Chancellor does a volte-face on the NIC of the self employed following the Budget bungle

 

Chancellor does a volte-face on the NIC of the self employed following the Budget bungle

What a pity Chancellor Hammond did not consult more widely on the National Insurance Contribution (NIC) ‘grab’ in the recent Budget. The truth is that the employed, pay 3% more in NIC than the self employed, but receive substantially more in benefits i.e. statutory sick pay, maternity/paternity pay, pension contributions, holiday pay, subsidised heath care, crèches and ensured employment. Surely, for all these benefits they should pay a higher tax charge?

Thatcher, in the 80s, expanded the concept of the self-employed, by breaking down the old, over-manned, Neanderthal state run companies, which simply existed by courtesy of the ‘dead hand’ of successive socialist governments. Workers who were made redundant and who had hitherto been totally dependent on the ‘nanny state’, wisely started to take charge of their own destiny by becoming part of the great service industry. All you needed was a van, mobile phone and an answer phone and with a little bit of initiative you were in business. Goodness help this country if we didn’t have this sector, we would all be in a sorry state.

The point is that neither Hammond nor his immediate circle of sycophants recognised that this was a breach of the sacrosanct ‘tax lock’ that Cameron/Osborne enshrined in the Manifesto before the last Election.

If you want to be a successful political party, rule number one, don’t break your election promises otherwise you will suffer the fate of the hapless Nick Clegg and the Lib Dems when they lost most of their MPs at the last Election, having done a volte-face on tuition fees, thereby disenfranchising their grass root supporters.

HMRC has always tried to limit the expansion of the self-employed and this is an extension of this process.

The futility of this Budget ‘bungle’ is illustrated by the fact that you should never break an Election pledge, but if you absolutely have to, then make sure you raise more than the net £145million, which will be the case for this initiative. It will pay for very little social care and will unfortunately lose the Chancellor, ‘spreadsheet Phil’, some very valuable credibility which, frankly, he will need in droves in the post Brexit era.

Given that the OBR (Office for Budget Responsibility) has predicted that the fool hardy Stamp Duty changes, left as a legacy by the feckless, pasty faced, Chancellor Osborne, will lose the Treasury £10billion over the Electoral term ending in 2020, there was a ‘golden opportunity’ to do something about this which he missed. In fact, there was conspicuously little about the housing market generally which you would have thought would be such an important part of the government’s housing initiative, which is woefully inadequate to meet the needs of this country.

Me thinks that this was an ‘abbreviated Budget’ in advance of the real ‘McCoy’ in the autumn version, when no doubt he will hopefully tackle the issues that have been overlooked so far. I hope he has learnt his lessons from this debacle.

Both Hammond and his predecessor seem to be suffering from the same fundamental error, in that they do not consult more widely with focus groups, or in fact, the Cabinet themselves and if they did, they would avoid some of the omni-shambles that past Tory Budgets have represented so far.

Whilst Philip Hammond seems a very likeable safe pair of hands, it may be the case that when discussing the contents of the Budget with his cabinet colleagues, he was economical with the truth and seemed not to have mentioned the NIC grab and therefore perhaps you cannot blame them for not flagging the breach that this represented.

It is quite unusual for so many MPs to be vociferous, in their distain, over this self-employed TAX issue. Prime Minister May, who had expressed some initial enthusiasm for the budget, has wisely ‘kicked it into the long grass’ for review in the autumn so as not to provoke an MPs revolt at a sensitive time.

Could this be an early sign of tension between number 10 and number 11, I wonder?