The election campaign has now begun in earnest. The bank holiday weekend saw each of the three main parties flexing their public relations muscles in anticipation of Gordon Brown’s trip to the Palace to call the election. With the country set to go to the polls on 6 May, and the public’s voting intentions continuing to fluctuate, the coming month looks set to be particularly hard fought.
National Insurance row
The past week has seen the ignition of a particularly furious row regarding employers’ National Insurance Contributions. This seems likely to become a touchstone issue throughout the rest of the campaign, with the Conservatives using it as the basis for their latest billboard campaign.
The row began with shadow Chancellor George Osborne’s pledge that a Tory government would reverse Alistair Darling’s plans to increase employers’ National Insurance Contributions by 1 per cent. The Tories have said that the planned tax rise amounts to a “tax on jobs” that risks derailing the recovery.
A range of prominent business leaders then wrote an open letter supporting Mr Osborne’s pledge, and encouraging all parties to avoid tax increases on employers. The signatories included chief executives from a range of large High Street retailers.
The government has hit back at the Tory proposals, suggesting that Mr Osborne has not explained how he would fill the financial hole that would be created by abandoning the increase. Peter Mandelson accused the Tories of “peddling a deception,” and many commentators have said that the Conservative plans would almost inevitably result in a VAT increase.
All three main parties are furiously angling for the business vote, and the National Insurance issue looks set to be the front line of this fight. But, as with many of the twists and turns of this election campaign, it may not be quite what it seems; as some commentators have pointed out, eight of the 23 original signatories of the letter have between them donated around £5 million to the Conservative Party.
‘Grey vote’ could have business consequences
Earlier this week researchers claimed that around 40 per cent of votes in the forthcoming election will be cast by those over the age of 55. The so-called ‘grey vote’ could therefore prove decisive.
Age concern charities have long been pressuring all parties to offer more for older voters, particularly as they begin to make up an increasing proportion of the population. This could have a series of important effects on business.
The Default Retirement Age has become a prominent battleground for business and government, with many suggesting that the current rules allowing employers to sack workers at 65 without severance pay are iniquitous. Perhaps in recognition of the increasing political importance of older people, the government has indicated that the Default Retirement Age is likely to be scrapped, or at least dramatically amended.
But, while pressure groups have called for the abolition of the law, many employers have said that they wish to keep the current regulations. It is unlikely that business will get their way on this issue, regardless of the makeup of the next Parliament – suggesting that our ageing population will continue to impact drastically on UK business.
What do the polls say?
The Tories suffered a dramatic dip in the opinion polls last week, seeing their lead drop below the psychologically important 10 points. While the Conservative lead is now back in double figures, most polls still suggest that they will not be able to achieve a working majority.
The prospect of a hung Parliament has been met with concern from many business groups. Sterling has suffered, with some traders believing that it would render the government less able to deal with the budget deficit. On the other hand, many believe that a hung Parliament would mean better representation for groups that have otherwise been sidelined, and a stronger sense of cross-party cooperation. Alistair Darling has given a number of interviews suggesting that he would seek to stay on as Chancellor in this event, meaning that there would be relatively little upheaval at the Treasury.
In an interview with Sky, David Cameron said that he is “fighting for an overall majority”. The most recent opinion polls indicate that the Conservatives would miss this target by around 25 seats – meaning that they would be forced to do a deal with both Labour and the Liberal Democrats.
The election campaign looks likely to become significantly more ferocious in the coming weeks, particularly if the Conservative lead wanes again. As always, Simply Business will be here to dig deeper into the parties’ commitments, and help outline the impact on UK business.