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UK General Elections; Political update; Major parties’ manifestos, Implications for Indian IT and Roadmap

A General Election is taking place in the United Kingdom on December 12th. Polling data suggests that the current governing party, the Conservatives led by Boris Johnson, is on course to win an overall majority and form the next government. However, this election as we all know is very volatile and therefore a caution against reading too much into the polling at this stage.

UK is our industry’s second largest and a very critical market for us. We have been engaging with the UK government on various issues such as Immigration, Apprenticeship Levy, Tier II Visa ICT Type, Surcharges and others that remain critical for our industry to operate in the UK. More recently have been following the manifestos of the major parties in the UK. While manifestos are usually light on detail and are more of an expression of principle than substance, we have captured them below, party-wise & issue-wise as a comprehensive update on the stance of various political parties on issues important to us. Implications for our industry and proposed next steps are also included.

Hope you find the grid below a useful summary on the UK political scenario. As the new government takes charge, we will start reaching out to the appointed office bearers to take forward the overall engagement that we have been driving with the earlier government.

 

  Policy Area Conservative Party Labour Party Liberal Democrats Scottish National Party Implications for NASSCOM / Next Steps
  Brexit
  • Leave EU on 31st January with the Deal Boris Johnson has negotiated.

 

  • Negotiate a future relationship with the EU based around a free trade agreement, staying out of the single market, customs union and the jurisdiction of the European Court of Justice.

 

  • No political alignment with the EU.
  • Negotiate a new deal with the EU within six months of entering government.

 

  • Hold a legally binding second referendum with this new deal with “Remain” on the ballot paper.

 

  • If a majority government secured, cancel Brexit immediately by revoking Article 50.

 

  • If supporting a minority government, insist on a second referendum.

 

  • Campaign enthusiastically for Remain.
  • Support a second referendum.

 

  • Campaign to Remain.

 

  • Press for an independent Scotland to remain a member of the EU even if the United Kingdom leaves.
  • With the Conservative Party looking likely to form the next government, it is likely that the UK will leave the EU by the end of January 2020.

 

  • As such, focus is likely to move onto the UK’s future relationship with the EU, alongside the importance of relationships with non-EU nations.

 

  • However, if a trade deal isn’t agreed in time, no deal would be a possibility at the end of 2020.
  International Trade  

  • Aim to have 80% of UK trade covered by free trade agreements within the next three years, starting with the USA, Australia, NZ and Japan

 

  • Create upto 10 freeports around the UK, areas within the UK which, for tax purposes, would exist outside the border. These are designed to ensure companies can benefit from easier global trade.

 

  • Forge stronger links with the Commonwealth, including India.
 

  • Remain in the EU Customs Union to benefit from EU trade deals.

 

  • Any future trade policy should emphasise upholding “the highest environmental and social regulations in all trade relations”
 

  • Scrutiny of trade deals to “ensure they do not worsen inequalities or undermine countries’ ability to regulate the environmental and social impacts of businesses”

 

 

 

  • Aim to protect Scotland’s key industries in any future trade deal

 

  • Seek to ensure that “dodgy trade deals” do not lower regulatory or employment standards.

 

 

 

  • Greater emphasis on strengthening relationships with non-EU countries is an opportunity for Indian IT Industry, however, in the case of the Conservative Party, this would to an extent be counter-balanced by weaker alignment with the EU.

 

  • NASSCOM has been engaging with the UK Govt on the overall value our industry creates in the UK. It will be important to continue to engage political stakeholders at highest levels on the value of inward investment from the Indian IT industry.
  Immigration  

  • Reduce overall immigration numbers.

 

  • Prioritise reducing the numbers of low-skilled migrants, whilst encouraging high-skilled immigration to continue.

 

  • Introduce an Australian style points-based system to set criteria for migrants.

 

  • Increase the health surcharge from £400 to £625.

 

 

  • End the hostile environment, which is designed to make staying in the UK as difficult as possible for people without the right to stay.

 

  • Protect the rights associated with freedom of movement in future negotiations with Europe.
 

  • End the hostile environment.

 

  • Replace tier 2 work visas with a “flexible, merit-based system.”

 

  • Abolish minimum income requirements for partner/spouse visas.
 

  • End the hostile environment.

 

  • Entirely scrap the immigration skills surcharge.

 

  • Oppose the £30,000 minimum salary threshold for immigrants.

 

  • Preserve freedom of movement with the EU.

 

 

  • All parties recognise the value of high skilled migrants. Given they are the only party currently advocating the abolition of the skills surcharge, the SNP is a significant group.

 

  • NASSCOM will continue its engagement strategy of submitting industry’s perspective on  Tier 2 ICT Visa to the relevant ministers, along with submission to the Migration Advisory Committee sponsored by Home Office.

 

 

  Apprenticeship Levy  

  • Improving the operation of the Apprenticeship Levy, without providing more detail.
 

  • Allow employers to use the apprenticeship levy for “a wider range of training.”

 

  • Require employers to allocate 25% of their levy funds to train climate apprenticeships, which will “enable employers to develop the skills needed to lead the world in clean technology.” Employers will be expected to allocate 25% of their levy funds to training climate apprentices.

 

  • Increase amount that can be paid to non-levy paying employers to 50%.
 

  • Expand the apprenticeship levy into a wider “Skills and Training Levy” with 25% of funds raised by the levy going into a “Social Mobility Fund”, to be spent in areas with the “greatest skill needs.”
 

  • The SNP did not include any policy proposals on the apprenticeship levy in their manifesto. The levy applies in Scotland as in the rest of the UK.
 

  • All political parties would reform the levy to an extent, with Labour and the Lib Dems most open to changes advocated by NASSCOM.

 

  • NASSCOM will continue to push reforms by using the Apprenticeship Levy position paper prepared jointly with techUk based on inputs received from the Industry members, to engage with the new skills minister & relevant departments following the election.
  Corporate Governance  

  • Strengthen the UK’s corporate governance regime, reform insolvency rules and the audit regime so that customers and suppliers – and UK taxpayers – are better protected when firms go into administration

 

  • Strengthen incentives against excessive executive pay and rewards for failure
 

The below proposals would only be relevant for UK-listed companies.

 

  • Companies will be asked to give a third of board positions to employees.

 

  • Require all large companies to disclose the ratio of total CEO remuneration to median employee pay and the steps being taken to reduce it

 

  • Ensure that all executive remuneration packages in large companies are subject to an annual binding vote by stakeholders, including shareholders, employees and consumers

 

  • Introduce Inclusive Ownership Funds for larger companies, forcing them to give over 10% of shares into an employee fund

 

  • Dividends will be distributed evenly up to £500 per employee, after which the funds would contribute to ‘Climate Apprenticeships’, designed to train people in the skills needed for a green economy, such as renewable energy engineering.

 

 

 

Require all UK-listed businesses and all private companies with more than 250 employees to give workers the right to request shares.

 

  • Require all UK listed companies, and private companies with more than 250 staff to have at least one employee representative on their board.

 

  • Require binding and public votes of shareholders on executive pay policies

 

  • Extend the scope of the existing ‘public interest’ test when considering approvals for takeovers of large or strategically significant companies by overseas-based owners

 

  • Require all companies registered in the UK set targets for climate change initiatives and to report on their implementation.
 

 

  • Back a reduction in employers National Insurance contributions – helping firms with the cost of creating new jobs

 

  • Back moves to increase worker representation on company boards

 

  • Consider proposals to ensure fairer pay by ensuring that the balance of salaries of all employees within a company or organisation are considered when senior pay packages are decided

 

 

 

 

  • Labour’s proposals could prove some challenge  for companies, seeing up to 10% of a company’s value seized and distributed amongst employees. However, it is worth noting that this policy would require Labour to achieve a full majority in the upcoming election, which is highly unlikely.

 

  • However, if a coalition government is formed, it is likely that there will be an agreement on increasing the representation of workers on company boards.

 

  • Based on election outcomes we will develop a suitable approach in consultation with NASSCOM member companies.  

 

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