- Forty pieces of legislation mentioned
- Water providers in for a harder time following regulatory crackdown
The new Labour government has promised to “take the brakes off” Britain’s economic growth by pushing through thousands of housing developments around the country. This will be done by changing planning rules around greenbelt development in England, although Labour is pitching this as ripping up derelict industrial sites instead of paving paradise.
The King’s Speech included 40 pieces of legislation ranging from social policies to a revamp of the rail system, as promised in the manifesto. Housing leads the way, with local councils responsible for how much gets built in their area. Water companies will also come under further scrutiny as Ofwat is handed more powers, while the Conservatives’ ban on cigarette sales for people under a certain age will be brought back, against the lobbying efforts of tobacco companies.
King Charles III said his ministers would “get Britain building” through planning reform “as they seek to accelerate the delivery of high-quality infrastructure and housing”. “They will also pursue sustainable growth by encouraging investment in industry, skills and new technologies,” he added.
Plans to rebuild confidence
A Planning and Infrastructure Bill will shake up the planning system to speed up the delivery of housing and critical infrastructure. Changes to the planning system will be made at local government levels, such as modernising planning committees and providing more capacity to local authorities to deliver a more reliable service to developers and investors.
Compulsory purchase compensation rules will also change. Payments to landowners will be “fair but not excessive” so that more sites can be unlocked for development and allowing for the delivery of more affordable housing.
The Bill will also attempt to simplify the process by which major infrastructure projects gain consent – the average time for “nationally significant” infrastructure projects to secure planning consent has increased to 4.2 years, up from 2.6 years, according to the National Infrastructure Commission. MF
Rail operators shrug off reforms
The Labour government has reiterated plans to bring train operators into public ownership once their contracts expire or if they fail to deliver on their commitments.
Ministers will bring forward legislation to reform rail franchising, renationalise train operators, and establish Great British Railways, an arm’s length body responsible for the day-to-day operations. A bill will also be introduced to allow local leaders to take control of their local bus services.
Shares in FirstGroup (FGP) – which currently runs Avanti West Coast, Great Western Railway and South Western Railway – were largely unmoved. Department for Transport contracts generated £106mn of adjusted operating profit at FirstGroup in FY2024, over half of total group profit, and up 13 per cent year-on-year.
However, analysts at Peel Hunt said it sees “little risk from Labour’s plans”. “This may not happen, or happen quickly, as a new government may find operating the UK rail industry challenging,” the broker said before the election result last month. It added that FirstGroup’s open access operations should be unaffected by Labour’s plans and that the company is pursuing a “number of growth opportunities from new routes and route extensions”.
Under Great British Railways, Labour said the rail fare and ticketing system would also be simplified. Shares in ticketing app Trainline (TRN) are down by 1 per cent this afternoon, but remain 6 per cent higher than at the start of the year.
The company received a similar scare from the Conservatives in 2021 when the party pledged to launch a rival digital ticketing service. The plan was scrapped in December 2023. JS
‘Business as usual’ pension bill seeks to consolidate small pots
The new government has shied away from major pension reforms in today’s King’s Speech, sticking to a series of smaller measures, many of which had already been somewhat in the making.
The Pension Schemes’ Bill will seek to consolidate small pension pots, introduce a framework to make sure pension schemes deliver value for money and require all pension schemes to offer “retirement income” options. Many schemes do not currently offer drawdown to their members, for example.
LCP partner and former pensions minister Steve Webb said the Bill’s measures “represent business as usual for pensions policy” and that “ a Conservative minister could happily have brought forward this legislation”.
There was no mention of encouraging pension schemes to invest more in UK markets, as pledged in Labour’s manifesto. Also, the Conservative’s UK Isa plan was not mentioned. VC
Government sticks to no fault evictions ban
Keir Starmer’s government will introduce a bill to increase protections for tenants, including banning ‘Section 21’ no fault evictions.
The Renters’ Rights Bill will be Labour’s version of the Conservatives’ Renters’ Reform Bill. The latter had been close to becoming law before the dissolution of parliament ahead of the general election. It also aimed to abolish no-fault evictions but was subsequently watered down so that the relevant section of the bill would not come into effect until the courts were also reformed.
The new bill will instead create a new ombudsman service for the private rented sector, with the aim of providing quicker resolution to disputes for both landlords and tenants and reducing the need to go to court. It will also introduce “new clear and expanded possession grounds…so landlords can reclaim their properties when they need to”. Landlords have been preparing for the abolition of no fault evictions for a long time but have been campaigning for measures to give landlords who do have the grounds for evicting a tenant the ability to do so more easily and with less delays.
Labour’s Bill will also seek to strengthen other tenants’ rights, for example by giving them the power to challenge rent increases and request a pet, and create a private rented sector database. VC
Energy stocks avoid high taxes (for now)
The oil and gas industry has been flagging for months the potential for disaster if Labour brings in higher taxes and cuts investment inducements within the previous government’s energy profits levy. But the first major set of policies to come from Starmer did not include a 78 per cent total tax rate or the freezing of new licence issuances in the North Sea, which were both part of its election manifesto. Shares in Serica Energy (SQZ), Ithaca Energy (ITH) and Harbour Energy (HBR) were all up 1 per cent.
Great British Energy (GBE), a new government body, will have the goal of doubling onshore wind capacity and quadrupling offshore wind output. While its £8bn in funding will not be used to fund this directly, the government said GBE would be used to “mitigate existing market failures, and therefore increase the speed and reduce the cost of deploying renewable generation capacity”. The renewables industry has struggled in recent years with higher development costs and guaranteed prices too low for attractive returns, cutting investment. The Scotland-headquartered body will be headed by former Climate Change Committee chair Chris Stark.
Separately, a leveraged Crown Estate will serve as the backbone of UK renewables investment, under new legislation that will “modernise” the body that manages the seabed and therefore offshore wind projects. “Currently The Crown Estate cannot use its large cash reserves to invest because it needs these to hold these against the prospect of future financial losses. Enabling it to borrow from the Exchequer will free up these reserves to be invested in new projects,” a government briefing document said. Despite the name, Crown Estate profits (such as those from auctioning off seabed development rights) are funnelled back into the Treasury. This change could add 20-30 gigawatts of new wind capacity, compared to the current 15 gigawatts in total offshore capacity. AH
Crackdown on water providers continues
A tough week for the water utilities operating in England continues as the government will give regulator Ofwat more powers, namely by going after bosses. Those at the top of companies like Thames Water and listed entities United Utilities (UU.) and Pennon (PNN) could face “personal criminal liability for lawbreaking”, and have bonuses blocked if environmental standards are not met. On an operational level, every sewage outlet will have to have a real-time monitor. The government said emergency overflows were still partly unmonitored, compared to storm overflows, for which monitoring has already “increased to 100 per cent”. AH
Labour to give workers full rights from ‘day one’
The government will introduce a new employment rights package to help “make work pay”, which could raise labour costs and complexity further for businesses that are already dealing with the sharp rise in the national minimum wage this year. It “will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights”. Retailer shares were largely unmoved on the news.
Labour’s manifesto said it would take action on zero hours contracts, end fire and rehire practices, and improve rights around parental leave, sick pay, and protection from unfair dismissal. A Labour policy document in May said the party wanted to ensure the minimum wage is a living wage and that it would change the remit of the Low Pay Commission to achieve this.
The party’s plans have previously attracted criticism from business. Currys chief executive Alex Baldock argued earlier this year that making the labour market less flexible from a business standpoint could make them less likely to hire and invest.
Strengthened rights for workers will include full protection and benefits like sick pay and parental leave from day one of employment, while flexible arrangements like working from home will be the “default” for all workers. Unions will also have their rights strengthened, with limits on strike action like minimum service levels removed. CA
Cigarette ban for teenagers and tighter vape rules
The government will legislate to phase out the sale of cigarettes and make vapes less appealing.
It will "progressively increase the age at which people can buy cigarettes”, meaning that those who were born on or after 1 January 2009 will never be able to legally purchase them. Former prime minister Rishi Sunak had planned to introduce the same policy, but the previous government didn’t bring forward legislation because of the general election announcement.
Imperial Brands (IMB) and British American Tobacco (BATS) shares were flat on the news, which was no surprise given Labour pledged in its manifesto to implement the policy.
There are also plans for “limits on the sale and marketing of vapes", in the context of increased concerns about the sharp rise in the number of children using the products, the impact on health, and illegal products entering the market. The shares of Aim-traded vape business Supreme (SUP) hardly budged, as the policy was in the manifesto. CA
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