There are several bills that have been introduced by the new Labour government that will affect business and the economy if they become law.
In this guide we provide detail on the Budget Responsibility Bill, National Wealth Fund Bill, the Audit Reform and Corporate Governance Bill and how these bills might impact international businesses looking to invest in the UK.
The Budget Responsibility Bill will ensure that all significant tax and spending changes are subject to an independent assessment by the Office for Budget Responsibility, to ‘prevent significant uncosted measures from being announced without sufficient scrutiny to mitigate the impact on the public finances’.
The bill is a response to the events of September 2022, when Liz Truss’ government introduced a mini- budget including unfunded tax cuts that led to a financial crisis. In future, any such measures will need to be assessed by the Office for Budget Responsibility.
This bill is likely to be introduced early in the parliament, with the intention of reassuring those considering investing in the UK that the government sees financial stability as a priority. It remains to be seen what measures will be within the scope of the bill, but it’s expected that the scope will be broad enough to include any tax or spending changes that would adversely affect the markets.
The National Wealth Fund Bill will align the existing UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund (NWF), which will invest in priority sectors.
The NWF will be capitalised with £7.3 billion (in addition to existing commitments), which will be invested especially in growth sectors, such as clean energy. It’s hoped to generate £3 of private sector investment for every £1 provided by government funding.
The inclusion of this bill in the King’s speech indicates that the government sees putting the NWF on a statutory footing as a priority. In aligning the UK Infrastructure Bank and the British Business Bank, the intention is ‘to simplify the UK’s fragmented landscape of support for business and investors’, attracting further investment from the UK and overseas. There are plans to start deploying the additional capital as soon as possible.
The Audit Reform and Corporate Governance Bill is intended to address the consequences of corporate failures of major British companies that have collapsed with catastrophic consequences for employees and customers.
The bill will strengthen audit and corporate governance and replace the Financial Reporting Council with a new regulator with enhanced powers – the Audit, Reporting and Governance Authority. All directors, not just those who are members of an accountancy body, will face consequences if a company makes incorrect financial statements.
Again, this bill is intended to promote stability and encourage long-term investment in UK companies. It’s hoped that the new regime, which has been welcomed by the Chartered Institute of Internal Auditors, will increase confidence in major companies’ published accounts and provide more reliable information for new and existing investors.
For more information, please contact our corporate team.
