The Conservative and Labour parties have published a plan of what they will do if they win the coming Election.
The Conservative Party’s 2019 manifesto was the thinnest of the three main parties’ documents and by far the smallest on planned increases in Government expenditure. The fact that the Institute for Fiscal Studies (IFS), supported by history, did not believe the Conservatives would stick to such modest expenditure is another matter.
Perhaps because of that relatively limited manifesto, the Conservatives have now “unveiled their plan of action for the first 100 days of a majority Government”. The emphasis on a majority Government is telling – as it looks impossible for Johnson to form a minority administration. As of now, Oddschecker suggests 2/5 odds that a Conservative Government will be next Thursday’s outcome.
The two most interesting aspects of the 100 day plan from the personal finance viewpoint are:
“…a post-Brexit Budget in February which will cut taxes for hardworking families”;
“Beginning cross party talks to find an enduring solution to the challenge of social care’.
The “hardworking families” tax cut is presumably the increase in the national insurance contribution (NIC) threshold to £9,500 a year (from the current £8,632) promised in the Conservative manifesto. This is being promoted as a ‘tax saving’ of £104 a year ((£9,500 – £8,632) @ 12%), although the self-employed will probably only see three quarters of this because of the lower Class 4 rate applied to profits. It should also be noted that the IFS puts the true net saving at £85 as normal indexation would raise the threshold by £156 a year for 2020/21.
The proposal of cross-party talks on social care has a feeling of déjà vu about it. In the wake of a bitterly contested Election the likelihood of a consensus looks small, although it is understandable that any Government would want to share the blame for whatever emerged with the opposition.
There is – or at least was – still the promise of a Green Paper on the subject. This was originally announced in March 2017 and subsequently became a Conservative manifesto commitment in that year’s Election. As the House of Commons Library notes, publication of the paper was originally due in summer 2017. It has since been deferred to the point that the last Government statement, made in September 2019, said only that publication would be “in due course”.
On 9th December, the Labour Party issued their plans with a speech by John McDonnell, Shadow Chancellor.
Mr McDonnell lists as a ‘key priority’ Labour’s (re)nationalisation programme. The Government would “start the process of bringing water and energy into public ownership” within its first 100 days, setting up boards to run these utilities made up of customers and workers, as well as representatives from local councils, metro mayors and (unspecified) others.
Various press reports suggest that one of the new Chancellor’s first challenges would be to deal with the corporate restructuring that has already taken place at the likes of National Grid and SSE. These revamps have placed the utilities’ UK regulated operational business in offshore holding companies, designed to provide protection under international law against state expropriation.
Mr McDonnell also set out priorities for his first Budget, timed for Wednesday 5 February, a Budget he said ‘which ends austerity for once and all’:
Curiously, the word ‘tax’ does not appear once in Mr McDonnell’s 100-day speech despite the precise scheduling of the Budget and a promise to set the Office for Budget Responsibility (OBR) to work on his first day at the Treasury (which means it would not have the 10 weeks’ notice it ought to be given).
Realistically, a Budget now appears increasingly likely in February. If Labour forms a Government, outright or in coalition, it will want Office for Budget Responsibility (OBR)-sanctioned figures. In theory that requires 10 weeks, although as Mr Javid demonstrated with his November non-Budget the timescale can be accelerated. Given the radical nature of any Labour programme, the OBR would probably insist on the maximum timescale – the number-crunching it did in October would be of only limited use.
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