General election 2015 A client guide to what to expect from the new Government 2 General election 2015 back to top Contents Commercial Corporate Corporate immigration Corporate tax Employment Energy Environment European Union Pensions Planning and infrastructure Private wealth Real estate Transport 2 4 5 7 8 10 12 14 15 16 20 22 24 This communication is provided for general information only and does not constitute legal or other professional advice. You should consult a suitably qualified lawyer on any specific legal problem or matter. 1 Introduction Although the Conservative Party set out its election promises in its manifesto, whether the Government is able to implement its agenda will depend on the loyalty of its backbench MPs and the support David Cameron can garner from opposition parties. Two issues loom large on the horizon. The first is the promised in/out EU referendum, which is due to take place before the end of 2017 and which could lead to the UK leaving the EU (a “Brexit”). This would have massive implications for business, which we will examine in a series of events later this year. Before the referendum, David Cameron will seek to renegotiate our settlement with the EU, which may also have consequences. The second major issue is the effect of the SNP’s victory in Scotland, where they now hold 56 out of the 59 seats. It is likely that this new nationalist block of MPs will put pressure on the Prime Minister to grant earlier and wider devolution for Scotland. Their presence will raise once again the West Lothian question, which is the issue of Scottish MPs voting on non-Scottish matters. Following publication of our manifesto tracker on 30 April, we have analysed what a Conservative Government will mean for business in the light of the manifesto, and the legislation we can expect to see in each practice area. We will know more when the Queen’s Speech is delivered on 27 May. We hope you find this guide useful. Kind regards Claire-Jane Nicol Partner This month’s surprise election result means that we now have a Conservative Government with a slim majority of just 12 seats. What does this mean for your organisation? What legislative changes are we likely to see? 2 General election 2015 back to top Commercial Competition • Implement the recommendations of the Competition and Markets Authority Inquiry into energy supply Trade • Push for freer global trade, concluding major trade deals with the US, India and Japan and re-invigorating the World Trade Organisation • Increase British exports by pushing for an EU-India trade deal and championing an EU-China trade deal, strengthening economic links with China, and doubling support for British firms selling goods there IT • Secure the delivery of superfast broadband in urban and rural areas to provide coverage to 95% of the UK by the end of 2017 • Hold mobile operators to their new agreement to ensure that 90% of the UK will have voice and SMS coverage by 2017 • Work with public libraries to ensure remote access to e-books, without charge and with appropriate compensation for authors that enhances the Public Lending Right scheme IP • Protect intellectual property by continuing to require internet service providers to block sites that carry large amounts of illegal content and build on anti-privacy projects to warn internet users when they are breaching copyright Public Procurement • Raise the target for SMEs’ share of central Government procurement to one third, strengthen the Prompt Payment Code and ensure that all major Government suppliers sign up 3 General election 2015 back to top Commercial Contact us David Crone Professional Support Lawyer Corporate (incl Corporate Tax & Cosec) T: 0191 279 9114 E: david.crone @bonddickinson.com What this is likely to mean for business The election of a Conservative Government could have a significant effect on the commercial legal sector. The party’s manifesto contained several proposals relating to trade in particular, including a push for freer global trade, increasing British exports and championing international trade deals predominantly with India, Japan and China. The Conservative Party also promised the delivery of superfast broadband to 95% of the UK and mobile coverage to 90% of the UK by the end of 2017. The Conservative manifesto included a commitment to strengthen the Prompt Payment Code (administered by the Chartered Institute of Credit Management), which tackles late and unfair payment of suppliers, so that 30 day payment terms become the norm and there is a requirement for signatories to report on their payment practices and policies. This ties in with the requirement for large companies to report on payment practices and policies included in the Small Business, Enterprise and Employment Act 2015. Competition played a much smaller role in the party manifesto, however, only appearing in the context of implementing the recommendations of the Competition and Markets Authority inquiry into energy supply. This means that Labour and Liberal Democrat proposals relating to competition, for example to strengthen the public interest test, will not be implemented. The Conservative Party has promised an in/out EU referendum before the end of 2017. Treaty changes or leaving the EU altogether could have a major impact on all areas of commercial law, but particularly in relation to competition and trade between member states. 4 General election 2015 back to top Corporate Contact us Stephen Pierce Partner T: 02380 20 8460 E: stephen.pierce @bonddickinson.com Suzanne Gado Associate (Practice Development Lawyer) T: 01752 67 7805 E: suzanne.gado @bonddickinson.com • Continue with the Red Tape Challenge which aims to reduce bureaucracy for businesses and has already resulted in a number of changes to company law • Continue the Bank of England’s Funding for Lending scheme into 2016 • Support new and existing challenger banks to inject fresh competition into the market including through the British Business Bank • Improve support for investment into start-ups and rolling out the Help to Grow scheme ** Please refer to the employment section for executive pay, diversity and employee representation on boards. What this is likely to mean for business The election result means the departure of Vince Cable as Secretary of State for Business, Innovation and Skills - champion of the British Business Bank aimed at supporting lending to SMEs. The impact of this change in practice is unclear at the moment although the Conservatives refer to the British Business Bank in their manifesto (see above). The Conservatives are also now expected to honour their pledge to hold an in-out referendum on EU membership by the end of 2017. This is likely to be the most significant issue affecting businesses under the Conservative majority Government. 5 General election 2015 back to top Corporate immigration • Negotiation of new rules with EU, including the end of the ability of EU jobseekers to claim any job-seeking benefits at all. If jobseekers have not found a job within six months, they will be required to leave • Toughen requirements for non-EU spouses to join EU citizens, including an income threshold and English language test • Insistence that free movement cannot apply to new members until their economies have converged much more closely with existing member states • Maintain the cap on workers from outside the EU (20,700) • Targeted sanctions for those colleges or businesses that fail to ensure that migrants comply with the terms of their visa • Extension of the ‘deport first, appeal later’ rule to all immigration appeals and judicial reviews • Introduction of a requirement for all landlords to check the immigration status of their tenants (which could affect employers who provide accommodation) • Harness data from multiple agencies, including Exit Checks data, to identify illegal immigrants and businesses that employ illegal workers • Requirement for employers regularly utilising the Shortage Occupation List to provide long-term plans for training British workers • Legislate to ensure that every public sector worker operating in a customer-facing role must speak fluent English 6 General election 2015 back to top Corporate immigration Contact us Rachel Jones Associate T: 01752 67 7677 E: rachel.jones @bonddickinson.com What this is likely to mean for business Immigration was a key issue in the election, with the Conservative party making the most radical and robust proposals for immigration reforms. David Cameron made it clear that, whilst Britain supports the principle of the free movement of workers, to restore a sense of fairness significant changes are needed to ensure the principle is operated on a more sustainable basis. The Conservative Government has promised the toughest system in the EU for dealing with abuse of free movement by negotiating new rules with the EU, including the end of the ability of EU jobseekers to claim any job-seeking benefits at all. If jobseekers have not found a job within six months they will be required to leave. Legislation will be introduced to ensure that every public sector worker operating in a customer-facing role must speak fluent English. Employers who provide accommodation may be affected by the introduction of a requirement for landlords to check the immigration status of their tenants. Multiple agencies will be used to capture data, including exit checks to identify illegal immigrants and businesses that employ illegal workers. The Government will impose a requirement for employers that regularly utilise the Shortage Occupation List to provide long-term plans for training British workers and it promises targeted sanctions for those businesses that fail to ensure that migrants comply with the terms of their visas. In the coming months and years it is likely we will see a real focus on education, training and incentivising British people so there is less demand for foreign workers and immigration to fill skills gaps. These are bold promises and such significant changes will not happen overnight. 7 General election 2015 back to top Corporate tax Contact us Ronan Lowney Managing Associate T: 0117 989 6949 E: ronan.lowney @bonddickinson.com • Employment allowance for employers taking on new staff whereby first £2,000 of national insurance is abolished • Expansion of Office of Tax Simplification and placing it on a permanent basis • Complete devolution of corporation tax to Northern Ireland • Maintain the banking levy • No increase in rates of VAT, income tax or national insurance • Introduction of criminal offence for economic crimes including tax evasion What this is likely to mean for business The Conservative victory will have a steadying effect for UK corporation tax. There had been considerable consensus between the main parties on the need for the UK to maintain a competitive tax regime. There had been uncertainties in some regards facing sectors which relied on tax beneficial incentivisation of key staff, however a majority Conservative Government will remove such uncertainty. The key issue now is the devolution of fiscal powers to Scotland and Northern Ireland, with the real prospect of there being intra-UK tax competition as a result. 8 General election 2015 back to top Employment Apprentices • Deliver three million more apprenticeships over the next five years Equal pay • Require companies with more than 250 employees to publish the difference between the average pay of their male and female employees National minimum wage/living wage • Increase the national minimum wage to over £8 per hour by the end of 2020 • Support the living wage and encourage organisations to pay it, if they can afford it Trade unions/strikes • Strikes will only be able to take place where at least half the workforce has voted in a ballot. For essential public services (health, education, fire and transport), industrial action will require the support of at least 40% of the workforce entitled to vote, as well as a majority of those that turn out to vote • A repeal of restrictions banning employers from hiring agency staff to provide essential cover during strikes • Strikes will not be able to be called based on historical ballots • Tackle the intimidation of non-striking workers, introduce legislation to ensure a transparent opt-in for union subscriptions by trade unions, tighten the rules around “facility time” for union representatives and reform the role of the Certification Officer 9 General election 2015 back to top Employment Contact us Jon Hales Partner T: 02380 20 8223 E: jon.hales @bonddickinson.com Karen Plumbley-Jones Associate (Practice Development Lawyer) T: 0175 267 7903 E: karen.plumbley- jones @bonddickinson.com Miscellaneous • Further steps to eradicate abuses of workers, such as non-payment of the minimum wage, exclusivity in zero hours contracts and exploitation of migrant workers • Introduce tougher labour market regulation to tackle illegal working and exploitation • End taxpayer-funded six-figure payoffs for the best paid public sector workers • Give employees working in the public sector and for large employers the right to do voluntary work for three days per year on full pay • Introduce a British Bill of Rights, repeal the Human Rights Act and curtail the role of the European Court of Human Rights so that the Supreme Court is the final arbiter of human rights matters in the UK What this is likely to mean for business The Conservative Government has already announced that it will push on with its reforms to the strike laws, which will mean fewer strikes (particularly in the public sector). The right to do voluntary work for three days per year on full pay will affect all public sector employers, as well as private sector employers with more than 250 employees, and will apply to more than 15 million workers. As a result of the Conservative majority, we can assume that employment tribunal fees will not be abolished, although they are expected to be reviewed at some point, and claims are expected to remain low in the meantime. The new Secretary of State for Business, Innovation and Skills is Sajid Javid, who replaces the Liberal Democrat Vince Cable. Dr Cable reportedly acted as a brake on Conservative employment law policy; as well as the promises set out above, we may therefore see a resurfacing of more pro-employer proposals, such as the controversial Beecroft report on employment law. Adrian Beecroft’s proposals included the introduction of no-fault dismissals, the reintroduction of the default retirement age, changes to TUPE and exemptions from employment regulations for small businesses. 10 General election 2015 back to top Energy Energy mix • Continue to support development of North Sea oil and gas • Significant expansion in new nuclear and gas • Continue to support the safe development of shale gas • Ensure local communities share proceeds of shale gas development through community benefit packages • Backing good-value green energy: start-up funding for promising new renewables – but only if value for money • Halt the spread of onshore windfarms and change the law so local people have the final say 11 General election 2015 back to top Energy Contact us Luke Gabb Sector Head – Energy & Natural Resources T: 0117 989 6810 E: luke.gabb @bonddickinson.com Vivien Gregory Consultant, Oil and Gas T: 0117 989 6961 E: vivien.gregory @bonddickinson.com What this is likely to mean for business An overall majority for the Conservatives, with the loss of the Liberal Democrat’s influence, will result in something of a shake-up for the energy industry. The appointment of Amber Rudd as Secretary of State for Energy and Climate Change was welcomed by Oil and Gas UK, the leading representative organisation for the UK offshore oil and gas industry, which reiterated its call for the Government to maintain its focus on the oil and gas industry during these challenging times for the UK North Sea. Her appointment is seen by the renewables industry as generally positive, given her support for reducing carbon emissions, and providing continuity following her previous role as parliamentary undersecretary at DECC. However, onshore wind in England and Wales will face a challenging environment if the manifesto pledge to halt new public subsidy is implemented, which looks certain to happen, although prospects in Scotland remain favourable given the SNP’s overwhelming success. Other renewable technologies such as wave and tidal are likely to receive continued support, as the Government looks to find ways to achieve an ambitious carbon reduction target in line with manifesto commitments. Like the anti-onshore wind pledges in the manifesto, the commitment for continued support for North Sea oil and gas and the plans for a new onshore extraction industry through exploiting shale gas reserves look to be at odds with a strong carbon reduction commitment. Although shale gas will provoke widespread public opposition, it is likely to receive a significant boost and may well make headway given the manifesto proposal to apply economic benefits locally, particularly with the proposals for a Sovereign Wealth Fund for the North of England. The tentative start for new nuclear under the Coalition, as demonstrated by EDF’s recent cold feet at Hinckley Point, is likely to be addressed by Amber Rudd given the clear steer that nuclear will be an important part of the mix. Looking ahead, an exit from Europe would affect carbon reduction commitments and uncertainty pending the referendum may affect investor confidence. 12 General election 2015 back to top Environment Energy efficiency • Support low-cost measures on energy efficiency, with the goal of insulating a million more homes over the next five years • Ensure that every home and business in the country is fitted with a Smart Meter by 2020 Climate change • Halt the spread of onshore windfarms – end to new public subsidy and change the law so local people have the final say on windfarm applications • Push for a strong global climate deal to limit global warming to two-degrees • Continue to support the UK Climate Change Act • Invest £500million over the next five years to ensure every car and van is “zero emission” by 2050 Waste • Introduce higher fixed penalty notices for littering • Power for Councils to deal with small scale fly-tipping using penalty notices Biodiversity • Extend term of the Natural Capital Committee until the end of the new Parliament to develop a 25 Year Plan to restore the UK’s biodiversity • Create a new ‘Blue Belt’ to protect marine habitats. This means creating networks of protected areas around the UK’s 14 overseas territories, and completing designation of Marine Conservation Zones off the UK coast • Oppose commercial whaling and press for polar bears to be classed as endangered 13 General election 2015 back to top Environment Contact us Stuart Wardlaw Partner T: 0191 279 9136 E: stuart.wardlaw @bonddickinson.com Sarah Holmes Legal Director T: 01752 67 7703 E: sarah.holmes @bonddickinson.com Countryside • Investment of £3 billion from the Common Agricultural Policy to enhance England’s countryside, including cleaning rivers and lakes, protecting stonewalls and protecting bees • Keep public forests and woodland in trust for the nation • Planting of a further 11 million trees What this is likely to mean for business The Conservative Party’s 2015 manifesto confirmed its commitment to its big environmental ambition of the 2010 general election: for this to be the first generation to leave the natural environment of England in a better state than that in which it was found. The reference to ‘England’ recognises the reality of devolution: that environmental matters are devolved to both the Welsh and Scottish Governments, who have been developing policies and legislation to move their respective legal frameworks and economies towards low carbon and circular economy models. For England, the manifesto is silent on the Government’s intended approach to key aspects of resource use and waste management. The only reference to sustainability is in respect of fishing and the defence of the changes secured to the Common Fisheries Policy. The 2015 manifesto environment headlines are threefold: to put in place a new ‘Blue Belt’ to protect marine habitats around our overseas territories and to complete the designation of Marine Conservation Zones around the UK, to invest in cleaner air and water, and to keep forests in trust for the nation. Other goals include the building of new infrastructure in an environmentally sensitive way and insulation of a million more homes over the next five years. The tension between halting financial support for onshore wind farms and increasing support for oil, gas and fracking whilst meeting climate change commitments and saving money is noted elsewhere in this update. Notwithstanding the big ambition, and in the absence of their Coalition partners in key posts with influence over the environment, there is uncertainty as to whether separate Departments for Energy and Climate Change, Environment, Fisheries and Agriculture, and Communities and Local Government will survive further budget cuts. The greatest uncertainty for the direction and ambition of environmental law and policy lies in the referendum on EU membership since the vast majority of domestic environmental law derives from EU obligations. Notwithstanding this, since the market is driving change in resource use more rapidly than the legal framework, sector representatives will be keen to engage with the new Government to secure influence, especially in areas where policy and ambition are unclear. 14 General election 2015 back to top European Union Contact us Karen Plumbley-Jones Associate (Practice Development Lawyer) T: 0175 267 7903 E: karen.plumbley-jones @bonddickinson.com • A straight in/out referendum on our membership of the EU by the end of 2017 • Negotiate a new settlement for Britain in the EU • Expand the Single Market • Conclude the EU-US trade deal • Resist EU attempts to restrict legitimate financial services activities What this is likely to mean for business We can expect to see a period of uncertainty over the next two years in the lead-up to the referendum, which may affect investment decisions in the UK. If the referendum results in a vote to leave the EU, the consequences could be enormous and are likely to include the negotiation of trade deals with the EU or its member states. Following an “out” vote, an exit could take up to two years to achieve under the Treaty of Lisbon and could lead to deregulation in many areas, as it is estimated that a third of our red tape comes from EU directives. Before the referendum, David Cameron intends to renegotiate various agreements with the EU, which would lead to reform. Details of the amendments he is seeking have not been made available. 15 General election 2015 back to top Pensions Contact us Gavin Ellison Managing Associate T: 0191 279 9854 E: gavin.ellison @bonddickinson.com John Bradley Dick Solicitor T: 0191 279 9252 E: john.dick @bonddickinson.com • Reduce tax relief on pension contributions for those earning over £150,000 • Retain the “triple-lock” on State Pension increases (ie higher of inflation, average earnings or 2.5%) • Continue to support the introduction of the Single-Tier State Pension • Support pensions flexibilities by giving individuals the freedom to invest and spend their pension as they like and pass it on tax free What this is likely to mean for business With the General Election result in the record books, Prime Minister David Cameron will now start work on his pre-election pledge to ensure that Britain becomes “the best country in which to grow old”. In a move generally welcomed by the pensions industry, Dr Ros Altmann, a tenured pensions expert, has been appointed as the new Pensions Minister. Dr Altmann takes over the pensions portfolio from the wellrespected Steve Webb, who had been the longest serving Pensions Minister. Having experienced an overhaul of the pensions industry under the coalition government, notably the implementation of automatic enrolment and defined contribution pensions flexibilities, it is likely that the forthcoming parliament will be one of continuity and consolidation. The Conservative manifesto did not hint at further wide-scale reforms. Instead, it focussed on key themes such as a reduction in tax relief on pension contributions for high earners and continuing support for the roll-out of automatic enrolment and pensions flexibilities. For state pensions, the Conservatives pledged to retain the “triple-lock” on state pension increases while introducing the single-tier state pension from April 2016. Looking beyond the manifesto pledges, Dr Altmann is likely to seek greater protection for savers by seeking further transparency in pensions charges. It has also been suggested that a new Pensions Minister will likely signal the final death knell for defined ambition plans. 16 General election 2015 back to top Planning and infrastructure Development Control • Planning control to prevent proliferation of high street betting shops London • Devolve further planning powers to the Mayor of London Housing • Require an upfront infrastructure package for schools and roads • Protect the Green Belt and support locally led garden cities (Ebbsfleet & Bicester) Localism • Strengthen community Right to Bid (for communities to save assets that are important to them) • Encourage completion of Neighbourhood Plan and assist more to draw up a NP • Let local people have more say on local planning and votes on local issues • LAs to keep higher proportion of business rates to boost local growth Infrastructure • Deliver the National Infrastructure Plan • Respond to the Airports Commission Final report • Devolve powers including for economic development and transport to large cities with elected mayors • Back Local Enterprise Partnerships 17 General election 2015 back to top Planning and infrastructure Energy • Ensure local communities share proceeds of shale gas development through community benefit packages • Halt the spread of onshore windfarms and change the law so local people have the final say Environment • Blue belt to protect marine habitat through Marine Conservation Zones (subject to local support and environmental need) • Protect the Green Belt and maintain national designations – AONB, SSSI, National Parks • Stronger protections for natural landscapes • New roads and railways to limit environmental impact – more tunnelling, better noise barriers, restoring lost habitat • Support Thames Tideway Tunnel • 1,400 new flood defence schemes to protect 300,000 homes • Develop 25 year plan to restore UK biodiversity • ‘Pocket Park Programme’ – small areas of public space What this is likely to mean for business Following the Conservative win, David Cameron made specific reference to three pledges affecting planning in his acceptance speech. Unsurprisingly he mentioned ensuring sufficient homes are delivered and Brandon Lewis (who remains in post) has tweeted that he will be focusing on ‘Delivering homes we need, where we need them’. There will be an emphasis on ‘brownfield first’ with the pledge to protect the green belt. The manifesto confirmed that brownfield land would be used “as much as possible” and local authorities would be required to have “a register of what is available” and ensure that “90 per cent of brownfield sites have planning permission for housing by 2020”. Release of public sector land was promised, and support for locally led garden cities pledged. The delivery mechanism for these is not yet known and some further reforms may need to be considered, including the compulsory purchase regime. 18 General election 2015 back to top Planning and infrastructure The Conservatives have consistently advocated that the planning system is vital for a strong economy and the Government will be pressing ahead with its delivery of the National Infrastructure Plan. David Cameron specifically referred to rebalancing the economy by building the Northern Powerhouse and Stockton South MP James Wharton has been appointed as minister at the DCLG with responsibility for this. Plans to give English cities, with an elected mayor, powers over housing, transport, planning and policing have been set out in George Osborne’s first post-election speech. Greg Clarke has stated that other cities will be able to follow suit, and a Cities Devolution Bill is promised in the Queen’s Speech. David Cameron said that he would implement the devolution settlement promised under the last Government “as fast as I can”. Scotland already operates a distinct planning system. Wales already has some devolved planning powers and further devolution is already underway. The Planning (Wales) Bill brings forward significant changes for planning in Wales and introduces a new procedure for smaller but important Welsh infrastructure projects (Developments of (Welsh) National Significance (DNS)), determined by Welsh Government Ministers directly. The Silk Commission also made a number of further recommendations related to the planning system. Neighbourhood planning is firmly established as part of the planning system and under the previous administration the chief planner on a number of occasions stated that the Government wanted to see a significant increase of neighbourhood planning, to see more neighbourhood plans approved and giving local people more say on local planning and votes on local issues. Energy development will be strongly promoted. The manifesto signalled “a significant expansion in new nuclear and gas; backing good-value green energy; and pushing for more new investment in UK energy sources”. However, onshore wind in England and Wales in particular will face significant challenges with the pledge to end “any new public subsidy”, and to “change the law so that local people have the final say on wind farm applications”. This follows an increasing level of intervention on wind farm applications by outgoing Eric Pickles in the months running up to the election. Offshore development will be affected by the Government’s pledge to “put in place stronger protections for our natural landscapes, establish a new ‘Blue Belt’ to safeguard precious marine habitats”. 19 General election 2015 back to top Planning and infrastructure Contact us Victoria Redman Partner, Planning and Infrastructure T: 0117 989 6861 E: victoria.redman @bonddickinson.com Sara Wex Practice Development Lawyer, Planning and Infrastructure T: 0117 989 6866 E: sara.wex @bonddickinson.com Shale gas development will be a priority. David Cameron and his party are proponents of shale gas and the last administration already made changes to the planning system to enable these developments. The Conservatives also want to deliver EDF’s new nuclear plant in Somerset, the first nuclear power plant approved in the UK for 20 years. They have also talked up a possible tidal barrage in Swansea Bay. Eric Pickles is replaced by new Communities and Local Government (CLG) Secretary Greg Clark. This also points to a continuation of the Department’s promotion of both the growth agenda and localism. He was for several years Eric Pickles’ Minister for Planning and promoted the National Planning Policy Framework (NPPF), so more planning reforms are likely to be in the offing. Nuneaton MP Marcus Jones has also been appointed a minister in the department for CLG. Penny Mordaunt, whose ministerial responsibilities included planning casework, town centres and enterprise zones, is moved to the Ministry of Defence. Details of the new ministerial team’s portfolios will be announced in due course. It looks like we may expect plenty more changes to planning under the new administration in a number of areas. 20 General election 2015 back to top Private wealth • Ensure that everyone, including the wealthiest, pays their fair share and maintain public confidence in the tax system • Introduce various income tax measures including: - raise the personal allowance for UK residents to £12,500 - increase the 40% tax lower threshold to £50,000 - commit to no increases in VAT, NICs or income tax • Increase annual tax charges for non-domiciled individuals • Crackdown on tax evasion and aggressive tax avoidance • Ensure developing countries have full access to global automatic tax info systems • Pass new law so PA automatically increases in line with national minimum wage • Enable married couples to transfer £1,060 of their tax-free income to husband or wife where the highest earner is a basic rate taxpayer • Increase the threshold from which inheritance tax (IHT) starts to apply to £1m and introduce a new transferrable main residence allowance of £175k per person, paid for by reducing tax relief on pension contributions for people earning more than £150k 21 General election 2015 back to top Private wealth Contact us Marcella Shone Director T: 0191 279 9410 E: marcella.shone @bonddickinson.com What this is likely to mean for individuals A Conservative majority means that we have greater certainty than we would have had with a coalition – but not much. We know that a mansion tax will not be introduced. Apart from that, very little can be guaranteed, except, perhaps, further complexity in the tax system! The manifesto says that there will be no increases in income tax, VAT or national insurance - legislation to that effect is expected in the first 100 days of the new Government. However, if other measures, such as the significant planned public spending cuts, are not enough to bring the country’s finances back into the black, legislation can always be repealed or amended. We’ve been promised a rise in the income tax personal allowance to £12,500 by the end of this Parliament, as well as a rise in the higher rate threshold (where 40% tax applies) to £50,000. However, there has been no mention of an increase in the £100,000 point at which the personal allowance begins to taper away, or in the £150,000 point above which the 45% rate applies. Furthermore, nothing has been said about Capital Gains Tax; it will be interesting to see whether, for example, a higher rate of CGT is introduced for those with income and gains over £150,000. The increase in the inheritance tax nil rate band to £1m has been a Conservative goal since before the 2010 election. It’s drawing closer. We’ve been told that, where the family home is left to children or grandchildren, there will be an additional £175,000 allowance, over and above the current nil rate band of £325,000, which will reduce the IHT on the house. Like the nil rate band, if that £175,000 is not used by one spouse (or civil partner), it will be available to the surviving spouse. So a surviving spouse potentially has a £1m allowance. (Will this act as an incentive not to downsize in old age?) However, for estates over £2m, the additional relief will be tapered away by £1 for every £2 by which the value of the estate exceeds £2m, until it disappears altogether for estates worth £2.35m or more. This additional IHT allowance will be paid for by restricting relief for pension contributions made by those with income of over £150,000. The annual allowance (currently £40,000) will be tapered away by £1 for every £2 (again!) by which income exceeds £150,000. The tapering stops at income of £210,000 and an allowance of £10,000. In practice, this will be more complicated than it might at first appear. 22 General election 2015 back to top Real estate Housing • Build 200,000 Starter Homes • Build a total of 275,000 affordable homes to by 2020 (not clear if this includes the Starter Homes quota) • Create a Right to Build concept requiring councils to allocate land for local people to self-build locally • Extend the “Right to Buy” to 1.3m housing association homes in England Brownfield • Create a “Brownfield Fund” to unlock brownfield sites (no explanation of what this would entail) • Require local authorities to register their unused brownfield sites and ensure 90% of suitable brownfield sites have planning permission by 2020 • Create a London Land Commission for the identification of brownfield land owned by the public sector • Fund Housing Zones to transform brownfield sites into new housing, creating 95,000 new homes (no further explanation of Housing Zone or if this falls into the quotas above) 23 General election 2015 back to top Real estate Contact us Nigel Emmerson Partner T: 0191 279 9546 E: nigel.emmerson @bonddickinson.com Victoria Duxbury Managing Associate T: 02380 20 8336 E: victoria.duxbury @bonddickinson.com What this is likely to mean for business Whilst in the 1960s the Conservatives based their election campaigns on building housing and keeping prices down, today’s climate is more about development and investment. It was only the Greens who suggested that house price stability and discouraging property investment might be a good thing for the country: those pledges, together with the mansion tax and proposed interventions on rents and leases, have been consigned to the manifesto dustbin (at least for another few years). So now that David Cameron has slipped his feet firmly back into the No 10 slippers, can we expect to see some of the Tory pledges on housing come to fruition? The Conservatives had the least ambitious housing targets of any of the main parties but the numbers are still formidable and much of the onus to build will fall on the private sector. The SNP wins cast some doubt on transactions in Scotland and likewise the promise of an EU referendum will lead to much speculation as to the likely effect on the real estate sector. Increased powers for English cities will also have an impact on the sector, with George Osborne revealing more details about the Government’s ambition to devolve powers (such as control of housing and planning) from Westminster to cities in its ‘Cities Devolution Bill’. The likely impacts will become more apparent when the Bill is laid before Parliament. It is still to a certain extent unclear how the Government will implement its manifesto pledges but we will likely have a better view following the Queen’s Speech later this month. 24 General election 2015 back to top Transport Devolved powers • Devolve far-reaching powers over transport to large cities with elected mayors Rail • Invest £13 billion in transport in the North in order to electrify main routes, build the Northern Hub and provide new trains as well as upgrading key Northern infrastructure including the A1, M62 and A555 link road • Commit to spend £50 billion on High Speed 2 (the new North-South railway linking up London with the West Midlands, Leeds and Manchester) (“HS2”) • Develop High Speed 3 (“HS3”) to join up to the North • Invest in the electrification of the Great Western Main Line (to improve connections to the South West) and the Midlands Main Line (from St Pancras to Sheffield) • Complete construction of the new East-West Crossrail across Greater London and push forward with plans for Cross Rail 2, a new rail route running through London and connecting Surrey and Hertfordshire • Freeze commuter rail fares in real terms for the whole of the next Parliament. Regulated fares will only be able to rise by RPI and train operating companies will not have any flexibility to raise regulated ticket prices above this • Introduce smart ticketing and part-time season tickets for rail passengers • Require train operating companies to improve compensation agreements for passengers when trains are more than a few minutes late 25 General election 2015 back to top Transport Contact us David Rewcastle Partner (Transport & Infrastructure, Corporate) T: 0191 279 9245 E: david.rewcastle @bonddickinson.com Joseph Causer Solicitor (Transport & Infrastructure, Corporate) T: 0191 230 8373 E: joseph.causer@ bonddickinson.com Roads • South West infrastructure improvements in respect of the M5, A358, A30 and A303 • Investment in the Midlands by upgrading the M1 and M6 • Improving roads with an aim to fix 18 million potholes between 2015 and 2021 • Commit to ‘Norwich in 90 minutes’ and ‘Ipswich in 60 minutes’ by improving rail connections as well as upgrading the A11 and A47 Housing • Ensure infrastructure projects are in place for new housing developments What this is likely to mean for business The new Conservative Government has committed to widespread investment in transport and infrastructure, particularly rail. The Conservatives’ manifesto emphasised investment in the rail industry, with pledges on: • continued investment (£50 billion) in HS2 • electrifying main routes • providing new trains in the north • developing HS3 • complete construction of the new East-West Crossrail • commuters benefiting from a real term freeze on regulated fares The Conservative win also brings greater certainty to the passenger rail franchise programme because, unlike Labour, the Conservatives made no commitment to allow public sector operators to challenge private train operating companies. Improvements should also be seen to our roads, with upgrades to the M1 and M6 and the filling of 18 million potholes by 2021. BD.1697 © Copyright 2015 Bond Dickinson LLP. All rights reserved. This communication is provided for general information only and does not constitute legal or other professional advice. You should consult a suitably qualified lawyer on any specific problem or matter.