The ABI’s Director General – Huw Evans – had this to say on the impact of the snap election announcement:
“To listen to some of the pessimism expressed within our industry since Theresa May’s election announcement, you could be forgiven for believing the snap poll on June 8th is a hammer blow to our chances of progress on whiplash, the Discount Rate, pensions dashboards and welfare reform. I couldn’t disagree more.
The PM’s decision to call an election is not just an entirely rational piece of political decision making, capitalising on her opponents’ polling weakness and catching them unawares with little time to prepare a full campaign. It also offers the opportunity for her to fully legitimise her premiership, strengthen her ability to get legislation through Parliament and negotiate a Brexit deal without the pressure of an impending electoral test. For anyone within our sector who was optimistic about the chance to make progress on a range of important policy areas with the current Government, the chance to do so with that Government strengthened after the short delay of a six week election campaign should not be a cause for concern.
Most concern has focused on the delay to potential reform of the Discount Rate in the Prisons & Courts Bill which also contained measures to tackle whiplash claims abuse. Having only just been introduced into Parliament, the Bill cannot be fast-tracked onto the statute book ahead of dissolution and so will have to be reintroduced following the first Queen’s Speech of the new Parliament in June. As the Government’s Discount Rate consultation does not close until May 11th anyway and the scope of the currently tabled whiplash proposals is full of loopholes, our industry should view this as an opportunity to win the argument and get the right Bill, rather than proceed with a flawed one.
Nor on the Pensions Dashboard project is it terminal for it to be subject to a short delay; ministers needed time to take a decision on whether to proceed with the next phase anyway. Following the ABI’s successful delivery of the prototype, on target and under budget, delivery by 2019 is still possible if given the ministerial go-ahead in the second half of June.
That leaves welfare reform where the current Government has grown increasingly warm to the potential role of protection insurance in meeting the challenges of workplace ill-health. As with the Discount Rate, the Government has its own reasons for wanting to find a better system which costs the taxpayer less and enables the insurance market to risk-share effectively. So we should continue to develop our analysis to influence a white paper that could emerge as part of a re-elected government’s agenda.
On tax, we should continue to expect that pension tax relief reform could feature either in party manifestos or in the autumn Budget given the Chancellor’s obvious problems delivering on the 2015 manifesto commitments while managing the public purse. As an industry that campaigned for a more sustainable single rate system with less restrictive allowances, we have nothing to fear from this debate and should engage in it. By contrast, any major promises not to raise direct taxes will have to be paid for by indirect taxes which makes our customers vulnerable to more IPT increases.
Finally, Brexit. Contrary to some of the more lurid headlines, the Brexit negotiations are likely to be involved, technical and packed with trade-offs. Whatever the final outcome, any PM’s ability to navigate this tortuous path can only be helped by having their own democratic mandate, a potentially more secure Commons majority and without having to fight an election within the first year of a deal being struck.
This blog, of course, assumes a Conservative victory in line with the polls. The impact of a Labour victory is harder to predict because of the lack of detail so far in the Labour programme, the carousel of shadow ministers since 2015 and the high level hostility to financial services manifested by the Leader of the Opposition and Shadow Chancellor. We will prepare for all outcomes and, as ever, remain politically neutral. But on the basis the polls are broadly right, our industry should view this election as a delay rather than a disaster.”
Thanks to the ABI’s Blog section for this article –