Now that we have a new government, business leaders should expect a wide range of changes which will affect their businesses; some positively, some negatively.
The new government says it is committed to supporting economic growth and wealth creation and its election manifesto spells out several key policies, many of which it is already pursuing.
One of these pledges is that it will provide economic stability with ‘clear rules’ on tax and spending policies with more independent oversight, and the new chancellor, Rachel Reeves has said that she is due to meet with the Office for Budget Responsibility (OBR) later this week.
This may signal that the government is aiming for a September Budget, meaning that change is likely to come sooner, rather than later, so let’s look at what the party’s pledges and policies will mean for business.
Businesses crave certainty, so it is welcome news that the party has committed to capping Corporation Tax at its current level of 25%. Meanwhile, the government will publish a roadmap setting out future business taxes, enabling businesses to make longer-term forecasts. However, we do know that there will be changes to the current business rates system and the party will draw up a new industrial strategy to replace the plan that was created in 2017.
Two of the main ways the government hopes to increase tax revenue have already been announced in the form of the introduction of VAT on private school fees and taxes for non-doms, and the party has pledged not to increase existing income tax rates, National Insurance or VAT.
However, it has not been as firm in ruling out capital taxes such as capital gains tax (CGT). The new chancellor, Rachel Reeves, has said that the government will not look at altering capital taxes straight away, but could this mean that changes to CGT, as well as inheritance tax, are not far away? The party will need to raise more money if it’s to meet its spending promises.
Increases to the National Minimum Wage and National Living Wage always come at a significant cost to businesses, but the party has committed to scrapping the tiered system that sees younger adults paid less than their older colleagues. The government also says it will turn the minimum wage into “a real living wage” that takes account of the cost of living.
To get more people into work, the party wants to reform employment support. This would include combining Jobcentre Plus and the National Careers Service, and the government will also be improving apprenticeships in a bid to boost skills and help people to work.
Meanwhile, the government says it intends to give workers more rights from their first day in a job and will also ban “exploitative” zero-hour contracts and the practice of “fire and rehire”.
The party will also ban employers who break employment laws from hiring foreign workers and will introduce workforce and training plans to end companies’ long-term reliance on overseas workers in sectors such as health and construction. This is part of its plan to address immigration and border security, which also includes the creation of a counter-terrorism-style command unit to stop people smuggling and trafficking, as well as accelerating the processing of asylum claims and reforming the points-based immigration system.
Regarding international trade, while the government will not be making moves toward rejoining the EU, customs union, single market or free movement of people with the EU, it will seek to improve trade with the bloc through a new UK-EU security pact.
The construction sector will be pleased to see that the government has made housebuilding and infrastructure a priority. In her first speech as Chancellor, Rachel Reeves announced mandatory housebuilding targets for local councils and the removal of some of the obstacles in the planning system. With the goal of building 1.5 million new homes over the next five years, this will help to create jobs throughout the construction sector and it will have other far-reaching benefits for local economies.
One of the new government’s big green policies is to create a nationalised energy company, Great British Energy, and a National Wealth Fund to invest in clean energy industries - a move which it says will create 650,000 jobs. As expected, the party is also ending what was effectively a ban on new onshore wind turbines and this will create new income streams for landowners, while improving energy security.
Health and social care is another sector of particular focus for the new government, and this also has an impact on productivity within the wider workforce. As well as aiming to cut NHS waiting times with 40,000 more appointments per week, more GPs and mental health workers, the party has pledged to provide more NHS dentistry appointments per year and launch a National Care Service to set minimum standards on care and reach a collective agreement on pay and conditions.
There will be implications for businesses in leisure and tourism, particularly those in areas such as Skegness where hotels have been used to house asylum seekers, as the government aims to end this practice, although it is not clear how quickly this will take effect.
Landlords and property owners will face a series of changes that will affect them, as the government will seek to ban ‘no-fault’ evictions and give renters more power to challenge rent rises. The party will also make it cheaper and easier for leaseholders to extend leases and ban new leasehold flats while tackling unregulated ground rent charges.
Retailers may also benefit from the government's aim of tackling shoplifting gangs by allowing police to investigate lower-value thefts.
The government also says it will end the sale of new petrol and diesel cars by 2030 and speed up the rollout of new EV charging points.
Time will tell as to how many of these manifesto pledges will be met within the next five years, but many of these policies are already being pursued.
If you require expert advice and guidance through what will certainly be a period of significant change under the new government, contact our team today.
