No clear majority in the General Election with talks set to commence between various parties on forming a new Government.
After weeks of political campaigning the General Election on 8 June provided no clear majority for any party to form a majority Government. At the time of writing it is unclear whether Theresa May will lead the UK through the next five years and what shape the next Government will take. However, Theresa May has set out her intention to use the prerogative of a sitting PM to attempt to form an administration.
Many possibilities are now on the table; the Conservatives could seek to form a minority Government which may rely on smaller parties to support their budget and other key votes in parliament. As an alternative to this, the Conservative Party could seek to form a coalition Government which could command a parliamentary majority.
While much is currently unclear, the landscape in Northern Ireland could play a significant part in forthcoming negotiations to form a UK wide Government. The Democratic Unionist Party (DUP) (ten seats) have stated their potential support of a Conservative minority Government and could now hold the balance of power in Westminster. However, whilst the Conservative Party will not have an overall majority, the abstentionist policy of Sinn Féin, who won seven seats, may make a minority Government easier to manage.
Whilst the DUP manifesto is light on tax policy it is broadly in line with the Conservative Party’s plans. A key part of the DUP manifesto is the commitment to reduce corporation tax (CT) to 12.5 percent in Northern Ireland. Although CT will be a devolved matter to the Northern Ireland Assembly, their low CT policies are in line with the Conservative Party’s plan to reduce CT to 17 percent. As well as this, the DUP manifesto supports proposals to increase the personal tax allowance, something which is also supported by the Conservatives.
If it becomes clear in the coming days that a minority or coalition Government cannot be formed by the Conservatives, the Cabinet Manual states that they should be expected to resign if there is a clear alternative.
The alternative may be a coalition or minority Government led by the Labour Party. John McDonnell, the current shadow Chancellor of the Exchequer, has stated that Labour will put itself forward to form a minority Government. The first sitting of the new Parliament is expected on 13 June and the Queen’s speech on 19 June. If no minority or coalition legislative programme for Government can make it through the Queen’s Speech, the public could be asked to return to the ballot box again for another General Election.
Many uncertainties still remain and the UK faces much uncertainty with the EU negotiating position documents for the first phase of Brexit negotiations expected to be published in the coming days.
If you wish to take a look back on what the parties have been saying on tax throughout the election campaign please check back on our previous four Tax Matters Digest articles:
General Election – What we know so far (11 May 2017)
General Election – What we know so far (18 May 2017)
General Election – What we know so far (25 May 2017)
General Election – What we know so far (1 June 2017)
For further information please contact:
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.