Government issues 'coalition agreement'
26/05/10
The coalition has published an agreement in which its plans as a new government are outlined. Although this only provides a high level view, the implications are significant.
The proposed legislation required to implement these changes was outlined in the Queen's Speech on 25 May. This is summarised below, along with legislation previously proposed.
The government will:
Pensions
- Consider giving people greater flexibility to access part of their personal pension early.
- Simplify rules and regulations relating to pensions, encouraging companies to offer high-quality pensions to all employees.
- Work with business and industry to support auto-enrolment.
- Roll out a national advice service fully funded by the industry via a new social responsibility levy.
- Establish a commission on long-term care - it will consider both voluntary insurance and partnership schemes.
- Restore the earnings link to the state pension with a triple guarantee that it will rise by the highest of prices, wages or 2.5%.
- Establish an independent commission on public sector pay - which protects accrued rights.
- Phase out the default retirement age.
- Review the date at which the state pension age rises to 66.
- Implement the Parliamentary Ombudsman's recommendations on Equitable Life.
Banking and financial services
- Make the Bank of England responsible for macro-prudential regulation and have 'oversight' of micro-prudential regulation.
- Introduce a banking levy.
- Tackle 'unacceptable' bonuses - ensuring the proposals reduce risk.
- Foster diversity in the financial sector, promoting mutuals and increasing banking competition.
- Ensure credit flows to SMEs consider both credit guarantees and net lending agreements.
- Launch an independent commission to consider separating retail and investment banking - the commission will report in one year.
- Create a single agency to tackle economic crime.
- Consider creating a Post Office Bank.
- Give regulators powers to define and ban excess store and credit card interest rates - and force credit card companies to provide charging information in a uniform electronic format.
- Introduce measures to ban unfair bank and transaction charges.
Business
- Reintroduce an Operating and Financial Review to ensure director's social and environmental duties are covered in company reporting.
- Introduce a 'one-in, one-out' principle for regulation and introduce 'sunset clauses' for all new regulations and regulators.
- End 'gold-plating' of EU rules.
- Scrap ID cards and the national identity register.
Economy
- Increase the personal allowance from April 2011 - funded by increasing CGT to at or near income and changing the way the proposed increase in National Insurance will be avoided. Employer NI thresholds will be increased.
- Aim to increase the personal allowance to £10,000 as a longer term policy objective - prioritising this over other tax cuts, including inheritance tax.
- Reform and reduce corporation tax by removing allowances and relief - with the aim of having the most competitive corporate tax regime in the G20.
- Consider including housing costs in the CPI measure of inflation.
- Implement measures to tackle tax avoidance.
Europe
- Not join the Euro.
- Ensure any future treaties that transfer powers or competencies are ratified by a referendum.
- Examine the balance of EU powers and, in particular, limit the application of the working time directive.
Equalities
- Promote equal pay and take a range of measures to end discrimination.
- Extend right to request flexible working to all employees.
- Look to promote gender equality on the boards of listed companies.
Three other important subjects are however absent - the future of the FSA, pensions income tax relief and the future of NEST (renamed Personal Accounts).
The coalition government can almost be thought of as a new party and both the Conservatives and Liberal Democrats are having to reconsider their policy positions. This means that much of the detail has not yet emerged.
However we will update this page as we receive more information.
