Business news 11 May 2022
James Salmon, Operations Director.
Reaction to Queens Speech. We can’t spend our way out of trouble, says PM. Absence of Employment Bill draws criticism. Mixed response to Leveling Up and Regeneration Bill. Plans for Infrastructure Bank welcomed. Business rates revaluation cycle to be shortened. And more business news.
We can’t spend our way out of trouble, says PM.
The Prime Minister yesterday said the Government could not shield everyone completely from the cost-of-living crisis, warning that Britain “cannot simply spend our way out” of the crisis caused by surging inflation. Boris Johnson rejected calls to cut taxes adding that the Government’s priority was to take a “responsible approach to the public finances”. Mr Johnson argued wider economic reforms would help households, telling MPs: “However great our compassion and commitment, we cannot simply spend our way out of problems. We need to grow our economy out of these problems by creating hundreds of thousands of high-waged, high-skilled jobs across the country.”
Absence of Employment Bill draws criticism
There was widespread criticism of the Government after an Employment Bill was left out of the Queen’s Speech. Verity Davidge, director of policy at Make UK, said “business will be frustrated that, yet again, three years after having promised it”, the Government had shelved it. The organisation, which represents manufacturers, called it “a major omission given how fast the world of work is changing, a trend accelerated by the pandemic”. Head of policy for the Chartered Institute of Personnel and Development, Ben Willmott, said delay on the bill “once again leaves the Government with very little time to meet its promises to protect and enhance workers’ rights”. Frances O’Grady, general secretary of the TUC, adds: “No employment bill means vital rights that ministers had promised – like default flexible working, fair tips and protection from pregnancy discrimination – risk being ditched for good.”
Mixed response to Levelling Up and Regeneration Bill
Among the bills announced in the Queen’s Speech on Tuesday was a Levelling Up and Regeneration Bill that will aim to expand devolution in England through the creation of more directly elected mayors. It will also provide some modest planning reforms to support housebuilding and give local councils additional powers to bring empty commercial premises back into use. These powers could include initiating rental auctions of vacant commercial properties in town centres and high streets. The plans received a mixed response, with Kate Nicholls, chief executive of UKHospitality, saying it had the potential to make a “huge difference in rejuvenating empty properties and … reviving high streets” but Melanie Leech, chief executive of the British Property Federation, said such “political gimmicks” were “not the solution and will deter rather than encourage investment into the areas where it is most needed”. Additionally, the Renters Reform Bill will end so-called “no fault” evictions that enabled landlords to throw out their tenants with eight-weeks’ notice.
Audit reforms announced only as a draft bill
The Queen’s Speech saw reforms to improve auditing and corporate governance announced only as a draft bill on Tuesday, meaning they will not become law until the 2023-24 parliamentary session at the earliest. The new bill would see a new regulator – the Audit, Reporting and Governance Authority – created as the next stage in the evolution of the Financial Reporting Council. The new regulator will be given “effective powers to enforce directors’ financial reporting duties, to supervise corporate reporting, and to oversee and regulate the accountancy and actuarial professions”, the Government explained. The bill would also increase competition through “managed shared audits” for the main listed companies. It was a commitment of sorts, which brought some relief for business groups. The Institute of Directors said it was a relief the “long overdue” reform was not completely dropped but the ICAEW said the scope of change signalled a missed opportunity. John Wood, chief executive of the Chartered Institute of Internal Auditors, said that putting the audit regulator on a statutory footing “with the legal powers it needs to do its job effectively, is vital to restoring trust in audit and corporate governance”, but urged ministers to “get on and swiftly issue its full response to the white paper it published over a year ago”. Louise Pryor, President at the Institute and Faculty of Actuaries, said a failure to commit to a clear timetable for reform was disappointing but the publication of the proposed draft legislation “will, at least, keep progress moving on reforms to the FRC and actuarial regulation.”
An editorial in the Guardian laments the Government’s decision to relegate audit reform to a draft bill describing the ongoing foot-dragging as “indefensible”. The piece notes how Sir John Kingman in 2018 said the need for the Financial Reporting Council to be replaced was urgent and how two further reviews agreed for the need for a more powerful regulator. The article ends with a further rebuke for ministers, this time for using the “feeble” excuse that audit reform isn’t exciting enough for voters to warrant inclusion this time round.
Ferry crews must be paid the minimum wage while in UK waters
New legislation unveiled in the Queen’s Speech will see the Government hand British ports the power to block ferry services from mooring if they do not pay their crew the minimum wage. Under the Harbours (Seafarers’ Remuneration) Bill ministers will seek to ensure ferry crews are paid at least £9.50 an hour while in UK waters. The move comes after P&O sacked close to 800 workers in March and set out plans to replace them with agency workers earning £5.50 an hour. Unions have claimed that some Indian agency workers are being paid less than £2 an hour by P&O.
Over 10,000 employers now pay the real Living Wage
The Living Wage Foundation has revealed that over 10,000 companies are now paying the real Living Wage, with 4,500 firms and organisations joining the ranks since the beginning of March 2020. Oxfam, the Royal Albert Hall, Nestle, the Nationwide Building Society and KPMG are among those to have introduced the real Living Wage for their staff. Katherine Chapman, director of the Living Wage Foundation, said: “Reaching 10,000 Living Wage Employers is an historic milestone for the Living Wage movement.”
Queen’s Speech promises to protect access to cash
The Queen’s Speech promised to introduce legislation to protect people’s access to cash as banks continue to cut branches and free cash machines close. Announcing the promised measures, economic secretary to the Treasury John Glen said: “We know that access to cash is still vital for many people, especially vulnerable people. We promised we would protect it, and we are delivering on that promise.” Natalie Cheney, chair of the Access to Cash Review said: “Today’s announcement to legislate to protect cash is a huge step forward.” She added: “We owe it to the public, small businesses and the communities they live in to see this through and get the legislation on the statute book.”
Plans for Infrastructure Bank welcomed
The Institute of Directors has welcomed plans announced in the Queen’s Speech to complete the establishment of the UK Infrastructure Bank, utilising its £22bn financial capacity to “support growth, improve connections across the country and help level up the UK whilst supporting our transition to net zero by 2050”. The GMB union also supported the move saying it was a “great opportunity to stop UK renewables jobs going overseas”.
Business rates revaluation cycle to be shortened
We heard from the Queen’s Speech on Tuesday how a new Non Domestic Rating Bill could shorten the business rates revaluation cycle from five to three years from 2023. The bill would also provide new reliefs for firms that invest in their properties or decarbonise.
Companies will need to report on modern slavery
Under a new Modern Slavery Bill announced in Tuesday’s Queen’s Speech, all companies with a turnover of £36m or more will have to publish an annual report on the steps they have taken to prevent modern slavery in their operations and supply chains.
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