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The 2019 election guide for small firms and sole traders

3 December 2019

Confused about who is promising what in the election? Here's our guide to the manifesto pledges from all the major parties, focusing on the big issues facing small business owners and self-employed workers.

 

Brexit

Tax

  • Labour has said it will increase corporation tax (gradually) to 26%; small firms with profits under £300,000 will pay 21% in corporation tax. It will also introduce a 45% income tax rate for those earning over £80,000 and a 50% rate for those on salaries of £125,000 and above.
  • The Conservatives have pledged that they will not raise income tax, National Insurance or VAT. They will keep corporation tax at 19%.
  • The Liberal Democrats will raise corporation tax to 20%.

IR35 tax changes

  • This hot topic has become a key issue in the election and both Labour and the Conservatives have made new announcements as election day draws closer. The upshot is that all the major parties are now pledging to review IR35.
  • The Liberal Democrats and the SNP both say they will review IR35 in their manifestos.
  • Speaking at an IPSE hustings, Labour's shadow small business secretary Bill Esterson said Labour would review IR35.
  • On 2 December, Sajid Javid told Radio 4's Money Box programme that the Conservative party will review IR35.

Late payment

  • There is cross-party agreement on the need to tackle the issue of late pay.
  • The Conservatives will strengthen the powers of the Small Business Commissioner.
  • Labour says it will ban late payers from public procurement.
  • The Liberal Democrats will require all companies and organisations with more than 250 employees to sign up to the Prompt Payment Code.
  • The Green party will fine large companies that don't pay their small suppliers on time.

Business rates

  • The Conservatives say they will reduce business rates as part of a fundamental review.
  • Labour will review business rates; it is suggesting a land value tax on commercial landlords as an alternative.
  • The Liberal Democrats are suggesting a commercial landowner levy based on the land value (as opposed to the capital value) of the premises.

Self-employment rights

  • Labour and the Liberal Democrats say they will review the definition of self-employment.
  • The Liberal Democrats will create a "dependent contractor" employment status which would come with entitlements to rights such as minimum earnings levels, sick pay and holiday entitlement.
  • The Conservatives will take forward the Taylor review proposals.
  • Labour and the Liberal Democrats have promised to extend parental leave and pay to the self-employed; the Conservatives say they will look at this as part of a wider review.

Pensions for self-employed workers

  • The Labour, Liberal Democrat and Green manifestos all include an acknowledgement that self-employed workers need specific solutions on pensions.
  • There's nothing on pensions for the self-employed in the Conservative manifesto.
  • The SNP has said auto-enrolment should be extended to the self-employed.

Employment law

  • The Conservatives will create a new body to crack down on employment abuse.
  • Labour will set up a ministry for employment rights, ban zero-hour contracts and unpaid internships, increase maternity pay and extend parental leave. Labour will also introduce a 32-hour week.

Minimum wage

  • The Labour party will bring in a "real living wage" of £10 an hour in 2020 for all workers over the age of 16.
  • The Conservative party will raise the national living wage to £10.50 an hour by 2024 for those over the age of 21.
  • The Liberal Democrats want to set a 20% higher minimum wage for people on zero-hour contracts.

Skills

  • The Conservatives are promising a £3bn national skills fund.
  • The Liberal Democrats will launch a £10,000 skills wallet scheme for every adult in England to spend on education and training throughout their life.
  • Labour will create a national education service, providing all children and adults with free education for life.

Public procurement

  • Every major party says it will make it easier for small businesses and start-ups to access public procurement contracts.
  • The Greens say 15% of government contracts should be awarded to micro businesses.

Broadband

  • All the parties have committed to improving digital infrastructure.
  • Labour is promising full-fibre broadband by 2030 and free broadband for all.
  • The Conservatives will spend £5bn to get broadband to the hardest-to-reach 20% of the country.

Business support

  • The Conservative party will expand start-up loans. It will conduct a review into better support for the self-employed.
  • The Liberal Democrats will introduce a start-up allowance for new businesses.
  • Labour will introduce collective income protection insurance schemes for the self-employed. It will provide £250bn in loans for a new national investment bank and set up a network of regional development banks.

Entrepreneur's Relief

  • Labour will scrap Entrepreneur's Relief.
  • The Conservatives will review and reform Entrepreneur's Relief.

Apprenticeship levy

  • The Conservatives will improve the "working of the Apprenticeship Levy".
  • The Labour party is promising to open up the apprentice system to include a wider range of accredited training.

Environment

  • The Conservatives have pledged to reach net-zero by 2050 with investment in clean energy solutions and green infrastructure.
  • By 2030, the Liberal Democrats say they will insulate all UK homes, ensure all new cars are electric and generate at least 80% of UK electricity from renewables.
  • Labour will set up a £400bn national transformation fund, including £250bn for energy, transport and the environment.

 

What the other parties are pledging

Green party: A second Brexit referendum, a £100 million-per-year investment plan to create a net-zero carbon economy by 2030, the introduction of a universal basic income, £2bn a year to be invested in skills and training.

Brexit Party: A clean-break Brexit, investing £50bn in road and rail schemes, free broadband in deprived regions, free Wi-Fi on public transport, abolishing business rates outside the M25 paid for by an online sales tax, VAT on fuel bills to be cut, no corporation tax on the first £10,000 of profits, reductions in import tariffs, creation of freeports.

Plaid Cymru: A second referendum on Brexit and an independence referendum by 2030, a £20bn "green jobs revolution" with investment in public transport, clean energy and green social housing, VAT revenue to stay in Wales, Wales to have power over corporation tax rates, National Insurance to rise from 2% to 4% for high earners.

SNP: A second referendum on Brexit, a second referendum on Scottish independence, a green energy deal with future oil and gas receipts going into a net-zero fund, a review of IR35 tax changes.

Business reaction to the party manifestos

Mike Cherry, national chairman, the Federation of Small Businesses (FSB ), on the Conservative manifesto: "The Conservative Party has given clear pledges to support small businesses and the self-employed. Cuts to the Jobs Tax and business rates are strong pro-small business pledges. Small businesses will welcome these commitments as well as the commitment not to raise National Insurance for the self-employed and to clamp down on late payment."

Mike Cherry on the Labour manifesto: "There are welcome pledges within Labour's plans for the small business community. However, we need to see more details around how the party would tackle the biggest challenges facing small firms. It's right that the Labour manifesto acknowledges the pain that business rates cause, however we have serious doubts about a commercial land value tax as a suitable replacement."

Adam Marshall, director general of the British Chambers of Commerce (BCC ), on the Conservative manifesto: "There's a big difference between 'getting Brexit done' and doing it right. The details matter to both businesses and communities - and the Conservative Party needs to be realistic with the electorate about the scale and complexity of the task ahead. There are some welcome proposals in the Conservative manifesto on real-world business issues such as training, road maintenance and childcare, but businesses still need much more clarity on big-ticket items like HS2, how the UK's future immigration system will work in practice, and how real power will be devolved to our towns and cities."

Adam Marshall on the Labour manifesto: "Businesses will welcome proposals to reform skills funding, upgrade our failing infrastructure and review business rates. But command and control isn't the way. Excessive intervention in business governance and sweeping tax rises would suppress innovation and smother growth."

Edwin Morgan, director of policy at the Institute of Directors (IoD), on the Conservative manifesto: "When it comes to Brexit, business will only feel it is 'done' when they know the terms of the new relationship with the EU, not before. There is still a long way to go, and the next government must put the needs of the economy first when negotiating on matters relating to trade and market access. On domestic policy, there is much for business to like, with a focus on skills, infrastructure and research."

The IoD's Edwin Morgan on the Labour manifesto: "While new investment in infrastructure and the green economy is welcome, taken as a whole Labour's measures on business risk being too much stick and not enough carrot. Many directors will have reservations that Labour's state-first plans for the economy could crowd out rather than crowd in private enterprise. Labour's approach on corporate governance is frequently insightful but almost always one-sided."

The IoD's Edwin Morgan on the Liberal Democrat manifesto: "The sustained focus on skills will be welcomed by directors, specific stress points in the system have been well diagnosed, from childcare to lifelong learning. Expanding the Apprenticeship Levy into a wider Skills and Training Levy is right on the money."

Written by Rachel Miller.

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