The Conservative Party’s election manifesto was published yesterday. The key policies proposed on the economy, jobs, tax and business are:

·       No increases to Income Tax, National Insurance (NI), VAT or Corporation Tax  

·       Abolish NI for the self-employed within five years

·       Cut NI by a further 2p for employees  

·       Keep the VAT threshold “under review”

·       Maintain the National Living Wage each year at two-thirds of median earnings [1]

·       Introduce a Triple Lock Plus for the state pension so pensioners pay no tax on state-pension earnings

·       Abolish stamp duty on houses up to the value of £425,000

·       Scrap Capital Gains Tax for landlords who sell properties to their tenants

·       Secure £259m in investment for female entrepreneurs from the British Business Bank and private sector fund managers

·       Improve access to finance for SMEs by expanding Open Finance and exploring the creation of Regional Mutual Banks

·       “Save small businesses at least one million hours of admin per year” by increasing the employee threshold at which companies are considered “medium-sized”

·       Roll out gigabit broadband to over 1m hard to reach premises, covering over 80% of the country

The Conservative manifesto also promised to deliver £12bn in welfare savings by tightening up “how the benefits system assesses capability for work” and overhauling the fit note process “so that people are not being signed off sick as a default” It also pledged tougher sanctions rules so people who refuse to take up suitable jobs after 12 months on benefits can have their cases closed and their benefits removed entirely. There was nothing on Inheritance Tax.

Labour is plotting a series of tax raids on homeowners, drivers and pensioners based on recommendations drawn up by the International Monetary Fund (IMF), Dame Harriett Baldwin, who chaired the influential parliamentary Treasury committee has claimed. Writing in the Telegraph yesterday, Baldwin accused shadow chancellor Rachel Reeves of “copying and pasting recommendations straight from the IMF’s playbook,” including a commitment to turbo-charge net zero investment and tear up planning laws, which she said were a grim portent for Britain’s future. “Let’s look at what else the IMF proposes for the UK – tax rises hidden under the guise of technical phrases like ‘mobilise additional revenues’ and ‘closing tax loopholes,’” she wrote, adding that there are also “proposals to set the capital gains tax rate and levels in line with income tax rates and levels; proposals to subject the sale of your primary residence to capital gains tax; proposals to end inheritance tax loopholes; and proposals to revalue all the properties in England for council tax bands, especially those worth over £320,000”. “And as if that’s not enough, they also want the Government to bring in road pricing and bring forward increases in the state pension age substantially. All this is likely to be what Reeves has on her list of tax hikes”.

Britain’s economy has stagnated, according to the latest Office for National Statistics (ONS) data, just a month after it exited technical recession. Gross domestic product (GDP) flatlined with 0% growth in April, down from growth of 0.4% in March. Economists have blamed unusually wet weather for dragging down output in the manufacturing and construction sectors, which both suffered monthly contractions of 1.4%. Output in services for consumers fell by 0.7%. and factories fell by 2.2%. Rainfall in April was 55% higher than average and the month was the wettest April since 2012. Last month, following the release of positive data, Prime Minister Rishi Sunak claimed Britain’s economy has “turned a corner,” a comment Shadow chancellor Rachel Reeves has been quick to pick up on, saying this morning: “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth”. However, over the three months to April, the economy grew by 0.7%.

Pensioners are paying more income tax than working age people for the first time “amid a surge in worklessness and Tory stealth raids” The Telegraph says, reporting on a study produced by The Institute for Fiscal Studies (IFS).  The IFS has found 65% of older Britons now pay tax on their income, up from just 48% since 2010, as a consequence of frozen tax bands, the income tax thresholds, and the £3,700 rise in the state pension because of the so-called ‘triple lock’ policy. [2] Now, a pensioner needs to earn just £1,067.60 above the state pension each year to be liable for tax. Meanwhile, only 63% of working-age people pay income tax, as 9.4m of them are not in work or looking for work, 800,000 more since Covid.

Worklessness: Meanwhile, Liz Kendall, Labour’s shadow work and pensions secretary, yesterday accused the Conservatives of an “abject failure” to address the worklessness crisis. “On Rishi Sunak’s watch, a record number of people are out of work due to long-term sickness at terrible cost to them, to business and the taxpayer, and we remain the only G7 country whose employment rate still isn’t back to pre-pandemic levels,” she said. Her comments were echoed by Tony Wilson, director of the Institute for Employment Studies, who told The Telegraph that the growing share of 16 to 64-year-olds not engaging in the labour force is becoming a serious threat to the economy. “When employment stops growing, so does the economy,” he said. “This parliament has seen the largest rise in economic inactivity and largest contraction in the size of the workforce since comparable records began in 1971”.

England’s house building pipeline is at the lowest level since records began 17 years ago, City AM reports. 2,472 sites were granted planning permission in the first half of this year, according to a Home Builders Federation study has found, the lowest quarterly figure since records began in 2006. London experienced a 39% drop in the number of builds being approved when compared to the same period the year before. Stewart Baseley, executive chairman at the Home Builders Federation said the housing pipeline is smaller than 2009 when the county was in the “depths of a recession”.

The Office of Rail and Road (ORR), Britain's rail regulator, says the tendering process should be more competitive for railway station catering outlets. In a draft report last year, is said outlets were staying in the same hands for extended periods due to protected leases, and that rail catering market was "not working effectively" before launching a full inquiry. The interim report also found station operators did not have sufficient incentives to invite competition for the outlets with leases due to expire. In its final report released this morning, the ORR recommended more competition and suggested a simpler, standardised contracts for new entrants into the market. The final report also asked all parties addressed in its report - including SSP, the largest single player in station catering - to submit a plan setting out key milestones and timelines for implementation of its recommendations.

British Home Stores (BHS): Two former directors of the high street retailer have been ordered to pay at least £18m to creditors by the High Court.  Mr Justice Leech found Dominic Chandler and Lennart Hennington liable for wrongful trading, misfeasance trading and misfeasance and ordered them to contribute £6.5m each to the company’s assets. BHS collapsed in 2016 with debts of more than £1bn and 11,000 jobs were lost. The case against the directors was brought by Anthony Wright, and Geoffrey Rowley of FRP Advisory Trading, the joint liquidators of the high street retailer. A claim against a third director, Dominic Chappell, will be held at a later date as he did not show up to the trial due to ill health. In 2020, Chappell was sentenced to six years in jail for tax evasion after being found guilty of failing to pay tax of around £584,000 on £2.2m of income he received after buying BHS for £1 from retail tycoon Sir Philip Green in March 2015. Following his release last November, he was recalled to jail in March over breaching licence conditions. Another former director, Keith Smith, has settled with the liquidators.

Raspberry Pi shares have soared almost 40% ahead of the company’s initial public offering (IPO) price today. In an announcement yesterday morning, the chipmaker confirmed its shares had been priced at 280p – right at the top of end of its pricing range – giving the company a market capitalisation of around £541.6m. The company’s IPO was oversubscribed multiple times, and soon after the deal began, the chipmaker’s shares jumped to 360p. London’s latest listed company is the largest tech floatation in London since video game maker Devolver Digital Inc. went public in 2021; and the largest float since Cab Payments Holdings hit the market in July 2023, according to Bloomberg data.  

Special Opportunities REIT, a British property trust, has pulled its London flotation after the owners said they failed to reach the £250m minimum demand required. The trust said this morning it did not believe it was in the best interests of investors to reduce the minimum and would instead buy properties using private capital.

Starling Bank has posted its third full year of profitability, reporting a pretax profit of £301.1m for the year ending on 31^st March 2024, up 55% from £194.6m the year before. Starling was founded in 2014.

Dame Alison Rose has joined private equity firm Charterhouse Capital, her first role since leaving NatWest in the wake of the debanking scandal sparked by Nigel Farage last year.  Charterhouse is perhaps best known in the UK as the former co-owner of Saga and AA. Lord Patten of Wincanton, a former education secretary, is also a senior adviser at the firm, which has €5bn (£4.2bn) of assets under management, and also owns UK pension consultants Lane Clark & Peacock. It was spun out of HSBC in 2001.

The EU is expected to notify Beijing on Wednesday it intends to impose tariffs of up to 25% on imports of Chinese electric vehicles, triggering duties of more than €2bn (£1.7bn) a year and probably prompting a trade war with China, The Guardian reports.

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