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Date: 07/11/2014

This weeks policy update looks at Ed Milliband's calls to disband the House of Lords in favour of an elected second chamber, the recent ruling on the backdating of holiday pay, the appetite for regional devolution in the West Midlands, and the newly launched investigation into British banks by the Competition and Markets Authority.

Milliband advocates a second chamber focused on diverse representation

In a speech on Saturday, Ed Milliband, the leader of the opposition, made an attempt to reclaim the devolution narrative for his own party as one of their key pre-election policy focuses.

Speaking at Labour's North-West Conference, Mr. Milliband outlined his plans for the implementation of constitutional reform that, if they come to power, would see the House of Lords abolished in favour of a second chamber focused on better representing the cities, regions and nations of the UK.

Milliband said: "It cannot be right that the north-west has almost the same population as London but only a small fraction of London’s number of peers. London is our capital and one of the world’s great cities but it cannot be right London has more members of the House of Lords than the East Midlands, West Midlands, Wales, Northern Ireland, the north-east and Yorkshire and Humberside added together."

Orchestrating such a seismic shift in the constitutional structure of Britain's political infrastructure would bound to be divisive, however many would welcome the prospect of increased representation for localities.

Mike Ashton, Chief Executive of the Herefordshire & Worcestershire Chamber of Commerce, said: "Herefordshire & Worcestershire have been underrepresented in Westminster for eternity, so we would welcome a more representative second chamber. That withstanding, this would not be sufficient to adequately address regional devolution. Only increased powers to localities will overcome the London-centric nature that has to long come to embody British politics.

Potential backdating of holiday pay could effect millions

A ruling on Tuesday could see over 5million people become eligible to have overtime included as part of their holiday pay, with a backdating potentially costing businesses significant amounts of money.

The Employment Appeal Tribunal will rule on Bear Scotland versus Fulton, along with two other cases where employees have claimed that due to overtime making up a fundamental part of their work, that it should be included as part of their holiday pay.

Whilst the decision represents a significant worry for businesses, with many fearing it could cost them millions of pounds, any decision will undoubtedly be challenged, meaning that the final verdict might not come for years.
A spokesperson for the Department of Business, Innovation and Skills, said: "The government wants to get the right balance between the needs of employers and employees. We do not believe voluntary overtime should be included in holiday pay and are concerned about the potential impact on employers.

Commenting on the ruling from the Employment Appeal Tribunal in the Bear Scotland versus Fulton case, Adam Marshall, Executive Director of Policy and Public Affairs at the British Chambers of Commerce said:
"This ruling is damaging for businesses across the UK. Firms could be at risk of incurring significant financial losses, which could force them to close their doors altogether.

"Managers across Britain are now in the difficult position of having to carry out more complex calculations for holiday pay; estimating overtime and commission rates of staff on holidays. This expanded definition of ‘pay’ is so ludicrous that the government itself has argued against it. No business should have to pay more than base salary during holiday periods, unless they elect to do so."

Regional Devolution debate proves that the appetite for change is here to stay

Last night saw a televised debate on BBC1 addressing the key issue on the political agenda, regional devolution, and Herefordshire & Worcestershire were well represented, with the MP for Redditch, Karen Lumley, Cllr Liz Harvey of It’s Our County, and from the Chamber of Commerce Policy Team, Jack Stephens, all forming part of the 30 strong panel and audience.

The Scottish Referendum, and the attempt to answer the ‘West Lothian Question’, well and truly placed devolution at the forefront of the political agenda in the run up to the General Election, with all the main parties clamoring to take control of the situation and convince voters that their party is the one to drive the decentralisation of power away from Westminster.

The Conservatives, spearheaded by Cameron, Hague and Osborne, are championing a system not dissimilar to that in London, with a Mayor as the focal point. Ed Milliband has, just this last weekend, pledged to abolish the House of Lords in favour of a second chamber that is representative of the cities, regions and countries of the UK, with further decentralising measures to follow.

The debate, which took place at the Drum in Birmingham, was part of a one-off special across all of the countries regions an d brought together audience members including the Chief Executive of Birmingham Airport, Paul Kehoe, and MPs and MEPs from across the region.

The discussion aimed to unpack the fundamental issues surrounding the devolving of powers to local authorities, how this could look in practice, and how it would impact the business community.

The diverse nature of the audience meant that a wide range of opinions was inevitable. However,  there appeared to be one inextricable point of consensus - that more powers need to be transferred to bodies within the West Midlands.

Differences in opinion became evident over the constitutional implications of devolution, what ‘powers’ actually should be handed down to local bodies, and whether it should be regions, cities or counties that should be enfranchised.

This was the key point picked upon by Jack Stephens, who said of the debate: “The question of upmost importance to the local business community is how representative will regional devolution be? Herefordshire and Worcestershire are very different counties even in comparison with each other, let alone Birmingham. So, if powers were to be transferred to a hypothetical Birmingham Assembly, would the benefits of those be felt here in the two counties?

“I raised the point that 40% of Gross Value Added comes from counties, so they have to be a key consideration in this debate.”

 Whilst the debate did not come to any definitive answers over how the local area would like to see devolution actualised, it did highlight one point that must not be forgotten by the politicians driving this agenda forward - devolution is about enfranchising local areas and the people within them. Therefore, any decisions over devolved powers should be made by those people, not, as is currently the case, representatives in Westminster.

Competitions and Market Authority to launch inquest into British banks

The Competitions and Market Authority (CMA) has launched a competition inquest into the current accounts and small business banking practices of the 'big four' banks - Barclays, Lloyds, the Royal Bank of Scotland and HSBC.

The main topics of investigation are into the difficulties that people face when looking to change bank, the lack of viable alternatives to the big four, and small business lending processes.

The inquest has been labelled 'unnecessary' by the banks, potentially amongst fears that the result of the investigation could conclude that they need to be broken up, however this appears to be highly unlikely.

Other possible conclusions could be that increased transparency over overdraft fees should be introduced ad branch networks should be split up.

All of the banks have said they will work in cooperation with the inquest, even though it has been accused of being 'backward looking' by HSBC.

John Longworth, Director General of the British Chambers of Commerce, said: "This investigation represents a unique opportunity which must be seized, in order to deliver real change in the banking sector. We call on the government to commit to implementing the findings of the CMA's investigation to restore trust, transparency and relationships between lenders and businesses."