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Queen's Speech: insurers can play an important role in the cost of living debate

Seth Williams blogIn 336 days’ time most of the people reading this will be heading to cast their verdict on the Coalition Government and if yesterday’s Queen’s Speech is anything to go by, quite a few of those days will be freed up for our politicians to canvass your votes.

New legislation on parks, pubs and plastic bags are the announcements of political parties positioning themselves ahead of a long election campaign, not a Government tackling the great issues of the day. But there were measures that will have an immediate impact on the insurance industry and insights into the thinking of Party leaders that we need to consider.

It’s a truism that the national political debate centres around the economy – the strength and resilience of the recovery versus the everyday costs that contribute to living standards up and down the country: George Osborne’s housing-fuelled economic recovery versus Ed Miliband’s energy-fuelled assault on the costs of living.

Whilst the opposition is ahead in the polls, this is a gap that always closes in an election year and on key measures such a prime-ministerial ratings and handling of the economy the Conservative Party is currently stealing a march. Speaking last weekend at the Progress Annual Conference, Peter Kellner, President of YouGov, pointed to the need for Labour to transform these ratings or augment the importance of the cost of living debate – where he maintains Labour remain slightly ahead – if they want to secure a victory at next year’s polls.

New measures

Queen’s SpeechThe announcements in the Queen's Speech speak to both halves of this debate with measures aimed on the one hand at reducing the red-tape burden for businesses and on the other seeking to ease the cost of living.  From an insurance perspective the announcement of the Social Action, Responsibility and Heroism Bill will at the very least provoke discussion on the cost of compensation. The SARAH Bill has all the signs of being a very tabloid-friendly piece of legislation. Insurers have long called for, and so should welcome a debate about, people taking a proportionate response to risk.

The performance of UKIP at the European and local elections has, to put it mildly, scared many a political horse in the last few weeks. A Conservative Right who see UKIP ideologically as kith and kin would happily see an electoral pact made with Farage, and there’s plenty in the Queen’s Speech to keep them and their constituency activists happy.

The measures announced on pensions reform and those around infrastructure and planning stand out for me as significant interventions designed to spur innovation in markets whose reform is fundamental to meeting long-term societal challenges. 

A Bill on shale gas will upset the loathed green lobby, laws on PubCos make the Tories seem on the side of beer drinkers, even if they’d still prefer a pint with Nigel Farage than David Cameron. And the power of recall is firmly aimed at the disaffected UKIP voters who haven’t forgotten the expenses scandal. A strong showing in the Newark by-election today will help convince the Conservatives that they can beat UKIP, but the plethora of measures for UKIP supporters (and their Conservative allies) is a pretty good sign that Cameron will be taking the toughest line he can stomach in Europe.

The measures announced on pensions reform and those around infrastructure and planning stand out for me as significant interventions designed to spur innovation in markets whose reform is fundamental to meeting long-term societal challenges. But whilst the intention on energy is clear – an attempt to try and realise a desired home-grown shale revolution and shift the reliance away from imported gas and coal - there is far less coherence on pensions.

Pension Bills

It is a peculiarity of the Coalition that the Government’s agenda for its final year should contain two pensions Bills that pull in such different directions on the same subject. One designed to enable greater flexibility over individuals' savings and the other seeking to bind individuals’ savings together. And both, taken separately, seemingly seek to address the two halves of the debate on the economy.

In bringing to life the Chancellor’s reform of the annuities rules, the Pensions Bill will ultimately facilitate hitherto unforeseen access to very helpful savings lump sums for thousands of people across the UK. That this should happen four weeks before the next General Election is, of course, a minor detail. Pensions Minister Steve Webb’s ambition, seemingly defined by his Private Pensions Bill is to improve the predictability of pensions outcomes – opinion will be divided on whether this is the right way to achieve that.

What begins to emerge is a subtle nudge towards greater personal responsibility when it comes to managing personal risks – whether that is in everyday life, the workplace or in terms of savings. The insurance industry knows more about risk than any other business and as greater personal responsibility becomes habitual, insurers have support, experience and insight to offer consumers across the UK.

Seth Williams is Head of Public Affairs, Association of British Insurers.

Last updated 29/06/2016