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13 November 2006

FT: Law to protect City from US-style red tape put on fast track

A law to ringfence the City against the incursion of US-style onerous regulations, included in Wednesday’s Queen’s Speech, will be fast-tracked through parliament and should be in force within a year, government insiders said yesterday.

The clearing house and banking bill is designed to overcome fears that a takeover of the London Stock Exchange by Nasdaq, the US exchange, could become a Trojan horse for Sarbanes-Oxleystyle rules to cross the Atlantic. The new law will give the Financial Services Authority a veto over regulations proposed by UK exchanges and clearing houses that would impose a disproportionate burden.

The bill will be short - about half a dozen clauses - and is expected to be politically noncontentious. Ed Balls, the economic secretary, said it was the government’s “agreed and clear intention” to get the legislation on to the statute books as quickly as possible. Ministers hope the bill will have its second reading before Christmas and reach the statute book before the end of the parliamentary year early next autumn.

The measure is one of about 25 bills in the Queen’s Speech, setting out a legislative programme for the next parliamentary session that Tony Blair, the prime minister, hopes will show a government getting on with “business as usual”, rather than being caught in policy paralysis awaiting his departure. Security will be the dominant theme of the speech. There will be Home Office bills to introduce more anti-terrorism controls, impose tougher curbs on organised crime, shake-up the criminal justice system by changing sentencing policy and open up the probation service to private sector companies.

The government intends to use this blitz of law and order measures to make a clear political demarcation between its tough stance and the softer “love a lout” approach adopted by David Cameron, the Conservative leader. The speech will include a pensions bill to overhaul the state pension system. It will implement some of the central recommendations of the Turner commission report, including a legal framework that will allow the link between the state pension and to earnings to be restored at some point between 2012 and the end of the next parliament.

Other measures in the speech affecting business include a bill to set up an independent Office for National Statistics, freeing it from political control by the Treasury, a bill to roll out road pricing and a bus services bill to give local transport authorities greater control over private sector provision in that area. Many of the most politically contentious issues surfacing in the political year ahead, such as a replacement for the Trident nuclear deterrent and the whole issue of party funding, are unlikely to feature heavily in the speech, however.

© Financial Times

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