Helen Swire explores what measures the re-elected Conservative government - having lost its overall majority - may decide to pursue

Westminister night

An uninformed observer might have thought that the UK’s new government was a Labour one on the morning of Friday 9 June 2017. Certainly, the celebration from Jeremy Corbyn and his team was reminiscent of victory.

While it wasn’t a Labour win, however, it certainly wasn’t a Conservative triumph, calling into question the wisdom of Theresa May’s gamble on a snap general election.

Winning 318 seats, the Conservatives fell eight seats short of a majority government, and have since held on to power through a deal with Northern Ireland’s Democratic Unionist Party. When the Queen officially opened Parliament, many aspects of the Conservative manifesto, notably social care and pensions reforms, were conspicuous by their absence from Her Majesty’s speech.

Impact on the workforce

The resultant uncertainty has left the UK workforce in limbo.

“The government is going to be nervous about putting forward any employment or salary-related proposals that could be regarded as contentious by other parties,” says Elliot Silk, head of commercial at wealth management firm Sanlam.

“We’ve already seen a fair amount in the press since the election about the 1% salary cap on certain public sector areas and how difficult this has been to defend with a non-majority government. Unless something’s fundamentally broken, the government will shy away from tackling any major workforce or employment issues.”

Impact on pensions

In the lead-up to the election, the Conservatives pledged to remove the pensions triple lock – which guarantees a minimum increase in the state pension each year – in favour of a double lock.

However, the DUP were firm that the triple lock remained as part of their agreement, described by Silk as “a prime example of the impact on a non-majority government”.

So are there likely to be further changes in this area? Baroness Ros Altmann, pensions expert and political campaigner, thinks not, saying that during the Brexit process “the auto-enrolment review is unlikely to put extra burdens on business”.

But, she adds: “There will be warm words about wanting to encourage higher contributions and bring in more workers over time, and also talk of measures to help the self-employed build private pensions.”

Impact on social care

“The wafer-thin majority means that pretty much any controversial legislation cannot be got through the House of Commons, and still less the House of Lords,” says Steve Webb, Royal London’s director of policy and former pensions minister.

This will certainly halt the changes to social care proposed in the Tory manifesto – reforms that are credited for losing some older, historically Conservative votes.

Webb continues: “In contentious issues such as social care the most we are likely to see is incremental changes to the current rules and vague consultation documents. If previous governments with large majorities have failed to grasp the nettle on these difficult issues, it’s hard to see a minority government doing so.”

The B-word

While all else might be on hold, Brexit is still full steam ahead. However, Silk says: “If Theresa May were to quit, or another general election is called within the next 12 months, our position could be seriously weakened as a result of yet another period of change in UK politics.”