UK general election 2024: financial services sector policies and pledges

The publication of manifestos provides the first opportunity to assess the major parties’ differing policy plans, with this article outlining and comparing the policies likely to impact the financial services sector.

Investments

The Conservative government has overseen a number of reforms and schemes to strengthen the UK’s investment market. If re-elected, the Conservatives pledge to implement the so-called ‘Mansion House’ reforms and measures such as a retail sale of NatWest shares. They will also retain the Enterprise Investment Scheme,  Venture Capital Trust, and Business Asset Disposal Relief to help evolve investment opportunity.

Read more of our analysis of the parties' 2024 manifesto pledges

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If Labour win, they would establish a National Wealth Fund, which would be capitalised with £7.3 billion over the course of the next parliament. 

The introduction of a 4% tax on the share buyback schemes of FTSE 100 listed companies forms part of the Liberal Democrats’ manifesto.

Banking

The Conservative Party have pledged to improve access to finance for small and medium sized enterprises. This would include expanding open finance and exploring the creation of regional mutual banks. Further support would be given to small and medium businesses by ensuring that Basel III requirements – international standards for banking capital adequacy, stress testing, and liquidity requirements- do not inhibit lending to these firms.

Labour would support open banking and open finance to ensure a pro-innovation regulatory framework, while the Lib Dems would protect the independence of the Bank of England while keeping the inflation target at 2%.

Pensions

Both Labour and the Liberal Democrats would retain the existing ‘triple lock’ on state pensions so that they continue to rise in line with wage growth, inflation, or by 2.5%, whichever is highest.

The Conservatives have promised to go one step further by introducing triple lock plus. This would mean uprating the state pension and ensuring the tax-free personal allowance for pension rises. They would also maintain the 25% tax-free lump sum as well as tax relief on pension contributions at their marginal rate.

Labour have also set out plans to review the pensions landscape by considering what steps are needed to improve pension outcomes and facilitate increased investments.

The Lib Dems said they would develop measures to end the gender pension gap in private pensions if elected.

Financial regulation

The Conservatives have said they are committed to maintaining the highest standards of consumer protection and prudential regulation if they remain in power.

Labour have pledged to create a new regulatory innovation office to update regulation, speed up approval timelines, and co-ordinate issues that span existing regulatory boundaries.

Both the Financial Conduct Authority and the Prudential Regulation Authority would be required to have regard to financial inclusion if the Liberal Democrats secured victory.

Climate finance

The Conservatives have pledged to continue their commitments to international climate finance if they remain in office.

On the other hand, if Labour win, they would mandate UK-regulated financial institutions to develop and implement credible transition plans that align with the 1.5C goal set out in the Paris Agreement.

The Liberal Democrats have pledged to regulate financial services to encourage climate-friendly investments, including requiring pension funds and managers to show that their portfolio investments are consistent with the Paris Agreement. They would also require all large companies listed on the UK stock exchanges to set targets consistent with achieving the net zero goal, and to report on their progress.

Tax and other headline commitments

General business

Labour said they would introduce a new UK industrial strategy and re-establish an Industrial Strategy Council – the latter being a pledge also made by the Liberal Democrats, which said they would put the body on a statutory footing. Labour has also pledged to publish a roadmap for business taxation for the next parliament.

The Conservatives said they would promote digital invoicing and improve enforcement of the Prompt Payment Code.

Corporation tax

Labour have pledged to cap corporation tax at the current level of 25%. The Conservatives have said they would not increase corporation tax either. The Liberal Democrats have said that they would make the case for increasing the global minimum rate of corporation tax to 21%.

VAT

Labour have pledged no increase to VAT. The Conservatives said they would keep the VAT threshold under review. The Liberal Democrats said they would cut the VAT rate applicable to public charging of electric vehicles to 5%.

Income tax and National Insurance

Labour have said that they would not impose increases to National Insurance or the basic, higher or additional rates of income tax. The Conservatives have pledged to abolish the main rate of National Insurance entirely by the end of the next parliament. The Liberal Democrats said they would raise the tax-free personal allowance, which applies before income tax is levied, when public finances allow.

Business rates

Labour have said they will replace the business rates system. They have also pledged to end the VAT exemption and business rates relief for private schools.

The Conservatives have promised to enable councils to retain all business rates growth within a defined zone for 25 years. They have also pledged to increase the multiplier on distribution warehouses that support online shopping over time.

The Liberal Democrats have said they would abolish business rates and replace them with a commercial landowner levy.

Tax reliefs

Labour have promised to retain a permanent full expensing system for capital investment and the annual investment allowance for small business.

The Conservatives have said they would lift the employee threshold, allowing more companies to be considered medium-sized and benefit from associated tax reliefs. In line with an announcement made by chancellor Jeremy Hunt in his March Budget, the Conservatives have also committed to extending the ‘full expensing’ policy to leased assets.

The Liberal Democrats have pledged to expand rural fuel duty relief.

Other tax pledges

Labour have said that they would abolish the non-domiciled tax status if elected to government.

The Conservatives have said they would not impose any increase to the rate of capital gains tax.

The Liberal Democrats have pledged to reform capital gains tax, increase the UK’s digital services tax rate from 2% to 6%, and restore the bank surcharge and bank levy revenues to 2016 levels in real terms.

Employment, skills and immigration

Labour have pledged to establish a youth guarantee, where all 18- to 21-year-olds would be given access to training, an apprenticeship, or support to find work,

Labour said that they would also implement what they term a ‘new deal’ for working people, in full. This, they said, would include banning zero hours contracts; ending fire and rehire; and ensuring workers have basic rights to parental leave, sick pay, and protection from unfair dismissal, from ‘day one’ in a job.

Labour have also said they will establish a flexible growth and skills levy, change the remit of the independent Low Pay Commission, and reform the points-based immigration system.

The Conservatives have pledged to create 100,000 more apprenticeships in England every year by the end of the next parliament.

They have also committed to maintain the national living wage in each year of the next parliament at two-thirds of median earning.

The Liberal Democrats have said that they would establish a new Worker Protection Enforcement Authority. They also said they would fix the work visa system and exempt NHS and care staff from the immigration skills charge.

Their other plans include to improve the quality of vocational education, including skills for entrepreneurship and self-employment; replace the apprenticeship levy with a broader skills and training levy; and create new lifelong skills grants for adults to spend on education and training throughout their lives.