UK political lookahead 2022 - A Cicero/amo overview

2022 Political Lookahead A Cicero/amo overview

January 2022 1

Foreword There’s no denying that Prime Minister Boris Johnson had a torrid end to 2021. He was dogged by sleaze scandals and endless rule breaking over No10 parties, topped by record low ratings in the polls. But for a man described as a ‘political teflon’, can he pull it back and what does 2022 have in store?

some into the next Parliamentary session, but he will need to make progress on his legislative agenda before this session ends. Votes on legislation will ramp up, particularly in the three months from February before the session is due to end in May.

Several Bills still making their way through are chunky and not without The COVID showdown reckons? controversy, including the Health and Care Bill. It begins Committee Stage in the House of Lords this month, where greater scrutiny will be The top priority for the Prime Minister in 2022 will be guiding the UK out the given to the Government’s changes to the social care cap, criticised for other side of the Omicron wave, allowing him to use the new year to reset hitting the poorest in society the hardest. The Nationality and Borders his premiership and refocus on the promises he made in 2019. However, Bill – framed by the Government as the cornerstone of their new plan as the Prime Minister himself admits, it is “folly” to think COVID has blown for immigration - has been severely criticised by the Joint Committee on over and he remains beset with challenge as data from the festive period Human Rights and set against the backdrop of rising numbers of migrant has been patchy and it’s still too early to tell the full impact of Christmas crossings taking place, is likely to have a difficult passage through the and New Year household mixing. Staff shortages in the NHS and other Lords. public services are also causing concern and Johnson may be forced to act if he wants to avoid headlines about rubbish left on streets, schools in Meanwhile the Elections Bill and the Judicial Review and Courts Bill disarray or in the worst-case scenario, more NHS trusts declaring critical both continue through the Commons, with concerns that the former will incidents. block some of the electorate from voting, and that the latter risks weakening checks against the power of the state.

Any new restrictions will require a Parliamentary vote. If the data starts to show an increase in severe hospitalisations or deaths then it’s likely The myriad votes give plenty of room for rebels to flex their muscles.

Labour would support new measures, allowing any vote to pass. However, Johnson cannot rely on Labour’s support on legislation as he did for the the Prime Minister’s authority will be tested by his own backbenchers as COVID restrictions before Christmas, and with the Whips ability to control nearly 100 voted against the implementation of Plan B measures, led by party discipline in question, Johnson will be under pressure to show that the unpredictable Mark Harper and Steve Baker aka the COVID Recovery he still has control.

Group. They won’t be shy in shoring up votes to oppose new restrictions.

Backbenchers making their voice heard Parliament has got to get busy This year, domestic issues are on a collision course with international issues Of the 30 Bills announced in last year’s Queen’s Speech, 24 are still as the cost-of-living rises. Soaring energy bills, rising inflation and empty progressing through Parliament. We can expect Johnson to carry over shelves dominate headlines as businesses deal with increased customs 2

Foreword checks post-Brexit. While no one can agree on a single cause - whether exacerbated by COVID or by inclement weather (Storm Arwen) -they can agree on who should find the solution and that’s the Government. MPs Johnson can normally rely on to be supportive are speaking out as their constituents suffer and looking to Johnson/Sunak to address their issues, not least ahead of a potential Budget on the 23 March. If they don’t, these MPs can see the writing the wall: no money = no votes and they won’t be going down quietly. The other big factor for many Conservative MPs elected on Johnson’s “Get Brexit done” manifesto will be proving to their constituents that Brexit has been a success. If 2022 is the year everyone gets poorer, it’s a bit hard to make that argument. There’s more on the Government’s Brexit troubles on P7.

The future’s bright, the future’s Truss?

Johnson’s future comes from his own party. If electoral success doesn’t translate at the local elections (5 May), Conservative supporters as well as Conservative MPs will be gunning for Johnson’s head, and we may see this as the trigger point for letters being submitted to the 1922 Committee.

But there are risks before then: Michael Gove’s Levelling Up White Paper, if ambitious, could set Gove down the path of leadership. Same for Liz Truss if she manages to succeed in Brexit negotiations and Rishi Sunak in getting the nations’ finances on track. Conversely, Johnson’s success relies on his Cabinet delivering for him, but that success could be his own undoing.

If you’re interested in hearing more from Cicero/amo on what the next six months has in store for UK politics and legislation, please contact us on the details below.

If the above wasn’t enough to deal with, the biggest challenge for

Sonia Khan Associate Director sonia.khan@cicero-group.com Charlotte Adamson Account Director charlotte.adamson@cicero-group.com

3

Levelling Up ‘Levelling up’ was a key plank of the Conservatives’ 2019 General Election campaign, which saw the party win unprecedented levels of support outside of its traditional southern heartlands. However, with Brexit and the pandemic dominating the political landscape over the past two years, this agenda has so far fallen by the wayside, with even Cabinet Ministers struggling to define the concept in terms of concrete policy.

It was only in the latter half of 2021 that we saw movement, with Boris Johnson giving a speech on the subject in July and the creation of the Department for Levelling Up, Housing and Communities (DLUHC) in September under policy heavyweights Michael Gove and Neil O’Brien.

These changes mean that the levelling up agenda can finally take centre stage in 2022. The Government has said that its long-awaited Levelling Up White Paper, now expected in 2022, will set out how new policy interventions can “improve opportunity and boost livelihoods across the country”, and will focus on tackling the huge, longstanding challenges of improving living standards, growing the private sector and spreading opportunity across the country.

White Paper Leak A leaked draft of the White Paper, as seen by reporters, indicates that the DLUHC has some bold ideas for reforming local governance. The White Paper sets out plans to “radically alter” local government and replace it with a single

tier system, with potential for the creation of ‘US-style’ governors who would “allow communities to take back control” in areas like health, housing and transport. Alongside this change, the paper will reportedly lay out 13 ‘missions’ to be accomplished by 2030. These include targets such as narrowing regional gaps in life expectancy, rolling out nationwide gigabit-capable broadband and 4G coverage and increasing the number of adults in training in low-skilled regions.

Regional Impact This radical new agenda will not come without risks for the central government. Northern Conservative MPs, many of whom stand on shaky electoral ground in their constituencies, are concerned about the ‘Andy Burnham effect’. Burnham, the Labour Mayor for Greater Manchester, has garnered local and national headlines with his vocal criticism of the Conservative Government and won 67% of the vote in May’s local elections. ‘Red Wall’ Parliamentarians are afraid that the White Paper’s plans for governors could lead to yet more vocal Labour politicians in their patches.

It has also been reported that the delay in publishing the White Paper is at least partially due to the Chancellor’s concerns about the costs. Following his two 2021 Budgets, Rishi Sunak came under fire for what some saw as a ‘short-termism’ mindset, as he appeared to focus on policy areas where issues can be solved quickly with a cash injection. Levelling up will be no such ‘quick win’ for the Treasury.

Spotlight The long-awaited Levelling Up White Paper, which evolved out of the initial idea of the Devolution White Paper and was originally due in December 2021, has been pushed to late January.

4

Financial Services 2022 will see wholesale changes to the financial services landscape. Major Government initiatives, including the Financial Regulatory Framework (FRF), access to cash, the Wholesale Markets Review, and the Solvency II Review are set to culminate in the most substantial review of financial services legislation since the post-financial crisis reform period.

Alongside their new rule-making powers, regulators are beginning to grapple with various hot-button issues, with issues including diversity, sustainability and operational resilience all set to feature in landmark papers in 2022.

The FRF: A launchpad for the City 2.0?

The new regulatory architecture is intended to be a more responsive regime, tailored to the UK with the detail of rules handed to the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). But questions hang over the regulators’ ability to develop a post Brexitregime that gives British-based firms an edge, rather than frustrating them through a parallel, but similarly burdensome, set of rules. The latest manifestation of the FRF Review proposes that both the FCA and the PRA take on statutory objectives for growth and competitiveness.

Public policy concerns around innovation, the transition to net zero and long-term investment in the real economy could also feature in this year’s energetic parliamentary debate.

Solvency II: Can insurers help level up?

sector that Solvency II reform would be a quick post-Brexit win, regulators are pushing back on proposals to include more ESG products from housing to green investments in insurers’ matching adjustment portfolios. As the Government casts around for sources of finance for its “levelling up” agenda, could insurers be the golden goose or will regulatory caution prevent serious reform?

The Coin Laws 2022 will also see policymakers trying to develop a coherent response to the disruption wrought by the move of crypto assets from margin to mainstream. The joint Bank-Treasury taskforce has pushed the prospect of “Britcoin” into the post-2025 long grass. But surging demand for crypto holdings shows no signs of abating – policymakers will have to answer how to balance innovation and what they see as risks to financial stability.

Fintech and the new Listings Regime The Kalifa Review in 2021 was less transformative than hoped, and expectations are limited for the FCA’s first steps towards an open finance regime. Despite some success stories, the UK has still yet to prove itself as the venue of choice for fintechs. The Government hopes that its revamped listings regime will position the UK as a major global hub for financial innovation.

Spotlight It is likely the Government will publish a Financial Services Bill in the next Queen’s Speech (expected May 2022) which will be the main legislative vehicle for many of the reforms highlighted above. The deadline for the FRF review consultation is the 9 February.

Despite expectations across the insurance

4 5

ESG As ‘Levelling up’ and ‘Net Zero’ continue to dominate the public policy debate, the demands on business to fulfil a wider societal role will grow in 2022, with companies facing increasing regulatory and reputational pressure across a range of Environmental, Social and Governance (ESG) issues.

with a future Carbon Border Adjustment Mechanism, a topic currently being discussed in Parliament, should the UK go down this route. Despite this, there is no doubting that the train has been set in motion for significant regulatory transformation.

D&I

There were two significant pre-COP announcements that will dominate the 2022 agenda. From 6 April 2022, over 1,300 of the largest companies and financial institutions will have to comply with the Task Force on Climate-Related Financial Disclosures (TCFD) aligned mandatory disclosure requirements.

The FCA has also acted quickly to progress Sustainable Disclosure Requirements (SDR), issuing a discussion paper in November 2021 with the plan to launch a subsequent consultation in Q2 2022.

Expect to see diversity & inclusion (D&I) move up the agenda throughout the first half of the year, with a joint FCA, Bank of England and HM Treasury consultation on the subject due in Q1. Industry initiatives such as the Financial Services Skills Commission’s work on menopause in the workplace and the City of London Corporation’s Socio-Economic Diversity Taskforce are also expanding the scope of what D&I means in practice and further topic-specific campaigns are likely to gain traction.

Climate While COP26 President Alok Sharma is promising a “full-fat” programme until the UK hands the Presidency over to Egypt in November 2022, it is unclear what impact his personal passion and international leadership on the urgency of climate transition will have on the wider Conservative Government.

The UK-Australia Free Trade Agreement deal contains no climate change penalties for Australia, in a sign that the Government is prioritising a trade deal that is predicted to boost GDP by between 0.06% and 0.10% over combating the climate crisis. It is also unclear how the provisions in this deal would align

So what to expect in 2022?

But as the SDR are to be aligned with the longawaited UK taxonomy, which is currently being developed by Green Technical Advisory Group (GTAG), and a date for the consultation on the initial climate mitigation and climate adaptation objectives is still to be announced, there is still a lot of work to be done.

While the building blocks of the UK’s Net-Zero strategy have been laid out, the final shape is not yet clear. 2022 will see businesses in the UK having to navigate an ESG landscape in flux, with the many consultations providing a valuable chance for firms to take advantage of opportunities to help shape the emerging debate through original thought leadership and by demonstrating clear action.

Spotlight The Government is due to publish a revised Green Finance Strategy in 2022, developing the initial 2019 strategy and building on last year’s Greening Finance Roadmap, which will be critical for setting a clear pathway for a net zero financial system.

6

Europe: Impact on the UK In Truss we trust?

New Brexit Negotiator Liz Truss starts 2022 with a challenge on her hands. Originally a Remainer, Truss’s stint as International Trade Secretary has demonstrated her credentials as a free marketeer and free trader to the Tory faithful, and at a time when a leadership bid is potentially on the horizon, she will be keen to maintain this reputation.

With negotiations on the Northern Ireland Protocol (NIP) still ongoing, Truss is aiming for a “comprehensive solution” but is yet to offer further detail on how she will handle the technical discussions about customs arrangements. She is however holding strong on her predecessor’s position that the UK is prepared to trigger Article 16 in the event that a solution to the Protocol is not found, which may dampen the EU’s hopes that the change of the guard would lead to a more positive UK-EU relationship this year.

Me, EU, and NIP No time limit has been set for a resolution to the NIP, but pressure is rising in Northern Ireland. 2022 is set to be a pivotal year for the territory, with Northern Ireland Assembly elections due to take place in May. The new Assembly will have a consent vote on the continued application of the NIP in December 2024 and its make-up will be critical to how the vote goes.

While the DUP vehemently oppose what they view as divide between the region and Great Britain, Sinn Fein welcome the closer ties on the island of Ireland and to the EU. With broadly pro-Protocol parties

currently constituting a slim majority in polling for the Assembly, unionist parties hope that the political mood will change to give them the numbers to veto the Protocol.

Pressure at the border New customs controls came into force on the 1 January, with British importers now required to make a full customs declaration on goods entering Britain from the EU, and rules of origin requiring exporters to prove their goods qualify for zerotariff access before shipping. Trade associations are already warning that this will hit food supply in particular, with smaller businesses likely to struggle the most. On top of the cost-of-living crisis, ‘empty shelve’ headlines will cause a headache for the Government.

The French Connection: Anglo-French relations The UK’s relationship with France was fraught over the last year due to a row over the rights of French vessels to fish in British waters, blockades, and responsibility over policing Channel migrant crossings. As we enter 2022, the upcoming French Presidential elections in April mean candidates including current President Emmanuel Macron will be wary of how any conversations with the UK impact their own standing in the polls.

Additionally, France’s takeover of the Presidency of the EU effective from the 1 January and Germany’s takeover of the G7 Presidency means the UK may struggle to find a friend within the European Union.

Spotlight The UK and EU agreeing a “swift resolution” on the Northern Ireland Protocol is desirable for early 2022, and the spotlight will be firmly on Liz Truss as she heads to Brussels to see if she can be the one to solve the impasse.

7

Political lookahead JAN Early 2022 (Date TBC)

Government response to the report by the Joint Committee on the Draft Online Safety Bill expected. This is due to be followed by the publication of a revised Bill and Second Reading in Parliament by April.

11 January

Health and Care Bill enters Lords Committee Stage

25 January

Dissolution and Calling of Parliament Bill enters House of Lords Committee stage

Early 2022 (date TBC)

Solvency II consultation due to be published (HMT)

Early 2022 (date TBC)

Levelling Up White Paper expected to be published

Q1 (date TBC)

Diversity in Financial Services Review consultation due to be published (FCA)

Q1 (date TBC)

Women in Finance Annual Review (HMT)

1 January

Full border controls on imports of most goods from EU to Great Britain

1 January

France assumes Presidency of the Council of Europe

1 January

Germany assumes G7 Presidency

5 January

House of Commons and House of Lords return from Christmas recess

6 January

Buy Now Pay Later consultation closes (HMT/FCA)

17 - 22 January

World Economic Forum Annual Meeting (online sessions)

FEB

Spring (date TBC)

Scale Up Visa launched

8 March

International Women’s Day

31 March – 19 April

House of Commons Easter recess

11 - 13 March

Liberal Democrat Spring Conference

June (date TBC)

Publication of the official strategy of the National Infrastructure Bank expected to be published

25 June – 3 July

London Climate Action Week 2022

30 June

Recovery Loan Scheme (RLS) extension terminates

26 - 28 June 25 June - 3 July

G7 Summit, Germany London Climate Action Week 2022

(online) 18 - 20 March

Conservative Spring Forum, Blackpool

23 March

OBR forecasts & potential Budget

APR Q2 (date TBC)

Future Regulatory Framework legislation expected to be brought forward (HMT)

Q2 (date TBC)

Access to cash legislation expected to be brought forward (HMT)

Q2 (date TBC)

Proposed Sustainability Disclosure Requirements consultation published (FCA)

6 April

Mandatory TCFD requirements come into force for certain financial companies (UK Government)

7 - 19 April

House of Lords Easter recess

15 - 18 April

Easter

28 April - 3 May

House of Commons May recess

April (date TBC)

Energy Price Cap Increase

MAY

Early 2022 (date TBC)

Solvency II consultation due to be published (HMT)

Early 2022 (date TBC)

Levelling Up White Paper expected to be published

Q1 (date TBC)

Diversity in Financial Services Review consultation due to be published (FCA)

May (date TBC)

State Opening of Parliament

Q1 (date TBC)

Women in Finance Annual Review (HMT)

5 May

Local Elections

Early 2022 (Date TBC)

Government response to the report by the Joint Committee on the Draft Online Safety Bill expected. This is due to be followed by the publication of a revised Bill and Second Reading in Parliament by April.

Deadline for the FRF review consultation

26 May - 6 June

House of Commons and House of Lords Whitsun recess

9 February

JUN

MAR

JUL 21 July

House of Commons (TBC) and House of Lords rises for Summer recess

Key Bills Political Events Other

8

Cicero/amo has extensive experience in supporting companies in the legislative landscape. Please do get in touch to discuss this document in greater detail or if you would like to find out more about how we can support your organisation.

Get in touch...

Follow us...

Sonia Khan Associate Director +44 (0)207 297 5953 sonia.khan@cicero-group.com Charlotte Adamson Account Director & Head of Legislative Affairs +44 (0)20 7947 5323 charlotte.adamson@cicero-group.com Tom Frackowiak Managing Director, UK Public Affairs +44 (0)20 7297 5966 tom.frackowiak@cicero-group.com

99