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The General Election: What are the major parties offering to recruiters?

Last updated on Thursday, April 23, 2015

Written by Churchill Knight

With less than a month to go, many within the recruitment industry are eagerly awaiting the outcome of what promises to be one of the most hotly contested general elections in recent memory. At the time of writing, the latest polls put Labour slightly ahead of the Tories in the race for Number 10, but neither party looks likely to gain an overall majority.

Each of the three main parties are promising to implement a number of policies that will have a significant impact on the recruitment industry over the coming years.

Here we take a look at what are seen to be the five areas of greatest concern for recruitment business owners and the impact each of the three parties will have on recruitment, should they win next month’s election.

Employment

With unemployment at a seven-year low and recruiter billings at an equal seven-year high, each party is keen to ensure that the economy continues along its upward trajectory. 

The Conservatives see Small to Medium Enterprises (SMEs) as key drivers for growth. They have announced their plans to cut Corporation Tax, and to provide new business loans for 75,000 would-be entrepreneurs. The party will also create opportunities for over 3m apprenticeships and cut income tax for the under 21s, whilst implementing a new policy which ensures that no worker on Minimum Wage will be subject to income tax payments. Furthermore, the Conservatives say that they will undertake a review of umbrella companies and the rules that apply to claiming travel and subsistence expenses. They also plan to plug investment into the oil & gas industry, promising opportunities for contract and permanent workers in this field and in turn, more vacancies for recruiters to fill.

Under a Labour government, the 50% top rate of income tax, for those earning in excess of £150k, will be re-introduced. Additionally, Mr Miliband will bring in a 10% starting rate for the first time, funded by scrapping the Married Couple’s Allowance. He also pledges no change to current VAT, NI or basic and higher rates of income tax whilst promising to 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 that permanent staff, whilst also banning zero-hours contracts.

The Liberal Democrats, for their part, also promise job creation by introducing 1 million apprenticeships, whilst at the same time increasing the salaries of the lowest paid apprenticeships and internships by £1 an hour. They promise to cut personal taxes by an additional £400 a year through raising the Personal Allowance to £12,000. Mr Clegg’s party manifesto is the only one that seeks to address the pay imbalance between male and female workers. Under his government, the Liberal Democrats will require companies with more than 250 employees to publish their gender pay gap.

All parties are looking to support the ongoing rise of apprenticeships - especially for younger workers, helping to close the youth unemployment gap that continues to trail behind the overall unemployment rate. An increase in jobs, promised by all parties, will create opportunities for recruiters to become even more competitive in their battle for the best talent.

However, the proposed changes, and the investigation into travel and subsistence rules, could see a shift for recruiters on who their third party providers are and how their contract workers in particular wish to be paid. To read more on how changes to travel and subsistence could affect the recruitment industry, please read our Travel and Subsistence: An end to umbrella companies? article.

Immigration

As the subject of much debate, immigration continues to be a major political hot potato for all three parties.

The Conservatives have fallen short of the target they set themselves in 2010, opting instead to revise their language by stating that it is now their “ambition” to cut net immigration by the end of the next government. This pledge is due to net immigration remaining consistently high for the last 20+ years, irrespective of which party has been in power. In the year up to September 2014, net immigration (the difference between those leaving the UK and those entering) stood at 298,000; three times the Government’s target. So how will they reduce the numbers? Mr Cameron plans to clamp down on illegal immigration and abuse of the minimum wage, beef up the UK's border security and strengthen the enforcement of immigration rules. He will also introduce a four-year benefit ban for new arrivals.

Labour, by comparison, wishes to impose a two-year benefit ban, recruit 1,000 more immigration officers, tighten the rules on short-term student visas and retain the cap on non-EU workers. The party also stated that “smarter targets” are to be brought in to reduce low skilled migration but will ensure university students and high skilled workers are not deterred.

The Liberal Democrat party revealed their major immigration plan for new claimants of Jobseeker’s Allowance to have their English speaking skills assessed, and if poor, help and develop those skills via courses.

The Economy

A Conservative manifesto promises “a clear economic plan” and a “brighter more secure future”.  With the economy improving of the under the Tories over the last five years, the Conservatives have put themselves in a good position – especially given Mr Cameron’s pledge to further reduce the deficit.

Messrs Miliband and Balls however, have put fiscal responsibility on the first page of Labour’s election manifesto. Ed Miliband claims 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, fresh from their coalition, the Liberal Democrats plan to “finish the job” of reducing the deficit whilst also balancing the books by 2017/2018 and creating a fair plan to reduce the deficit by ensuring the rich pay "their fair share" and corporations are unable to avoid "tax responsibilities". They have also pledged to double spending on innovation in the economy and devolve more economic decision-making to local authorities.

Tax Rates and Thresholds

In its manifesto, the Conservative party have outlined plans to increase the 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. Cameron’s document also includes passing a new law that would mean all those working 30 hours a week and earning the minimum wage will not pay income tax on earnings.

In a Labour government, the UK can expect a 50% top rate for income tax earnings over £150,000, a cut to income tax for approximately 24 million people by introducing the 10p 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 £12,500 in 2020, increasing Capital Gains Tax for profit on second homes or shares to 35%, and expanding 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.

Both Labour and the Liberal Democrats follow suit and show support for individuals in regard to savings, with the former wishing to reduce university tuition fees from £9,000 to £6,000 and the latter announcing new savings to the income tax Personal Allowance, so that 95% of the UK could save completely tax-free.

Recognising their importance, Labour has also stated that they would give 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.

As the saying goes, a week is a long time in politics. Two weeks is even longer and much will still change between now and May 7th. Will recruiting migrant workers be the election-defining hot potato? And what impact could a cap on overseas workers mean for the UK skills shortages?

The top three front-runners’ election manifestos may generate more questions than they are able to answer. Whichever party comes to power, we can all rest assured that the next few months will be as unpredictable as the result. Where will your vote go?

 If you would like to know how working with Churchill Knight could benefit your agency, please visit our website for more information or contact our Agency Sales team today on 08082 525 533.

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Keep updated on what is affecting the recruitment industry by reading our blog on the Autumn Statement 2015.

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