Expert reaction to the King’s Speech
The King marked the start of the new parliamentary year last month by delivering the new Labour government’s key priorities following its general election. Here we ask some of our expert contributors about their thoughts on how they will impact various business sectors…
Fundamental effects on finance
Gary Jeffries, CEO Panoramic Wealth
“Labour are looking to be a bold government – and hopefully Rachel Reeves can be more in control of the economy than Keanu Reeves was with the bus in the Hollywood movie Speed. Here are my musings on a variety of different areas…”
Property
Abolishing Renters Right Bill -This is very welcome for renters given the nature of non-fault evictions but the snag is it may reduce landlords keeping properties. UK wide there is already a shortage of available properties in the market due to demand. The impact of introducing this could mean an increase in rents.
Pensions
Auto Enrolment in Workplace Pensions – The government wants employers to offer retirement options in their plans. This will include drawdown and annuities options. This will be interesting in terms of who ends up paying for this as providers will not simply absorb the extra burden. A result in more cost for employer is therefore likely.
Taxation
VAT on school fees – this is being brought in to fund 6,500 extra teachers. There are at present 7% of children at fee paying schools and for some this is aspirational. With middle earners squeezed from cost of living rises, the increase is likely to mean many will leave and go into the state sector. The knock-on effect of this is likely to affect those in post age 11 education, putting pressure on state schools with parents looking at grammar and Ofsted Outstanding state schools which are already heavily subscribed.
Care Cap Provision
Previously there was going to be a Care Cap introduced by October 2025 limiting the amount of ‘care’ an individual would pay for. In essence this was £86,000 which, once paid, would mean the state would then pay. This assistance had initially been suggested back in 2014 under the then government’s Care Act. This has now been scrapped. So individuals with their own assets will now be required (as is currently) to fund all care personally.
Time to work things out
Sophie Forrest-Lavery, CEO Forrest Group
Sophie outlines some key employment areas which she believes will be of specific interest to small and local businesses…
Proposed Employment Bill – The main point with the employment bill that businesses need to be taking into consideration, is that everything is ‘proposed’ and ‘in draft’. Whilst our new PM Sir Keir Starmer has advised that he wants to introduce this within 100 days, it is more realistic that we will see this roll through more gradually, and with some aspects of the legislation we may have to wait as long as two years.
Unfair Dismissal Rights – Currently an individual has to work for an employer for at least two years to accrue employment rights. It is now proposed that these rights should accrue from day one of employment. The main reason for this being introduced is to encourage individuals to move jobs more frequently, as salaries are likely to be considerably higher with a new employer, than with their current one. We are still lacking in further information in regard to this though, particularly in respect of how this will affect temporary, seasonal and casual workers. No longer will it be possible for employers to exit individuals with very little reason. Instead businesses will be expected to manage situations more thoroughly and using a probation period to deal with any early performance issues.
Banning ‘exploitative’ Zero Hours Contracts – the main point to focus on here is the word ‘exploitative’. The new government are not suggesting that all zero hours contracts are banned, just those that are considered one-sided and are unfavourable to the worker. Many businesses in the hospitality industry utilise these types of contracts frequently and I don’t believe that would be beneficial for the company or the worker for these contracts to be banned in their entirety.
Statutory sick pay – currently an individual is only entitled to Statutory Sick Pay (SSP) if they are off sick for four working days or more and if their earnings meet the lower earnings limit (currently £123). It is proposed that SSP should be payable from day one of sickness and that the lower earnings limit should also be removed. The impact and cost to businesses could rocket with this proposal, meaning they will need to manage sickness absence much more effectively to keep control of this.
All in the detail
Emma Thompson, Partner at Thackray Williams
Changes to UK employment laws are expected in the coming months and Emma Thompson believes these will significantly strengthen employee rights and entitlements…
Headline changes to employment laws include day one employment rights, including parental leave and sick pay rights and the right not to be unfairly dismissed (though employers will be able to operate probationary periods).
As previously mentioned there will also be a ban on ‘exploitative’ zero-hour contracts with workers receiving contracts reflecting regular hours and reasonable notice for shift changes, alongside compensation for cancelled or curtailed shifts. Coupled with this, and the strengthened statutory sick pay entitlement, there’s also enhanced redundancy consultation requirements and additional protection against dismissal for employees returning from maternity leave. There is also expected to be enhanced requirements for pay gap reporting and the introduction of a new state enforcement body to ensure compliance with employment laws.
Whilst several of the proposals remain light on detail, it is expected that businesses will need to navigate these changes carefully to ensure compliance and to avoid potential legal issues.”
Let’s talk technology
John Speed, Managing Director, Heliocentrix Ltd
Commenting on what kind of impact the new Digital Information and Smart Data Bill will have on tech John Speed believes it can do nothing but enhance all our lives…
Technology is a big part of all of our lives, and I am pleased to see it being discussed in these two new government bills. Many of my clients have been talking about productivity and how they can use technology more efficiently. And the Digital Information and Smart Data Bill may create new opportunities for innovation to do that.
“I would expect, that in the coming years, we will see faster house purchases, quicker background checks and easier access to our own information. It should make information sharing between organisations much easier.
“Writing this only a few weeks after the July 19 tech issues – where so many people were affected by one application – makes me stop and think about our reliance on technology. While the scale of the outage was unprecedented it was not unexpected. Hopefully these bills will stop further incidents of this kind. I just hope the requirements are realistic for small businesses.”
