ConLib pact would threaten higher rate relief and FSA reform
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A pact between the Liberal Democrats and the Conservatives is now a likely outcome with issues such as higher-rate tax relief, corporation tax and regulatory reform up for grabs.
LibDem leader Nick Clegg made a statement this morning stating his belief that the party that wins the most seats has the right to form the next Government.
The Conservative Party has won the largest share of seats although not enough to command a majority in Parliament.
Cameron gave a speech this afternoon stating that he wanted to make a “big open and comprehensive offer” to the LibDems. Experts currently suggest that a Conservative/LibDem pact, rather than a formal coalition, is the most likeliest outcome.
Such a pact would lead to LibDems supporting the Conservatives on a case-by-case basis to get through an emergency Budget and is likely to lead to a number of Tory concessions to the LibDems.
Cicero Consulting director Iain Anderson says the LibDems are likely to resist Gordon Brown’s overtures which will include a package of electoral reforms.
Anderson says a Con/Lib pact could create a scenario where higher-rate pension tax relief could be threatened while Tory plans to cut corporation tax may have to be shelved. Many of the regulatory reforms suggested by the Conservatives, including scrapping the FSA, may be difficult to achieve as the LibDems want to retain the FSA.
Anderson says the Conservatives and LibDems may come to an agreement regarding breaking up the banks, with George Osborne moving closer to Vince Cable’s position.
Anderson says this process is taking place with Greece as a back-drop and politicians will be looking to work to achieve progress in creating a new Government as quickly as possible.
Anderson says: “Gordon Brown is looking increasingly like a lame duck Prime Minister. Whether he will survive the day is now the question.”
Hargreaves Lansdown pensions analysts Laith Khalaf says: “It will not be at the top of the list but scrapping higher rate tax relief would be a very easy sell because it would earn around £5.5bn annually.
“It is looking increasingly likely that this will happen. It is being handed on a platter and of all the things they can quibble over, they will not quibble over something that will save them money. And they can always lay the blame with the LibDems if the pension system falls apart as a result.”
Anderson says a Conservative LibDem pact would almost certainly result in another election in the next 12 to 18 months.
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Readers' comments (3)
Jack Morris | 7 May 2010 3:38 pm
Brown promised a referendum in further powers being granted to the european paliament. He then booted it through without keeping his promise. he is a political non elected thug who got what he deserved.
Jack Morris
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Blair Cann | 7 May 2010 3:54 pm
I doubt greatly that the scrapping of the FSA will be difficult to achieve in any link-up between Conservatives and Liberals.
My perception of the campaign and the manifestos is that this is quite high on the priority list of the Conservatives-especially getting the banks under the control of the Bank of England-whilst it is fairly low on the Liberal list.
There are more pressing concerns which the Liberals may bring to the party. I do agree the likely timescale of this fine example of political expediency will be 12-18 months.
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Incompetent Regulators Awards Team | 7 May 2010 3:57 pm
This may be the opportunity for change for IFAs. We need to get out there and kick some ar*e and force MPs to make some changes whilst they are on the back foot!
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