As the race to succeed Boris Johnson as leader of the Conservative Party kicks off, we wanted to update you on the implications for investment management and our next steps.
Leadership timings and interim government
The 1922 Committee of backbench Conservative MPs is due to be reformed on Monday, and will then set out a timetable for a leadership election. While the details of this are yet to be confirmed, the most likely scenario is that the Parliamentary stages of the contest (where MPs whittle down contenders to the final two) will take place before recess. The final two will take their campaigns to the membership over the summer, with the winner being announced in September. This process may be truncated if there is a clear front runner among MPs or (as happened when Theresa May became leader) one of the final candidates drops out.
Boris Johnson is intending to stay on as Prime Minister until a new leader has been chosen, and has started to reappoint ministers filling the gaps left by this week’s resignations (the post of City Minister is currently vacant). The manner of Mr. Johnson’s resignation angered many in the party however, meaning that some groups of MPs are looking for options to appoint an interim Prime Minister, potential Dominic Raab MP who has ruled himself out of the leadership race. Whether or not this is a serious option is likely to become clear over the weekend.
Whoever is at the helm, it is likely that an interim administration will refrain from major policy decisions. In this regards it is helpful that the long summer recess is scheduled to start on 21 July, and may be brought forwards.
Legislative agenda
The IA has been focused on two pieces of legislation:
- The Online Safety Bill, which (among much else) contains changes crucial to preventing investment fraud after a campaign from the IA and others. This is part way through its Commons stages, and although the sections relevant to investment managers are have wide support, some aspects of the legislation are more controversial. We do not expect any movement on this Bill before the new Prime Minister is in place, but given that it is ‘in flight’, it could well be picked up (at least in part) by the new team. It is notable the minister previously responsible, Chris Philp MP, offered his support to DCMS to continue the Bill’s progress in his resignation letter.
- The Financial Services and Markets Bill, which was due to implement the Future Regulatory Framework including the secondary regulatory objective of economic growth and international competitiveness. This Bill had been due to be published shortly after the 19th July Mansion House Speech, where we were also scheduled to see the ‘State of the Sector’ report. It is currently unclear whether the speech will go ahead, but it is almost certain that the Bill will now be delayed until the Autumn at the earliest.
The new Treasury team will want to revisit the draft Bill. There is the potential for it to become politicised, should the new administration wish to focus on a deregulatory agenda in particular. It is helpful in this regards that the Labour party will be supporting key parts of the Bill (Jonathan Reynolds confirmed at yesterday’s IA annual conference that they support the new secondary objective), which should smooth the Bill’s journey once it does emerge.
IA activity
The IA has been in touch with HMT officials to ensure that our continuing support for the Financial Services and Markets Bill is understood. We will continue to press this point with both officials, and the new ministerial team when they are fully in place.
As soon as new teams are settled we will be ensuring that they understand investment management’s particular role in the economy, and working with them on key policy positions. While the government is in flux, we will be taking the opportunity to spend time building our relationships with opposition parties and officials.
Over the coming weeks the IA will keep members up to date with relevant developments. Please do get in touch with [email protected] if we can help at all.