Following on from last month’s General Election results, Sussex Business Times explore the effects of the result of a Hung Parliament on business in the UK. We hear from Sheen Stickland Chartered Accountants, as well as other Sussex-based companies, to hear their thoughts
As we all know – after all, it’s all we’ve heard about for the last few months – the United Kingdom General Election 2017 took place on June 8th. Each of the 650 constituencies elected one Member of Parliament to the House of Commons. Although an Election had not been due until 7th May 2020, current Prime Minister, Theresa May called for a Snap Election, leading to much controversy amongst many sectors, and boy did we hear about it!
So how did Britain vote in the Election? Following on from the results of the Election being released, YouGov interviewed over 50,000 British adults to gather information on how the country voted; one of the largest surveys ever undertaken into British voting behaviour. Their results showed that amongst first time voters (those aged 18 and 19), the Labour party was 47 percentage points ahead, while amongst those over the age of 70, the Conservatives has a lead of 50 percentage points. Of course, figures in between showed a steady correlation, with the Tories becoming more popular as we go up the age scale.
Alongside age, education has become one of the key electoral demographic dividing lines. Amongst those with low educational qualifications (defined as GCSE or equivalent or below) the Conservatives beat Labour by 22%. However amongst those with high level educational qualifications (defined as degree-level or above), Labour led by 17 percentage points. Part of this relationship is down to age – the expansion of education means that, on average, the young have more qualifications than the old, although the Conservatives still have a “graduate problem” even after accounting for this
There was only a small gender gap between men and women, with women being equally split between Labour and the Conservatives, and men slightly more likely to have backed the Tories.With regards to employment status, Labour was in fact ahead amongst those in work; 4 points ahead amongst those wrking part-time and 6 points ahead amongst those working full time, showing how the Conservatives are increasingly relying on the grey retired vote.
Of course, we could go on in explaining the votes made by different groups and demographics, but now that it’s all over and done with, the element at the top of everyone’s minds is the result – a Hung Parliament. But what does this mean?
For those who need some clarification on what a Hung Parliament actually is, it’s when a General Election results in no single political party winning an overall majority in the House of Commons. In our situation, the Conservatives failed to acquire enough seats to be victorious in winning the majority, losing 32 seats in total.
As a result of this, it was unclear as to whether or not Theresa May would remain as the UK’s Prime Minister, however the Prime Minister only has to resign if it is clear that they cannot command a majority of the House of Commons on votes of confidence or supply. We all know May is a very determined lady, and she has since ensured that she will remain as PM, much to the annoyance of some people.And what does this result mean for Brexit?
Because of the resulting Hung Parliament, Britain’s exit from the EU has been plunged into further uncertainty – a feeling that’s been in the air since the vote to leave in June last year. If the Conservatives form a minority government, Theresa May could start negotiations but she might have to water down her plans if she wanted to get any Brexit-related legislation through the House of Commons, where she will need the support of other parties.
This is Sussex Business Times after all, and what we’re really interested to know is how the results of this year’s General Election will affect UK businesses, big and small…
James Pitman, Managing Director, Higher Education UK & Europe, Study Group: “We’re look forward to working collaboratively with the new government to create a visa regime for international students that is robust, clear and free from abuse.
“Despite government threats, there have been no further damaging restrictions this year aimed towards international students. The Conservatives did however included a pledge in their manifesto to “toughen the visa requirements for students”. We hope that the new government will base any new policies on accurate data, and work with the Office for National Statistics (ONS) and the sector to establish the true number of student overstayers. UK Visas and Immigration (UKVI), part of the Home Office, has acknowledged that students are essentially ‘one in, one out’, and hopefully this will be reflected in future policy.
“A hostile regulatory environment over the last 7 years has already damaged the UK’s reputation abroad, but it’s not too late for a new government to make some small changes to ensure we maintain our position as a global study destination.
“International education arguably has the greatest post Brexit opportunity for growth of any sector and we would like to see the government engaging with the sector to drive a national strategy to grow international student numbers, because like tourists the benefits are substantial for the whole of the UK.”
David Jinks, Head of Consumer Research, ParcelHero: “While many businesses will be dismayed by the uncertainty caused by a hung parliament, the international parcel broker ParcelHero says the result could in fact be remarkably good news for exporters and international freight transport companies.
“May will now form an alliance with the DUP in order for the Conservatives to remain in office; but there will be an increased need for consensus with other parties – and both the Labour Party and Lib-Dems are in favour of a softer Brexit.
“Our industry had been looking at a likely scenario of a Brexit deal that involved the UK leaving the Single Market; inevitably leading to new tariffs and Customs delays. However, Labour and the Conservatives oppose leaving the Single Market. That means the odds are that we will now get a Brexit deal that is considerably softer-boiled than it would have been, in order for it to pass the promised vote for MPs at the end of the negotiations.
‘In further good news for exporters the result has again weakened the pound; which makes UK products increasingly affordable overseas. It’s an ill wind that blows nobody any good!”
David Maslen, Director, Maslen Estate Agents: “There have been several factors that have impacted the property market over the past few weeks – the triggering of article 50, two May bank holidays and, of course, the election and the uncertain outcome. While there are still plenty of people looking to buy, as demand in Brighton and Hove continues to outweigh supply, buyers are more cautious and are not paying the prices they were a few months ago. As a result, property prices have dropped slightly.
“We need to get a stable government and clear Brexit negotiations underway as quickly as possible to re-strengthen the property market. The government should also life the additional stamp duty incurred for second homes and investment purchases to encourage more people to invest in property.”
Of course, times change incredibly quickly within the world of politics, and things might well be very different by the time you read this; that’s the only thing we can really be certain of! What will happen in the forthcoming years, who knows?
Jack Bedell-Pearce, Managing Director, 4D Data Centres: “If there is one thing most economists can agree on, it’s that businesses abhor uncertainty. By all accounts then, the recent hung parliament result on 8th June signalled more bad news for British business. But in the weeks that have followed, the market reaction has been much less subdued than expected.
“Both the UK economy and migration of skilled workers from the EU are slowing, which is having a dampening effect on business. But British business is surprisingly adaptable and it seems to be investing in things that will boost productivity in the long term, such as IT infrastructure. Anecdotally, we have seen a significant increase in interest over the past couple of months of local Sussex businesses wanting to improve their IT infrastructure by moving their servers into our Gatwick data centre or increasing their broadband connections.”
Here, Sussex Business Times heard from Sheen Stickland Chartered Accountants who explain themselves their own view on the result of this year’s General Election and what it means for business in the UK…
“Theresa May’s aim in calling a snap election was to increase the Conservative party majority and strengthen her hand in the Brexit negotiations. The surprise result has meant that not only is the UK political landscape thrown into uncertainty, but on a wider scale it calls the outcome of the Brexit negotiations into question. In consequence, business leaders are facing a significant challenge. The CBI business lobby group called this a “serious moment for the UK economy.” Brexit is top of the list of priorities for many, with the Institute of Directors demanding a focus away from political rhetoric and towards productive Brexit talks. The manufacturing organisation the EEF felt that it was time for a “careful rethink” of the planned negotiation strategy.
“Experts believe this result means that a hard Brexit is less likely, but the outcome is far from clear and all predictions should be taken with a pinch of salt. This, in addition to a weakened government means that business owners are facing a period of sustained uncertainty. Even if parliament pulls together to deliver successful Brexit negotiations, another General Election may be on the cards sooner rather than later which will lead to even more uncertainty on top of the short-term result of fluctuating currency
“It may be harder to predict the future without a clear manifesto or statement of intent, but this doesn’t mean that business leaders are entirely at the mercy of the political landscape. The prospect of a softer Brexit could be a positive sign for companies that trade internationally. The fluctuating value of the pound does present a challenge, but the right foreign exchange strategy can mitigate the risk in this area to an extent. This approach – essentially proceeding with caution – can apply to most areas of business. Growth is still possible in uncertain times but what is clear is that companies need to develop a robust financial plan in order to remain on a firm footing through times of unprecedented change.
“Even businesses that do not operate in Europe will be watching parliament closely. Promised developments such as improved infrastructure and connectivity are a priority and may get lost in the clamour to successfully deliver Brexit. On a more positive note, the government will be more reliant on a range of disparate voices; the lack of a strong majority means that the government will be more reliant on external support and will not be as able to push through unpopular measures. This means SME owners do have the chance to exert more influence on certain issues. Plans such as the Making Tax Digital initiative may face delays due to the political uncertainty, but it is likely that the changes are inevitable in the long term. It’s important for business owners to continue to look to the future and, where possible, plan for anticipated changes in both the political and regulatory environment. Such uncertainty does present a challenge for business owners, but as in all periods of change, this may also be an opportunity.