Katy Little, Policy and Public Affairs Assistant, looks at Boris Johnson's new Cabinet and how this will impact on the IFoA's policy work.
Boris Johnson succeeded Theresa May as Britain’s 55th Prime Minister on 24 July, promising that his Government would oversee a new 'golden age'. The defining message throughout all of Johnson’s campaign was his commitment delivering on Brexit, however it was not until his first speech as Prime Minister that the nation got a clear insight into his priorities for the UK domestic agenda.
So what might this ‘golden age’ entail? There were encouraging words for those with an interest in social care, policing, education and regional infrastructure. But with Parliament in recess, it will be September at the earliest before we really get to see how it all plays out.
What has been evident however, is the drastic overhaul of Theresa May’s Cabinet. The first few days of Johnson’s tenure saw one of the most dramatic cabinet shakeups since Harold Macmillan’s infamous reshuffle in 1962, with 17 out of 30 ministers either handing in their resignation letters or being sacked. There is no clearer signal that Johnson intends to deliver a new government with new direction.
So what do these new appointments tell us about the likely direction of policy, and what does this mean for the IFoA, actuaries and the industries they work in?
The appointment of any new administration will change the way organisations like the IFoA work and may have implications for how we try to inform and influence government policy. We are keen to see that some essential policy proposals in the insurance and pensions areas are continued and progressed. At the same time, there might be new opportunities in areas such as social care, green finance and infrastructure, where much of the policy agenda is still up for grabs.
In this light, let’s take a look at some of the key ministers that the IFoA will look to engage with, and which key bits of policy and legislation we’ll be looking out for.
Secretary of State for Work and Pensions: Amber Rudd was one of the surprise incumbents to keep her job in the Cabinet: a Remain supporter in the EU referendum who decided to back Jeremy Hunt in the leadership contest. Rudd has responsibility for the administration of the State Pension and working age benefits system.
It is unlikely that we will see huge shifts in policy in this area, as both Guy Opperman and Justin Tomlinson have returned to their pervious roles in the Department for Work and Pensions - one of the only departments to survive Johnson’s purge. We can expect, for example, the department to continue with the previous government’s plans to introduce new pensions legislation which we expect will:
- introduce an authorisation and regulatory regime for commercial defined benefit (DB) consolidation schemes (‘superfunds’);
- allow for the creation of new collective defined contribution (CDC) schemes;
- compel all pensions schemes to take part in the pensions dashboard project; and
- amend GMP equalisation regulations in response to the landmark Lloyds ruling last year.
Secretary of State for Business, Energy and Industrial Strategy: Andrea Leadsom previously served in May’s government as Leader of the House of Commons. A staunch Brexit supporter, she resigned over the issue earlier this year. She is newly appointed to the role in BEIS and has overall responsibility for business, industrial strategy, science, innovation and energy.
It will be interesting to see if Leadsom plans to follow through on the commitments made in the Green Finance Strategy, which was published shortly before her arrival. The strategy seeks to establish the UK as a leader in green finance by embedding reporting of climate risk and setting new precedence for regulators to take account of the Paris Climate Agreement when carrying out their duties. These proposals will eventually be rolled out in an Environment Bill, which will also put the Government’s 25 Year Environment Plan into law.
This is a critical time for environmental policy, and Leadsom will take charge at a time when she will be tasked with delivering a legislative framework to enable the country to transition towards a net zero carbon economy by 2050. It will be essential for the new Secretary of State to be fully on board if this ambitious target is to be met.
Leadsom will also assume responsibility for implementing the Kingman Review, and will decide where regulatory oversight of actuarial profession should sit. Kingman recommends that the FRC should be replaced with a new statutory body (Audit, Reporting and Governance Authority). It’s suggested that this new body should not take on the oversight of actuarial regulation. At this stage, there is no clear recommendation on where oversight of actuarial regulation will sit. It is now for the government to decide on which recommendations to take up and where the FRC’s responsibilities, as the IFoA’s oversight body, will be transferred.
Chancellor of the Exchequer: Sajid Javid MP has been promoted to Chancellor. This the second ‘Great Office of State’ he has held – he also has previous Treasury experience having served as Economic Secretary to the Treasury, and later Financial Secretary to the Treasury.
His responsibilities include:
- funding Government spending and setting the budget
- setting inflation targets and controlling currency
- ministerial arrangements (in his role as Second Lord of the Treasury)
Even before entering No. 10, the Prime Minister had made a series of promises while campaigning that involved increased spending on a number of public services, including infrastructure, policing and devolution. The new Chancellor may therefore be expected to spend more generously than his predecessors did, particularly the famously prudent Phillip Hammond from whom he inherits the office.
On the tax side, Boris Johnson pledged during his campaign to raise the 40% income tax threshold from £50,000 to £80,000 and to raise the level at which workers start paying national insurance contributions. The first budget, due in autumn 2019, will be our first real glimpse of just how generous the Chancellor will decide to be.
Secretary of State for Health and Social Care: Matt Hancock is another key Cabinet figure who backed Boris after a short stint as a leadership hopeful himself. He was rewarded by keeping his past role as Health and Social Care Secretary in the new-look cabinet. He is responsible for social care provision and funding, as well running the NHS.
Boris has said he will ‘end the crisis in social care once and for all,’ which is hopefully a strong indication that we can expect some movement on the previous Government’s long-awaited Green Paper when Parliament resumes. The IFoA previously met with Hancock at Conservative party conference, and his advisors only last year, and we remain hopeful that Hancock will be given the opportunity to deliver on this priority in the coming year.
You can always read more about the IFoA’s Public Affairs and Policy work our website pages.