Labour, the Conservatives and the Liberal Democrats launched their manifestos this week (10-14 June), setting out their plans for government if they win a majority on 4 July.

ICAEW has met with representatives from all three political parties over the past few months, outlining where its members thinks the next government should focus its efforts to get the UK economy back on track, looking at productivity, skills, sustainability, innovation, resilience, trust and trade.

The Liberal Democrat manifesto, For a Fair Deal, launched on 10 June, prioritises sustainability, placing a heavy emphasis on the net zero agenda as a key driver of economic growth. The manifesto also emphasises public service provision, especially on issues related to the NHS and social care. 

The Conservatives published their manifesto the following day, headlined with a cut National Insurance by a further 2p, abolishing the tax completely by the end of the parliament, and a guarantee that the state pension and tax-free allowance for pensioners will always rise with the highest of inflation, earnings or 2.5%. 

Labour’s manifesto, simply titled Change, released on 13 June, sets out its ambitions to boost growth and skills. It leads with plans for a new National Wealth Fund and Industrial Strategy, the creation of Great British Energy, and workers rights.

Here’s how the various policies align with ICAEW’s manifesto priorities. 

Productivity

The Liberal Democrats promised an enhanced role for the British Business Bank. ICAEW recommended that the next government increase the amount available from the British Business Bank for start-up loans. As in the ICAEW manifesto, the Labour manifesto significantly emphasises the role of SMEs and investment in increasing productivity. It commits to reforming the British Business Bank to make SME finance more accessible and take action on late payments. It calls for pension sector reform to encourage investment in British PLCs.

The Conservatives outlined several policies aimed at improving SMEs’ access to finance and public sector contracts, and reducing reporting requirements. Alongside committing to tackling late payments, they want to further empower the Small Business Commissioner, something called for by ICAEW.

The Labour manifesto pledges to introduce an industrial strategy, informed by business leaders through the Industry Strategy Council, and to publish a business taxation roadmap. ICAEW recommended the creation of an overarching tax strategy, establishing a route to simplifying taxes.

All manifestos include pledges to boost research and development (R&D) investment that align with ICAEW’s recommendations. Labour identifies the importance of R&D investment, keeping full expensing and encouraging SME investment. The Conservatives meanwhile pledge public spending on R&D of £22bn. ICAEW had called for an increase in spending to 3% of GDP and the Liberal Democrats are targeting 3.5% by 2034.

There is also a commitment in the Labour manifesto to give HMRC additional funding to close the tax gap and increase regulation and reporting requirements. This has overlap with ICAEW’s calls to invest in HMRC and Companies House. 

Skills

The Liberal Democrats pledge to establish a national standard for tech/digital literacy, something which ICAEW also called for, adding that this standard must go hand-in-hand with an additional standard on financial literacy.

The Liberal Democrats want to make the apprenticeship levy more flexible, though without any specifics, while the Conservatives aim to increase the number of apprenticeships without outlining changes to the apprenticeship levy. Labour pledges to implement a guarantee for young people that they will have access to a post-18 role of some kind, including apprenticeships. ICAEW’s manifesto offers a potential way of making this guarantee achievable, recommending changes to apprenticeship funding bands, which would provide greater flexibility to businesses.

ICAEW also recommends addressing skills gaps in the UK labour market, something the Liberal Democrats’ manifesto prioritises too.

All the manifestos reference the link between skills and immigration. The Liberal Democrats endorse a merit-based system for work visas to help alleviate skills gaps. The Conservative Party pledges to introduce a strict cap on migration and to build on the party’s existing approach to limit migration to people that can fill key skills gaps in public services and business.

Labour meanwhile wants to reform the immigration system to place “appropriate” restrictions on work visas and establish a framework for joint working with skills bodies across the UK. ICAEW has suggested a specific policy on how to identify and fill skills gaps, namely through reform to the Shortage Occupation List.     

Labour’s manifesto endorses an overall strategy or leadership to guide skills policy while leaving local authorities to decide on the best approach in their area, aligning with ICAEW’s recommendations. This overarching leadership role is handed to the new body of Skills England, the body best-placed to write and pilot the Overall Skills Strategy mentioned in ICAEW’s manifesto. This body recognises the need to take a spatial approach to skills gaps that considers the nature of these gaps in different parts of the UK. ICAEW’s manifesto agrees, recommending the creation of an automated map, enabling individuals to see skills gaps in different areas of the country.   

Labour also pledges to devolve adult skills funding to local authorities, reflecting ICAEW’s recommendation to provide wider online access to adult learning materials.

The Conservatives signal the importance of enhancing childcare provision. ICAEW has endorsed the extension of the childcare measures announced in the 2023 Spring Budget.

Sustainability

The Liberal Democrats call for the UK Infrastructure Bank to be more explicitly environmentally facing, which aligns with ICAEW recommendations, as does the call for an overall net zero transition strategy. This would be owned by the government with additional responsibilities for businesses. Proposals to create a Chief Secretary for Sustainability in the Treasury and to implement a carbon border adjustment mechanism (CBAM) are possible steps towards ICAEW’s recommendations of a Treasury-owned Net-Zero Delivery Tracker and consultation with industry on the implementation of CBAM.

The Conservative manifesto includes completion of the Edinburgh Reforms. It focuses on ensuring that climate change policies are voted on in parliament and that Climate Change Committee recommendations consider the impact on household and UK energy security. The Conservatives also commit to implementing an import carbon pricing mechanism by 2027, as called for by ICAEW.

The Labour manifesto, reflecting ICAEW’s recommendations, wants the City to become a global green finance capital. Both manifestos set out clear roadmaps for financial services to align with net zero, and call for green investment across the economy through the industrial strategy.

Labour proposes creating a National Wealth Fund to manage investment with the private sector, and ICAEW calls for the UK Infrastructure Bank to create new private-public partnership opportunities. ICAEW and Labour also discuss implementing a carbon border adjustment mechanism – continuing the Edinburgh Reforms and consolidating workplace pension schemes respectively.

Innovation

All party manifestos include a focus on regulation and accountability around artificial intelligence (AI) models. The ICAEW manifesto calls for the creation of an AI governance framework to facilitate ethical and responsible decision-making and accountability, transparency and appropriate human oversight. The Liberal Democrats’ pledge around the appropriate use of personal data in AI correlates with ICAEW’s call for the facilitation of an ethical framework for AI developers, deployers and users.

The Conservative manifesto shares ICAEW’s concerns about the safe and responsible use of AI. It focuses on individual use cases where AI might improve civil service and health sector productivity. ICAEW’s manifesto takes a broader view, encouraging AI uptake across all sectors.

Labour’s manifesto touches on regulation of the most influential “handful of companies”, but its general sentiment of caution around the risks associated with AI development and use aligns with ICAEW’s calls for ethical and responsible application of the technology.

Labour also plans to remove planning barriers to new data centres and the creation of a National Data Library, bringing together existing research programmes to deliver data-driven public services and to support Open Banking and Open Finance. These are positive steps towards ICAEW’s recommendation of broader data sharing. Labour’s pledge to ensure an industrial strategy that supports the development of the AI sector echoes ICAEW’s call to incentivise the use of AI.

Resilience

The Labour Party and ICAEW agree that major changes are needed to change the way the local audit market works. Both manifestos reference the shortage of key skills in local authorities, which councils require to make these changes; the Labour manifesto singles out the need for additional planning officers, and ICAEW endorses adding greater investment and skills training for local authority finance teams. Labour agrees with ICAEW that more predictable and stable funding streams for local government are needed, supporting multi-year funding settlements and an end to competitive funding pots.

ICAEW wants the next government to commit to replacing competitive bidding with stable long-term funding commitments. The Conservatives show signs of embracing this idea with a pledge for a multi-year funding settlement for local authority social care spending from the next Spending Review. 

While the Liberal Democrats say they will decentralise decision-making from Whitehall and Westminster by inviting local areas to take control of the services that “matter to them most”, they have focused more on policy changes to local authority care budgets, housing, planning and transport, than policies relating to audit and financial controls.

Trust

The Liberal Democrats agree that corporate governance needs reform, considering it through an ESG and sustainability lens, while ICAEW has focused on the need for reform to increase economic resilience and includes audit reform. The Liberal Democrats identify a need for greater investment in HMRC, albeit with a focus on tackling tax avoidance and evasion, instead of improvements to service standards.

The Conservative manifesto identifies that fraud needs additional attention, as set out in the ICAEW manifesto. However, the Conservatives focus on equipping DWP with similar powers to HMRC for welfare related fraud, rather than additional policies to tackle fraud more generally. 

Labour pledges to publish a fraud strategy that might incorporate some of what ICAEW calls for in its manifesto around economic crime. It references regulatory reform and the strengthening of reporting requirements, but ICAEW’s recommendations are more detailed than the policies set out by Labour.

Trade

The Liberal Democrats agree that mutual recognition of professional qualifications must be a key focus of the UK government when making alterations to trade agreements in future. Labour also agrees on mutual recognition of professional qualifications. It singles out future changes to the UK-EU Trade and Cooperation Agreement as one agreement which must include a deal on MRPQ, something reflected in ICAEW’s manifesto. 

The Conservative manifesto references a need to ensure that the 2020 UK-EU Trade and Cooperation Agreement is built on in future and. ICAEW specifically suggests consulting with businesses on how the agreement could be enhanced. More effective use of UK embassies abroad to promote trade in specific sectors is also included. ICAEW’s manifesto recommends improving trade, promoting a more targeted approach focused on leading service sectors, and using embassies to achieve this.

Labour’s manifesto signals that the next UK government should publish an overarching trade strategy to form the basis of future trade negotiations, in line with ICAEW’s suggestions. It pledges to improve guidance and remove barriers to exporting for small businesses. ICAEW agrees with this and encourages the next government to hasten the launch of the Single Trade Window, that will provide traders one way to access the various systems they need to use for importing or exporting goods.