Election watch: How the major parties shape up for your finances

Tom Selby

5 December 2019

As the general election approaches, voters around the UK will be assessing the promises made by politicians during the campaign.

While Brexit remains arguably the dominant topic, a vast array of offers have been made, designed to appeal to people’s pockets.

To help make some sense of the chaos, AJ Bell has summarised where the major parties stand on the key personal finance and pensions issues.

Tom Selby, senior analyst at AJ Bell, comments:

“This election is very much a tale of two manifestos, with the Conservatives intent on focusing the conversation squarely on Brexit and Labour countering with a smorgasbord of giveaways aimed at everyone from young parents to pensioners.
“Pensions are arguably the big story of the Labour campaign, with the party committing £58 billion in compensation to the WASPI women and freezing proposed increases in the state pension age beyond 66. This latter proposal could end up costing £24 billion a year by the 2050s, with no clear indication of where the money for either promise will come from.
“Not to be outdone, the Conservatives followed with some more modest handouts to the retired population, including maintaining the state pension triple-lock, winter fuel payment and free bus passes.
“For those in work, the Tories have pledged to increase the National Insurance threshold to £9,500, while Labour is mounting an attack on higher earners by bringing the 45p threshold down to £80,000 and creating a new 50p rate for those earning above £125,000. Those earning through dividends or realising capital gains would also be hit by a Corbyn Government.
“While many will have already know who they are going to vote for, millions will be still be undecided. For many, the impact any promises might have on their personal finances could sway them one way or another.”

General Election 2019: Manifesto promises summary

The table below shows a snapshot comparison of the main political parties’ manifesto - and other - pledges on key financial and long-term savings area. If you would like more information on what these pledges will mean for savers and investors in the UK, please get in touch.

	Labour			Liberal Democrats	Conservatives		SNP
STATE BENEFITS
State pension	Maintain triple lock. Uprate state pension for British pensioners overseas			Maintain triple lock	Maintain triple lock		Maintain triple lock
Pensioner benefits	Maintain winter fuel payment and bus pass. Free TV licenses for over 75s			No mention	Maintain winter fuel payment and bus pass. Believe free TV licenses for over 75s should be funded by the BBC		Demand government re-instates the free TV license for over 75s
WASPI	Promise to compensate WASPI by an estimated £58bn paid out over five years.^[1]			Ensure properly compensated – in line with recommendations of the parliamentary ombudsman	No mention		Continue to ‘stand up’ for WASPI women.
State Pension Age	Abandon plans to raise SPA, leaving it at 66. Review retirement ages for physically arduous and stressful occupations, including shift workers in public and private sector			No mention	No mention		Oppose plan to increase SPA to 68 by 2038
Pension Credit	Restore pension credit for couples where partner is of working age			No mention	No mention		Restore pension credit for couples where partner is of working age & create a pension credit awareness & take-up campaign
TAXATION
Income tax	Cut additional rate of tax threshold from £150,000 to £80,000. Introduce new 50% rate for those earning more than £125,000			1p increase in income tax ring-fenced for NHS and social care	Not raise income tax or VAT		No additional comments on Income Tax. Support the reform of VAT
National Insurance	Freezing NI for those earning under £80,000. No mention of over £80,000 implications			Review the NI status of employees, dependent contractors & freelancers	Raise NI threshold to £9,500 in 2020/21		NI rate & thresholds will fit devolved income tax rates
Capital gains tax	Cut the capital gains allowance and tax gains as income			Remove the capital gains allowance and tax gains as income	No mention		No mention
Dividend tax	Remove dividend tax-free allowance subject to a de minimus of £1,000 and tax dividends as income			No mention	No mention		No mention
Inheritance tax	Remove the residence nil rate band			No mention	No mention		No mention
Marriage allowance	Scrap it			Scrap it	No mention		No mention
PENSION TAX RULES
NHS pensions	Review the tax and pension changes to ensure the workforce is fairly rewarded and services are not adversely affected			Listen and act on the pension crisis that is driving away our most experienced clinicians	Within first 30 days, hold an urgent tax review to ‘solve the taper problem’		No mention
Tax relief on pensions	Reduction in additional tax rate band and new tax band will have impact on pension tax incentives			Abolish employee NI payments on pension contributions ¹	Review ‘net pay’ tax relief rules for low earners		No mention
ACCESS TO PENSION SAVING
Self employed	Better access to mortgage and pension schemes.			Review pension rules so those in the gig economy don’t lose out and portability between roles is protected	Comment on improving access to finance and credit – but nothing on pensions specifically		Included in auto-enrolment
Automatic enrolment	Stop people being auto-enrolled into ‘rip-off schemes’ and seek to widen and expand access for more low-income and self-employed workers			No mention	A review on net pay rules for low earners		Extend auto-enrolment, so that more low paid and self-employed workers can benefit from regular pension savings
Pension contribution levels	No mention			No mention	No mention		Legislate to align executive pension contributions to all staff
Independent pensions commission	Establish a commission to recommend target levels for workplace pensions			No mention	No mention		Support the establishment of an Independent Savings and Pension Commission to ensure pensions and savings policies are fit for purpose and reflect the demographic needs of different parts of the UK
Pensions dashboard	Develop a single dashboard			No mention	Reintroduce legislation to create [multiple] pension dashboards		No mention
Defined ambition	Legislate to allow CWU-Royal Mail agreement and allow similar schemes			No mention	Reintroduce legislation to create new type of pension scheme		No mention
TPR powers	No mention			No mention	Reintroduce legislation to increase TPR power		No mention
Same sex inequalities	No mention			Address continuing inequalities in pensions law for those in same-sex relationships	No mention		No mention
PENSION FUNDS
Climate change		No mention	Require pension funds to show their portfolio investments are consistent with the Paris Agreement, new powers for regulators to act if not managing climate risks properly			Unlock long-term capital in pension funds to invest in and commercialise our scientific discoveries.		SNP support moves to introduce an easy to understand system of climate-friendly external auditing of firms, so that investors can better understand the climate related risks of investments, including employee pension schemes.
SOCIAL CARE
Social care	Fund free personal care for older people and extra care packages			An additional 1p in income tax rates ring-fenced for NHS and social care	Build a cross party consensus to consider a range of options. Promise no-one should have to sell their home to meet care costs.		Fund free personal care for all that need it²

^[1] Labour party announcement Sunday 24 November

² Not in manifesto: https://www.snp.org/policies/pb-how-is-the-snp-improving-social-care-services/

Tom Selby

Director of Public Policy

Tom is director of public policy at AJ Bell. He is a prominent spokesperson on retirement issues and his views are regularly sought by national print and broadcast media. Tom has successfully campaigned for a number of consumer-focused reforms, including banning pensions cold-calling and increasing pensions allowances, and he is passionate about improving outcomes for savers and retirees. Tom joined AJ Bell as senior analyst in April 2016, having previously spent seven years as a financial journalist. He has a degree in Economics from Newcastle University.

Contact details

Mobile: 07702 858 234
Email: tom.selby@ajbell.co.uk