Labour v. Tories: Which Party Is Best for Your Business?

With the 2019 General Election just a few weeks away, all parties running for government have now published their manifestos. From Brexit to public services, their policy areas are quite vast and offer a wide range of plans for the country’s future. One focus area in particular has been the center of heated debates and polarization: the economy.

We’ve had a look at the different manifestos and have broken down how businesses might be affected by the upcoming result.

The Conservative Party

With the motto “Get Brexit Done. Unleash Britain’s Potential” in mind, Conservatives aim to create a post-Brexit economy with “high wages, low tax, high skill and high productivity”. The party has promised to accumulate a £1bn (US$1.3bn) boost for businesses over the course of the next three years, a benefit they claim can be achieved by changing the Employment Allowance (EA), the Structures and Buildings Allowance (SBA), the Research and Development Expenditure Credit (R&D) and business tax rates.

Let’s break these down.

Employment Allowance

Businesses can currently claim a reduction, also called EA, up to £3,000 (US$3,876) on the amount they spend on Class 1 National Insurance Contributions (NICs). Under a new Tory government, employers would be allowed to claim back up to £4,000 (US$5,168) – which, Conservatives claim, would provide a tax cut for more than half a million businesses.

Structures and Buildings Allowance

By raising the Structures and Buildings Allowance (SBA), a tax relief allowing businesses to invest in the construction and conversion of non-residential buildings and structures, from 2 percent to 3 percent, Conservatives hope to make it easier for companies to purchase, build, or liaise, making the economy more dynamic.

Research and Development Expenditure Credit

By increasing businesses’ allowance to spend on research and development by 1 percent, the party claims private companies will see a spike in productivity, particularly in manufacturing, science and technical services.

Tax rates

The last, most impactful action a Conservative majority government would take is reducing business rates. The party hasn’t yet broken down potential costs and percentages, but claims it will launch a “fundamental” review of their budget once in government.  

As of now, it seems that Johnson’s main goal for businesses is to facilitate their development in various areas by cutting taxes. It will be interesting to see how these proposals develop as Brexit negotiations unfold, as it’s still unclear whether the UK will leave the EU in the near future.  

The Labour Party

Labour’s manifesto promotes the idea of “real” and “unstoppable” change. Corbyn and his party have pledged for a radical transformation of the British economy, with particular focus on “the crisis of living standards and the climate and environmental emergency”.

Labour’s main goal is to put an end to austerity, industrial pollution and the privatization of the UK’s biggest economic institutions by investing in public ownership, greener practices and taxation of Britain’s richest businesses.

Let’s take a look at the specifics.

Inclusive Ownership Funds

Under a Labour majority government, up to 10 percent of companies would be collectively owned by employees, who will receive a share of the profits – Inclusive Ownership Funds (IOFs) – capped at £500 (US$645.30) a year. The remaining shares would go towards a new Climate Apprenticeship Fund and invested to make the economy greener.

New minimum wage and Ministry for Employment Rights

By increasing minimum wage to £10 (US$12.90) an hour for all workers aged 16 and over, Corbyn aims to extend “security”, “dignity” and workers’ rights. Savings to public finances will be used to help small businesses manage the extra cost. Labour would also establish a Ministry for Employment Rights, where businesses and employees would have to come together to bargain and agree legal minimum standards on a wide range of issues, such as wages and hours, that every employer in the sector would have to follow.

Public ownership of utilities

Perhaps Labour’s most radical policy in its manifesto argues for a nationalization of public services. Corbyn’s plan includes restoring governmental ownership of railways, water, energy, Royal Mail and broadband, buying these utilities back from private foreign corporations for an estimated amount of £182bn (US$234bn). The party claims this resolution would benefit the British population and the planet, widening access to services and kick-starting the pathway towards a zero-carbon energy system.

Green Industrial Revolution

By heavily taxing the biggest fossil fuel corporations, creating a Sustainable Investment Board and pushing for the electrification of industries, energy, transport, agriculture and buildings, Labour hopes to shift the UK’s economy towards more green practices while creating at least 1m jobs.

Labour’s manifesto is clearly a radical one, promising revolutionary policies that could transform the country’s economy. While these might seem excessively ambitious, the manifesto is fully costed, giving businesses and voters the opportunity to assess its feasibility themselves.