With the 2017 General Election looming, we thought we'd take a brief look at what the 3 main party manifestos hold for SMEs. Clearly, each manifesto is nothing more than a wishlist, but it gives us an idea of the direction each party's leadership wants the UK economy to take.
Their main focus is on Brexit, with Theresa May's "strong and stable" government dominating the negotiation standpoint. From a business advice pont of view, the Tories have pledged to:
- Give workers the legal right to unpaid time off to care for loved ones
- Increase the amount levied on firms employing non-EU migrant workers
- Introduce new protections and rights for ‘gig economy’ workers
- Enforce worker representation on company boards
- Give workers rights to request leave for training
- Reduce corporation tax to 17% by 2020 (currently 19%)
- Conduct a review of the business rates systems and explore the introduction of self assessment to the process
- Ensure that 33% of central government purchasing comes from SMEs before the end of the next term
- help innovators and startups and encourage early stage investment
- Increase the minimum wage to 60% of median earnings by 2020
- Better protect self-employed workers in the so-called 'gig economy', pending a report by Matthew Taylor
- Help tech companies to scale up and grow and ensure that consumers have access to digital infrastructure
- Encourage a 'new culture of exporting among UK businesses'
- Increase the Immigration Skills Charge to £2000 per year, effectively penalising companies that employ non-EU workers
The general thrust of Labour's manifesto revolves around renationalising the water industry, rail networks, energy networks and the Royal Mail. This approach is in direct opposition to the Conservatives' austerity programme and are promoting greater invention and investment by:
- Establishing a £250Bn National Transformation Fund to invest in industry
- Creating a National Investment Bank and regional development banks to support SMEs
- Introducing Tax increases for those earning over £80,000 a year (the top 5% of earners)
- Increasing corporation tax (up to 26% by 2020-2021) for "big" companies (those with annual profits exceeding £300,000) whilst reducing corporation tax for small businesses (with annual profits of less than £300,000)
- Exempting businesses with a turnover of less than £85,000 from mandatory quarterly reporting (a further move away from the 'Making Tax Digital' initiative)
- Promising to end zero hours contracts
- Giving ALL workers equal rights from day 1 of government; part-time, full-time, temporary or permanent
- Increasing the Minimum Wage to the level of the Living Wage (expected to be £10 per hour by 2020), for workers 18+
- Appointing a Digital Ambassador to promote Britain in attracting investment and support for start-ups
- "Championing" the export interests of SMEs and supporting them in new trade agreements
The LibDems believe that 'the role of entrepreneurs and small businesses in delivering a thriving economy is fundamental'. If elected, they would:
- Give employees more rights from day 1, including a presumption of 'flexible working hours' and stopping abuse of zero hours contracts
- Support income tax increases to fund healthcare
- Prioritise staying in the European Single Market, ensuring trade continues without customs controls at UK /European borders
- Reverse the Conservatives corporation tax cut to 17%
- Reform corporation tax so that the smallest businesses benefit and take tough action against corporate tax evasion
- Review business rates, prioritising the development of the 'digital economy'. Business Rates would be a priotity for any future tax cuts
- Create a new start up allowance to help businesses in the first few weeks
- End 'abuse' of zero hours contracts and creating a formal right to request a fixed contract
- Double the number of SMEs participating in the digital economy by supporting ICT capital expenditure
- Create a network across the UK of technology 'incubators'
The SNP have pledged to fight to give Scotland special status after Brexit and want to keep the right to trade within the 'single market'.
The Green Party
Have a similar stance to the LibDems on corporation and income tax.
Whilst the two main approaches to the economy could not be more different, it's rather difficult to pinpoint exactly how each manifesto will affect small businesses in practice, as there are pros and cons to each 'wishlist'. Other commentators are in agreement that neither Conservative nor Labour manifesto is particularly exciting for small businesses.
Paul Johnson, director of the Institute for Fiscal Studies, said:
“In one sense the two main parties have rarely offered the British such a clear and substantial choice. One is promising relatively low levels of spending, tax and borrowing, while the other is promising a much bigger state."
Whatever the outcome on June 8th/9th, it's incumbent upon us all to keep an open mind and work through any new legislation to best advise our clients as some doors will open when others close, presenting new opportunities and requiring us all to adapt and change.