Queen’s Speech fuels criticism against PM

Queen Elizabeth sits with Prince Philip as she waits to deliver her speech in the House of Lords, during the State Opening of Parliament at the Palace of Westminster in London yesterday.

Agencies/London

Queen Elizabeth yesterday unveiled Britain’s last legislative programme before the next national election, citing mostly minor new laws and fuelling opposition criticism that the coalition was out of ideas.

In a ceremony in the upper house of parliament rich in pomp and pageantry, it took the Queen less than 10 minutes to list 11 new pieces of legislation Prime Minister David Cameron’s government plans to enact before a May 2015 general election.

With the exception of legislation overhauling Britain’s pensions system, much of what she announced was already known and many of the measures were relatively minor in scale.

She confirmed plans to give people more control over their pension savings, with new measures including the introduction of collective pension schemes which allow members to pool risk.

The yearly Queen’s Speech is regarded as a major fixture of political life when governments can unveil up to about 30 new laws.

Incumbent governments have often used such pre-election occasions as an opportunity to try to woo voters with eye-catching measures.

But Cameron’s government, a sometimes fractious tie-up of his right-leaning Conservative Party and the centre-left Liberal Democrat Party, cannot agree on how to tackle many of the bigger policy issues such as European integration and immigration.

As next year’s election draws closer, both are also keen to differentiate themselves from one another to appeal to their traditional voters, further undermining any incentive to co-ordinate policy-making.

However, the introduction of fixed five-year parliaments in 2011 and both parties’ desire to appear responsible in voters’ eyes means that in practice the government is obliged to hold together even if ideological differences prevent the coalition partners from agreeing a fuller legislative programme.

Angela Eagle, an opposition lawmaker and a senior Labour spokeswoman, said the paucity of new legislation showed the government was struggling to function. “This is a zombie government fast running out of steam and ideas,” she told BBC radio before the speech.

Labour sources said it was “staggering” the government programme did not contain major new measures on immigration or the country’s health service, two of voters’ top priorities.

But business organisations welcomed the government’s focus on securing Britain’s economic recovery and praised the lack of new red tape introduced.

Proposals to help encourage house building were also set out as the government said it would continue to promote the Help to Buy mortgage guarantee programme, which some critics have said is helping to fuel a housing bubble.

Other measures included plans to support the development of oil and gas from shale and a promise to introduce charges for supermarket plastic bag use in England.

Pensions industry lambasts collective workplace plans

Britain’s pensions industry has criticised government plans to introduce collective workplace pension schemes, which formed a part of the legislative programme for the coming year announced yesterday.

In a ceremonial speech delivered by Queen Elizabeth, the government confirmed plans for collective defined contribution (CDC) schemes, part of an overhaul of UK pensions that will also remove the need for retirees to buy annuities with their savings. But the plans for CDC schemes - which the government has named Defined Ambition schemes - were lambasted by the pensions industry, which warned they would add to a welter of reforms that the industry may struggle to deal with.

“We wonder whether the introduction of rules to allow collective DC arrangements in the UK is a bridge too far for employers and the pensions industry,” said Stephen Bowles, head of defined contribution at asset management firm Schroders . The spate of proposals reflects growing concerns in Britain and other mature economies that ageing populations, with more people living longer in retirement, are not adequately prepared financially and are too expensive for governments to fund. Under the new legislation, three mutually exclusive types of scheme will be available: defined benefit (or final salary) schemes, which are being phased out by most employers; defined contribution schemes, in which workers build up individual pension pots; and the new collective schemes.Supporters of the collective schemes say these would reduce costs, as they have the advantage of economies of scale, and could bring richer returns because assets can be kept in riskier investments such as equities, rather than being transferred into safer asset classes as members approach retirement. But Bowles noted any cost advantages would be offset by a cap on charges already announced by the government. And he said CDC schemes could be at odds with the abolition of compulsory annuities, as they would be designed to provide long-term income in retirement.“The announcement on CDCs seems at best inconsistent with other pension policy, and at worst as another layer of complication in an already overcomplicated industry,” Bowles said. Mark Wood, CEO at advisory firm JLT Employee Benefits, said: “While investment returns and life expectancy conform with expectations, the system brings some benefit. Outside these norms ... the system breaks down. “Annuities protect the individual from investment risk and living longer than expected. Defined Ambition gives no such guarantee,” Wood added. The schemes have, however, received cross-party support, with opposition Work and Pensions Minister Rachel Reeves saying last week they could boost returns by up to 30% - an argument previously made by Pensions Minister Steve Webb.But some argue that the idea of collective schemes runs counter to the decision to give retirees increased flexibility, as set out in March’s budget. Neil Shillito, investment manager at SG Wealth Management, called the plans “muddled thinking in the extreme”, while Tom McPhail, head of pensions research at financial services firm Hargreaves Lansdown, said: “An employer selecting a CDC scheme may have to explain to their staff why they’ll be missing out on these new pension freedoms. “Good luck with that.”

Voters get power to sack MPs

The coalition will bring in a new law allowing voters to sack misbehaving MPs under new legislation included in the Queen’s Speech. The new power of recall - promised in the coalition agreement in 2010 - will be triggered only if MPs are given jail sentences or if the House of Commons resolves that they have engaged in “serious wrongdoing”. Voters would then have to collect the signatures of 10% of constituents to force a by-election. The Queen’s Speech, which sets out new legislation, contained a mixed bag of 11 bills for the final year of the coalition, including proposals for local elections to national park authorities, a law to prevent invasive species entering the UK and legal protections for have-a-go heroes. The bills are largely uncontroversial for the coalition partners but they fail to finalise powers to allow fracking for gas under people’s homes. Most of the bigger proposals have already been announced by George Osborne, the chancellor, at the budget and the autumn statement. These include a pensions bill giving people more control over how they save their money for old age, a small business bill that cuts red tape, increases transparency about corporate ownership and reforms zero-hours contracts, and a childcare payments bill offering tax relief on childcare.