5th August 2024
The King’s Speech, delivered on July 17 in the House of Lords, marked a pivotal moment for the new Prime Minister Keir Starmer’s administration. It outlined Labour’s ambitious agenda to jumpstart economic growth through 40 bills, with significant implications for accountants.
Audit Reform and Corporate Governance
One of the key highlights for accountants is the overhaul of the audit market. The government plans to replace the Financial Reporting Council (FRC) with a new, more powerful regulator, the Audit, Reporting, and Governance Authority (ARGA). This change aims to tighten corporate governance oversight and hold directors accountable, ensuring higher standards of transparency and reliability in financial reporting.
Strengthening the Office for Budget Responsibility (OBR)
The government’s decision to enhance the powers of the OBR is also noteworthy. This move will allow for more rigorous scrutiny of tax proposals, increasing transparency and fiscal credibility. Jonathan Ashworth, chief economist at ACCA, expressed strong support, highlighting the role of robust financial forecasts in ensuring stability.
Employment and Apprenticeship Reforms
The proposed Employment Rights Bill introduces significant changes, including the abolition of zero-hours contracts and the “fire and rehire” practice, alongside setting a national minimum wage at a “genuine living wage.” These changes will impose additional costs on employers but are aimed at improving workers’ rights and wages from day one.
Additionally, the reform of the apprenticeship levy and the establishment of Skills England seek to create a more integrated approach to skills development, involving employers, unions, and educational providers. This aims to reduce barriers to opportunity and better align skills training with market needs.
VAT on Private School Fees
Another major change is the removal of the VAT exemption on private school fees. This measure is expected to fund the hiring of 6,500 new teachers for state-run schools, enhancing education quality for the majority of students.
Pensions and HMRC
The Pensions Scheme Bill aims to boost pension investments, potentially increasing individuals’ pension pots by over £11,000 through consolidation of old, forgotten pensions. However, the speech did not address concerns regarding HMRC, despite calls for improved services and increased funding to restore trust and efficiency.
Overall, the King’s Speech sets a transformative agenda with substantial implications for the accounting profession, emphasising the need for vigilance, adaptation, and proactive engagement with new regulatory landscapes. If you would like to know how we can help, get in touch with a member of our team.
