We have a Labour government again after 14 years. Advisers will, no doubt be split across several parties as indeed is the UK but what will it mean for their clients and their businesses?
It is a relatively low vote percentage backing Labour at 35% but that gives a whopping 411 seats. The Tories have seen their worst defeat in more than a century beset by parties to both the right and left of them with a Lib Dem and even greater Reform surge in percentage terms though not seats. The SNP in Scotland also lost a painful 39 seats in Scotland.
The House of Commons Library looks at all the permutations in a non-partisan way here.
But what does it mean for IFAs and financial services?
Well, interestingly a few advisers have taken to social media to express joy or concern though usually in practical and measured ways. For the real fun debate, I recommend the community of mortgage brokers on Twitter. Banter indeed, though usually civilised if you appreciate sarcasm.
It does feel a little too early make bold predictions about what this all means for financial services policies.
Yet I think we can see the outline of things. First money is incredibly tight, so there could be moves to reduce the generosity of some tax breaks, incentives, reliefs and so forth.
Labour will not want to do a couple of years of austerity but have been hemmed in to promises not to raise the main taxes or to borrow more.
It will be a very interesting balancing act for the UK’s first female Chancellor of the Exchequer Rachel Reeves, a milestone hailed by Money Marketing who is very much echoing early-years, semi-prudent Gordon Brown in tone.
She has nothing like the benign economic inheritance of New Labour of course. As the Institute for Fiscal Studies warned two weeks’ ago, tax rises will be hard to avoid.
If I were an IFA I would keep a close eye on the next two Budgets on behalf of clients and – if you are selling a business – yourselves as well.
Financial planners tell New Model Adviser they expect changes to IHT and CGT.
Separately, it is likely that what are called civil society organisations will be given more of a hearing at the Treasury and the regulators after a decade or so in the wilderness. This has always been an interesting challenge for advisers. Sometimes, their views align with how these organisations - such as Which? - define the consumer interest. Sometimes very much not. For this Labour administration, there isn’t a huge misselling issue to clean up this time (though British Steel will have queered the pitch to a significant degree, unfortunately).
IFAs will note the significant impact Consumer Duty is having already. The mood music may get a little more pro-consumer but admittedly before we know the attitudes of many relevant ministers, it’s likely they’ll mainly let that bed in.
It is important to note that Labour have accepted many deregulatory initiatives around Solvency II and the Mansion House reforms, though again I wonder especially for insurers being given capital concessions and having made it part of their lobbying, that Labour will want to see more evidence of investment in infrastructure and energy transition promised by, among others, the ABI.
The pensions industry is setting great store by Labour’s plans for a pensions review that could see a big shake up or – perhaps – a more coherent policy mix as Pensions Expert reports.
The Secretary of State will be Liz Kendall, from the right of the party, as Professional Pensions reports.
She has tended to be tough on benefits but whether she will take the lead on broader pensions policy or leave it to a Minister of State or even more junior minister (let’s hope not) remains to be seen. The previous pensions minister Paul Maynard lost his seat in the election amid something of a constituency expenses kerfuffle as Corporate Adviser reports.
Could it result in the full implementation of the extension of auto-enrolment? And might we see more asked of employers by way of increased minimum contributions?
In your reviewer’s opinion, I think Labour will find it very difficult to direct pension assets in the three or four new directions the government wants (as the Conservatives would have found too).
Could carrot work better than stick? One component of the change could be more investible energy transition assets as Keir Starmer sets out plans for clean British power noted here by Business Green.
(Personal view – the grid needs a serious upgrade, regardless of the power source!)
Also interesting to see an opinion from Moira O’Neill in the Financial Times suggesting that people need more help with the choices presented by Pension Freedoms.
Finally Labour appear set to build more houses. In the region of 1.5 million in fact with several new towns. It will no doubt get those mortgage brokers debating again.
More questions answered in coming weeks, no doubt.
