General election update

What now?

Boris Johnson has been presented with an overwhelming endorsement from the UK electorate to deliver the Conservative party manifesto following the 12 December 2019 General Election result. 

As the impact of a margin of victory for the Conservative party not seen since 1935 is considered and digested, we wait for the new Government to get into action and enact the proposals set out.

There is little doubt that political reality will mean that pledges will be tweaked, if not wholly amended in the weeks ahead, and the expected Budget in the New Year will also add more meat to the Government’s plans. 

So, whilst we wait for these actions to play out, let’s recap on the impact and aspects of the published manifesto.

Brexit

With this majority the draft agreement between the UK and EU will be successfully voted through Westminster before 31 January 2020.

The transition period will operate until at least 31 December 2020.

Whilst negotiations between the UK and the EU get underway to agree the details of the new trade and operational workings, at the same time negotiations will start with other countries, particularly the United States over free trade agreements.

These will not be easy processes. The chance of an extension to the transition period beyond 31 December 2020 is a possibility, as is the chance of a ‘no-agreement’ exit at the end of 2020.

Taxation

A summary of the Conservative tax proposals announced include:

  • a pledge to not increase the rates on income tax, National Insurance Contributions or VAT (although the manifesto is silent on other taxes, such as Capital Gains Tax);
  • increase in National Insurance threshold to £9,500 (currently £8,632), with a pledge to increase this to £12,500 to be in line with income tax;
  • increase in Employment Allowance (i.e. the reduction to an employer’s Class 1 Secondary National Insurance Contribution bill) from £3,000 to £4,000;
  • increase in structures and buildings allowance (introduced on 29 October 2018) from 2 per cent to 3 per cent;
  • increase in R&D tax credits from 12 per cent to 13 per cent;
  • introducing Stamp Duty Land Tax surcharge of 3 per cent for non-residents buying UK residential property;
  • Entrepreneurs’ Relief to be reviewed and reformed;
  • a Digital Services Tax to be implemented; and
  • retaining corporation tax at 19 per cent.

Employment rights

The Conservatives, unlike the other parties, have less to say about the future of employment law. Whilst the government reassured us that it plans to preserve workers’ rights under EU law, this is dependent on Brexit and the terms of any agreement which would determine the future of EU employment rights. 

The Conservatives' manifesto proposals included:

National Living Wage

  • Increase the NLW to £10.50 to ‘everyone over 21’ by 2024.

Measures to protect low paid workers and the gig economy

  • Create an ‘enforcement body’ to crack down on any employer abusing employment law.
  • Ensure that workers have the right to request a more predictable contract. 

Flexible working and family friendly rights

  • Encourage flexible working as the default unless employers have a good reason not to.
  • Allow parents to take extended leave for neonatal care. 
  • Reform redundancy law so that pregnant women and new parents have increased protection. 
  • Extend entitlement to leave to unpaid carers.
  • Fund ‘more high-quality childcare’ before and after school and during holidays to help working parents. 

Much of this employment regulatory change was existing Conservative government policy with its implementation already advanced. So the assumption should be that the expected Good Work Plan employment regulatory changes will proceed in April 2020 as planned. 

As more details and information is forth-coming we will assess the impact and the implications in the weeks ahead.