The Queen’s Speech starts election race
THE government yesterday laid down battle lines for the next general election with a politically charged Queen’s Speech that the Conservatives and Liberal Democrats dismissed as “pointless”.
The legislative programme outlined by the Queen in the House of Lords contained moves including a widely-expected Financial Services Bill, which will allow regulators to veto bankers’ bonuses and make it easier to wind down banks that hit by a financial crisis.
There was also a Fiscal Responsibility Bill aimed at halving the UK’s ballooning budget deficit of some £825bn within four years.
Labour hailed the plans as a “force for good” that would spark a return to economic growth.
Prime Minister Gordon Brown told the House of Commons that banks would be unable to “return to their old ways”.
“There has to be a new contract of trust between the banks and the society they serve,” Brown said. “I hope they will support us in moving further to improve the economy.”
But opposition politicians said the plans were unachievable because most of the bills would fail to reach the statute book before the election, which must be held by early June.
They urged ministers to use the time left to repair damage done by the MPs expenses row.
Conservative leader David Cameron said: “Labour has run out of money, time and ideas and now they’ve run out of courage.”
Liberal Democrat Treasury spokesman Vince Cable said: “The problem is endless legislation – there’s too much. What we really need is action to clean up politics.”
Chancellor Alistair Darling revealed earlier this week that ministers would give the Financial Services Authority (FSA) the power to tear up pay and bonus contracts it believed would undermine the stability of the financial system.
Top banking executives wanted the measures to help them cut costs and keep “out of control” bonuses in check, Darling argued.
But City figures yesterday reiterated doubts about the plans, questioning how they would work and warning they may force bankers abroad.
Canada Corporation policy chairman Stuart Fraser said better regulation was needed, but called for a level playing field.
“Pay structures need to take account of the normal practice in other competing financial centres if we are not to risk the City’s competitiveness in the long-term,” he said.
SO WHAT DID THE CITY THINK ABOUT THE QUEEN’S SPEECH?
JOHN CRIDLAND CBI DEPUTY DIRECTOR-GENERAL
The government is right to address the UK’s budget deficit, but needs to be more ambitious. We have called for all the major political parties to commit to balancing the budget by 2015, and set out a clear and credible path to achieving this. Plans to halve the deficit over four years are too little, too late.
DAVID FROST BRITISH CHAMBERS OF COMMERCE
Fiscal responsibility is neither the preserve of legislation nor of politics. It should be every government’s guiding principle. The UK urgently needs a credible plan to cut the deficit, reduce public borrowing, and enable businesses to lead our return to growth. Work to cut borrowing needs to start now.
ANGELA KNIGHT BRITISH BANKERS ASSOCIATION
British banking is a global business and many of our banks operate outside the UK. Moves to bind how our banks operate overseas could seriously disadvantage the industry and discourage global banks from coming to the UK, which would be a major problem for jobs, the taxpayer and the wider economy.
JON TERRY PARTNER, PRICEWATERHOUSECOOPERS
Some of the changes needed to restore trust in remuneration processes and support the future resilience of financial services are already underway. Clarity on how the Bill would interplay with other initiatives, such as the G20 pay agreements and the Walker governance review, will be the critical next step.
BETTINA BENDER PARTNER, CM MURRAY
The new rules will not affect bonus payments for 2009, which is still expected to be a bumper year for the banks. With no cap on bonuses overall the practical effect of the Financial Services Bill in terms of reducing the level of bonuses in fact paid is likely to be very limited.
AT A GLANCE: BILLS IN THE QUEEN’S SPEECH
Bribery Bill
Will provide a new scheme of bribery offences enabling courts to improve response to bribery at home or abroad.
Children, Schools and Families Bill
Government will launch new pupil and parent guarantees over standards.
Cluster Munitions (Prohibitions) Bill
Will prohibit use, production and transfer of cluster munitions in the UK.
Crime and Security Bill
The bill would make parents responsible for children’s anti-social behaviour.
Digital Economy Bill
The bill aims to build a new digital communications infrastructure with proposals on radio licensing.
Energy Bill
The bill would enforce social price support, such as in the form of an electricity bill rebate.
Financial Services Bill
The bill would give the FSApowers to veto contracts providing for excessive bonuses.
Fiscal Responsibility Bill
The bill would aim to halve the UK’s budget deficit within four years.
Flood and Water Management Bill
The bill would provide better, more sustainable management of flood risk.
Personal Care at Home Bill
Would guarantee free personal care for 280,000 people most in need.
Child Poverty Bill Carried over from 2008-9
This would enshrine in law a commitment to banish child poverty by 2020.
Equality Bill Carried over from 2008-9
Will significantly strengthen Britain’s anti-discrimination legislation.
Constitutional Reform and Governance Bill Carried over from 2008-09
Will end the by-election of hereditary peers to sit in the House of Lords.
International Development Spending. Draft Bill
Will make binding a commitment to spend 0.7 per cent of national income on international development from 2013.
House of Lords Reform draft
Includes plans for a reformed second chamber of Parliament with a democratic mandate.