Labour’s first King’s Speech in almost 15 years is expected to be quite meaty. According to reports, His Majesty’s new government will propose 35 parliamentary bills for the coming year.
Labour is proposing dozens of red tape measures that will put the breaks on businesses
To be entirely realistic, many of these will fall by the wayside. Parliamentary time is limited, and there are always unexpected events that derail existing legislative plans and call for new ones. Nevertheless, the King’s Speech will be quite revealing about the new government. What they choose to include – and not – sends a signal about early priorities and dispositions.
Prime Minister Keir Starmer has said ahead of the speech that the government will ‘take the brakes off Britain’. They are promising a legislative agenda focused on improving living standards by driving economic growth. This comes off the heels of big announcements on housebuilding, infrastructure and major projects. Reforming the planning system is undoubtedly the most important part of the new government’s agenda. It is something that could really unlock growth and prosperity.
But, and there’s always a big but, the new government is promising more than just planning reform. They are proposing dozens of red tape measures that will put the breaks on businesses and entrepreneurs.
Before the election, research from the Institute of Economic Affairs found that Labour’s manifesto contained 62 policies to increase regulation and just 13 that would decrease burdens on British business. Many new regulatory measures will be in the King’s Speech, undermining the new government’s pro-growth rhetoric.
From the state’s perspective, regulation is costless. Unlike fiscal measures, which must be funded through borrowing or taxation, new rules require private enterprises to act on the government’s behalf without a financial transfer. A cash-strapped government will always be tempted to lean heavily into new regulations.
Regulation can also be entirely justified and necessary. The issue is when nice-sounding new rules are introduced on top of existing ones without a proper sense of the costs and limited benefits.
A good example of this phenomenon is Martyn’s Law, which is expected to be in the King’s Speech. This is a proposal named after one of the people who was killed in the Manchester Arena attack in 2017. It would mandate measures to protect against terrorist attacks, including risk assessments, training and security measures. The proposal could apply to most places the public can freely enter, from shopping centres and retail stores to concert halls, bars and nightclubs.
At first glance, this sounds like an entirely good idea – who could oppose strengthening security measures? In fact, complying with these fiddly new rules will be extremely difficult, particularly for smaller venues and businesses. The financial burden could result in some venues closing, which is hardly ideal considering the ongoing struggles nighttime venues face. The government previously estimated that the law would cost businesses £2.7 billion.
There’s also a significant risk that the new measures will fail. It’s hard to imagine that some new risk assessment processes will dissuade a terrorist intent on creating havoc. So it could be all new administrative burdens for no particular gain to security.
This is just one of many pieces of new red tape on the way. An even bigger and more costly theme will be workers’ rights. This will include measures to ban ‘exploitive’ zero-hour contracts and give access to unfair dismissal, sick pay, and parental leave rights from day one. There will also be new equal pay requirements and reporting duties for ethnic minorities and disabled workers.
Again, for most these measures sound reasonable. But the trouble is that such measures will increase costs and risks for businesses; as a result, they will either have to pay employees less or charge consumers more to compensate. There’s even a risk that making it harder to fire people will make businesses less likely to hire people in the first place. This is not a recipe for growth.
Then there are the government’s plans to introduce a football regulator, which the Tories also wanted in the previous parliament. This is meant to ensure local communities have more of a say in how their clubs operate. But it risks giving extraordinary new powers to an unaccountable quango, pushing agendas that ultimately undermine the commercial viability of clubs. This is hardly a way to celebrate the huge sporting and commercial success of the existing system.
It’s possible to go on like this – the smoking ban and new rules coming for AI are other measures that could undermine Starmer’s quest for growth. What’s clear is that while the new government is praying for a miracle to the gods of growth, much of their agenda is pushing in the opposite direction.
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