Businesses up and down the UK are attempting to assess what the results of the 2017 snap general election will mean for them, as the electorate returns a Conservative minority government.
The results of the election have left many political pundits in shock and the “hung parliament” has raised a number of questions, which are only now beginning to be answered, with many more uncertainties on the horizon.
What is clear is that Theresa May the Prime Minister intends to stay on, with the support of Northern Ireland’s Democratic Unionist Party (DUP).
With this in mind it is worth reflecting on the 2017 Conservative manifesto to find out what may lay in store for business.
Below are some of the key tax and economic pledges that have been made:
Corporation Tax – The Government has continued its pledge to lower Corporation Tax to 17 per cent by 2020.
Personal Tax – It also pledges to increase the personal allowance to £12,500 and the higher rate to £50,000.
Tax evasion – The Government has within the manifesto promised to legislate for tougher regulation of tax advisory firms and will take a “more proactive approach to transparency and misuse of trusts.”
National Living Wage – The government has pledged to continue to increase the National Living Wage to 60 per cent of median earnings by 2020 and then by the rate of median earnings.
Corporate pay – The Government said it wishes to legislate to make executive pay packages subject to strict annual votes by shareholders and listed companies will have to publish the ratio of executive pay to broader UK workforce pay and explain their pay policies when questioned.
Corporate governance – Listed companies will be required by law either to nominate a director from the workforce, create a formal employee advisory council or assign specific responsibility for employee representation to a designated non-executive director. Employees will also be permitted to request information on the future direction of the business.
Increasing trade – The Government pledged to seek new free trade agreements in the light of Brexit and to forge new relations, but they said they will seek a ‘no deal, better than a bad deal’ approach, including leaving the single market and adopting World Trade Organisation rules instead.
Red Tape – The Conservatives promised to cut up to £9 billion by reducing the amount of regulations and bureaucracy businesses face.
Protecting private pensions – According to the manifesto, The Government will act to tighten the rules against abuse of private pension schemes and will increase the punishment for those caught mismanaging them.
Increasing innovation – The Government said it will further support R&D by meeting the current OECD average for investment in R&D (2.4 per cent of GDP) within ten years.
Mergers and Takeovers – The manifesto says that the Government will tackle mergers and takeovers that aggressively asset-strip companies or allow tax avoidance to take place.
National Productivity Investment Fund – If introduced, this new £23 billion National Productivity Investment Fund will target spending in areas that are critical for productivity, such as housing, research and development, economic infrastructure and skills.
Consumer regulation –The powers of consumer enforcement bodies will be strengthened to order fines against companies breaking consumer law and deliver redress for wronged parties.
Buy-to-Let – The Government said it will crack down on unfair practices in leasehold and will also improve protections for those who rent, including by looking at increasing security for good tenants and encouraging landlords to offer longer tenancies as standard.
Debt and Insolvency – The manifesto says the Government will adopt a “Breathing Space” scheme, with the right safeguards to prevent abuse, so that someone in serious problem debt may apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks.
“Dementia Tax” – One of the more controversial measures introduced in the manifesto suggests that money for care costs could be reclaimed from a deceased’s estate, including from the sale of a house after death, leaving relatives with a minimum inheritance of £100,000 – a move that has been labelled the “Dementia Tax”.
While these provide some indication of the Government’s intended economic policies and strategies, businesses will have to wait until the Queen’s Speech, which may be delayed, to find out which of the manifesto proposals are still planned to go ahead.
However, no matter what it ultimately pledges, the results of the general election will make the position of the proposals within the speech extremely precarious and the current arrangements may well complicate the passing of each piece of legislation.
The result is also likely to affect the Brexit process, with many outsiders now suggesting a softer Brexit than had been originally forecast, but only time will tell.
Theresa May and her cabinet have been left in an unenviable position following this election result, and it is not yet clear to what extent the above measures will be implemented.
