July 9, 2024 UK General Election 2024 results in first Labour Government in 14 years
The results of the UK's General Election The results for the United Kingdom's (UK's) General Election became clear in the early morning of 5 July 2024. The final results confirmed that the Labour Party had won a significant victory and will form a new Government with a majority of 170 — more than double that of Boris Johnson's Conservative Party at the last election in 2019. Although the majority is slightly less than that achieved by the Labour Party in 1997, the result is a success for the new Prime Minister, Sir Keir Starmer, who will lead Labour into government for the first time in 14 years. What we can expect from the new Government We can expect the new Government to focus on deliverable actions in its first 100 days. Labour may prioritize sweeping changes to planning regulations (which does not require primary legislation), allowing new houses to be built and businesses to invest and expand. The Prime Minister and his Chancellor, Rachel Reeves, believe this is one of the most important inputs to unlock growth. In advance of the General Election, Labour set out five "missions" that will now guide the new Government and on which further details are expected over the first 100 days. The five missions are to:
It is being argued that the Government now has a mandate to push through not just Labour's election manifesto, but also bold reforms that might usually be met with substantial opposition. Tax proposals in Labour's campaign In summary, Labour has promised to:
Beyond these specific tax proposals, Labour has also promised to:
Labour also promised not to make changes in certain areas. For example:
In addition, Rachel Reeves has previously said: "There are hundreds of different tax breaks. Some are important, but too many simply provide loopholes for those who can afford the best advice. And added together they cost more than our entire NHS [i.e., National Health Service] budget. So, we will look at every single tax break. If it doesn't deliver for the taxpayer or for the economy, then we will scrap it." This suggests that certain issues, such as higher rate relief for pension contributions, could be taken forward during the next Parliament. What's next? The King's Speech on 17 July 2024 will be significant. The King's Speech sets out the Government's proposed policies and legislation for the coming session and gives the Government the chance to set out its list of priorities for the coming year. Among other measures, reform proposals for employment practices (including a ban on exploitative zero-hours contracts and enhanced protection for employment rights) and planning are anticipated. However, though the Chancellor has promised an update on the "spending inheritance" before the summer recess, this is "separate from a Budget." Instead, Ms. Reeves has said she is meeting with the Office for Budget Responsibility (OBR) and a date for the Budget should be confirmed before the summer recess (that is, before the end of July). The date of any Budget is at the discretion of the Government, but Labour has committed to accompanying a Budget with a forecast from the OBR. That suggests a Budget will be at least 10 weeks off. Given that Labour has regularly talked about action within the first 100 days of taking office, this might suggest a Budget on 9 October (the need for an OBR forecast suggests an earliest day of 18 September). However, even without a Budget, it is possible that before the start of the summer recess Labour may seek to announce changes or even introduce emergency legislation to act as anti-forestalling measures for changes that would then be detailed in the later Budget. It is possible that the Budget could be combined with a much larger Spending Review. Spending Reviews are the process by which the Government sets out detailed plans for public spending over a number of years and determines the overall "envelope" that individual departments must spend within over a particular period. The current Spending Review, set back in 2021, is due to expire at the end of 2024. An early decision for the new Chancellor will be whether to have a relatively short Spending Review period (perhaps just a single year), before a larger event next year or, having examined the public finances, to go for a longer three- or five-year period. Having committed to not raising National Insurance contributions, or the rates of income tax and VAT, finding funding will be difficult for the Chancellor. Separately, the Chancellor has committed to holding a Global Investment Summit, similar to those held in 2021 and 2023, in the first 100 days of the Labour Government, with the aim of attracting much-needed foreign investment to the UK. Although few details are known about what the Summit will look like, and how it might be structured, we can expect to hear more shortly, given the tight timeframes.
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