MercoPress. South Atlantic News Agency

The Queen addresses Parliament setting out government policy

The Queen addresses Parliament setting out government policy (Photo: AP)

Queen Elizabeth II gave her “Queen's Speech” to Britain's parliament Wednesday, setting out government policy for the coming year as the ruling coalition sought to fight back after a dismal month.

The year's new laws would focus on “economic growth, justice and constitutional reform”, the queen said, while “the first priority will be to reduce the deficit and restore economic stability”.

The two-year-old coalition government's pursuit of deep spending cuts to reduce the deficit was one of the reasons for the drubbing that the Conservatives and their Lib Dem coalition partners received in local elections last week.

The government will also reform parliament's non-elected House of Lords and force banks to separate their retail and investment divisions, the queen said, as it seeks to win back voters' approval.

Amid the traditional pageantry, the monarch announced from a throne in the House of Lords that the upper chamber itself would be reformed to become a senate with 80% elected members, from the current largely appointed body.

“A bill will be brought forward to reform composition of the House of Lords,” the queen said -- but without specifying a timeframe, in an apparent concession to assuage critics of the plan.

The coalition has backed Lords reform under pressure from junior partners the Liberal Democrats, despite opposition from some majority Conservative lawmakers who have labelled it a distraction from pressing economic problems.

The queen said legislation on the agreed European Union bailout fund deal would be put to a parliamentary vote.

The introduction of the new European Stability Mechanism will remove Britain's liability for future bailouts for countries in the Euro zone, of which Britain is not a member. British finance minister George Osborne has also resisted calls for Britain to contribute to EU bailouts through the International Monetary Fund.

Both coalition partners took heavy losses in the local elections, with the opposition Labour party taking control of 32 councils and winning more than 800 seats from the ruling parties.

Punishment at the polls followed news of Britain's return to recession, a budget criticised over tax cuts for the rich, and questions over leaders' closeness to Rupert Murdoch's newspapers amid an inquiry into phone hacking.

Wednesday's speech pledged pro-business moves including slashing red tape, reforming competition law and limiting state inspections. State and private pensions will be overhauled in a move likely to spark clashes with unions.

But after the financial crash, banks will be forced to ring-fence separate retail and investment functions to protect ordinary people from a future crisis, while the “framework” for executive pay will be reformed.

A National Crime Agency -- said to be modelled on the US' FBI -- will be created to fight organised crime and boost border security. And in a move heavily criticised by civil liberties groups, a draft law will seek to give intelligence agencies extra powers to monitor emails and web use.

Adoption is to be streamlined, making race less of a key factor, and maternity and paternity leave made “more flexible so that both parents may share parenting responsibilities and balance work and family commitments”.

The speech is drawn up by the government and approved by the cabinet, despite being read out by the monarch, and is followed by four to five days of debate. It was skipped in 2011 as fixed-term parliaments were introduced.

The 86-year-old queen was escorted by Household Cavalry from her palace to parliament in keeping with traditions dating back over 400 years, before donning ceremonial robes and processing to the House of Lords.

An official called the “Black Rod” summoned lawmakers to the chamber, where lawmakers and lords heard the speech -- the queen's 69th -- read out from a handwritten script on vellum.