Last month, the UK Government set out its legislative programme for this Parliament in the Queen's Speech. In this briefing, we look at some of the proposals relevant to business which have had less media attention. We also highlight some of the notable omissions and consider how far the proposed legislation might deliver on the Government's commitments to cut red tape, promote economic growth and achieve "levelling up".
The Queen's Speech: did you miss anything?
- Cutting red tape: The Queen's Speech contains a number of measures in areas which are intended to cut red tape and allow businesses to make savings; of particular note are the proposals relating to financial services, data protection, public procurement and retained EU law. However, for reasons explained below, substantial benefits are often difficult to deliver in practice. See section 3.
- Planning and levelling up: The Government plans to make a number of changes to the planning regime, intended to boost local growth although overall these are likely to fall short of the radical overhaul that some have called for – see section 4. Meanwhile, an Infrastructure Bank with a £22 billion budget is being established to support "under-invested areas".
- Business rates and residential property: The Government is proposing reforms to the existing business rates regime (see section 5), together with new protections/rights for tenants in the residential property sector (see section 6).
- Net zero, energy and climate change: The proposals in this area suggest a shift in focus towards energy security, perhaps reflecting current Government concerns about the adverse economic impact in the short to medium term of certain measures designed primarily to meet net zero targets – see section 7.
- Online harms: The Online Safety Bill will introduce a new regulatory framework for a range of online businesses including social media platforms, internet marketplaces, online forums and search services. See our briefing from August 2021.
- Consumer law and competition regulation of "Big Tech": the draft Digital Markets, Competition and Consumer Bill will give the UK Competition and Markets Authority (CMA) new powers to (i) enforce consumer law; (ii) regulate the market behaviour of large tech firms; and (iii) enhance competition law enforcement.
- Audit reform: the draft Audit Reform Bill will provide a new regulatory framework for auditors, following criticism of their role in a number of high profile business failures.
- Supply chains and modern slavery: The Government intends to strengthen protection and support for victims of human trafficking and modern slavery, as well as increasing the accountability of organisations in driving out modern slavery from their supply chains. See our full briefing on this measure.
- Rail: in a major change for the rail industry, the Transport Bill will create a single body, Great British Railways to oversee both passenger and freight operations (effectively ending the post-privatisation model of franchise arrangements with multiple train operating companies).
- Telecoms and connected devices: The Product Security and Telecommunications Infrastructure Bill will impose new minimum security requirements on smart devices and aims to make changes to the telecoms regulatory framework to facilitate roll-out of upgraded infrastructure.
- Media: whilst the flagship proposal here is the privatisation of Channel 4, the Media Bill will also change aspect of the existing regulatory framework and give media regulator Ofcom new powers over Video-on-Demand (VOD) services.
- Biotech research and food production: the Genetic Technology (Precision Breeding) Bill will introduce a simpler regulatory regime for authorising the development and marketing of precision bred plants and animals.
- Sport: a White Paper is promised on proposals to establish an independent football regulator to oversee a new licensing regime for the sector.
With any Queen's Speech, there are always going to be measures which do not make the final cut, mainly because the Government only has a finite amount of time in which to get its legislative programme through Parliament. That said, there were reports this year of a number of Government Departments jockeying to have their proposals included; as a result, there were several notable omissions in this Queen's Speech, despite previous Government commitments to legislate:
- Employment Bill: In 2019, the Government said it was planning to introduce an Employment Bill which would (among other things) include measures on flexible working, extended redundancy protection for mothers, paid neonatal leave, unpaid carers' leave and additional rights for zero hours workers. Following the pandemic, it was widely anticipated that the Bill would come back on the agenda in 2022 – but it did not appear in the Queen's Speech at all, even as a draft Bill.
- Pension superfunds: In winter 2018/19, the government proposed a statutory authorisation and regulatory regime for defined benefit consolidator pension schemes, also known as 'superfunds', but no legislation in this regard has been announced. In the meantime, there is Pensions Regulator guidance for (a) those setting up and running such a scheme and (b) scheme trustees and employers considering a transfer to one.
Included – but only as draft Bills
The following measures were included in the Queen's Speech, but only as draft Bills – which means there is no commitment to legislate in this Parliament:
- Draft Digital Markets, Competition and Consumer Bill: The Government had previously promised to legislate to give the UK Competition and Markets Authority new powers in relation to (i) large tech firms (through the creation of a Digital Markets Unit with the CMA); and (ii) enforcement of consumer legislation.; and (iii) enhanced competition law enforcement.
- Draft Audit Reform Bill: Following criticism of the role of auditors in relation to a number of high profile business failures, the Government is proposing a new regulatory framework designed to restore confidence.
The Northern Ireland Protocol
Legislation allowing the Government to amend the Northern Ireland Protocol to the Brexit Withdrawal Agreement unilaterally was not included in the Queen's Speech, but has since been published, along with explanatory notes, the Government's legal position and the UK's latest proposals. A number of commentators have expressed scepticism about the Government's argument that the concept of "necessity" under international law is sufficient to justify the legislation, which would effectively disapply large parts of the Northern Ireland Protocol to the Brexit Withdrawal Agreement.
We discussed last year how the EU might react to the UK adopting a tougher stance on the Northern Ireland Protocol and in particular, whether it would be likely to suspend or terminate the UK-EU Trade and Cooperation Agreement. Whilst the EU's position is that the Protocol is not up for renegotiation, it published extensive proposals in October 2021 setting out potential changes on detailed implementation.
A key theme of the measures designed to cut red tape is that they all target areas which were largely regulated by EU law – notably financial services, data protection, public procurement and other areas of retained EU law. However, it remains to be seen whether these changes will allow businesses to make material savings, particularly where there is a need to comply with both EU and UK regulations (and where divergence from EU regulations may therefore have the opposite effect).
Financial Services and Markets Bill
The Financial Services and Markets Bill aims to maintain and enhance the UK’s position as a global leader in financial services while also cutting red tape and ensuring that UK financial services regulation reflects the particular circumstances of the UK. Retained EU financial services law would be revoked and replaced by regulation tailored to the UK. The objectives of the financial services regulators (such as the Financial Conduct Authority and Prudential Regulation Authority) would also be updated to ensure a greater focus on growth and international competitiveness and the UK capital markets rules would be reformed to promote investment. Measures in respect of access to cash and protection from financial scams are also envisaged. As the detail of the Bill has yet to be published, it is difficult to assess how effective it will be in achieving the Government's stated objectives.
Data Reform Bill
The Queen's Speech confirmed that we can expect a new Data Reform Bill in the summer, but told us little else about the extent of the reform – as with the financial services legislation (see above), this will only become apparent when the initial text of the Bill is published. The key themes set out in the accompanying Briefing Notes, i.e. shifting the emphasis of the UK's data regime to become more "outcomes-focused" and reducing the burden on UK businesses, facilitating responsible innovation and research and modernising the ICO, all appear to be consistent with proposals published by the Department for Culture, Media and Sport in September 2021 in its consultation document entitled "Data: a new direction" (which we previously wrote about here). The key questions are:
- Will the new law seek to sweep away all of those GDPR measures that have been identified as overly burdensome "box-ticking" requirements, such as the data protection impact assessments, the obligation to appoint a DPO, the legitimate interests balancing test and the low threshold for data breach reporting?
- How burdensome will any new measures (such as the proposed "privacy management programmes") prove to be in practice? In particular, businesses which have already invested heavily in implementing procedures to comply with the existing GDPR regime may find that adapting to the new regime imposes additional costs.
- Will the reforms prompt the EU to consider withdrawing its data adequacy decision in respect of the UK, which currently allows the free flow of personal data from the EEA to the UK? Lose that and UK business will have a significant additional compliance burden to contend with in order to process EEA personal data.
The Procurement Bill will introduce a new regime for public bodies when purchasing goods or services from the private sector. It is expected to come into force in 2023. The aim is to create a simpler, more flexible approach to procurement than currently permitted by the existing EU derived regimes. From a private sector perspective, the key benefit will be if the changes make it cheaper and easier to bid for government contracts. Whilst the new regime is expected to introduce new flexibilities and more streamlined processes, it is likely that in many cases, businesses will continue to be asked to provide substantial amounts of documentation when responding to tenders; this may limit the extent of potential savings from the perspective of private sector bidders.
Brexit Freedoms Bill
Alongside these reforms, much has also been made of the Brexit Freedoms Bill, which will – among other things – give Ministers "fast track" powers to change retained EU law. The Government has suggested that this could help to achieve potential savings of £1 billion, but as we noted in our briefing when the Bill was first announced earlier this year, this is likely to prove challenging to deliver in practice.
- Electronic Trade Documents Bill: this measure aims to put electronic trade documents on the same legal footing as paper documents, as recommended by the Law Commission. The potential savings would primarily accrue to businesses in the international logistics sector, although some investment in technology and staff training may be needed to take advantage of the changes.
- Genetic Technology (Precision Breeding) Bill: this measure will introduce a simpler regulatory regime for authorising the development and marketing of precision-bred plants and animals.
The Levelling Up and Regeneration Bill contains a range of measures to boost local growth and regeneration, building on the Levelling Up White Paper published in February this year. It also draws on some of the ideas in the Planning for the Future White Paper (August 2020) to the extent that they support the current approach to Levelling Up. The changes relating to the planning process are of particular note from a business perspective.
Regeneration of town centres
The Bill seeks to empower local authorities to regenerate towns and cities – by, for instance, giving them powers to force owners to fill vacant commercial property by high street rental auctions. The British Property Federation has responded negatively to this suggestion, saying that "No property owner wants their premises to be empty. In our experience, property owners are willing to do zero-rent deals to avoid boarded up shopfronts but the burden of business rates and other occupational costs mean it is still unviable for many small and independent businesses to trade from town centre premises."
Localism and increased democracy in the planning process
The Bill aims to improve the planning process, to give local communities control over what is built, where it is built, and what it looks like, and so create an incentive to welcome development provided it meets the standards which are set. Key proposals include:
- Accelerating devolution by allowing "combined county authorities" of county councils and unitary authorities, and more democratically-elected mayors.
- Parish councils and neighbourhood forums will produce a simpler ‘neighbourhood priorities statement’ which the local authority will be obliged to take into account when preparing its local plan.
- The Bill also includes new ‘street vote’ powers, allowing residents on a street to bring forward proposals to extend or redevelop their properties in line with their design preferences. Where prescribed development rules and other statutory requirements are met, the proposals would then be put to a referendum of residents on the street, to determine if they should be given planning permission. It has been reported that local planning authorities are concerned that the policy will add unnecessary complexity to the planning system.
Streamlining the planning process and enhancing environmental protection
The Bill will also include measures designed to streamline the planning system, including full digitalisation of the process, strengthening the role of local plans and making them easier to produce and navigate. The 2020 proposal for introducing development zones will be dropped, as will the requirement for planning authorities to maintain a rolling five-year supply of deliverable land for housing, provided that the local plan is up to date. Meanwhile, the concept of biodiversity net gain will be implemented through the planning system from late 2023 onwards.
Replace the Community Infrastructure Levy
The Bill will replace the current system of developer contributions (the Community Infrastructure Levy or CIL) with a simpler, mandatory, and locally-determined Infrastructure Levy. The levy will be charged on the value of property when it is sold and applied above a minimum threshold. Levy rates and minimum thresholds will be set and collected locally, and local authorities will be able to set different rates within their area. The rates will be set as a percentage of gross development value rather than based on floorspace, as with the CIL at present.
Section 106 agreements will still be used to support delivery of the largest sites. In these instances, infrastructure will be able to be provided in-kind and negotiated, but with the guarantee that the value of what is agreed will be no less than will be paid through the levy.
The Government will introduce the levy through a ‘test and learn’ approach. This means it will be rolled out nationally over several years, allowing for careful monitoring and evaluation, in order to design the most effective system possible.
"Creating beautiful places"
Every local planning authority will have to produce a design code for its area, to reflect the National Model Design Code and stronger national policy on the importance of good design. This will either form part of the local plan or will be issued as a supplement to the plan. This whole area level of design requirement will not need to cover every aspect of design or every description of development. Design codes will have full weight in planning decisions.
The Government proposes to introduce a Non-Domestic Rating Bill which will:
- Modernise the business rates system with more frequent revaluations (3 years not 5 years).
- Incentivise business ratepayers to invest in their properties and decarbonise with new reliefs backed by the Government.
- Remove or reduce the ability to appeal against a rating valuation on the grounds of a change of circumstances.
Contractual controls register
Part 9 of the Levelling Up and Regeneration Bill will increase the transparency of contractual controls and other arrangements used to exercise control over land. The Government will have the power to collect and publish data on these arrangements to expose anti-competitive behaviour by developers and help local communities to better understand the likely path of development. The Government will also have the power to collect additional real-time ownership, funding and transaction data, enabling a fuller understanding of who owns and controls land and property in England and Wales. This follows a 2020 consultation: "Transparency and competition: a call for evidence on data on land control".
This Bill is intended to fulfil the Conservative party's manifesto commitments to abolish so-called ‘no fault’ section 21 evictions and to reform the possession grounds for landlords, introducing new and stronger grounds for repeated incidences of rent arrears and reducing notice periods for anti-social behaviour. It builds on a 2019 consultation "A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants". The legislation will:
- apply the legally binding Decent Homes Standard in the Private Rented Sector;
- introduce a new ombudsman for private landlords so that disputes can be resolved without the need to go to court;
- introduce a new property portal to help landlords understand their obligations, give tenants performance information to hold their landlord to account as well as aiding local authorities with enforcement;
A new white paper will be released to expand on these proposals.
Extending the "right to buy" to housing association tenants
Although it did not form part of the Queen's Speech, the Government has recently announced that it plans to bring forward a new Right to Buy scheme which will permit tenants in housing association properties to buy their homes at a discount. This scheme would involve the one-for-one replacement of each social housing property sold. Critics of the proposals have raised a number of objections, including concern about the risk of reducing the stock of social housing. The details of the scheme have yet to be released.
- Energy: The Government announced an Energy Security Bill which aims to "deliver the transition to cheaper, cleaner and more secure energy". BEIS notes that this will be "based on renewable energy and low carbon technologies". The Bill will also, in an ambitious but necessary move, look to modernise both the network infrastructure and the overarching structure of the energy system for better integration with new technologies.
- Climate change: The UK Infrastructure Bank Bill will, according to the Government, enable the recently formed UK Infrastructure Bank to support investment in the green economy including by loans directly to local authorities, but the bank will also need to use its £22bn of funds to grow the economy and address the current cost of living crisis.
- Transport: additionally, the Transport Bill will contain measures to facilitate EV charging points.
According to media reports, some in Government had hoped that sustainability disclosure requirements or SDR (equivalent to the EU's Sustainable Finance Disclosure Regulation or SFDR) would be included as part of the Financial Services and Markets Bill, but these measures did not make it into the Queen's Speech. However, it is understood that the Government remains committed to SDR and the Financial Conduct Authority is continuing with its programme of work in this area, with a further consultation paper expected in July 2022.
Curbing environmental protests
Meanwhile the Public Order Bill is expected to have serious consequences for environmental protestors looking to make an impact via disruption, notably Extinction Rebellion and more recently, Insulate Britain. New offences will be created for "locking on" (to another person, object or land) and interfering with key national infrastructure; both are tools frequently used by environmental protesters.
Key themes of the Queen's Speech include cutting red tape and promoting growth opportunities – both of which most businesses would broadly welcome. However, these objectives are easy to state but far from straightforward to deliver in practice. As explained in section 3 above (see in particular the discussion of the Data Reform Bill), the devil will be in the detail, much of which has yet to be published. Meanwhile, certain other measures that were announced, such as the Online Safety Bill, will tend to increase regulatory burdens, at least for some businesses – so overall, it is likely to be difficult to assess whether the net regulatory burden for business will be lighter once all the reforms are implemented (which will also take time – so no one should expect an immediate regulatory dividend from these measures).
Putting it in perspective
When assessing the Queen's Speech, it's also important to bear in mind that it doesn't represent the whole of any Government's activity and in that respect, the picture it presents can be misleading:
- Firstly, the focus is almost exclusively on Bills to be put before Parliament, when there may be many other regulatory reform initiatives underway involving either regulators or secondary legislation – see for example, our briefing from October last year entitled "A blizzard of regulatory reform".
- Secondly, there is a great deal that Governments can do using their existing powers – and these measures can often have more of an impact in the short to medium term (whereas legislation can only have an impact once it has been passed and brought into force). Examples include fiscal measures such as those announced in the Chancellor's Spring Statement (March 2022) or funding initiatives designed to support levelling up.