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The new coalition government and what this will mean for small businesses
Added: 2010-05-12 13:57:01.0It is an historic day for Britain today as the first coalition government for 70 years sets to work. After 5 days of negotiations, The Conservative party, who were unable to get a majority in last week’s election, have come together with the Lib Dems to create a government that few would have expected a week ago.
The new cabinet has been confirmed with Nick Clegg acting as the new Deputy Prime Minister and several other key Lib Dem figures taking place in David Cameron’s new cabinet. Predictably, George Osborne will be Chancellor and William Hague will act as Foreign Secretary. There is space for Vince Cable on the cabinet as a proposed Business/Banking secretary, although his title has not been fully confirmed.
At this moment. we are not fully aware of the compromises that have been made by both sides on policy. Crucially, for business owners, the following are also rumoured to be agreed:
- An ‘emergency’ Budget will take place in 50 days; as part of a wider plan to “significantly accelerate” the attempts to reduce the budget deficit.
- The new government will scrap Labour’s proposed 1% rise in National Insurance.
The news that National Insurance will not be raised will please many business owners who had been concerned about what the 1% increase would mean. Read our blog post about the petition to scrap the rise.
One issue that has not been covered thus far is the impact of the new coalition government on the proposed Default Retirement Age (DRA) reform. Whilst there was cross-party agreement on the fact that the DRA needed to be reviewed before the election, it was not clear exactly what each of the parties wanted to do; scrap it completely or raise it. Nevertheless, this will doubtless become clear once the new government has had time to settle.
Amongst other policies, there are rumours however that the following have been agreed:
- A plan for five-year, fixed term parliaments. This would remove power from the Prime Minister to call an election whenever he/she feels appropriate in a five year period. It is expected that this is designed to make it harder for the Tories to attempt to pull out of the coalition deal that has been made.
- The Lib Dems have pledged to scrap their attempts to heavily tax properties that are worth more than £2m, a move designed to endear them to grass root Conservatives?
- Conversely, the Conservatives have put their plans for scrap inheritance tax up to £1m on hold.
- A move will also be made to increase the income tax threshold for lower earners, this was a key part of the Lib Dem election campaign.
- A referendum on the EU has been agreed; to let the country decide whether more powers should be transferred to Brussels. Along with this, the Liberal Democrats have agreed not to push to adopt the Euro in the next five years.
- The Lib Dems have agreed to support Conservative plans to introduce a cap on immigration.
- The Conservatives will try to recognise marriage in the tax system however they will not have the Lib Dems’ support on this in the House of Commons.
- There will be a referendum on moving to the Alternative Vote system as part of a move for electoral reform.
As ever, we will bring you more news on the new government’s policies associated with employment law and the general issues that will interest small business owners, as and when it becomes available.
How do you feel about the Conservative-Lib Dem coalition? Do you think this is good or bad news for your business? Glad to see the back of Labour and their National Insurance increase? Let us know by commenting below.
The content of this blog is not legal advice and should not be relied on as such, or used instead of seeking legal advice.
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