General Election: What the manifestos mean for you: Sarah Coles

Manifesto week is like Christmas for political obsessives – with a whole host of new potential policies to unwrap every day. For everyone else, it’s more like the last week in January – when everyone is bored, exhausted, and it feels like it’s never going to end. However, even if manifesto week has left you cold, it’s still worth knowing what’s lurking in the fine print, so you have an idea of what the major parties would mean for your finances.

Tax

It’s worth saying that on the big vote winners there’s an awful lot that both Labour and the Conservatives have signed up to. Both are keen to say they’ll not raise key taxes - including income tax, National Insurance or VAT.

However, unfortunately, this doesn’t mean you won’t pay more tax. Frozen tax thresholds have already pushed 2.1 million more people into paying income tax and 1.4 million into paying higher rate tax. Given that both Labour and the Conservatives are committed to the policy, it means whoever is elected, you’re set for a bigger tax bill.

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Prime Minister Rishi Sunak, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby. (Photo by Stefan Rousseau/PA Wire)Prime Minister Rishi Sunak, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby. (Photo by Stefan Rousseau/PA Wire)
Prime Minister Rishi Sunak, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby. (Photo by Stefan Rousseau/PA Wire)

Differences on tax policy open up from here, because the Conservatives are throwing their weight behind cuts. The ‘triple lock plus’ would mean the personal allowance for pensioners would rise every year on the same basis as the state pension, so most pensioners won’t pay tax on their state pension. Meanwhile, the promise of another 2p National Insurance cut for employees and the abolition of NI for the self-employed could save someone on £35,000 £448 a year.

They’re also making a number of council tax commitments and say they won’t raise capital gains tax – something which Labour has refused to be drawn on. In both cases there’s a key distinction to make. You don’t have to raise the capital gains tax raise in order to force more people to pay the tax – as we’ve seen from the impact of cutting thresholds. Likewise, pledging not to change council tax valuations or change the discounts is very different from a promise not to raise council tax itself. Given the immense pressure on councils right now, it would be a shock if bills didn’t rise.

For investors, the Conservatives are committing to the sale of the Natwest shares to retail shareholders and say they will keep tax incentives for investors supporting small businesses – including the Enterprise Investment Scheme and Venture Capital Trusts. Interestingly, although both parties have committed to investigating the potential of a British ISA, it doesn’t get a look-in for the manifestos. This could mean the parties are unsure as to whether it’s the right way to encourage investment in UK companies.

Pensioners

Labour Party leader Sir Keir Starmer, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby.  (Photo by Stefan Rousseau/PA Wire)Labour Party leader Sir Keir Starmer, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby.  (Photo by Stefan Rousseau/PA Wire)
Labour Party leader Sir Keir Starmer, addresses the audience during a Sky News election event with Sky's political editor Beth Rigby, in Grimsby. (Photo by Stefan Rousseau/PA Wire)

The other priority seems to be to appeal to pensioners, a vital demographic when it comes to targeting those who actually vote. It’s one reason why straight out of the traps, both Labour and the Conservatives committed to the pensions triple lock – so the state pension rises with inflation, wages or 2.5% - whichever is highest.

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Again, the Conservatives have gone further in the manifesto, and are pledging to maintain pensioner benefits, including free bus passes, winter fuel payments, free prescriptions and TV licences for those who qualify. Plus, they promise to leave the tax benefits of pensions untouched – including tax free cash and tax relief on contributions.

At the start of the campaign, there was a question mark over whether Labour would stick with its pledge to bring back the lifetime allowance on pensions – which limits how much you can hold in your pension pot tax-efficiently during your lifetime. This has only just been axed by the Conservatives, so it raised real uncertainty among those with larger savings pots. However, Labour has confirmed it has dropped this plan, closing another gap between the parties.

Families

There are a handful of things for families in the manifestos. The Conservatives promise to change a rule around how child benefit is clawed back from high earners, to make it fairer for single parents and couples with a single high earner. Labour, meanwhile, says it will roll out breakfast clubs in every primary school.

For those with older relatives needing social care, the tone was set by a serious of generous pledges by the Liberal Democrat manifesto, so it’s no surprise that the other parties have chimed in. The Conservatives are committed to acting on reforms laid out in its White Paper – which could include a cap on care costs. Labour focuses instead on a National Care Service with a fair pay agreement, and building consensus for long-term reform. At least on the face of it, this sounds like there’s little prospect of swift action on something that’s devastating for so many families.

Lower-paid

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The Conservatives say they would stick with the minimum wage if elected, while Labour is offering more. It says it would take account of the cost of living, and axe age bands, so all adults received the same minimum wage. It would also ban zero hours contracts, end fire and rehire, and introduce rights to parental leave, sick pay, and protection from unfair dismissal from day one at work.

Property

There are a few common principles in pledges from both parties – including the commitment to build more housing, reform planning, keep the Mortgage Guarantee Scheme and make changes to the leasehold system.

The Conservatives have a few more schemes in mind, pledging to make the temporary stamp duty holiday permanent for first time buyers and proposing a new Help to Buy equity loan scheme. For those renters on the cusp of buying, it has also suggested a two-year capital gains tax holiday for landlords who sell to tenants, to incentivise them to sell to those who already live there.

For renters who are a million miles from buying, both parties would restart the Renters Reform Bill, which would end no-fault evictions and shore up tenant rights. This was halted when the election was called, so it’s essentially just undoing the damage caused by calling a snap election.

The bad news

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All of this will need to be paid for, and one major source of difference between the parties is identifying where the burden will land. For Labour, it’s those groups singled out for specific tax hikes, while for the Conservatives it’s an eye-watering £12 billion of welfare cuts.

But, of course, as ever, the really bad news won’t ever go anywhere near a manifesto. It’s only once a new government is safely installed in Downing Street that we’re likely to get the full picture.

Property data this week

Rising mortgage rates finally got under the feet of the property market in May, and it has taken a bit of a tumble. The RICS Residential Market survey out this week showed that buyer numbers fell, along with the number of agreed sales. At the same time, sellers were still putting their homes on the market, which weakens their position further. It means prices fell in May, and estate agents are concerned that they may continue to do so until better news emerges from the mortgage market.

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