King's Speech: money matters

The King’s Speech was fuelled by Labour's ambitions to kickstart economic growth with 40 bills, including audit reform, overhaul of employment law, VAT on private school fees and changes to apprenticeship levy

Growing the economy will be no easy task in Sir Keir Starmer’s first term, but the King’s Speech in the House of Lords on 17 July showed the new Prime Minister is not wasting any time.

The announced bills will build the foundations of what Labour envisages for the future by giving the Office for Budget Responsibility (OBR) more powers to scrutinise any proposals on tax changes affecting taxpayers.

Jonathan Ashworth, chief economist at ACCA: ‘The government’s decision to strengthen the powers of the OBR is something that ACCA welcomes with great enthusiasm. As with all entities, proper financial forecasts play a significant role in increasing transparency and ensuring stability.

‘The changes will enhance the government’s fiscal credibility, as well as that of the broader UK policy-making framework.’

Private school fees were brought up, King Charles said: ‘Measures will be brought forward to remove the exemption from value added tax for private school fees, which will enable the funding of 6,500 new teachers.’

It looks like the legislation will be brought in with a statutory instrument but no further details are available.

As of January 2024, there were 600,000 students in private schools, less than 10% of the 9.1m children in state run schools. This measure will fund the 20,000 state run schools to ‘give children and families the school places they need in their communities’.

Additionally, reform of the apprenticeship levy will be introduced to ‘break down barriers to opportunity’ by joining up Skills England with employers, unions, education and training providers and experts. Skills England will take on many of the roles of the Institute for Apprenticeships and Technical Education.

King Charles said: ‘My Government will establish Skills England which will have a new partnership with employers at its heart [Skills England Bill], and my Ministers will reform the apprenticeship levy.’

Employers will face extra costs as the new government wants to ‘make work pay’ by introducing an Employment Rights Bill, ‘the biggest upgrade to workers’ rights in a generation’. Zero hours contracts are to be banned as well as the fire and rehire trend along with giving employees basic employment rights from day one.

The national minimum wage will also be set to a ‘genuine living wage’ through changes to the Low Pay Commission.

Neil Carberry, REC chief executive said: ‘We have to be clear – businesses are worried that the government will rush reforms to the labour market and do more harm to workers than good.

‘Our focus should be on improving the daily lives of workers while helping firms grow, not ticking things off a list quickly. From the national minimum wage to pensions automatic enrolment, Labour governments have shown that big changes can be successfully delivered when a proper partnership with business is created.”

The Pensions Scheme Bill ‘will be brought forward to strengthen pension investment,’ said King Charles. This will help 15 million people who have been saving through a private pension throughout their life to have over £11,000 more in their pensions pot. A key method is to consolidate old pension pots previously forgotten or lost by an individual into one pot, boosting their final savings amount.

Becky O’Connor, director of public affairs at PensionBee said: ‘Millions of people are currently not saving enough for retirement, so it’s extremely encouraging to see pensions at the top of the new government’s agenda. Any incentives that look to increase the amount savers in the UK put aside for retirement are welcome.

‘The automatic consolidation of small pots is a crucial measure that should help workers keep track of their old pensions and reduce the fees they pay, positively impacting their retirement outcomes. An estimated 4.8 million pots are already lost in the UK, with smaller pots (less than £10,000) more likely to be misplaced than larger ones.’

Improving the NHS, introducing the Great British Energy company, which will be based in Scotland, launching a Border Security Command and nationalising train operators when their franchises expire by establishing the Great British Railway company were also included in the King’s Speech.

Starmer said: ‘Today’s new laws will take back control and lay the foundations of real change that this country is crying out for, creating wealth in every community and making people better off - supporting their ambitions, hopes and dreams.’

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