Advertisement

What the Tory and Labour election manifestos mean for your money

election  money SALFORD, ENGLAND - JUNE 4: (EDITOR'S NOTE: This Handout image was provided by a third-party organization and may not adhere to Getty Images' editorial policy.) In this handout provided by ITV, Labour Party leader Keir Starmer (L) and Prime Minister Rishi Sunak speak on stage during the first head-to-head debate of the General Election on June 4, 2024 in Salford, England. The first televised debate of the 2024 General Election between Rishi Sunak and Sir Keir Starmer will take place on ITV. (Photo by Jonathan Hordle - ITV via Getty Images)
The Conservative and Labour election manifestos hold clues as to what the next government might mean for your money. (Handout via Getty Images)

The Conservative manifesto is peppered with new policies in the hope of offering a new start without a change of government while Labour's manifesto seems to play it safer — to avoid damaging what has become a commanding lead in the polls. Yet both hold clues as to what the next government might mean for your pocket.

Both major parties have committed to some very similar vote-winning policies. These include not raising income tax, national insurance or VAT during the life of the next parliament, and sticking with the pensions triple lock. However, there are also some significant differences.

The Conservatives are focusing on tax cuts. These include the "triple lock plus" — a tax break for pensioners to ensure most won’t pay tax on their state pension.

ADVERTISEMENT

They’re also promising another 2p national insurance cut for employees, and to abolish the main rate of self-employed national insurance by the end of the parliament.

Plus, they’ve made a number of council tax commitments, and say they won’t raise capital gains tax either.

Read more: What Labour’s ‘U-turn on lifetime allowance’ means for your pension

Labour steers clear of capital gains tax pledges in its manifesto — although Keir Starmer highlighted that nothing in the manifesto will need additional tax rises.

By contrast, Labour plans to raise tax for very specific wealthy groups — namely non-doms, those using offshore trusts to avoid inheritance tax, private equity managers, non-UK residents buying residential property, and parents paying private school fees.

However, the tax that could make the biggest difference to a lot of people is the one that didn’t make the manifestos. Neither party is pledging to change the frozen income tax thresholds that have been busy laying waste to our finances for years. It means whoever is elected, as you get pay rises, you’ll still pay more tax and risk being pushed into a higher tax bracket.

There are pledges from both parties on property. Both say they’ll continue the mortgage guarantee scheme, and both want to build more homes — with 1.6 million pledged by the Conservatives and 1.5 million from Labour. They agree that planning reform holds the key.

Elsewhere on housing, both parties plan to pass the legislation ending no-fault evictions for renters and to reform leasehold.

Read more: General election campaign ignoring looming £12bn public finances hole

However, the Conservatives are suggesting a handful of other schemes. These include making the current temporary stamp duty holiday permanent for first time buyers, a new Help to Buy equity loan scheme, and a temporary two-year capital gains tax holiday for landlords who sell to tenants.

The Conservatives are going further in making promises to pensioners — pledging to maintain all current pensioner benefits, including free bus passes, winter fuel payments, free prescriptions and TV licences for those who qualify.

Plus they promise to leave the tax benefits of pensions untouched — including tax free cash and tax relief on contributions — which they’re calling the "pension tax guarantee".

The Conservative manifesto says it will act on reforms laid out in its white paper — which could include a cap on care costs.

Labour, meanwhile, doesn’t mention the cap, but emphasises fair pay and standards for carers, and building consensus for long-term reform. It doesn’t bode well for swift changes to protect people from the sometimes catastrophic costs of care.

Help for parents from the Conservatives centres on a plan to make the child benefit clawback on those earning £60,000 and over fairer.

Read more: How to get the best holiday exchange rates

Labour, meanwhile, is offering free breakfast clubs in every primary school, and a limit on expensive, branded school uniforms.

The Conservatives say they will maintain the national living wage at two-thirds of average earnings, while Labour says it would also factor in the actual cost of living to help people keep on top of rising prices.

Labour also pledges to end age bands, so all adults receive the same minimum wage.

The Conservative manifesto commits to the sale of the Natwest (NWG.L) shares to retail shareholders, and the tax incentives for investors supporting small businesses — including the Enterprise Investment Scheme and Venture Capital Trusts. Neither make the Labour manifesto.

Unfortunately, in these fully costed manifestos, there is a price to pay. For Labour, there are the tax rises for specific groups, while for the Conservatives, the focus is on £12bn of welfare cuts. For many voters, this will lie at the heart of the difference between the two manifestos.

But this isn’t going to be the last of it for either party. The manifestos are designed to deliver the good news, and help get a party elected. We can expect the bad news to come once the new government is installed in Downing Street.

Given that all the costings are based on enormous departmental spending cuts, there’s every chance this could include cuts to public services or tax hikes — which isn’t the kind of thing they’ll be printing in the manifestos in a hurry.

Download the Yahoo Finance app, available for Apple and Android.