LONDON — All three of Britain’s main political parties have now put forward their manifesto plans, following the launch of the Conservative Party’s manifesto on Thursday.
The documents set out the parties’ plans for the next five years in the UK, as the country steers through the uncharted waters of Brexit.
While Brexit is the biggest issue facing the country today, policy must still be created on everything from the economy to education to ensure that Britain continues to run smoothly as its leaves the European Union.
Perhaps the most important thing in keeping the nation stable is economic policy. Business Insider decided to look at some of the pledges related to the UK’s economic health, as well as the personal finances of the average Brit.
We’ve focused on three key areas of economic pledges made in the manifestos: the deficit, taxation, and wages, and looked at policies put forward in the manifestos of the Conservative Party, Labour, and the Liberal Democrats.
Probably the most biggest economic issue in the UK since the financial crisis is reducing the deficit. This is a key pledge in the manifestos of both Labour and the Conservatives. The Liberal Democrats have a slightly different approach.
Getting rid of the deficit has become something of a political necessity, with a surplus seen as the ultimate goal for the UK’s public finances.
In its simplest terms, a government runs a budget deficit when in a single year it collects less in revenues than it spends. Government’s must then borrow to makeup the shortfall, adding to national debt. Britain has run a deficit every year since 2001-02 when the Labour government created a small surplus. The current deficit is £52 billion, or 2.6% of GDP.
Here are the key points from the three major parties.
Conservatives: The Tories will eliminate the deficit by “the middle of the next decade” committing to fiscal rules laid out by Hammond during the Autumn Statement last November. These rather loose rules commit the government to return to a budget surplus “as soon as practicably possible” and try to limit borrowing to 2% this year.
The party says in its manifesto: “Conservatives believe in balancing the books and paying down debts — because it is wrong to pass future generations a bill you cannot or will not pay yourself.
“The next Conservative government will continue the difficult but necessary work of restoring our public finances while still ensuring that we are investing for the future.”
It should be noted that when the Conservative Party came to power in 2010, it pledged to eliminate the deficit by 2015, but has slowly pushed back that horizon every year since then
Labour: Labour’s plan includes a complete elimination of the deficit “within five years,” with an end point of 2022, the likely year of the general election.
It says in its manifesto: “Our public services must rest on the foundation of sound finances. Labour will therefore set the target of eliminating the government’s deficit on day-to-day spending within five years.
“But government must have a laserlike focus on how we earn, as well as how we spend. At the same time as eliminating the current deficit, Labour will invest in our future, to ensure faster growth and help us to earn our way as a country again.”
Liberal Democrats: The Lib Dems commit to balancing day-to-day spending by 2020, but “reject” the idea that the UK should run a surplus on “both capital and revenue.”
In its most basic terms, reaching a capital account surplus would mean that foreign investors are putting more money into the UK than the UK is putting into foreign assets. Reaching surplus in revenue terms means that the government is collecting more in incomes than it is spending in any given year.
“Liberal Democrats reject the Conservative Government’s damaging and irrational commitment to run budget surpluses on both capital and revenue, which imposes completely unnecessary deep cuts in spending and limits the scope for much-needed capital investment.
“But we have no intention of just throwing away our hard-fought efforts to control the deficit during the Coalition years. Liberal Democrats will therefore commit to eliminating the deficit in day-to-day spending by 2020.”
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Shadow Chancellor John McDonald.
Taxation is always a contentious issue and tends to be an area where major parties — particularly Labour and the Conservatives — differ substantially. Traditionally the Tories favour lower taxes, while Labour looks to tax the rich heavily. 2017’s manifestos continue these themes.
Conservatives: A Tory government will commit to a Conservative staple — low taxation — the manifesto says.
“The Conservatives will always be the party that keeps tax as low as possible and spends the proceeds responsibly. It is our firm intention to reduce taxes on Britain’s businesses and working families.”
Plans include raising the tax-free earnings allowance to £12,500 by 2020 and raising the threshold for top rate taxpayers to £50,000 by the same year. Other pledges include maintaining a commitment to freeze VAT at its current level of 20% and allowing local citizens to veto council tax hikes via referendums.
A Tory government is also committed to cutting corporation tax to 17% by 2020, from the current 20%. This maintains a previous pledge.
Labour: “A Labour government will guarantee no rises in income tax for those earning below £80,000 a year, and no increases in personal National Insurance Contributions or the rate of VAT,” the party writes in its manifesto.
Labour claim that this will mean that 95% of people will not see their income tax increase. Those earning more than £80,000 will pay 45p in every pound in income tax, while anyone earning £123,000 will pay 50p. The current top rate is 45p for anyone earning £150,000 or above.
Labour plans to reverse any Conservative corporation tax plans, increasing the rate to 26%. It hopes to raise an extra £19.4 billion a year in the process. 26% is still a little below the 28% rate left behind by the previous Labour government in 2010.
Jeremy Corbyn’s party will also levy a so-called “Robin Hood” tax on the City of London, aiming to raise £5.6 billion by taxing derivatives and other “exotic” areas of trading in the financial services sector.
Liberal Democrats: Every taxpayer will see an extra penny in every pound added to their income tax bill.
Lib Dems also want “in the long-term, and as resources allow, to raise the employee National Insurance threshold to the Income Tax threshold, while protecting low earners’ ability to accrue pension and benefit entitlements.”
Plans are also in place to reverse a planned Tory cut on corporation tax, maintaining it at 20%, rather than continuing with a planned cut to 17%.
Wages and pay
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Sir Vince Cable, the Lib Dems most prominent spokesperson on the economy.
Wages in the UK are set to come into sharp focus as the impacts of Brexit on the economy cause a squeeze on living standards. With inflation currently sitting at 2.7%, and average weekly earnings (excluding bonuses) growing by just 2.1%, real wages are now falling in the UK. Consequently, ensuring people can maximise their earnings potential is a key commitment for Britain’s political classes.
Here’s what the big three are pledging:
Conservatives: “A new Conservative government will continue to increase the National Living Wage to 60% of median earnings by 2020 and then by the rate of median earnings, so that people who are on the lowest pay benefit from the same improvements in earnings as higher paid workers.”
Labour: Labour will “raise the Minimum Wage to the level of the Living Wage (expected to be at least £10 per hour by 2020) — for all workers aged 18 or over, so that work pays.”
The party would also cap maximum pay at all employers at 20x the wages of the lowest earner. This would be enforced “in the public sector and in companies bidding for public contracts” and has been pledged by the party “because it cannot be right that wages at the top keep rising while everyone else’s stagnates.”
Liberal Democrats: Wage plans from the Lib Dems focus on the establishment of an “independent review to consult on how to set a genuine Living Wage across all sectors, as well as forcing employers to reveal “the number of people paid less than the Living Wage and the ratio between top and median pay.”