The usual pomp and ceremony associated with a normal state opening of Parliament was played down today. Theresa May needed to negotiate right to the wire with the DUP and ended up with a minority Government. Many Conservative MPs are unhappy. Further strain has been placed on Theresa May from 30 Conservative backbenchers who’ve declared that no Brexit deal with the EU would be “unacceptable”. The Government is, to put it mildly, weak and unstable.

To set aside the time to negotiate the exit from the EU, the Government is making this Queen’s Speech cover two Parliamentary terms (a two-year period). The details of the Queen’s Speech reflect this reality: 8 of the 27 bills and drafts are related to Brexit.

Here are the key Bills that will affect financial services:

  • The Great Repeal Bill – to begin exiting the European Union and to start translating EU law into British law. Key areas of policy were mentioned briefly – immigration, agriculture & fisheries and nuclear safety.
  • Customs Bill – This Bill aims to replace the Customs Union. A key area of debate for those critical of the Brexit process. The Bill aims to create a standalone UK customs regime on exit from the EU. The Bill means the UK will control:

¾     Changes to the UK’s VAT and excise regimes on exit from the EU, whatever the outcome of negotiations

¾     Allow the government to collect payments of customs duties, administer the customs regime and tackle duty evasion

¾     Control over the import and export of goods.

  • Trade – the Government Bill on trade will put in place a legal framework to allow Britain to sign new free trade deals with countries around the world while ensuring domestic businesses are protected from unfair trading practices.
  • Financial Guidance and Claims Bill – establishes a new statutory body, accountable to Parliament, with responsibility for coordinating the provision of debt advice, money guidance and pension guidance. This also enables the body’s activities to be funded through existing levies on pension schemes and the financial services industry. The Bill will also transfer the regulation of claims management services to the Financial Conduct Authority, and transfers complaints-handling responsibility to the Financial Ombudsman Service.

Other Bills announced included:

  • Data Protection Bill – Among various counter terror measures, this Bill gives people new rights to “require major social media platforms to delete information held about them at the age of 18”.
  • High Speed 2 – A Bill is included to progress the next phase of High Speed Rail (dubbed HS2) to connect cities in the North of England and Scotland.
  • Electric vehicles – A Bill to facilitate the insurance and development of electric facilities for electric cars. This is a key Bill for many car manufacturers which expect to launch a new generation of electric cars in 2018.
  • National Insurance Contributions – legislate for the National Insurance contribution (NICs) changes announced in the 2016 Budget and 2016 Autumn Statement to make the NICs system fairer and less complex. Note that this does not relate to the discussion of Class 4 (relating to the self-employed) contributions at the time of the Spring Budget 2017 which the Government U-turned on.

 

While it was widely accepted that the Government needed to focus on Brexit, there is also a shadow hanging over the Government in terms of legitimacy and the increasingly precarious position of Theresa May’s leadership. Speculation continues to mount as to whether Theresa May will exit the Government before the UK exits the EU.

If May does step down this could lead to one of two scenarios, a collapse of the minority government and a Conservative leadership election (followed by another General Election) or, a leadership race and a new Prime Minster with the Conservatives retaining power. Both scenarios would be disruptive. It seems likely that the Conservatives will continue to rally around Theresa May to ensure continuity and avoid giving Labour the opportunity to challenge them in a new election.

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