Economic policies are usually the key to winning general elections – and that could still be true with this year’s poll.
While voters may see other issues such as Brexit and the NHS as higher priorities, politicians typically insist that a strong economy is the foundation for everything else.
But following last year’s EU referendum – which some interpreted as a rejection of the economic status quo – a number of parties are signalling a change in the way the country does business.
Politicians of all colours are claiming to be on the side of ‘hard working families’ and the ‘just about managing’, who they say have suffered due to policies in the past which have favoured tax-avoiding multi-national corporations.
Parties are proposing to increase the minimum wage and tackle excessive executive salaries, while helping smaller businesses grow. There are also manifesto pledges to invest hundreds of millions of pounds on infrastructure improvements.
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But whoever wins the election it appears likely that taxes will go up. The Conservatives have not ruled out increases to income tax and NI, while Labour plan tax hikes for high earners and big business.
Carolyn Fairbairn, director-general of the Confederation of British Industry, says the next government needs to be ‘pro-business’ and has raised concerns over the prospect of tax rises, big cuts to immigration and nationalisation.
Ms Fairbairn said: “An open economy, the discipline of competition and free trade have served the UK well over the past four decades.
“But the smoke signals coming from the political parties are mixed. Suggestions of limits on migration, price caps in the energy market, nationalisation and tax rises do not signal the confidence in enterprise that’s so urgently needed. This matters – the world is watching.
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“Firms, like people, are not perfect. But they are a powerful force for good. British companies provide four in every five jobs in the UK and have created two million new ones since 2012.
“Their enterprise has made the UK the fastest growing G7 economy in 2014 and again last year. UK based firms paid £205 billion in tax last year, a quarter more than five years ago and enough to more than cover public spending on the NHS and education combined.”
A number of parties are proposing changes to business rates in their manifestos, following complaints that the current system unfairly targets traditional high street businesses who face competition from online retailers.
But Bill McDonald, chairman of Tunstall Chamber of Trade, believes any change to the system should protect small businesses.
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Mr McDonald, who also runs Tunstall-based printing firm Copy-Cad, said: “At the moment the business rates for small business aren’t too bad, because we get the business rates relief, although I can understand why you’d feel differently if you did have to pay a lot.
“But if they are going to change the system they need to make sure it doesn’t leave smaller businesses worse off.”
Mr McDonald said the dip in the value of the pound since the EU referendum had hit his business.
He hopes that the General Election will be followed by a period of political and economic stability so there are no similar issues in the future.
Mr McDonald said: “We import a lot of products, so over the last few months we’ve been affected whether we’re buying in dollars or euros. We’ve seen the value of the pound change from around $1.60 to $1.20, which means a 25 per cent rise in prices. There’s only so much you can absorb as a company.
“Hopefully once we’ve got the election out of the way things will calm down. That’s the main thing that we need at the moment.”
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- Commit to a £100 billion package of additional infrastructure investment, including spending on housing, hyperfast broadband, road and rail.
- Reverse cuts to corporation tax, capital gains tax, and the raising of the inheritance tax threshold.
- Expand the activities of the British Business Bank, enabling it to tackle the shortage of equity capital for growing firms.
- Protect the science budget by continuing to raise it at least in line with inflation, with the long-term goal of doubling research spending across the economy.
- Cut business rates by 20 per cent for businesses operating from premises with a rateable value of less than £50,000.
- Raise the personal tax allowance to at least £13,500 by the end of the next parliament.
- Bring in measures necessary to prevent large multinational corporations using aggressive tax avoidance schemes.
- Launch a review with the aim of opening public sector contracts up to small and medium-sized businesses employing fewer than 250 people.
- Take steps towards a universal basic income, including a Government sponsored pilot scheme.
- Phase in a four-day working week and abolish exploitative zero hour contracts.
- Use the Government-owned Royal Bank of Scotland to create a network of local people’s banks, obliged to lend locally and provide cheap basic banking services.
- Introduce a Robin Hood tax on high-value transactions in the finance sector, and inheritance taxed according to the wealth of the recipient.
- No rises in income tax for those earning below £80,000 a year, and no increases in personal NI contribution or VAT.
- Protect small businesses by reintroducing the lower small profits rate of corporation tax, and exclude small firms from quarterly reporting.
- Create a National Transformation Fund, borrowing £250 billion to invest in upgrading transport, communication and energy systems.
- Re-nationalise rail companies, Royal Mail and key utilities.
- Review the business rates system to take into account the face that people increasingly shop online.
- Increase personal tax allowance to £12,500 by 2020, and the higher rate to £50,000. No increase in VAT.
- Legislate to make executive pay packages subject to strict annual votes by shareholders.
- Increase spending on research and development, make a modern technical education available to everyone and invest in infrastructure.