes.
It will help them achieve better outcomes from their pension assets, aligning with the Government’s goal of fostering economic growth.
To do this, it will establish a system for consolidating pension pots from various employments, ensuring people do not lose track of their savings when they change jobs.
Additionally, this Bill aims to boost the savings for pension savers, potentially allowing an average earner, who saves throughout their lifetime in a defined contribution scheme, to have over £11,000 more in their pension pot.
The Bill will introduce a standardised test that requires trust-based defined contribution schemes to demonstrate they deliver value. This should remove the underperforming schemes leading to a more productive investment of funds.
They will also be amending the Special Rules for End of Life (Pension Protection Fund and Financial Assistance Scheme) by broadening the definition of ‘terminal illness,’ enabling eligible members to receive a lump sum payment sooner.
Economic growth and wealth creation
Business investment in the UK has been persistently low, holding back productivity and living standards.
The introduction of the National Wealth Fund (NWF) will be central to the Government’s mission to drive growth and create a greener economy.
With an additional £7.3 billion in funding, the NWF will make transformative investments nationwide, attracting billions of pounds in private sector investment.
The Labour Party will create new partnerships with businesses and workers to overcome cost of living challenges and prioritise wealth creation.
As local leaders typically know more about what their areas need, Labour will introduce a Bill to move power out of Westminster and back to local leaders, giving them the tools they need to drive growth in their communities.
The new laws will give more powers to metro mayors and combined authorities, helping support local plans that bring wealth to communities.
To kickstart investments right away, the NWF will work through the UK Infrastructure Bank, expanding its role.
This will help attract even more private investment, aiming to bring in £3 from the private sector for every £1 invested by the Fund.
The Fund will make it easier for businesses and investors by bringing together key institutions like the UK Infrastructure Bank and the British Business Bank.
By uniting these organisations under the NWF, there will be a clear, streamlined support system for businesses and a compelling opportunity for investors, to use public funds wisely to open up new investment opportunities.
VAT
Measures will be taken to remove the exemption from Value Added Tax (VAT) for private school fees, which will enable the funding of six and a half thousand new teachers.
European Union
The Labour Government will seek to reset the relationship with European partners and work to improve the United Kingdom’s trade and investment relationship with the European Union.
This aims to gain more favourable trade conditions and attract more European investment into the UK and vice versa, leading to increased funding opportunities for businesses, and facilitating growth and expansion.
What is next?
There are still many unknowns when it comes to Labour’s policies regarding personal and business financials, with very little mention of taxes and funding opportunities.
The Budget date has now been announced to take place on 30 October 2024 and is expected to make the Labour policies clearer.
We will keep you updated with any updates that happen between now and then, alongside a Budget summary following the event.
In the meantime, we encourage you to ask any questions you may have about these new policies and how they impact your business.
Please contact us if you have any questions about what the new Government means for your finances.
