Parliament has been hung out to dry; following the election on Thursday 8 June, 2017, no political party gained a majority, but the Conservatives did come out on top with 318 (possibly 319 with Kensington still to declare) seats – eight fewer than what is needed for a majority. After almost a full day of talks and deliberation, Theresa May asked the Queen if she could form a government with the backing of the Democratic Unionist Party (DUP). Relying on the fact that all Tory and DUP MPs will vote in favour of the government, let’s have a look at how this will impact SMEs and businesses starting up.
How has the results affected GBP?
Firstly, at 22:00 BST, directly after the exit poll was announced - suggesting a hung parliament – the value of sterling against both the euro and dollar began to slide. Although, the dip is not as dramatic as the fall following the Brexit vote, the pound remains to be down 1.7% against the dollar. This is bad news for both currency traders, as both the dollar and euro become more expensive, and, also, businesses based in Britain who are exporting and/or importing goods, as their profit margins are likely to fall. Due to the instability of parliament, and the existence of a minority government, a period of uncertainty is likely to reign, as investors will continue to be unnerved by Britain’s economic situation, and so the strength of the pound will continue to fluctuate.
What promises have been made to the self-employed?
Now let’s take a look at what the Conservative manifesto promised for the self-employed. One large enticement for businesses to vote Tory was the decrease in corporation tax from 19 per cent to 17 per cent by 2020. Additionally, they promise to “simplify the tax system” for the self-employed and small businesses. Both of these new taxation plans would, in theory, benefit the majority of businesses up and down the country.
In terms of funding, the Conservatives wants to encourage new businesses to start-up by providing early stage investment, as well as considering future incentives. It is not particularly clear what these “incentives” will be, thus one cannot be certain as to whether they will be of much value to prospective businessmen and women.
Nonetheless, in the public sector, the Tory government has promised that – by the end of parliament – 33 per cent of central government purchasing will be provided by SMEs. This is a key opportunity for many enterprises to gain lucrative business contractors. Following on from this, the government stated in their manifesto that any government contractor must comply with their ‘Prompt Payment Code’ – which sets regulations for standards of payment practices – or the company risks losing their ability to bid for government contracts.
When it comes to employment law, the Tories stated that they will be waiting for Matthew Taylor’s report on employment practices before reviewing the system in place. Thus, so far, no extra protections for the self-employed have been promised – something you might want to watch out for.
The Conservatives have said they will continue to increase the minimum wage by 60 per cent of median earnings by 2020 – a smaller increased than what was proposed by many other parties.
Another interesting development was their pledge to intervene in company takeovers. The Conservative government are attempting to reduce the fear of aggressive takeovers by making sure companies are clear about their intentions for a target business. Furthermore, they will act to block more takeovers by foreign companies on national security grounds.
So, what about Brexit?
Following this election, the Brexit negotiations will begin to take shape. Although some promises have already been made in the Conservative manifesto, as they now must appease the DUP and have a majority of only two seats to work with, this is likely to change and will be assessed in a separate article from Smarta.
Overall, these pledges made by the Conservative party are subject to change due to the current political climate and unstable situation. If only two DUP or Tory MPs decide to vote against the government, any bills may fail. It is best to take all of these impacts with a pinch of salt.