Greg Wright: Brexit is worst possible moment for Budget tax raid on the strivers

We will face a less prosperous future if the Government displays a lack of insight and vigour at the Brexit negotiating table. Our business community is seeking evidence that the Government has a clear strategic vision and an eye for detail. The events of the last week suggest that both are lacking.

When Chancellor Philip Hammond stepped up to deliver one of the dullest Budget speeches in memory, the Government must have hoped that the only passages to excite attention would focus on its much-trumpeted support for hard-working people.

The sort of hard-working people, for example, who had studied the Tories’ 2015 election manifesto, and decided that self-employment was for them. These are the same people who were stunned to find themselves clobbered by the Chancellor with what has now been dubbed the “strivers’ tax”.

It’s clear the Prime Minister and Chancellor failed to anticipate the backlash over plans to increase the national insurance rate for wealthier self-employed people. You can argue until you’re blue in the face about whether this measure is fair, or represents a breach with the Conservative Party’s manifesto commitments. What it certainly displays is incredible political naivety, which does not bode well for the Brexit negotiations.

If you’re a Tory Prime Minister, it’s just plain stupid to harm your core supporters; the self-employed with big dreams. It takes guts to become self-employed. It’s a lonely and at times stressful existence. The Federation of Small Businesses, which represents the Tories’ natural constituency, has told the Government to do a U-turn and show that they “back the strivers and risk-takers”.

So, on a day in Brussels when her mind should have been focused on our post-Brexit relationship with the EU, Mrs May had to defend her Government’s first Budget. It’s hard to imagine Mrs Thatcher, the grocer’s daughter, making such an error.

The Prime Minister has said she will listen to Tory MPs’ concerns about the plans to increase national insurance for the self-employed, and a Government paper is expected to look at a potential package of new rights for those who have taken the plunge into self-employment.

There are two worrying elements to this saga. Firstly, it shows the Government lacks a natural affinity with the entrepreneurs who will help the UK economy to keep growing after Brexit. The self-employed are often on a journey that leads to bigger things. I’ve met so many who started small and went on to hire dozens of staff.

As Lucy-Rose Walker, chief executive of Entrepreneurial Spark, observed: “Increasing National Insurance rates for the self-employed could be a further step by the Government to penalise those who are taking risks and starting a business, often giving up their regular pay cheques to take a chance at creating something great.

“We believe there should be more, not less, support for entrepreneurs who are starting and scaling businesses.”

“Spreadsheet Phil” and the Prime Minister should have seen this row coming. The fact that they didn’t, and seem to have been flung into a tailspin by the reaction, shows they lack a real understanding of what will matter to grassroots entrepreneurs in post-Brexit Britain. When we withdraw from the EU, we will need our small businesses more than ever.

Since the EU referendum, the British economy has defied the doom-merchants and managed to trot along at a healthy pace. The Chancellor had an open goal in front of him. He could have delivered a fiery, bullish message about the inherent strengths of the UK’s economy, while delivering an honest assessment of Brexit’s potential impact on the public finances. Instead, he delivered a limp, dreary speech in which Brexit was barely mentioned. It wasn’t a Budget to fire the passions of home-grown entrepreneurs, who could help to bridge the UK’s terrible skills gap after we leave the EU.

Which brings me to the second, and perhaps more important, point. The shambles over “reforming” National Insurance for the self-employed does not inspire confidence in the Brexit negotiations. The Government wants to secure a deal that will ensure we still have a harmonious relationship with the European Union, without, I would imagine, suffering a significant penalty. That’s an ambitious objective.

On the opposite side of the table, they will face negotiators who will be keen to punish Britain for deciding to leave. They want, to put it bluntly, to make an example of the UK. We must hope, for all our sakes, that the “omNICshambles” is an aberration and the Government will have recovered its composure when it finally confronts the country’s biggest ever peacetime challenge.

Greg Wright is the deputy business editor of The Yorkshire Post.