Election 2024 and Business – What is on the Table from Both Main PartiesPosted: May 29, 2024

Here we go again. The election is ramping up and the media are dissecting every statement and promise in search of a great headline. Behind all that though, both main parties have made several promises in manifestos and statements about how they will help business if they have someone in Downing Street.

As we have said many times, politics isn’t our business… but business is. So, let’s take a quick, impartial, look at what both parties have said and what it could potentially mean for businesses going forward.

Before we look at policies though…Just a quick thought about Capital Gains tax.

The financial situation driven by the pandemic, inflation, war in the Ukraine and other factors, will almost certainly mean one thing. Whoever wins the election is going to find the coffers rather empty. That is likely to mean they will need to bring in the money to fund their election promises. One seemingly obvious source would be Capital Gains tax.

If you are a business owner and you are thinking of retiring and winding up your business, then now may well be the right time to talk to use about those plans. If, as seems likely, there is a change to Capital Gains tax, you could find yourself paying a lot more. There is no guarantee that it will change of course, but it does seem to be a tax that neither party is talking about or making promises on and therefore in my view makes it more likely. Take a look at our Members Voluntary Liquidation section for more information or download or free guide. Better still, book in for a free consultation and let’s see where you would stand now if you decided it was time to retire and close your business.

Labour Party Business Policies

The Labour Party, seems to be focusing on fostering sustainable growth, supporting small businesses, and promoting fair practices. Several of the key aspects of their business-related agenda so far include:

• Green Industrial Revolution: Labour plans to invest heavily in renewable energy and sustainable technologies. This initiative aims to create thousands of new jobs and establish the UK as a leader in the green economy. Significant funding will be allocated for green infrastructure projects like wind and solar power.
• Support for Small Businesses: Labour intends to simplify the tax system, provide affordable credit, and offer grants for innovation to small and medium-sized enterprises (SMEs). They also aim to tackle late payments by enforcing stricter regulations on larger companies​.
• Workers' Rights and Fair Pay: Labour proposes raising the minimum wage to a living wage and enhancing job security. They aim to introduce robust protections against unfair dismissal to create a fairer working environment, which is expected to boost productivity and workforce motivation​.
• National Investment Bank: A proposed National Investment Bank would provide long-term financing for projects that benefit the national interest, particularly in under-invested regions. This bank would also support businesses involved in research and development​
• Corporate Taxation: Labour plans a progressive corporate tax system with higher taxes on large multinationals and relief for smaller businesses. The additional revenue would fund public services and infrastructure improvements​.

Some thoughts:

While there is a very specific targeting of SMEs with some very nice sounding promises (I am sure the idea of stricter regulation for late payments will raise a little cheer if you are an SME trading with some of slower payers in the corporate world), Green economies tend to come at a price and that could be passed down the supply chain financially and as process changes. Recent changes in minimum wage have impacted businesses already, so the thought of a further wage increase could be a concern. What the corporation tax overhaul would mean is yet to be seen, but, on the surface at least, this sounds promising. Possibly the most revolutionary thing on offer here is the idea of a national bank that would fund projects in underdeveloped areas and other innovative projects.

Conservative Party Business Policies

The Conservative Party core approach to business seem focused more on creating a business-friendly environment through tax cuts, deregulation, and support for innovation. Key points of their business-related agenda include:

• Tax Reduction for Businesses: The Conservatives propose cutting business taxes, including reducing corporation tax and offering tax reliefs to stimulate investment. The theory seems to be that lower taxes will attract more businesses to the UK, create jobs, and boost economic growth​. As part of the latter, they are looking to return to an economy where wages are rising faster than prices.
• Investment in Technology and Innovation: Increasing investment in technology and innovation is a priority for both parties. For the Conservatives includes funding for research and development in areas like artificial intelligence, biotech, and digital infrastructure.
• Deregulation: To ease the regulatory burden on businesses, the Conservatives plan to review and simplify existing regulations. This effort is intended to make it easier for businesses to operate and grow, especially startups and SMEs.​
• Skills and Education: Recognising the importance of a skilled workforce, the Conservatives propose increasing investment in vocational education and apprenticeships. They aim to enhance partnerships between businesses and educational institutions to ensure access to skilled workers​​.
• Infrastructure Investment: Continued investment in national infrastructure, including transport, digital connectivity, and housing, is a key Conservative policy. Improved infrastructure is seen as critical to supporting business growth and ensuring regional economic development​.

Some thoughts:

The Conservatives aim of increasing investment by cutting taxes is an interesting one but there is possibly a question of how overseas investment will see the higher wages and therefore production costs in the UK. I am sure many industries that suffer from skills gap problems will welcome the idea of more investment in vocational and apprenticeships routes though. Deregulation is a hot topic as post Brexit regulations in particular have prompted a rise in costs for many businesses with ties to Europe. Investment in the infrastructure will be welcomed by many people, both business and private individuals, and the goal of ensuring all regions can participate in economic development seems promising.

Conclusion – What do the election promises mean to business right now?

Well, honestly, not a lot for the short term. Elections tend to slow the market a little in the wider sense and there is also naturally some impact on planning for any potential increases in the cost of employment and similar. At the highest level of investment, overseas money may well be less available, and some banks could be a little nervous about lending. Overall, though, on a day-to-day basis, until we see these policies in place, our advice is stay in lane. Focus down on what matter now to keep the cash coming in. It's probably a good time to revisit your cashflow (we have a survival guide for that) and perhaps run some scenarios based on potential changes. If there is going to be a period of uncertainty, then now would also be a good time to look at your credit control.

Elections make great news and they’re good for conversations around the water cooler. Until the policies roll out though, the best option if your business is struggling is to focus on now. Several of these policies may well help you in the long run, but they are months and maybe years away, so beware of clutching at straws when the problems are more immediate. Call us or book an appointment online if you need help.