King’s Speech promises budget responsibility requirements, audit reform and National Wealth Fund

The King’s Speech, delivered yesterday (17 July), has set out the programme of legislation to be presented by the new Labour government to the next Parliament, which aims to “take the brakes off the British economy”.

‘Budget responsibility’

A new Budget Responsibility Bill will strengthen the role of the Office for Budget Responsibility (OBR), requiring its scrutiny for all new taxation and spending commitments from the government.

The new requirements will “protect taxpayers’ money and people’s living standards,” prime minister Sir Keir Starmer has said.

“From that foundation of economic stability, we will generate higher economic growth in every community.”

Audit reform

The Financial Reporting Council (FRC), which currently regulates auditors and accountants, is set to be replaced by a new Audit, Reporting and Governance Authority.

This new body will have more powers to thoroughly audit large companies, a change which aims to prevent the collapse of large firms such as BHS. It will also be able to impose sanctions on the directors of companies who do not meet their financial reporting duties.

As noted by the Independent, the FRC has welcomed the announcement, saying it represented a “positive direction of travel”. The council’s CEO, Richard Moriarty, said:

“Without these changes we are the regulatory equivalent of being a sheriff for only half the county and with a weaker powers than are needed.”

Chief executive of the Institute of Chartered Accountants in England and Wales, Alan Vallance, said “this long-awaited reform will not only reduce the risk of disorderly business failure but will contribute to the transition to net zero.”

National Wealth Fund

Another measure designed to help usher the UK towards a net zero carbon emission future is the establishment of a National Wealth Fund, covered by a National Wealth Fund bill in the speech.

This new fund will select investment vehicles in sectors related to heavy industry with an aim to reducing carbon emissions. Initially, it is set to spend money through the existing UK Infrastructure Bank alongside the British Business Bank.

Planning changes

The government’s goal of growth, Starmer has argued, is also behind its plans for reform of the planning system, which will include mandatory targets for local authorities on housing construction, as noted by the Guardian.

The new plans will also require explanation from local authorities on how they plan to support their regions with new infrastructure. The process of approving new infrastructure projects is also set to be eased and simplified.

Workers’ rights

The UK labour market will receive a shake-up under the new government’s proposals in its Employment Rights Bill, which will ban “exploitative” zero hours contracts – though what this means in practice has yet to be detailed.

Offering flexible working will also be required under law where possible. It will also become illegal to sack a woman who has had a baby within six months of her return to work.

Plans in Labour’s election manifesto to limit the use of foreign labour by firms have been shelved until next year’s parliamentary session, the Telegraph reports.

Devolution

England’s mayors and regions will enjoy new powers with an English Devolution Bill, set to “drive growth in every part of the country”, according to deputy prime minister Angela Rayner.

Following the devolution of powers to mayors in Greater London, the West Midlands and other regions, there are also plans for new powers in Suffolk and Norfolk, as well as new mayors in Greater Lincolnshire and Hull and East Yorkshire, according to the Guardian.

Opposition response

The interim Leader of the Opposition, Rishi Sunak, said his Conservative Party “will hold [the new government] accountable for delivering on the commitments they made to the British people.

“In the national interest, we will not oppose for the sake of it but when we disagree with the government it is our responsibility as the opposition to say so.”