The Queen’s Speech And Beyond – Consolidated Latest Position

The Queen’s Speech was significant as much for what it did not contain as for its predictable (and weighty) Brexit content.

The Queen’s Speech was not the grand event that might have been expected less than a month ago. To quote the Parliament website, the State Opening of Parliament took place with “reduced ceremonial elements…due to the unique circumstances of the general election”.

The Speech lasted just nine minutes, yet was designed to cover the next two years of legislation – if the government survives that long. The doubled (theoretical) length of the parliamentary session is a direct consequence of the raft of Brexit-related legislation that needs to be in force by 29 March 2019 (EU exit date). Meeting this timetable promises to be extremely challenging.

A month on from the election, Theresa May has yet to finalise a “confidence and supply” deal with the DUP. If she does, that will mean a House of Commons majority of 13, assuming Sinn Fein MPs remains absent. However, the 10 DUP MPs will vote in favour of the Queens Speech this Thursday, so the Prime Minister should at least stay in post until July.

The House of Lords, where the Conservatives do not have a majority, also poses a considerable threat. The Lords has a majority of Remainers and there are already suggestions that their Lordships may choose to ignore the Salisbury Convention. This constitutional convention says that the Lords will not oppose second and third readings of legislation promised in a government’s election manifesto. However, there is an argument over whether such a practice applies for coalitions in which the main party did not win the majority of seats: there was no joint Conservative/DUP manifesto.

As far as legislation relevant to the financial services industry is concerned, you will hunt in vain for any of the proposals contained in the Conservative Manifesto:

• The word ‘pension’ did not pass the Queen’s lips, so we can assume the Triple Lock and Winter Fuel Allowance (both of which the DUP support) stay in place. There was no mention of (BHS-inspired) legislation protecting pensions during company sales or mergers.
• The statement that the government “will seek to enhance rights and protections in the modern workplace” is little more than an acknowledgement that there will be a response to the Taylor Report. However, press reports suggest its publication has been put on hold while the government considers its position.
• On social care, the Speech offered only a promise to “bring forward proposals for consultation.” As the Dilnot capped regime for care costs is not due to begin until April 2020, there is still time for it to be culled.

There was no comment about Budget timing in the Speech, although last weekend the Chancellor had used the Andrew Marr Show to confirm that there will be no summer Budget. Mr Hammond said “…there’s not going to be a sort of summer budget or anything like that, there will be a regular budget in November as we as we had always planned, and in that budget we will set out our future plans for public spending, for taxation, for fiscal balance and everything else that needs to be clear.”

The Chancellor’s promise that there would not be “anything like that” was subsequently contradicted by a few lines in the 82 pages of background notes issued by No 10 to accompany the two pages of Queen’s Speech. Hidden on page 16 of these copious notes under the heading of “Other Measures” is the following:

“The [two-year parliamentary] programme will also include three [our italics] Finance Bills to implement budget decisions. Summer Finance Bill 2017 will include a range of tax measures including those to tackle avoidance.”

The prospect of a Summer Finance Bill raises two questions:

1. When does summer end? Governments are prone to elasticate seasons to suit their circumstances, witness the timings of some Autumn Statements. The parliamentary timetable announced before the House of Commons dissolved has the [genuinely seasonal] summer recess running from 20 July to 5 September 2017. In past years the post-summer sitting has lasted only ten calendar days before the House shuts up shop for nearly four weeks because Conference Season has arrived. In 2016, that meant the House rose on 15 September and business did not resume until 10 October.

On the face of it a new Summer Finance Bill introduced before the summer recess would have very limited time to debate if the aim was for it to reach Royal Assent by 20 July. Thanks to the recesses, it would not have much more debating time if the Royal Assent goal was mid-October.

2. What would be in the Summer Finance Bill? The material culled from the Finance (No 2) Bill 2017 was the contentious content. In theory, a Summer Finance Bill could run to over 600 pages, based on the difference between the Finance (No 2) Bill 2017 (776 pages) and the eventual Finance Act 2017 (155 pages). Would the government try to reinstate all the abandoned legislation and, if Royal Assent by July 20 is the goal, rush it through? In the current political climate trying to push through Making Tax Digital (to mention just one of the dropped items) without detailed parliamentary scrutiny might well be difficult.

The legislative situation remains unclear on the “lost” Finance Bill measures. Alas, the promise of a Summer Finance Bill does little to clarify matters for now.