The election and your finances
As the election race gets underway, we look at the three main parties and how a victory for each of them would affect your bank balance.
With many of us still reeling from the recession, economic issues will probably be at the fore of our minds when we cast our votes on 6 May.
What would a fourth Labour term bring?
If re-elected, Labour promises to halve public finance deficit within four years. Although the party would protect the NHS and schools, we could expect streamlining of budgets at Whitehall.
In what is proving to be one of the most controversial issues in the election, Labour plans to increase National Insurance contributions by one per cent for both employers and employees from April 2011.
The party plans to help more people get on the property ladder by abolishing stamp duty for first time buyers on homes worth up to £250,000 for a two-year period.
Child Trust Funds (CTFs) – a savings scheme that provides parents with an incentive to save for their children’s future – would stay. According to Family Investments, five million CTF accounts have already been opened.
Those who have lost their jobs could receive support through the Homeowners Mortgage Support scheme – allowing them to reduce and defer mortgage payments.
Under Labour, the Financial Services Authority (FSA) would be able to block banks from undertaking excessively risky contracts.
Business tax rates would be reduced for one year from October – meaning 345,000 small businesses would not pay business rates.
Labour announced plans to commit £2 billion to a ‘green bank’ – encouraging investment in renewable energy. The party also aims to make sure all new homes are energy efficient from 2016.
What a Tory government would mean for the economy
A Conservative government promises to reduce public spending by £12 billion with hiring freezes, cuts on office costs and IT projects.
In a move that has attracted a great deal of support from businesses, a Tory government would scrap Labour’s proposed one per cent National Insurance rise.
Like Labour, a Conservative government would also raise the stamp duty threshold for first time buyers to £250,0000.
The party would cut spending on the CTFs for all but the poorest third of families and those with disabled children.
A Tory victory would mean one-year pay freezes for public sector workers earning more than £18,000. Furthermore, Ministers would receive a five per cent pay cut – followed by a five-year pay freeze.
While the Tories plan to keep the 50 per cent tax rate for those earning more than £150,000 as proposed by Alistair Darling in the Budget, they do not regard it as ‘a permanent feature of the tax system’.
A Conservative government would increase the inheritance tax threshold to £1 million.
To reduce household energy bills, the party would offer every household £6,500 worth of home insulation improvements.
The Tories would aim for 25 per cent of government contracts to go to small-to-medium sized enterprises.
The party would overhaul the current system of financial regulation— getting rid of the FSA and allowing the Bank of England power to control the balance sheets of major banks.
The Lib Dems – future power brokers?
Although an outright victory for the Liberal Democrats seems unlikely, the party could wield a great deal of power in a hung parliament.
If one of the other parties were to win but not have an overall majority, Liberal Democrats support could be vital to help to push through economic policies.
One of the Liberal Democrat’s chief economic policies is to ease the tax burden on low income families by raising the threshold at which people start paying income tax to £10,000.
The party is also campaigning for ‘fairer local taxes’ to replace council tax. The rate would be determined by a person’s ability to pay and not the value of their property.
The Liberal Democrats would abolish government contributions to the CTFs and reinvest this money into education.
The party promises to stop banks from imposing hefty fines on customers who exceed overdraft limit.
Unlike the Conservatives and Labour, the Liberal Democrats aim to reduce greenhouse gas emissions by 100 per cent in time for 2050.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
