15 October 2019
In this blog, IFoA Public Affairs Manager, Mike Williams, assesses the Queen’s speech and its relevance to the IFoA’s policy priorities.
The Queen has delivered her speech to mark the state opening of Parliament, for the first time in over two years. Her Majesty has set out the Government’s agenda for the coming Parliamentary session, listing the legislation the Government intends to put forward and the policy areas on which it will focus. It is a first glimpse at a brand new parliamentary agenda and the IFoA has recently been engaging on a number of topics which we feel should be a priority. In this article we will look at some of those areas, and look at the ways the Government has set out its stall on each of them.
Pensions
“To help people plan for the future, measures will be brought forward to provide simpler oversight of pensions savings. To protect people’s savings for later life, new laws will provide greater powers to tackle irresponsible management of private pension schemes.”
The Government has announced the introduction of a ‘Pensions Schemes Bill’ that will look at legislation for the introduction of pensions dashboards, enhancing the Pensions Regulator’s powers, and providing a framework for the establishment of Collective Defined Contribution (CDC) pensions.
This represents a number of positive steps for pensions in the UK that will help to mitigate the increasing transfer of risk and responsibility for retirement saving from institutions to individuals. The pensions dashboards will help savers to see all of their pensions in one place and therefore better assess if they’re saving enough; and the introduction of CDC will encourage greater risk sharing between employers and employees than traditional defined contribution schemes.
To maximise their usefulness, the dashboards should be supported by information and tools that help people maximise their understanding of their financial situation and plan accordingly. For example, information on how much people will need to save based on their current level of savings and length of time until they retire. Auto-enrolment has successfully brought 10 million more savers into pension arrangements. These savers need support to ensure that they enter into retirement with enough income to meet their needs for the duration of their lifetime.
Social Care
“My Government will bring forward proposals to reform adult social care in England to ensure dignity in old age.”
Although the Government has pledged to look at the issue of social care, as yet no further legislation has been announced.
This is disappointing, not least because the system of funding for social care in the UK is no longer fit for purpose. Action must be taken, and quickly, to ensure that those who require care in later life are able to access the services they need to live in dignity. We have urged the Government to address this as soon as possible, given that, the situation becomes increasingly untenable as more time passes.
The government will need to strike a balance between state and individual funding to meet health and care needs across generations. In particular, we would caution the government from asking younger generations to bear a disproportionate amount of the costs of supporting the current older generation, particular when this cohort may, generally, be able to rely on housing wealth and generous defined benefit pensions. Therefore one approach for those in retirement that helps people to use their assets to pay for care, coupled with a pre-funded model for the working age population that encourages those who can take action now to do so, could lead to a fair and sustainable long-term solution.
Environment
“My Ministers remain committed to protecting and improving the environment for future generations. For the first time, environmental principles will be enshrined in law... Legislation will also create new legally-binding environmental improvement targets. A new, world-leading independent regulator will be established in statute to scrutinise environmental policy and law, investigate complaints and take enforcement action.”
The Government has announced a raft of measures aimed at protecting the environment, and related to enshrining environmental principles in law, including establishing an independent regulator.
However, commitments aimed at reducing carbon emissions are conspicuous by their absence. Without action taken to tackle the UK’s carbon emissions, the UK will not achieve its net-zero carbon emissions target by 2050. As such, while laudable, the measures outlined are merely tinkering around the edges of the issue. If the Government is really serious about achieving net-zero, it needs to engage fully with its Green Finance Strategy and focus efforts on creating opportunities for a just transition to a carbon neutral economy, for example by mandating climate-related financial disclosure by 2022.
Infrastructure
“To ensure that the benefits of a prospering economy reach every corner of the United Kingdom, my Ministers will bring forward a National Infrastructure Strategy. This will set out a long-term vision to improve the nation’s digital, transport and energy infrastructure.”
As a part of this we would like to see steps taken to increase private funding of large scale infrastructure projects, as investments in such projects have a myriad of benefits for all parties involved. The long-term nature of these projects means that government and investors need to factor resilience measures into their planning, such as strengthening assets to withstand unexpectedly severe weather conditions, building capacity to meet unforeseen extra demand, for example owing to population growth, and making infrastructure adaptable in light of rapid technological advances e.g. ensuring roads could support autonomous vehicles. A National Infrastructure Strategy should seek to unify all of this in one place.
Conclusion
The 2019 Queen’s Speech is a mixture of both good ideas and worrying gaps. In the current political climate it is all too easy to focus entirely on the UK’s departure from the European Union and its effects. However, issues like tackling climate change and funding social care are not going away, and while they remain unaddressed the situation is only getting worse. The IFoA will continue to push, in the public interest, for the resolution of these societal problems, and continue to assist the Government wherever possible to make informed policy decisions.