Nine ways the Conservative manifesto affects businesses

Theresa May manifesto
Theresa May at the launch of the Conservatives' manifesto yesterday Credit: Ben Lack

Theresa May unveiled the Conservative Party's manifesto on Thursday and it contained a raft of measures which could affect British businesses. Here are some of the most important:

Corporate pay transparency

What is it?

The manifesto said companies would be forced to publish the ratio between chief executive and average pay as part of their annual reports, and executive pay packages will be subject to strict annual votes by shareholder. Additionally, companies employing more than 250 people will be required to publish more data on the pay gap between men and women.

What do people think?

Carolyn Fairbairn, from the Confederation of British Industry, said: “The next government’s intentions on executive pay would be best served by developing the existing regime to focus stricter votes on those cases that warrant greater attention.”

Workers in the boardroom

What is it?

A Tory government would bring forward legislation that would guarantee worker representation on boards. Companies will be able to choose whether to appoint a director from the workforce, create a formal advisory council or assign responsibility for employee representation to an existing non-executive.

What do people think?

British Retail Consortium employment and skills policy adviser Fionnuala Horrocks-Burns said: "Retail businesses employ a variety of different models to ensure the views of their workforces are heard by their board.

"Strengthening this voice is a positive step to support employee engagement and productivity but there must be flexibility in how individuals’ businesses do this in practice."

Under Tory proposals, workers would be given seats on company boards Credit: David Davies

Doubling the Immigration Skills Charge

What is is?

The charge is levied on companies employing migrant workers. The Conservatives have proposed doubling it to £2,000 a year by the end of the parliament, using the revenue generated to invest in higher level skills training for workers in the UK.

What do people think?

Ed Cooke, chief executive of retail industry body Revo, said: “The moves to reduce immigration and increase punitive measures for firms employing non-EU workers will have a disproportionate effect on the retail and retail property sectors, which contribute more than £20bn in taxes to the economy.

"Given the ongoing economic uncertainty and wavering consumer confidence, retailers in particular would be forgiven for thinking they are fighting a war on two fronts, should these policies be implemented.”

Clearer share schemes

What is it?

While Theresa May stopped short of announcing plans to completely outlaw complex share schemes, companies will have to explain them more clearly. Returns could be curbed by new rules to stop senior 
executives hitting their targets through share buybacks that “artificially” boost stock prices and payouts to management.

What do people think?

Stephen Martin, director general at the Institute of Directors, said: “The IoD believes in high standards of corporate governance, but there has to be a balance between sensible reform and the risk of hampering a company’s ability to make nimble commercial decisions.”​

The Tories have proposed a 'Cadbury clause' to protect UK businesses from aggresive foreign takeovers Credit: Clara Molden

Intervening in takeovers

What is it?

In a bid to reduce concerns over aggressive takeover deals, companies will have to be clear about their intentions for a target business and any undertakings they make will automatically be legally binding. Pensions authorities will also get a stronger voice in takeover scrutiny.

Additionally, a Tory government would take powers to block more foreign takeovers on national security grounds, with energy, defence and telecoms deals due to face greater scrutiny.

What do people think?

Oliver Parry, head of corporate governance at the Institute of Directors, said: “The Companies Act already states directors must make decisions in the long-term interest of the company - and that means employees and shareholders.

"More regard seems to be paid to investors than staff at the moment - all M&A activity needs to consider the whole company so maybe just the threat of legal action could be enough to make businesses follow the Companies Act.”

Enhancing workers’ rights

What is it?

The National Living Wage would be increased to 60pc of median earnings by 2020, with subsequent rises pegged to the average. Workers will also be entitled to benefits such as a year's unpaid leave to care for relatives.

What do people think?

Suzanne Horne, head of the international employment practice at Paul Hastings, the international law firm, said: "The latest set of pledges concerning workers' rights, whilst eye-catching and media-friendly, will only result in more red-tape for employers. For SMEs in particular, more employment rights means more workforce planning at a time when employers are already juggling the challenges that come from existing statutory rights."

Introduction of a national retraining scheme

What is it?

Companies will be able to train staff using Government grants, with companies able to access the existing apprenticeship levy to support wage costs during the training period.

What do people think?

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development, said: “While we welcome the idea of a creating a national retraining scheme, we are concerned at the suggestion that companies will be able to use the apprenticeship levy to support wage costs as part of this initiative.

“A far better way to boost training opportunities for individuals and meet employers’ skills needs would be to reframe the apprenticeship levy as a more flexible training levy.”

Theresa May's party has promised to create 3 million apprenticeships for young people by 2020 Credit: Jeff Morgan 09 / Alamy Stock Photo

Reforming the business rates system

What is it?

The Conservatives have promised to reform the business rates system, conducting more frequent revaluations. Currently the value of properties, which determines the amount of business rates companies have to pay, is assessed every five years.

What do people think?

Robert Hayton, executive vice president of ratings agency Altus, said: "There is nothing fundamentally wrong with a five-year revaluation cycle, provided it is always five years. A five-year cycle allows a business to plan properly over the short term. It fits in nicely with a normal rent review period or lease length, it follows the ordinarily gradual evolution of values and allows for periodic redistribution of liability.

"It means savings won on appeal are meaningful, with the cost and effort of challenge balanced by a lasting result."

Business rates have been blamed for accelerating the decline of high streets in some parts of the UK Credit: PAUL ELLIS

Cut in corporation tax

What is it?

Does what it says on the tin: Mrs May maintained a previous Conservative pledge to cut corporation tax to 17pc by 2020.

What do people think?

Gary Lynch, chief executive of supply chain business GS1 UK, said: "The news on corporation tax is music to the ears of business.  European leaders and officials have warned the Government against slashing taxes after Brexit – speaking at the World Economic Forum in January, Germany’s Finance Minister said Theresa May would not be taken seriously by world leaders if she turned Brexit Britain into a low-tax competitor off Europe’s coast."

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