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Election 2024: What does this new dawn hold for accountants?

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Is a Labour landslide good news for accountants? The Imprudent Accountant thinks the answer is almost certainly yes.

5th Jul 2024
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You didn’t need to be a Conservative Party insider to win some money by betting on the outcome of the hastily called general election.

The more interesting question is what lies ahead for the population at large, our clients and ourselves. If nothing else, we now have certainty and this should settle financial markets, at least in the short term.

By the end, even diehard Conservatives seemed to have lost faith in their leadership, following a series of bad decisions stretching back through eight years and five prime ministers. They will now be seeking a re-set in opposition.

Throughout the past couple of years and the election campaign, Sir Keir Starmer and the woman who we must assume will be the new Chancellor of the Exchequer, Rachel Reeves played their cards very close to their chests, largely parroting Conservative policies and committing to very little.

This means that we enter the second half of 2024 with rather less idea of how the next few years will pan out than many of us would regard as ideal.

Economy is key

The key to everything will be the economy. If Labour really can encourage it to grow faster than at any time in the past couple of decades, then all will be rosy. Realists might have their doubts.

Assuming that the growth doesn’t immediately fire off into the stratosphere – and I will be happy to bet on that – there are only three choices. Move from austerity into double austerity by cutting services even further, change the fiscal rule and borrow more or – a subject dear to the heart of almost every accountant – raise more by way of taxes.

Rather hypocritically, given that he increased taxes to the highest level since just after the war, in the run-up to the election Rishi Sunak spent a lot of time sniping about imaginary Labour tax increases.

Ironically, there were stories in the media about billionaires leaving the UK after Jeremy Hunt announced that he was closing down the tax benefits of non-dom status. It is possible that more will now depart, rather than taking a chance on basing what could be significantly higher taxes. Then again, there is an increasing group of the ultra-rich who appear to believe that they have an obligation to pay higher taxes and will willingly do so.

As the likelihood of a Labour victory became a racing certainty, there were also stories emerging of rich folk crystallising capital gains in the expectation that the rate could increase.

New broom

Now that we can expect the new broom to start sweeping with Labour in place for at least five years and conceivably 10 or longer, it is time to start strategising for our own practices and our clients, quite possibly in that order.

Even though, by repetition, Starmer has begun to make change sound to some like a dirty word, it is almost certainly good news for those in the profession.

I would imagine that a good number of clients have been spooked by stories in the right-wing press about tax hikes. If that is the case, then they will be rushing to our (virtual) doors asking for help.

Whether this means assistance in leaving the country, ideas for mitigating capital gains tax or inheritance tax or, more positively, considering how business prospects might be improved if the government seeks and achieves closer relations with the EU will depend on the nature of your client base.

From a personal perspective, some of us may have to accept that we will be paying more tax in future, but that was baked into the last government’s policies anyway.

Crossing borders

One Labour idea has not received as much coverage as it should have. This is the intention to negotiate with the EU to allow professional qualifications to cross borders again. I imagine that those in larger firms will welcome the opportunity to institute or refresh exchange programmes, while others may be able to recruit much-needed staff who fancy spending some time in the UK.

Having held an election in the middle of the holiday season, the likelihood is that we will remain in the dark for a month or two, especially since Reeves has already announced that she will not be introducing her inaugural Budget until September.

Since change is always exciting, whether good or bad, I for one can’t wait to hear what lies ahead.

Replies (9)

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By SteveHa
05th Jul 2024 08:49

I'm happy enough with the outcome, but very much in the "sit back and watch for a while" camp, now.

I am, however, curious. Given the speed that you got this out, did you do a Boris, and write two versions, ready for either predictable outcome?

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Replying to SteveHa:
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By FactChecker
05th Jul 2024 19:49

Who'd have been the 'alternative outcome' winners?

The only danger to Labour would've been if there'd been an even greater fall-off in the numbers bothering to vote. We're now nearing the point for a GE where the turnout percentage would've been described as worrying/poor for local elections only 20 years ago.

What WILL be interesting is to see if LibDems suddenly drop their determination to bring in Proportional Representation ... given that they actually got fewer total votes than Reform UK (who with their unnatural bedfellows, the Greens) were the only parties to noticeably increase their votes!

Disillusionment seems to be the motto ... so "sit back and watch for a while" seems a wholly sane response.

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Replying to FactChecker:
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By Paul Crowley
06th Jul 2024 16:57

The PR thing is probably impossible to resolve.
When the Tories are in power, even Labour talks about reform of the system to make votes count. But those thoughts disappear when the system works to their advantage
The problem is constituencies. One MP per constituency does not fit any viable PR system.
MPs without constituencies?
No idea how it could work, but Reform having more MPs than the LibDems means that the LibDems and SNP would now want to put it on the back burner.

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By Brian Gooch
08th Jul 2024 09:36

STV for constituencies with a number of additional members elected on a PR basis regionally, like the Scottish parliament, would maintain the constituency approach without all of the failings of FPTP and give a layer of PR to smooth the wrinkles.

Incidentally, having observed it first hand a few years ago, the Scottish parliament also seem to behave much more like civil adults than the playground that Westminster has increasingly become!

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Replying to Paul Crowley:
paddle steamer
By DJKL
09th Jul 2024 11:06

We have both constituency and list ones up here as MSPs with out top up system. Not very keen on it, list systems have the MPs as slaves to their parties.

Must admit I prefer in constituency transferable votes, rank them 1,2,3 etc, if your guy drops to the bottom they are eliminated and their second choice votes then get allocated, rinse repeat until someone has over 50% of 1st, 2nd,3rd etc choice votes. Still not ideal but it was okay for Edinburgh University Student Association elections so it should be okay for the country.

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By listerramjet
05th Jul 2024 09:33

We have just had 14 years of a tax and spend proxy socialist government. No reason to suppose the red variety will be any different. We should perhaps write a letter of apology to our grandchildren for the challenges we are leaving them.

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Replying to listerramjet:
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By Paul Crowley
05th Jul 2024 15:02

Starmer is more pink than red. A populist that really struggles with what a woman is.
Rayner will be the puppetmaster. Funny really, because she is more of a man than he is. Starmer really would not get that joke, worried that he does not know whether to be angry or laugh is the populist thing to do.

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Replying to Paul Crowley:
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By FactChecker
05th Jul 2024 20:00

Suspect that (lack of) decisiveness is going to be the least of his problems ... even ignoring for a minute the state of the economy and expectations of a miraculous 'cure' for the 'cost of living crisis' ... he'll be having a series of nightmares whenever he drops off to sleep. And in whatever order they appear, the cast of characters will include dear old Jeremy and Diane ... and the unresolved chasm between those in the party determined on ousting anti-semites whilst not offending pro-palestinians. JKR is just one of many 'topics' keeping him awake.

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By justsotax
08th Jul 2024 15:34

Could be worse Paul, we could have Bozo the Clown still in, sure he was 'funny' but doesn't now how many children he has never mind a grasp on general economics.....best not talk of the lettuce, or the guy who dreamed of having sky tv when he was getting back from Winchester college. Only kidding, they all smashed it when in power....

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