Jayne Dowle: Budget tax grab a hammer blow for self-employed

Chancellor Philip Hammond’s decision to inflate the rate of NI contributions for the self-employed is a clear breach of a manifesto promise – and why Prime Minister Theresa May has been forced into an undignified row-back.

The proposed Budget increase now appears to have been delayed until the autumn. And legislation will have to be passed by Parliament to make it happen.

That’s not really the point, however. The decision to even announce the policy has had repercussions few would have envisaged. Who would have thought that the fate of a government could swivel on the tax affairs of the bloke who comes to mend your boiler or the woman who cuts your hair? Most people, the employee millions who pay all their contributions at source, never think about National Insurance. Until now.

Not only does this row make the Conservatives appear arrogant and untrustworthy, but it also shows a scant disregard for all workers. If a Chancellor can blithely scythe through the earnings of one group of people, he can do it to any he chooses.

We all have taxes to pay and National Insurance contributions to make. If we are to have schools, hospitals, a safe country to live in and the possibility of a pension when we eventually retire, a price must be paid.

The problem is the way that the Government has gone about it. Most importantly, there’s the serious moral matter of the manifesto. In 2015 David Cameron promised faithfully: “We will not raise VAT, National Insurance contributions or Income Tax.” And then he went on to state in detail how such changes would damage the economy and working families. It is unjustified to reverse this, and calls into question yet again the position of Mrs May’s government, in power effectively without a mandate.

The acute political position is damaging enough. However, it is the wider implications which threaten to undermine this Government’s credibility.

For a start, this lack of understanding runs entirely counter to the Government’s oft-stated promise to encourage “the next generation of entrepreneurs”. It’s one thing to trot out their pet self-made millionaires – the likes of outspoken bra company boss Michelle Mone, elevated to the House of Lords in 2015, come to mind – but quite another to sit at your kitchen table doing the sums and wondering if it’s worth giving up your job to go it alone.

What kind of message does this send to those who want to launch a great business idea, create a job which fits around their children or simply yearn to work for themselves? It’s not worth it, that’s the answer.

It is hard enough being self-employed, as I well know. I’m a journalist, my partner is a builder. Clients don’t pay on time, sometimes not at all. Your bank thinks you’re a financial flake. No one wants to give you a mortgage. And everybody with the luxury of a monthly salary thinks you’re on the fiddle, a factor which I’d wager plays a huge part in the Government’s righteous crusade to bring us all into line. Ministers have also mooted plans to make us reprobates do our tax returns four times a year. If I was them, I’d keep quiet about that particular notion for the foreseeable future.

I’ve heard the same Ministers and talking heads from various right-leaning think-tanks argue that disparities between the contributions made by the self-employed and the rest do need addressing. I’ve also heard it said that various benefits have already been graciously extended to those of us who know that if we don’t get up every single morning and start grafting, there will be no tea on the table. Duvet days? Only when we’re dead.

I’d like to remind these lofty philosophers that self-employed people receive no sickness pay, no holiday pay, no employer’s pension contributions, no carers’ leave, no compassionate leave, no bereavement leave, no days off for working a few hours’ overtime, and rubbish parental leave and maternity pay. Just what are we going to get in return for each handing the Government up to £700 more every year?

None of the above, I suspect. Unless the Government paper currently being prepared into the proliferation of the UK “gig economy” has startling news, I can’t see this situation changing.

And this is the biggest issue of all. At 15 per cent of the workforce, the Office for National Statistics says that the number of self-employed workers is at “unprecedented” levels.

Contrary to what the Government might think, this significant proportion of working age adults is not sitting about in coffee bars brainstorming ideas for internet start-ups. They are toiling as road workers, delivery drivers, market traders and cleaners for an average wage of £207 a week, less than half that of employees. Self-employed people are becoming the backbone of Britain. And Philip Hammond has just broken us with a hammer blow.