Money Wellness
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calendar icon08 Jul 2024

Dawn of a new era. What do Labour’s pledges mean for your money?

Today marks the start of a new era for the country. After presiding through austerity, Brexit and the pandemic – among other things – 14 years of Conservative rule has come to an end.

Politics can sometimes feel distant and irrelevant but decisions made by the government make a difference to how we live every single day.

It remains to be seen exactly what a Labour government will mean for your money. But, from the party’s election manifesto, we have some idea of what might – or might not – change.

So, we’ve pulled together an overview on how they could affect your household finances.

Taxes

Labour says they'll keep taxes as low as possible for working people, and they won't increase national insurance, income tax, VAT or stamp duty. They have hinted they might make changes to council tax but have pledged not to touch the number of council tax bands. They will also start charging VAT on private school fees – most likely from the start of next year.

Pensions

Labour promises to keep the triple lock, which means the state pension will go up by at least 2.5% each year. It increased by 8.5% in April this year because of strong wage growth in 2023. But as inflation normalises, the boost next year will likely be lower.

They will also reinstate the lifetime allowance (LTA) which Jeremy Hunt abolished last year. The LTA caps the amount people can have in their pensions without incurring a tax charge. Savers will be able to benefit from this tax break.

Benefits

Despite opposing the two-child benefit cap in the past, Labour’s manifesto made no reference to getting rid of the restriction. In a BBC interview last year, Keir Starmer said he was ‘not changing that policy’ if Labour won power so it seems like it’s here to stay.

The two-child cap limits child tax credit and universal credit to the first two children in most households and means families miss out on more than £3,000 a year per extra child after the second.

They will also make sure the minimum wage is a genuine living wage by changing the remit of the Independent Low Pay Commission so that it accounts for the cost of living. They’ll also do away with the age bands, so all adults get the same minimum wage.

Homes

Labour will introduce a scheme to help first-time buyers with small deposits get mortgages. They also want to build 1.5 million new homes in the next five years and plan to start this process within three weeks of Keir Starmer taking power. They also plan to review how to protect people who rent their homes, as well as banning new leasehold flats.

Renting

On their first day in office, Labour will stop landlords from evicting tenants without a good reason. They also want to give renters more power to challenge unfair rent rises.

The party has also promised to raise living standards in rented accommodation by extending ‘Awaab’s Law’ to the private sector. It requires social housing landlords to adhere to strict time limits for addressing dangerous hazards, such as damp and mould.

Awaab’s Law was brought in to provide greater protection to social tenants following the death of Awaab Ishak, a two-year-old who died as a direct result of exposure to mould in the social housing home his family was renting from Rochdale Boroughwide Housing.

Childcare

Labour plans to open over 3,000 new nurseries by using space in primary schools. They’ve also committed to continue the rollout of the Conservatives’ childcare expansion plan so that all children under 5 in England get free childcare. They'll also provide free breakfast clubs in every primary school.

Environment

Labour's "warm homes plan" will give £6.6 billion to help make 5 million homes more energy-efficient, with things like insulation and solar panels, and say they won't force anyone to replace their boiler. They also plan to cut £1,400 from household’s annual energy bills by taking back control of energy. They say they will do this by investing £8.3 billion in forming Great British (GB) Energy – a state-run company that will invest in clean power.

Social care

Labour wants to create a new national care service with the same standards of care for everyone, no matter where they live. They'll also try to find long-term solutions for social care.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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