Tory manifesto: the pledges that will affect your pocket
Conservative Leader Theresa May has published the party’s manifesto, but how will its election promises affect the pound in your pocket?
The much-anticipated Conservative manifesto – Plan for a stronger Britain and a prosperous future – was published today which hopes to meet the great challenges beyond Brexit.
But what are the Tories promising and what does it mean for your household budget? Below we summarise the key points of the Tory manifesto:
Pension triple lock to become double lock
Since 2010, the state pension has risen annually by whichever is highest out of inflation, earnings growth or 2.5%.
The triple lock guarantee applies to the old state pension (currently £122.30 a week) and the new flat rate state pension, which was introduced in April 2016 (currently £159.55 a week). It has come under fire from MPs recently owing to the costs but the Tories have kept the promise to guarantee the triple lock until 2020. After this date, it will introduce a new double lock.
This means pensions will rise in line with the earnings that pay for them, or in line with inflation – whichever is highest.
Auto-enrolment to be extended to the self-employed
About 7.5 million people have started contributing to a workplace pension under the success of auto-enrolment. However, a major criticism is that it didn’t extend to self-employed workers.
May announced that a Tory government would look to extend auto-enrolment to the self-employed. See YourMoney.com’s Not auto-enrolled yet? Five things you need to know for more information.
Care home costs
Under the current system care costs deplete an individual’s assets, including in some cases the family home, down to £23,250 or even less. See YourMoney.com’s Will I have to pay my own care home fees? for more information.
With many older people having built up considerable property wealth owing to rising property prices, May announced the party will align the future basis for means-testing for domiciliary care with that for residential care, so that people are looked after in the place that is best for them.
This will mean the value of the family home will be taken into account along with other assets and income, whether care is provided at home, or in a residential or nursing care home.
In order to ensure this is fair, a £100,000 ‘single capital floor’ will be introduced so that people will always retain at least £100,000 of their savings and assets, including value in the family home.
May also wants to extend the current freedom to defer payments for residential care to those receiving care at home, “so no-one will have to sell their home in their lifetime to pay for care”.
Winter Fuel Payments
Winter Fuel Payments helps older people pay for their energy and it’s paid regardless of need, meaning even wealthier pensioners receive the money.
The Tories said if they get elected they will means test Winter Fuel Payments, “focusing assistance on the least well-off pensioners, who are most at risk of fuel poverty”.
Additional savings will go towards the cost of health and social care. May added the Tories will maintain all other pensioner benefits, including free bus passes, eye tests, prescriptions and TV licences, for the duration of the parliament.
The Tories have reiterated their commitment to raise the personal allowance – the amount of income you can earn before you start paying income tax – to £12,500 and the higher rate will climb from £45,000 to £50,000 by 2020.
Minimum wage rises
Those aged 25+ receive a minimum of £7.50 an hour. A new Conservative government will continue to increase the National Living Wage to 60% of median earnings by 2020 and then by the rate of median earnings, “so that people who are on the lowest pay benefit from the same improvements in earnings as higher paid workers”.
Gig economy worker protection
May said millions of people are enjoying the flexibilities of working in the sharing or gig economy, but these workers face challenges such as fewer pension entitlements, reduced access to benefits, and no qualification for sick pay and holiday pay. The government is awaiting a report reviewing the changing labour market, but in its manifesto published today, the Conservatives said it “will act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected.”
Shared parental leave and childcare costs
The take-up rate of Shared parental leave has remained low since its introduction in April 2015 and May said her party will take steps to improve the take-up rates and help companies provide more flexible work environments that help mothers and fathers to share parenting.
“We want to help those who have been caring for a child or children for a number of years or supporting an elderly relative. For these people, returning to work can be daunting: things have moved on and people worry that their skills have been eroded. We will address this, providing parents and carers with the confidence to return to work when and how they wish,” May pledged.
As planned, the 30 hours of free childcare for three and four-year-olds will be introduced for working parents who find it difficult to manage the costs of childcare. However, the Tories outlined plans to “go further” by introducing a capital fund to help primary schools develop nurseries where they currently do not have the facilities to provide one.
“We will introduce a presumption that all new primary schools should include a nursery. And we will continue to support maintained nurseries and allow them to take on academy freedoms, supporting them to grow independently or as part of a multi-academy trust,” May said.
Breathing space scheme for people in debt
If re-elected, the Tories will adopt a “Breathing Space” scheme, with the right safeguards to prevent abuse, so that someone in serious problem debt may apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks. Where appropriate, they will be offered a statutory repayment plan to help them pay back their debts in a manageable way. This will give eligible debtors time to seek advice and help to apply for a sustainable solution to their debt problem.
Corporation Tax is due to fall to 17% by 2020 and May confirmed the party will stick to that plan, because “it will help to bring huge investment and many thousands of jobs to the UK”.
Energy price cap
May said the Tories “will pay immediate attention to the retail energy market” and as such it will ensure that smart meters will be offered to every household and business by the end of 2020, as well as introduce a “safeguard tariff cap” which will protect customers who do not switch against abusive price increases.
“Alongside giving individuals greater control over their energy bills and protecting customers from unfair bills, we will help them to save energy. An energy efficient home is a more affordable and healthy home. We will improve the energy efficiency of existing homes, especially for the least well off, by committing to upgrading all fuel poor homes to EPC Band C by 2030. We will also review requirements on new homes,” May announced.
Home building to stabilise house prices
May said the party will meet its 2015 commitment to deliver a million homes by the end of 2020 and aims to deliver half a million more by the end of 2022. The Tories will also free up more land for new homes and it wants to build new fixed-term social houses, which will be sold privately after 10 to 15 years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes.