Which party will romance your wallet?

As an election looms, Sam Dunn looks at how its outcome will affect your finances

During times of election fever, personal finances rarely bring voters out in a rash. Anxieties over local hospitals, schools and crime rates tend to push pensions policies off the podium at hustings.

During times of election fever, personal finances rarely bring voters out in a rash. Anxieties over local hospitals, schools and crime rates tend to push pensions policies off the podium at hustings.

Few voters would admit to being fired up by any political party's long-term savings plans, yet, depending on the result of the next general election, we could see major changes to income tax, stamp duty and inheritance tax.

With an election widely predicted to take place in May, it's worth taking a look at what a future British government might do with your hard-earned cash.

The apparently dry and often complex nature of pensions can be a turn-off - particularly for younger people - making this a difficult subject for lively political debate. The long-term nature of saving for retirement also works against discussion of this issue, since election manifestos are more likely to concentrate on quick-fix policies.

Mick McAteer of the consumer body Which? points out that any successful government reform introduced now would take effect so far down the line - in around 20 years' time - that it would be unlikely to be a huge vote winner today. "There's no political expediency to [act] now," he says.

Mr McAteer thinks the state pension will be a battleground in the election but that private pension plans will spark little more than "noises" from the three main parties.

Here, we consider each of the three parties' main proposals. Bear in mind, too, that the Chancellor can be expected to use the next Budget in March to dangle financial incentives in front of voters in an effort to secure Labour's re-election.

Labour

The Government has had eight years to reshape the UK's financial landscape in savers' favour, yet the pensions and long-term savings industry is stuck in a quagmire.

Recently, Gordon Brown reviewed his controversial plan to cut individual savings account (ISA) allowances from £7,000 to £5,000; it now seems the current allowances will remain.

Meanwhile, the government-appointed Pensions Commission is looking at the retirement savings crisis and is due to report back in August. Its recommendations are expected to include a higher statutory retirement age, greater incentives to save and higher income tax to boost the state pension.

Other long-delayed financial shake-ups are on the way.

New pensions rules being introduced in April 2006 will allow you to invest much more of your salary in a pension pot.

The child trust fund goes live in April, giving at least £250 to every baby born after 1 September 2002, but it is already under fire. Critics say the choice of vehicles in which to invest the money is too limited, and that the real benefit of the fund will be to wealthier families, which will take advantage of the tax breaks, rather than the poor ones it is mainly intended to help.

In the same month, new low-cost "stakeholder" products will be launched to encourage people on lower incomes to save and invest in the stock market.

In his pre-Budget report, Mr Brown also flagged plans to extend paid maternity leave by 2007, and to guarantee free nursery care to all three- and four-year-olds for 15 hours a week.

Conservatives

The official opposition has yet to say what a Tory election victory would mean for voters' personal finances. Overall, some £4bn in tax cuts has been earmarked but quite where these will fall has yet to be worked out. Proposals include exempting first-time buyers from stamp duty, raising or even abolishing the threshold on inheritance tax and changes to capital gains tax.

The Lifetime ISA (nicknamed "Lisa"), unveiled by the Tories last year, has been touted as a replacement for the ISA but it would not grow tax-free; instead, your savings would be matched (at a capped rate) by the government. Alternatively, the party says it may raise the amount you can save in ISAs to £9,000.

The basic state pension would be raised under the Conservatives; it is estimated that this will equate to £7 extra a week for a single pensioner.

Liberal Democrats

The Lib Dems have already drawn up a pre-election manifesto. The most important proposal is a new 50 per cent tax on any income above £100,000.

The party says this would help pay for free long-term care for the elderly; for the abolition of the council tax and the transition to a local income tax based on ability to pay; and for the scrapping of tuition fees.

The child trust fund would also be scrapped and the cash spent on education - reducing class sizes, for example.

The basic state pension would be raised to today's minimum income guarantee (£105.45 for a single pensioner). Future rises would be linked to earnings.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Sport
Malky Mackay salutes the Cardiff fans after the 3-1 defeat at Liverpool on Sunday
footballFormer Cardiff boss accused of sending homophobic, racist and messages
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Corporate Tax Solicitor

    Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...

    Relationship Manager

    £500 - £600 per day: Orgtel: Relationship Manager, London, Banking, Accountant...

    Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Test Lead (C#, Java, HTML, SQL) Kingston Finance

    £40000 - £55000 per annum: Harrington Starr: A Global Financial Service Organi...

    Day In a Page

    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
    eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

    eBay's enduring appeal

    The online auction site is still the UK's most popular e-commerce site
    Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

    'Lack of ethnic minority and black faces on TV is weird'

    Culture Minister Ed Vaizey calls for immediate action to address the problem
    Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

    Magic circles: Artist Olafur Eliasson

    Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
    Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

    Josephine Dickinson: 'How I discovered a new world of sound'

    After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
    Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

    Greggs gives lesson in crisis management

    After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
    Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

    Matthew McConaughey sings the praises of bumbags

    Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
    7 best quadcopters and drones

    Flying fun: 7 best quadcopters and drones

    From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
    Joey Barton: ‘I’ve been guilty of getting a bit irate’

    Joey Barton: ‘I’ve been guilty of getting a bit irate’

    The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
    Andy Murray: I quit while I’m ahead too often

    Andy Murray: I quit while I’m ahead too often

    British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
    Ferguson: In the heartlands of America, a descent into madness

    A descent into madness in America's heartlands

    David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
    BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

    BBC faces corruption allegation over its Sir Cliff police raid coverage

    Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home