Winners and losers from Labour's general election victory

Questions over how Labour will fund its policies and public services means cuts or tax rises may be needed. We reveal the likely winners and losers under the new government.

Keir Starmer celebrating election win
(Image credit: Getty Images/Justin Tallis)

Labour has swept to power with a promise to help create wealth in every community following last week’s general election result, but not everyone can be a winner.

New Prime Minister Keir Starmer has entered Downing Street with a landslide majority, pledging not to raise income tax, national insurance or VAT.

But critics say Labour will have to raise money somehow to fund other pledges.

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That could mean spending cuts or even other tax rises.

This means there are likely to be winners and losers under the new government.

Its plans will be revealed in chancellor Rachel Reeves’ first Budget later this year.

But here are the groups that could benefit more than others from Labour’s policies that have been announced so far.

Winners under the Labour government

First-time buyers

Starmer used his first speech to highlight the importance of providing affordable homes.

The Labour Party manifesto promised to introduce a Freedom to Buy scheme, which is a permanent form of the previous government’s mortgage guarantee scheme that was due to end in June 2025.

Chancellor Rachel Reeves has also pledged to build 1.5 million new homes over the next five years, with a focus on affordability and the creation of new towns. 

“Theoretically these measures should aim to make it easier for young people to get on the housing ladder without large deposits, but it may take a while for this to feed through to the system and given how much house price inflation has stretched affordability it may not help huge swathes of people anytime soon,” says Rachael Griffin, tax and financial planning expert at Quilter.

“It is also important to temper expectations. While these plans are ambitious, historically similar large-scale housing targets have often fallen short due to challenges such as planning system inefficiencies, rising construction costs and a shortage of construction workers. So, whether these lofty targets become a reality will be yet to be seen.”

However, some of the support may be offset by the Labour government’s plans to reduce the first-time buyer stamp duty exemption from £425,000 to £300,000 from April 2025.

“The temporary reduction in the stamp duty threshold was a relief for many buyers, making homes more affordable,” says Nicholas Hyett, investment manager at Wealth Club.

“However, with the threshold returning to its previous level, buyers will have to account for this additional cost, potentially making home purchases more expensive and affecting the housing market dynamics.”

Investors

Financial markets have so far reacted well to Labour’s victory.

Sterling has risen against the dollar, while the FTSE 100 is up 0.41% since the end of the week and the FTSE 250 is up 1.3%.

Hyett says stock markets have, at least initially, reacted positively to a Labour victory given the certainty that a government with a large majority provides.

“The chancellor seems to have done a decent job reassuring the financial services sector prior to the election and this is currently being reflected within domestic markets,” he adds.

“As we have learnt previously, markets dislike uncertainty so for the time being, in the absence of any shock fiscal decisions, positive sentiment should continue to prevail.”

Housebuilders

Housebuilders will have been pleased to have seen government plans to build more homes as that means more work for the sector.

“This means leaning heavily on housebuilders who have the skills and resources to make it a reality, that should be good news for revenues and ultimately profits,” adds Hyett.

The average housebuilder has seen its share price rise 3% since the day before the election, driven by commitments to unlock the planning process and rapidly increase the number of houses built every year, according to Wealth Club.

Young workers


Labour’s manifesto vowed to provide the full minimum wage to workers from age 18.

The Conservatives had raised the minimum wage from £9.50 an hour two years ago to £11.44 an hour today. It also extended the full minimum wage to 21-year-olds, where previously the cut-off was 23.

But Labour wants to go one step further and give those aged 18 and above the full wage.

Based on current rates, if 18-year-olds were eligible for the full national minimum wage it would represent a £2.84 an hour increase to their salary. For a full-time worker on the average UK wage, that would mean a more than £5,000 a year increase to their salary, according to AJ Bell calculations.

“Labour has pledged to extend the minimum wage to younger people, giving an income boost to the youngest and lowest paid workers in the UK,” says Laura Suter, head of personal finance at AJ Bell.

Losers under the Labour government

Private school parents

One of Labour’s flagship policies is to add VAT to private school fees.

It claims this will boost the state sector but it leaves parents facing a choice of paying more, moving school, or even moving to a different area with lower charges or better options.

“Working parents who are higher earners but not massively wealthy will feel this the most,” adds Griffin.

“For those with much more wealth or who have grandparents who are happy to foot the bill then this will not be such an issue but for many who have budgeted for one cost but are now facing an increased price then this will force some difficult decisions."

Non-doms

The non-dom regime was already being reformed by the previous government and Labour has also said it will abolish it, which would result in these individuals paying more taxes on their global income.

Many wealthy individuals have already started relocating due to fears of higher taxes in the UK.

“This policy is designed to increase tax revenue and reduce inequality, but it could lead to some non-doms reconsidering their residence in the UK due to the higher tax environment they then find themselves in,” adds Griffin.

 

Pensioners

Pensioners could face having to pay income tax on their state pension under the new Labour government unless personal tax thresholds are unfrozen.

This is because Labour has said it will maintain the controversial triple lock. But if the personal tax allowance remains the same, the payments could take recipients above threshold - particularly if they have other sources of income.

The Conservatives had proposed raising the pensioner tax allowance in line with the triple lock to avoid this.

“Labour has pledged to retain the triple lock but stopped short of matching the Conservatives’ ambitious "triple lock-plus", which would have raised the personal income tax allowance for pensioners so that no one paid income tax on the state pension as it rises in the years to come,” says Gary Smith, financial planning partner at Evelyn Partners.

“This does mean that the state pension - at its current full rate of £11,502 a year - will remain on a collision course with the personal allowance.

“This raises the prospect that pensioners will soon be taxed on their state pension income, and the Office for Budget Responsibility has forecast that the state pension will overtake the personal allowance level by 2027. But if inflation or wage growth gives an unexpected boost to the state pension, this could happen sooner.   

“That would present the government with a major policy quandary, possibly on the eve of the next general election shining a harsh light both on the affordability of the triple lock and on the stealth tax rises effected by the long-term freeze in personal tax thresholds.”

Landlords

Investors have already faced restrictions on buy-to-let properties and landlords could face another clampdown under Labour.

The party’s manifesto pledged to scrap Section 21 ‘no-fault’ eviction notices.

Plus, there are concerns that Labour will raise capital gains tax, which would hit landlords when selling their properties.

“This is probably the one area of uncertainty where we have had most enquiries from clients, and some who are most concerned about a possible CGT hike have been looking to dispose of assets,” adds Smith.

“Although in most cases this is bringing forward disposals that were already on the cards in the next year or two.”

Marc Shoffman
Contributing editor

Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and The i newspaper. He also co-presents the In For A Penny financial planning podcast.