The Labour Manifesto: what it means for your finances

It’s the first of the major political parties to announce its plans if it gets elected, following leaked details of its manifesto being reported in the national press last week.

Moneywise has gone through the manifesto and highlighted below, which elements will affect your finances. We will do the same with the Conservative and Liberal Democrat manifestos when these are announced.

Retirees

Pensions look to be a key battleground in the election. In order to win the older vote Labour is pledging to:

Guarantee the state pension triple lock throughout the next parliament: This ensures that the state pension rises by the higher of inflation, wage growth or 2.5%, helping pensioners cope with the rising cost of living. Although this is a clear grey vote winner, its sustainability long term has come into question. A recent report from the Work and Pensions Committee concluded that the triple lock should be scrapped because it is unaffordable and unfair to younger people that may have a greater need for government support.

Increased protection for the ‘Waspi’ women: Labour says that some 2.5 million women born during the 1950s have been hit by steep increases to the state pension age without receiving adequate notification from the government – an issue Moneywise has reported on. Their cause has been championed by the Waspi (Women Against State Pension Age Increases) campaign. The Labour party has pledged to extend pensions credit to the “most vulnerable” women but says it is exploring “further transitional protections to ensure that all these women have security and dignity in older age”.

New review of the state pension age: The state pension age is currently due to increase to 66 in 2020 and 68 by 2046. However, the recent Cridland Review of state pension age commissioned by the Conservatives proposed speeding up increases and recommended a state pension age of 68 by 2039. Labour’s leaked manifesto said that it would put these increases on hold and keep the state pension age at 66. However, analysis from Royal London has shown that this would cost tax-payers in the region of £300 billion. In its official manifesto launched today, Labour appears to have watered down its proposal. It is now saying that it “rejects the Conservative’s proposal to increase the state pension age further”. But doesn’t go any further than this, saying it will commission a fresh review on state pension age “tasked with developing a flexible retirement policy to reflect both the contributions made by people, the wide variations in life expectancy and the arduous conditions of some work.” Following the publication of the Cridland Review in March, pensions champion Ros Altmann, expressed disappointment at its failure to tackle these issues. She said: “Cridland highlights the vast differences in life expectancy across the UK - more than 15 years differential. Just as the review recommends more flexibility is required by employers to facilitate part-time work for older people, I believe more flexibility is also needed in the state pension system.” She added: “It was disappointing that the review decided against early access. People with shorter than average life expectancy generally still pay around a quarter of their salary in national insurance. They may have worked for 50 years or more but may die before being eligible for any state pension - or may receive very little. This seems inequitable and their lower life expectancy is not recognised by our national insurance rules. Normal insurance would usually charge lower premiums to such people but that does not happen. Therefore allowing early access could compensate for this even if for a reduced pension.”

Improve workplace pensions: Labour says it wants to “restore confidence in the workplace pension system”. It pledges to put an end to “rip off hidden fees and charges”. It also proposes the introduction of larger, more efficient pension funds to lower costs for employers and increase savings for employees. More specifically it says it will conduct an immediate review of the mineworkers’ pension scheme. The government currently takes 50% of the scheme’s surplus in return for its commitment to guarantee the scheme. Miners says that a fairer agreement needs to be made, with more of the surplus being used to top up the pensions of struggling retired miners.

Housing

Build over one million new homes: With house building reported to be at its lowest level since the 1920s, Labour is pledging to build over a million new homes. This will include 100,000 council and housing association homes by the end of the next parliament. Homes will be for rent or sale and “genuinely affordable”.

Launch a new ministry for housing: The key task of this new office will be improving the “number, standards and affordability of homes”. Councils will get new powers to build the homes needed in their area. Brownfield sites will be prioritised and work will start on a wave of new towns. Labour also wants to ensure new housing caters to the needs of the elderly with downsizing options available.

Help for first-time buyers: More low cost homes will be built and reserved for first-time buyers, with local buyers getting ‘first dibs’ on properties. Help to Buy funding will also be guaranteed until 2027.

 

Support for renters: In order to increase security for rental tenants, Labour wants to make three-year tenancies ‘the norm’ and introduce inflation linked rent caps. Letting agents fees will be banned and renters will be given new consumer rights, although what form these will take remains to be seen. The current government is already consulting on banning letting agent fees in England.

Scrap the bedroom tax: Labour has pledged to scrap the controversial bedroom tax. According to charity Citizens Advice, the bedroom tax – which is effectively a cut to Housing Benefit – began in April 2013. However, your Housing Benefit could be cut at any time for this reason if your home is considered too large for you.

Suspend Right-to-Buy: The Right-to-Buy scheme helps eligible council and housing association tenants in England to buy their home with a discount of up to £104,900 (£78,600 outside London). Labour says it will suspend the right-to-buy policy to “protect affordable homes for local people”, with councils only able to resume sales if they can prove they have a plan to replace homes sold like-for-like.

In the workplace

Introduce a 20-point plan for security and equality in work: Key measures under Labour’s 20-point plan on the workplace include:

  • Banning zero hour contracts.
  • Introducing four new public holidays to mark the four national patron saint’s days – these will be on top of statutory holiday.
  • Raising the minimum wage to the level of the living wage for workers aged 18 or over (expected to be at least £10 per hour by 2020).
  • Banning unpaid internships
  • Doubling paternity leave to four weeks – it’s currently one to two weeks of paid leave - and increasing paternity pay. The current weekly statutory paternity pay rate is £140.98 or 90% of your average weekly earnings – whichever is lower.

Household bills

Energy price cap: Labour says it will introduce an “immediate” emergency price cap to prevent average dual fuel bills from rising above £1,000 per year while it transitions to a “fairer system” for bill payers. The Conservative Party has already pledged to cap energy prices if they’re re-elected, although no details on what the cap will be have been announced. Experts at energy price comparison websites, MoneySupermarket and uSwitch have voiced concerns that a price cap will be a “disaster” as it will damage competition. However, comparison websites will have an ulterior motive for wanting people to switch.

 

Bringing energy back into public ownership: This “fairer” energy system Labour is calling for includes taking energy back into public ownership (it’s currently privatised), and supporting the creation of publically owned, locally accountable energy companies and co-operatives.

Insulate: Labour says it will offer interest-free loans to homeowners who want to improve the energy efficiency of their property and re-establish the ‘Landlord Energy Saving Allowance’ to encourage landlords to uptake efficiency measures for renters.

Bring water companies into public ownership: Labour says it wants to replace the “dysfunctional” privatised water system with a network of regional publicly-owned water companies.

Keep the winter fuel allowance: This pays people that have reached state pension age between £100 and £300 (depending on their age and circumstances) every winter. It is intended to help pay fuel bills during the colder months but recipients can spend it as they wish.

Rail travel

Bring railways back into public ownership: Labour says it will do this when franchises expire, with franchise reviews or with break clauses.

Improving rail services: Labour says it will cap rail fares and introduce free wi-fi. It doesn’t however give any details on the level or timing of the price cap and wi-fi roll-out.

Students

Abolish tuition fees: Labour says it will abolish university tuition fees, which now stand at £9,000 year.

Reintroduce maintenance grants: Labour adds that it will reintroduce maintenance grants for university students. Currently, students have maintenance loans, which have to be repaid.

 

Banking

Preventing bank branch closures: Labour says it will change the law to prevent banks closing branches in areas where there is a clear local need. “Britain has a successful international finance industry, but we also need a strong, safe and socially useful banking system to meet the needs of our own regional economies and communities,” the manifesto said. Labour adds that it will also launch a consultation on breaking up publically owned RBS to create new local public banks that are “better matched to their customers’ needs”.

 

 

Published: 16 May 2017
Last updated: 29 May 2017

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