Well!  That was a surprise.  Who would have thought that we would have a single party government of any hue, let alone one with an overall majority.  Having only one manifesto to consider, this outcome has also rather simplified my task, and it being Conservative, there is less likelihood of legislation relating to social policy.  However, this sweeping statement excludes the significant commitment to repeal the Human Rights Act 1988, a commitment more likely to be made flesh now that Michael Gove has been appointed Lord Chancellor with that specific brief.

Let us start with that.  The Conservative plan is to repeal the Human Rights Act, curb the power of the European Court of Human Rights in Britain, and introduce a British Bill of Rights.    Fundamental to this arrangement would be that the Supreme Court would no longer be answerable to the European Court of Human Rights, and that the Strasbourg based court would lose the power to direct changes in UK law.

Plans were originally drawn up by Chris Grayling, but said to have been blocked by the Liberal Democrats.  However, other information suggests that, even amongst those that supported the move, no agreement could be reached on what to include within the British Bill of Rights, let alone what it should say.    It seems to have been the rights of prisoners (in relation to voting and deportation) that has triggered the decision to proceed. This does seem rather a small issue on the basis of which to discard a convention which  we largely drafted , which we have abided by for 60 years, which has a significant totemic status, and most of which would be repeated in any Bill of Rights of our own In any event, even though the Act is only 17 years old, it is already woven into numerous subsequent constitutional developments, to include the Good Friday Agreement and the devolution arrangements for Scotland and Wales.  While there may be a majority (just) for all this in the House of Commons, this is unlikely to  exist in the House of Lords, and the SNP may also use it as a basis for another independence referendum. It seems to me to be a hornet’s nest the Government could do well to  shelve as gracefully as it can.

Inheritance and Income Taxes

The Conservatives have pledged to raise the threshold for inheritance tax relating to the main residence to £1 million.  This figure only applies to married couples or civil partners – for a single person it is halved – and to a substantial extent is already in place, as it involves the nil rate band (£325,000 each), and the existing ability to combine them if not already used up.  This brings the relief to £750,000.  The new element would be an additional tax free allowance of £175,000 per person so far as it relates to the value of the main residence, taking the maximum available for a married couple to £1m (or £500,000 for a single person). The particular point to note is that the new element is to apply to main residence only and not to the general estate.

Separately, the Conservatives have pledged, over the course of the Parliament, to raise the personal allowance to £12,500 per annum and to ensure that the personal allowance increases in line with the national minimum wage.  Higher up the income scale the Government has pledged to raise threshold for the 40% income tax band to £50,000.  (It was in any event going to increase to £42,385).

Finally, in this context, in its efforts to promote the institution of marriage, a married couple (or civil partners) are able to transfer between themselves gross income of up to £1,060, if one is in a lower tax bracket than the other. Please note it does not apply if either is a higher rate taxpayer.

A medley of other promises

• Anti-strike legislation is expected to be included within the Queen’s Speech. This would require that no strike can go ahead unless the voting turnout is at least 50% of those entitled to vote, and the strike is supported by 40% of those eligible to vote.  It is worth noting that the recent ballots by the Rail unions would have passed both thresholds comfortably.
• Late in the campaign David Cameron pledged a cast-iron guarantee, with a legislative basis, that it would not raise the rates of income tax, national insurance or VAT during the present Parliament. The relevant legislation will be introduced within the first 100 days of the new session, and would apply until May 2020.
• Freed from the shackles of coalition, it is expected the Government will move forward with the introduction of substantially increased surveillance powers, (known colloquially as the “Snoopers Charter”) presently contained within the draft Communications Data Bill. This legislation would force British internet service providers to keep huge amounts of data on their customers and to make that information available to the Government and security services.  .  It is possible that the Bill may go further; in January this year, David Cameron expressed the opinion that there should be no form of communication that the Government was unable to read.  The fear expressed by the industry as a result of this is that encryption could be outlawed or heavily regulated, making users data much less secure.
• The extension of the right to buy schemes to housing association tenants in England. This is intended to complete the package originally begun under Margaret Thatcher where council tenants were given the right to buy.  The suggestion is that it is illogical for council tenants to have the right to do so, but not housing association tenants.

How much these and other spending commitments (£12bn cut to the welfare budget, and £8bn to be invested in the NHS) were intended as negotiating cannon fodder in the Coalition discussions they expected to follow an inconclusive election, we will never know (or at least not until the first set of memoirs). However, they are stuck with them now, and it will be interesting to see how they deal with them, the first indications being available in the Queen’s Speech (May 27th) and the Budget (July 8th).

Henry Hood
Partner, Hunters
020 7412 0050