On May 22, Prime Minister Rishi Sunak made an unexpected announcement, surprising many, including members of his own party, by scheduling a general election for Thursday, July 4.
At the beginning of 2024, Sunak indicated that his "working assumption" was that the general election would occur in the second half of the year. His surprising decision to set the date for July 4 barely meets this timeframe. So, what are the next steps?
General Election Timeline
In the days leading up to the dissolution of parliament, there will be a rush to pass pending legislation, including the Finance Bill from the March Budget. Party manifestos are expected to be released around mid-June, though they might be quite concise.
May 23-24: Parliament will engage in a 'wash-up' period to address outstanding legislation. Sixteen bills will either be discarded or pushed through by consensus. This includes the concise Finance (No 2) Bill 2024, which was at the report stage in the House of Commons when the election was called. Parliament will then be prorogued.
May 30: Parliament will be dissolved, initiating a 25-day election campaign period.
June 5-16: Anticipated release of party manifestos.
July 4: General election day.
Current Tax Policies
The main parties have revealed limited and predictable tax policies:
The Conservatives propose abolishing individual national insurance contributions. However, this would cost over £40 billion, making it a long-term goal rather than an immediate plan.
Labour intends to:
Extend the tax on non-domiciled individuals, building on proposals disclosed by Jeremy Hunt in March;
Impose VAT on private education; and
Alter the tax treatment of carried interest for investment managers.
These measures are expected to generate only modest revenue.
Shadow Chancellor Rachel Reeves has largely agreed to the spending plans outlined by Jeremy Hunt in the spring Budget. However, outside political circles, these plans are considered unrealistic. The chairman of the Office for Budget Responsibility (OBR) has criticized them as worse than fiction. Similarly, the International Monetary Fund's recent report pointed out a £30 billion deficit in the Chancellor’s Budget, necessitating either tax hikes or spending cuts.
Post-Election Outlook
Following the pattern of previous elections, we may learn more about the new government’s actual tax and spending plans in a Budget presented within two months of the election. This suggests that a Labour Budget could be seen by early September if they win. Rachel Reeves has expressed a preference for a single annual Budget each autumn.
Regardless, the incoming Chancellor will need to deliver a Spending Review for the next three years starting April 2025, which realistically cannot be delayed beyond November.
Additional tax announcements might be made during the second fiscal event in autumn. This period brings several significant financial obligations for the government, such as compensation for the Post Office and blood contamination scandals, along with potential bailouts for struggling water companies and local councils. The next Economic and Fiscal Outlook from the OBR, expected in autumn, will be a major challenge for the future Chancellor and might explain the early election date.
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