On Thursday 7th May, I spent the evening at the opening of a new art gallery. Before shutting down my laptop for the night, I took a quick look at the front page of the newspaper I usually read. Voting was still in process and the pre-voting polls predicted a close run race between Labour and the Conservative party. It would be interesting to see what happens to the Lib Dems, I thought. I went to bed without checking the early results, but the first thing I did on waking was to fire up my iPad and go straight to the news. The results were something of a surprise: the pollsters certainly got it badly wrong; the possibility of a new dawn had quickly faded well before daybreak.
The older voter
From the perspective of the over 50s community, we must assess how the election result harms or helps us, and in what areas. Interestingly, the result is largely the choice of voters aged 50 and over, as they make up the majority of the electorate who actually take the trouble to go to a polling station. Did you know that 85% of people aged 50-65 always vote and that rises to 89% at 65+? Younger voters may make the most noise about elections, but older voters are the ones who actually do the deed.
The Conservative government promises to balance the books and eradicate the deficit by 2018. It’s the prudent, safe approach to housekeeping that appeals to older voters who understand the pitfalls of bad bookkeeping. It may mean austerity measures that prove unpleasant, but then the prospect of ‘belt-tightening’ and making do with less so that the future is brighter is something that older generations can live with more readily. They also know that the Cameron government will be more supportive of small business start-ups. A Conservative government is always friendly to entrepreneurs and with the over 50s launching business start-ups that are most likely to succeed, it is likely we will play an important role in this sector. Successful small businesses help an economy recover and expand faster, so expect help from the government to make this happen.
Personal and inheritance tax
The Conservatives pledged not to raise taxes, because that usually means hurting the wealthier parts of the population, which typically includes their key supporters. Instead, the Conservatives will use spending cuts to reduce the budget deficit. The personal allowance taxation point will rise from £10,500 to £12,500 incrementally by 2020. Plus, the higher tax rate of 40% will start at £50,000 rather than the present £41,900. Again, this will happen in steps by 2020. This will cost the Treasury a loss in tax of £7.2 billion. They will cover this deficit by £25 billion in spending cuts over the next five years.
The Conservatives also promise not to raise VAT. But, more importantly for the older voter, they promised to increase the inheritance tax threshold to £1 million from £325,000. This is certainly good news for property owners.
Health and NHS
George Osborne stated he would put an extra £2 billion into frontline health services across the UK and that people in England would be able to see a doctor seven days a week by 2020, partly achieved by the employment of another 5,000 doctors. However, a spectre looms over the NHS, called Transatlantic Trade and Investment Partnership, or TTIP. This is a bilateral trade agreement between the EU and the US that is favoured by the Conservatives. The EU has withdrawn public services from the discussion, but the UK is still talking about privatising parts of the NHS through US companies.
Pensions and benefits
The new pension reforms are unlikely to change, although you should be aware that the recent changes were pushed through by the Lib Dem part of the coalition government. David Cameron did promise that the basic state pension would rise to £7,000 per annum by 2020, but financial consultants TMF Group warn high earners to be aware that pension tax breaks may change post-election. Indeed, they say the Conservatives may reduce tax relief on pensions to pay for the increased Inheritance tax threshold.
The promise of apprenticeships
It is the young who will feel the brunt of the Conservative government’s bookkeeping. The initial spending cuts of £12 billion, to balance the books by 2018, will largely target welfare benefits to the young and unemployed. On the plus side, they have pledged to create three million apprenticeships.
On a cheerier note, the free bus passes, free TV licences for the over 75s and the winter fuel allowance are protected. As is ever the case, not everyone will be happy with the new government’s actions, but once the hoo-ha over the results has died down, I suspect it will feel like business as usual. Then, we’ll go back to complaining about the unsummery British weather!
*The opinions expressed in this article are the author’s own and do not reflect the views of Staysure.