The Conservatives’ dramatic loss of their majority has largely been seen as a positive thing by those in the financial services community, with Theresa May’s more unpopular ideas on corporate governance areas financial services may wish to see shelved in what has been described as a ‘collegiate’ approach to Government, where the Cabinet as a whole make decisions as a collective, and where the Conservative manifesto is ‘pruned’ to an extent that it can pass the Queen’s Speech.
Largely, this means that issues like minority pay reporting, workers’ rights, and corporate governance reform may be scrapped. May’s tough stance on immigration had been opposed by almost all of the Cabinet, and may be moderated. Passing a law to double the foreign worker charge of £1000 per year almost certainly lacks a majority in Parliament. Passing any changes to the tax code will be extraordinarily difficult, as will going through with any cuts, so the idea of balancing the budget “by the middle of the next decade “ is unfeasible. Changes to the Triple Lock on the State Pension have also been ruled out.
The inclusion of the DUP in the Conservative administration will likely push the Government forward on cutting corporation taxes. Look for the DUP to receive guarantees on funding and business development for Northern Ireland.
The team of ministers responsible for Financial Services has also changed, with a number of individuals losing their seats:
City Minister and Economic secretary to the Treasury Simon Kirby lost his Brighton Kemptown seat to Labour. An MP since 2010, Kirby had been closely associated with the pensions dashboard project, and was responsible for financial services policy within the Treasury, although he had been stripped of his responsibility for FS policy and Brexit in January 2017.
Financial secretary to the Treasury Jane Ellison lost her Battersea seat to Labour. An MP since 2010, Ellison had developed excellent links within the City during her time as financial secretary.
Staying the same:
Speculation on the future of Philip Hammond had swirled around in the days leading up to the election, with Theresa May expected to replace him had she won a large majority. Hammond now remains in place, perhaps with greater influence than he had enjoyed before. May had notably overruled Hammond before on his questions around friendliness to business in the run up to the election, this is expected to no longer be the case and Hammond will have greater powers on financial policy.
After running the Department for Work and Pensions up until the June election, Damian Green has been promoted to fist secretary of state and Minister for the Cabinet Office. It’s understood that Green will effectively be Theresa May’s second in command, and he is a long-standing ally of the Prime Minister. Green was also a prominent backer of the Remain campaign during last year’s referendum. A prominent member of the Tory Reform Group, Green will provide balast to the centrist cause within the Tory Party, and temper the less One Nation instincts of some of those in Downing Street.
David Gauke replaces Damian Green as Secretary of State for Work and Pensions. Gauke has been an MP since 2005, and has previously been involved in a number of ministerial positions within the Treasury. He was made Chief Secretary to the Treasury in July last year, after having been Financial Secretary to the Treasury between 2014 and 2016, and Exchequer Secretary to the Treasury between 2010 and 2014. Gauke’s background is as a solicitor in corporate and financial law.
Liz Truss receives what is largely considered a demotion, after a year at the Justice Department largely considered to have been a poor performance, as she repeatedly failed to stand up for the judiciary when they were attacked by the press. Truss has not had experience in the Treasury during her time in Government so far, nor does she have a tremendous amount of financial experience in her time as a private citizen.