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The self-employed power Britain. Tax them more at your peril, Philip Hammond

13 March 2017

12:56 PM

13 March 2017

12:56 PM

Claudio Ranieri will go down in footballing folklore as the individual who accomplished mission impossible by winning modest Leicester City the Premiership title in 2016.

He will also be remembered by many footballing aficionados as Mr Tinkerman, the manager who had a propensity to tinker with teams (especially during his time at Chelsea) when a more laissez faire approach was called for. But like his job at Leicester, Mr Ranieri has now lost his Mr Tinkerman mantle. It has been wrestled from him by Philip Hammond, the meddling Chancellor of the Exchequer.

For the time being, Mr Hammond wears the Tinkerman crown, albeit somewhat embarrassingly rather than vaingloriously. He adorns the crown because, like many Chancellors before him,  Mr Hammond could not help tinkering with the Government’s finances in the Budget. And like Mr Ranieri, it could well lose him his job (of course Mr Ranieri did not lose his Leicester job for too much tinkering but for a run of bad form from his overpaid squad who were content to bask in the glories of last year) .

The Chancellor’s tax assault on the country’s self-employed – through the raising of class four National Insurance Contributions – is spectacularly wrong on so many levels. For a start, it breaks a Conservative Party manifesto commitment made in 2015 not to raise National Insurance contribution rates – and for that matter income tax or VAT.

Manifesto pledges should not be made to be broken. They are issued to define future policy and greatly influence the way many people vote, especially swing voters. As a result, they should be upheld at any cost. Woe betide any political party that breaks them as the Liberal Democrats found out to their horrible cost when in Coalition they reneged on a 2010 manifesto commitment to phase out tuition fees.


They were constantly mocked in Government as a result and paid a heavy price at the 2015 General Election as swathes of good Liberal Democrats (the likes of Steve Webb and Vince Cable) lost their seats and were forced to gainful employment elsewhere (Mr Webb ended up doing spectacularly well, pitching up at mutual insurer Royal London as policy director).

Although Mr Hammond’s ripping up of the 2015 manifesto may not prove as catastrophic (primarily because Labour is currently unelectable), it will not be forgotten come 2020.

Secondly, the £2 billion tax grab cuts across everything that a Conservative Government should stand for. Ever since Margaret Thatcher’s days, Tory administrations have stood four-square behind the country’s growing army of self-employed, encouraging many victims of de-industrialisation to set up in business and give it a go.

As someone who was self-employed for a while in the mid-1980s, and lived on a financial edge for most of the time, I know that striking out on your own is fraught with danger, especially in the early years.  The last thing you need by way of reward for your entrepreneurial zeal is a hike in your tax bills.

Most of the self-employed are risk-takers.  This is a point I made in the Mail on Sunday in the aftermath of the Budget, one that was then challenged by a BBC correspondent who questioned whether the self-employed are really risk-takers. That is a bit rich coming from someone who enjoys gainful employment courtesy of us taxpayers without constant fear of whether they are going to be able to pay the next utility or business rates bill.

The self-employed need all the encouragement they can get from Government. They can’t rely upon a benevolent employer – the BBC for example – when they are sick or wish to go off for a three-week trek to the Himalayas (or even a long weekend in Skegness). Time off is time not earning money. These are issues Mr Hammond – and his phalanx of cosseted Treasury advisers – have singularly failed to grasp.

Thirdly, the scheduling of the tax raid is all wrong. No one knows what the future holds for our economy as we march ever closer to the door marked Brexit.

Yes, it has performed better than expected in the aftermath of the Brexit vote in June last year (when the likes of George Osborne were forecasting financial Armageddon). But even Mr Hammond now concedes that economic growth will slow down from 2018 onwards. With inflation on the rise and horrible insurance premium tax rises on the immediate horizon (June), it means many households will have no choice but to batten down the hatches. Given such a precarious economic backdrop, the last thing the self-employed need – or deserve – is bigger National Insurance Contribution bills.

With any vote on the National Insurance Contribution hike now postponed until the Autumn (thank you Theresa May), there is a chance for the newly crowned Mr Tinkerman to tinker once more before being sacked. How? By abandoning his crass plan to soak the country’s five million self-employed, the beating heart of this glorious country of ours.

Jeff Prestridge is personal finance editor of the Mail on Sunday.


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