Takeaways for Executives

Takeaways for Executives

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Promises, promises…key takeaways from the election manifestos for Executives and leadership. 

Following our overview of the key electoral policies put forward by the leading political parties, here we explore how the manifestos may affect key areas of business and different sectors.

Taxes:

Conservative Party:

• £17bn tax cuts per year by 2029/30.
• Includes a further 2p off employee National Insurance by April 2027 and end of NI for 4m self-employed.
• No income tax rises – but thresholds frozen until 2029.
• No rises on VAT, corporation tax, capital gains tax, or stamp duty land tax.

Labour Party:

• No increase to National Insurance, income tax or VAT, thresholds frozen until 2029.
• Corporation tax capped at 25% for the full term.
• £8.6bn in taxes to be raised by the end of a first term by raiding private schools, energy companies, overseas property investors and cracking down on non-doms and tax avoidance.

Workforce and skills:

Conservative Party:

• Fund 100,000 apprenticeships for young people, paid for by curbing some “poor quality” university degrees.
• Mandatory National Service – military or civic – for all 18-year-old school leavers. (Unclear how this will fit with apprenticeships.)
• Introduce “Advanced British Standard” baccalaureate-style qualification and scrap  ’levels and newly-introduced T levels. Business leaders say the constant reform of further education and qualifications makes it difficult to compare potential recruits of different ages.
• Extend free childcare for pre-schoolers from 15 to 30 hours per week, supporting working parents.

Labour Party:

• New Deal for Working People to ban exploitative zero hours contracts, enforce a living wage for all workers based on the cost of living, equal workers’ rights from day one, improve trade union access and protection.
• Remove cap on compensation for ordinary unfair dismissal, currently the lower of one year’s pay or £115,115.
• Establish Skills England to bring together business, training providers and unions with national and local government to create a highly trained workforce.
• Create 650,000 new jobs, mostly skilled, largely through public/private investment in the green economy. Open 3,000 new nurseries.
• Replace the Apprenticeship Levy with a Growth and Skills Levy, align skills provision and migration with an industrial strategy, empower regional mayors to support skills and growth

SMEs:

Conservative Party:

• Improve access to finance for SMEs including through expanding Open Finance and exploring the creation of Regional Mutual Banks
• Lift employee threshold allowing more companies to be considered medium-sized.
• Retain key tax incentives like the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Venture Capital Trusts, Business Asset Disposal Relief, Agricultural Property Relief and Business Relief.

Labour Party:

• Create a new Regulatory Innovation Office and framework to foster innovation.
• Wholescale reform of business rates to make them fairer and level playing field between smaller businesses and online giants.
• Take action on late payments
• Improve guidance and remove barriers to exporting for small businesses as well as reform procurement rules to give smaller companies greater access to government contracts. (companies with at least two of the following: less than 50 employees, max turnover of £10.2m or 5.1m max on the balance sheet)
• Reform of the British Business Bank to help SMEs access capital.

Trade:

Conservative Party

• Complete free trade agreements with India and with the Gulf Cooperation Council.
• Continue to pursue free trade agreements with countries such as Israel and Switzerland
• Agree a free trade agreement with the US ‘when they are ready to do so’.

Labour Party

• No reversal of Brexit but would seek better EU trade deal.
• Publish a trade strategy striking new free trade agreements and negotiate standalone sector deals.
• Seek a new strategic partnership with India and deepen co-operation with partners across the Gulf and emerging African markets.

Infrastructure:

Conservative Party:

• Invest £36bn in local roads, rail and buses to drive regional growth including £8.3bn to fill potholes and resurface roads
• Reverse ULEZ expansion and apply local referendums to new 20mph zones and Low Traffic Neighbourhoods.
• Nationwide gigabit broadband coverage by 2030.
• Speed up the average time it takes to sign off major infrastructure projects ‘from four years to one’.
• Rail Reform Bill to create Great British Railways, a public-private partnership with £44bn allocated to Network Rail over five years

Labour Party:

• £1.8bn to upgrade ports and build supply chains across the UK.
• Push to full gigabit and national 5G coverage by 2030.
• Great British Railways – bringing them back into public ownership
• Update national planning policy to make it easier to build laboratories, digital infrastructure, and gigafactories.
• Create a new National Infrastructure and Service Transformation Authority.
• Develop a ten-year infrastructure strategy aligned with industrial strategy and regional development priorities.

Construction and estate management:

Conservative Party:

• 1.6m new homes over five years (100,000 more than the 2019 pledge which hasn’t yet been possible to deliver).
• Stamp duty cut for some first time buyers.
• New Help to Buy scheme.
• Tax cuts for landlords who sell to tenants.
• Abolish legacy EU ‘nutrient neutrality’ rules to immediately unlock the building of 100,000 new homes with local consent.

Labour Party:

• 1.5m new homes over five years made easier by reformed planning laws and enforced mandatory local targets.
• Establish new towns.
• Mortgage guarantee scheme to support first-time buyers.
• Stop developers selling new flats as leaseholds.
• Retrofit 5m homes to make them energy efficient.

Finance and professional services:

Conservative Party:

• Support the City of London’s position as a leading global market through the implementation of the Mansion House reforms.
• Ensure the Basel III capital requirements do not inhibit lending to SMEs.
• £250m Invest in Women Fund to support female entrepreneurs.
• Step up fight against money laundering and dirty money; ensure all British Overseas Territories and Crown Dependencies adopt open registers of beneficial ownership.

Labour Party:

• Support reforms in the Financial Services and Markets Act 2023.
• Uphold the ring-fencing regime.
• Regulate the Buy Now Pay Later sector.
• Create a national financial inclusion strategy.
• Reform the British Business Bank to support growth in the regions and nations, giving SMEs greater access to capital.

Retail and services:

Conservative Party:

• Ease burden of business rates for high street, leisure and hospitality firms with a £4.3bn business rates support package over five years.
• Crack down on high street crime.

Labour Party:

• Plan for higher wage bills through minimum wage/gig economy reform.
• Business rate reform to enable high street businesses to compete with online giants.
• End £200 threshold on prosecuting shoplifters.

Manufacturing and energy:

Conservative Party:

• Invest £6bn in energy efficiency over the next three years to make around a million homes warmer.
• Look to fund an energy efficiency voucher scheme for installation of energy efficiency measures and solar panels.
• Push forward with Advanced Manufacturing Plan providing a £4.5bn commitment to secure strategic manufacturing sectors including automotive, aerospace, life sciences and clean energy.

Labour Party:

• Set up a new Great British Energy.
• National Wealth Fund aims to bring in £3 private investment for every £1 spent.
• £1.5bn to new gigafactories to support automotive industry.
• £2.5bn  to rebuild steel industry.
• £1bn to accelerate the deployment of carbon capture.
• £500m to support the manufacturing of green hydrogen.

Technology, innovation, investment and R&D:

Conservative Party:

• Increase public spending on R&D from £20bn to £22bn and maintain research and development tax reliefs
• Create more freeports.

Labour Party:

• Support development of the AI sector, remove planning barriers to new datacentres, create National Data Library.
• Scrap short funding cycles for key R&D institutions in favour of ten-year budgets.
• New Regulatory Innovation Office to speed up approval of innovative products and accelerate benefits of the AI revolution.

Lib Dems, Reform and Greens, at a glance: 

Liberal Democrats:

• Seek to rejoin the Common Market and later reverse Brexit.
• A push for net zero would see more investment in renewables and retrofitting.
• Raise income tax thresholds when economically viable.
• 3% of GDP to go into R&D by 2030
• Address labour and skills shortages through provision of lifelong vocational training in key areas including technology.
• Modernise employment rights especially around the gig economy.

Reform: 

• Lift the income tax threshold from £12,570 to £20,000.
• Slash corporation from 25% to 20% and lift the threshold to £100,000 profit.
• Scrap business rates for SMEs.
• Raise NI for “foreign” workers to 20% to encourage hiring of UK staff.
• 20% tax relief on private healthcare.

Green Party:

• Nationalise water, five big energy companies, railways.
• Four-day working week.
• 75% windfall tax on banks.
• £15ph minimum wage.
• Freeze corporation tax.
• 150,000 new social homes a year.
• Carbon tax on businesses.

Hopefully we’ve been able to provide a valuable insight into what executives and leadership can anticipate post-July 4, areas of potential growth and some food for thought for individuals to decide how much faith can be placed in some of the bolder manifesto promises.

Of course, global events will continue to have an unpredictable and profound impact on the economic landscape, especially with half the world going to the polls, a resurgence of far right politics in Europe and a possible return for Donald Trump in the US.

What will that mean for relations with China, the war in Ukraine and geopolitical stability?

For executives and senior leadership, the central message domestically is the continued political emphasis on stability and robust regulation and infrastructure support to foster growth in key areas from both leading parties. Unless we are rocked by another seismic event, we are unlikely to see any shocks to the economy or radical socio-economic reform coming from Westminster, in the foreseeable future at least. What remains to be seen is how many of these promises we can realistically afford and which the incoming government will prioritise if they cannot all be met.

In summary, Sunak continues to insist the British economy is “turning a corner”. His manifesto promises to stimulate the economy with reduced taxes and greater consumer spending power, in line with Conservative tradition.

A Labour victory would see investment and devolution of decision-making in the regions, potentially creating new opportunities for business outside London and the South East. It may also see wage bills grow and union powers enhanced.

Both parties are promising improved road and rail networks to connect the country and stronger trade deals to promote export growth.

We’ll continue to keep a close eye on any developments we think relevant to our clients both in the UK and globally and seek to help executives and senior leaders navigate this rocky landscape through staying informed and ensuring they are poised to seize new opportunities for strategic and personal growth while avoiding pitfalls and risks.

If you require support to understand how the unfolding economic and political trends will impact your personal or organisations strategic planning and direction, please contact a member of the Rialto team to discuss how our business and leadership support can help.