Whichever party enters Downing Street on the morning of May 8th, changes will be made by the new government that will affect contract workers. For some, a Conservative government will mark a welcome continuation of the status quo. For others, the next five years need a fresh approach, with Labour hoping to step in and assume that role. And the Liberal Democrat’s will bring in new policies if they can overcome their dip in form.
Much has changed since the last election. Back in 2010 unemployment stood at 8% and 4 million were self-employed. Fast-forward to 2015 and unemployment is at a seven-year low (5.2%) with contractors up by a further half a million. Employer confidence is on the rise and the economy is shedding the last, lingering traces of the recession that has dominated the early years of the current government. All signs point to a job well done for the coalition.
Scratch beneath the surface though and it is apparent that economic growth is slowing. Each party has proposals to remedy this, should they get the keys to Number 10, so there are multiple solutions to examine.
So with less than a month to go before polling day, do you know how each of the three main parties’ policies will affect you? Are you ready to decide who should get your vote? Here we take a look at how each of the three main parties will impact contractors over the course of the next government.
A Conservative manifesto promises “a clear economic plan” and a “brighter more secure future”. With their strengthening of the economy over the last five years, the Tories have put themselves in a good position; especially given Mr Cameron’s pledge to further reduce the deficit inherited from the previous government.
Messrs Miliband and Balls, however, have put fiscal responsibility on the first page of Labour’s election manifesto, stating that they are “not only the party of change, but the party of responsibility.” The document states that none of the manifesto policies will be paid for by extra borrowing and that Labour will reduce the deficit every year, with the goal of putting the current deficit into surplus “as soon as possible” in the next parliament.
Meanwhile, the Liberal Democrats, eager not to let their contributions over the last five years go unnoticed, plan to “finish the job”. Nick Clegg’s aim is to balance the books by 2017/2018 and to create a fair plan to reduce the deficit by ensuring the rich pay “their fair share” and corporations are unable to avoid “tax responsibilities”. The party have also pledged to double spending on innovation in the economy and devolve more economic decision-making to local government.
Tax Rates and thresholds
In their manifesto, the Conservative party has outlined plans to increase the income tax Personal Allowance to £11,000 by tax year 2017/2018 and £12,500 by 2020. It also details their idea to raise the higher rate tax threshold to £50,000 and bring the annual tax return to an end. Mr Cameron’s document also includes passing a new law that would mean that all those working 30 hours a week or less, and earning the minimum wage, will not pay income tax on their earnings.
Under a Labour government, contractors can expect a 50p top rate for income tax earnings over £150,000, a cut to income tax for approximately 24 million people by the return of the 10 pence lower rate and a mansion tax introduced for properties worth over £2million.
Similar to the Conservative manifesto, the Liberal Democrats aim to raise the Personal Allowance to £11,000 in April 2016 and to £12,500 in 2020. They will also increase Capital Gains Tax for profits on second homes or shares to 35%, and expand the conditions for Shared Parental Leave with a ‘use it or lose it’ month for fathers.
Savings and Investments
David Cameron pledges a change to annuities and ISAs, making it more flexible for people to access their savings should the Conservatives remain in power. The party also plans to invest in new technology for the public sector, hoping to develop cross-government digital platforms.
As expected, both Labour and the Liberal Democrats follow suit and show support for individuals with regards to savings and the future, with the former wishing to reduce university tuition fees from £9,000 to £6,000 and the latter announcing new savings to the Personal Savings Allowance so that 95% of the UK could save completely tax free.
Recognising their importance, Labour has also stated that they would give Small and Medium-sized Enterprises (SMEs) a “voice at the heart of government” whilst strengthening rules on late payment. With Labour’s university tuition fees promise, more students will be encouraged to explore higher education, helping to bridge the skills gap seen recently. However, with all parties unveiling plans to improve savings and increase investments, both job creation and confidence should rise.
With unemployment at a seven-year low and recruiter billings at a comparative seven-year high, each party will be keen to ensure the economy continues along its upward trajectory.
The Conservatives see SME’s as key drivers for growth and have announced their plans to cut Corporation Tax, in addition to providing new business loans for 75,000 would-be entrepreneurs. They also say that they will undertake a review of Umbrella Companies and the travel and subsistence rules. The recent review of travel and subsistence (T&S) stated that T&S should be limited to a maximum 30% of a worker’s employment and must be assessed on a rolling 12-month basis. To read more on the matter of T&S, and how these rules could possibly change, please read our ‘Travel and Subsistence: An end to umbrella companies?’ article.
Under a Labour government, the 50% top rate of income tax for people earning over £150k will be re-introduced, with a new the 10% starting rate introduced for the first time. These changes will be funded by ending the Married Couple’s Allowance. There will also be no rise in VAT, NI or basic and higher rates of income tax. In addition, Mr Miliband will raise the national minimum wage to more than £8 an hour by October 2019. The party also announced that they plan to abolish the loophole that allows firms to pay agency workers less than permanent staff whilst also banning zero-hour contracts.
The Liberal Democrats, for their part, promise job creation by introducing a million apprenticeships whilst increasing the salaries for the lowest paid apprenticeships and internships by £1 an hour. They promise to cut taxes by an additional £400 a year by raising the Personal Allowance to £12,000. Mr Clegg’s party manifesto is the only one that seeks to address the gender pay gap in this country. Under his government, the Liberal Democrats will require companies with more than 250 employees to publish their gender pay gap.
With the Conservatives guaranteeing a “good life for all”, the party has unveiled plans for the ‘Right to Buy’ scheme to be extended from council tenants to 1.3 million families living in house association properties.
Meanwhile, the Labour party insists that they will build at least 200,000 homes by 2020, including expansion in new towns and garden cities. It also promises that local first-time buyers will be given priority for the purchase of the new homes.
Bettering Labour’s promise, the Liberal Democrats aim to build 300,000 homes with up to 5 new garden cities.
With each party firmly committed to addressing the UK’s growing housing shortage, it will become easier for contract workers to get their foot on the property ladder. Moreover, for those contractors employed within construction and its allied trades, demand will be high with the number of new opportunities, both for short and long-term projects, expected to see a significant rise over the next five years – irrespective of which party takes office in May.
In June, we will be providing more in-depth information on the matter of contractors stepping onto the property ladder, and the problems that they can face.
The battle between the three major players in the 2015 election is perhaps the most unpredictable in decades. However, as with all party manifesto’s, the true question is whether or not they will be implemented. Only time will tell.
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