Philip Hammoind has had to back down on modest national insurance increases for the self employed that overall made economic sense. He has done so because of the objections of the same semi-detached from reality Tory MPs who also drove his party to Brexit. This is nothing to celebrate in that case. What it really says are three things.
The first is that the Tory wreckers are still wrecking.
The second is that May has not appeased these people by going for hard Brexit.
Third, it makes clear there are no limits to which they will not go to destroy the state, its capacity and so its ability to serve the people of this country. Destroying the country, our community, our economy and the capacity to tax it to create the world most of us want to live in is their aim, and they are intent on it whatever the cost.
I was no lover of Philip Hammond before this but this weak action in the face of puny intimidation shows how unfit he and his boss are to run a branch of McDonalds, let alone a country.
This is a deeply troubling development.
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The power of the Daily Mail is truly frightening, government by fake news media barons, strange days indeed.
Even Malcolm Tucker couldn’t deal with this.
Scary.
Keep going Richard it’s all about to to go pop!
And today the Daily Mail won newspaper of the year award- we are in the midst of lunacy.
I was a self employed plumber in the 80s. Single, living in a bed sit in Sheffield. Very hand to mouth. By the time i’d paid my rent, the bank loan on for a reliable car to get me to and from jobs, public liability insurance and my phone there was barely enough left over to eat. I declared my self bankrupt after i was told to pay out for a gas safety course or i would be told to stop trading. Like now there was no safety net for the self employed. If i didn’t work i went hungry and had to fend off my undestanding landlord on many occasions. Any proposal to increase overheads for small traders seems to me a big disincentive to local community based businesses. Surely what the government was propsing was a bad idea?
Bernard
You’re right of course. It was always accepted that self-employed people enjoyed far less protection than the employed & the lower NIC rate was one way in which that was acknowledged.
The problem is that the Conservatives have encouraged employers, as always, to privatise their profits & nationalise their costs. Mr Hammond introduced the bill by, oddly, shooting the Tory’s own fox. “Wb hy should 2 people doing the same job pay different rates of NIC?”
Well, that wasn’t the real point was it? The point is why should 2 people doing the same job be in one case employed & in the other self-employed? As a Judge so rightly pointed out, if Pimlico Plumbers set your hours, set your hourly-rates, tell you which customers to see, even give you their outfit, you are NOT self-employs, you work for Pimlico Plumbers.
The Tory line is “we’ve made Britain a more entrepreneurial society”
How does sacking your work force & taking them on again as ‘contractors’ make it a more entrepreneurial society???
Is there any data anywhere on the impact of this by salary bands? I have searched for a long time and cannot find any.
Why Labour thinks creating a £2 billion black hole in the budget is a good thing is beyond me when the proposals didn’t look that bad.
What figures did they base their decision on?
I just heard J McDonnell ask (on Radio 4) where the 2bn shortfall would come from. Can you tell me where it was that Labour said that creating a 2bn black hole would be a good thing?
(Personally I`m self employed, have been all my life, and I don`t think that the NI increases were outrageous – although there are certainly are many rentiers more deserving of a tax hike)
John needs to learn some very basic economics
I’m a self employed builder that was happy to pay this increment. However the drop in corporation tax over the past decade and the raising of the higher threshold from 40-50k has angered me.
What really troubles me though is that the repeal is because of upsetting those who evade taxes whilst being in full time employment because they pay the lowest rates holding a UTR number
I think just as in the Brexit Referendum pledge the 2015 manifesto was an opening position in negotiating with the Lib Dems. This 5 year lock on taxation and NI in the Tory manifesto was never expected to be implemented by Cameron.
One of my major fears should Brexit go Leave was that the Tory right would be unstoppable. I’m almost ashamed to live in Northumberland when the Lib Dem Alan Beith was replaced by the hideous Ann Marie Travelyan – pro Brexit and vocal in causing the U-turn on NI. I’m not sure I want to live in this country any more.
Sean
You are one of many who feel like that
Richard
Data by salary band: the IFS have figures by income decile.
See slide 3 here for the total impact of changes since 2010: https://www.ifs.org.uk/uploads/budgets/budget2017/budget2017_ah.pdf
For just the (now abandoned) NICS change, see slide 3 here, then slide 7, then slide 11: http://www.ifs.org.uk/uploads/budgets/budget2017/budget2017_hm.pdf
When added to the abolition of class 2 NICs, it actually reduced the NICs burden for the self-employed with incomes below about £15,500, with a maximum impact of about £590 for those with incomes over about £45,000.
Fact is, it was a manifesto commitment not to increase the rates of NICs. That may be unwise, but it was what they said. This is the “pasty tax” all over again: big political row for little tax gain; not worth the candle.
The problem is that those at the very bottom, who ONLY pay Class 2, show up in the stats as better off, BUT if they want to accrue pension entitlement, they will have to pay Class 3 contributions, which are £750pa rather than £280pa. Ironically, I actually WANT to pay tax (aka NICs).
I have seen it suggested elsewhere that self employed people with low earnings will get NI credits towards state pensions entitlements, even if they are below the threshold for paying class 4 NI. It sounds plausible, although I’ve not checked.
More specifically, see section 15A inserted by clause 3(2) in this draft of the legislation to make the NICs changes, published in December. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/574619/Abolition_of_Class_2_draft.pdf
It makes provision for notional class 4s on profits below the threshold for actual payment which will count towards entitlement for certain contributory benefits.
Thanks
You have noted elsewhere the stupidity of the US administration in failing to take advantage of the desire for public debt to fund much needed expenditure; it seems to me to be equally true in the case of the UK.
We have no effective opposition, and that in turn leads to infighting in the ruling party where right wing extremists demand more and more be taken from those who are already desperately struggling to hang on. The Scottish Nationalists are doing a far better job of Opposition than Labour, but Labour under Corbyn seems to be doing its best to lock Scotland into the death spiral of Hard Brexit, whilst apparently not even noticing the results of the elections in Northern Ireland.
It is difficult to find much in the way of optimism but I am grateful for your persistence; we need it!
They had already broken the pledge by raising the NI rate for those who were contracted out of SERPs, and who were and still are contributing to their own occupational pension, from 10.5% to 12% from April 2016.
The Tory Manifesto said that they would not increase income tax,NIC and VAT. The party is set on reducing corporate taxes. They reject borrowing.
They have three more years and a Brexit to fund; where is the “money” to come from?
Does the OBR have a purpose any longer given that there is no data upon which to make even approximate forecasts.Either the manifesto will have to be thrown aside or we are facing further savage cuts at a time when inflation is running faster than yearly earnings.
Oh and no economic assessment has been made of the “no deal” outcome of the Brexit negotiations,
This is a total shambles and yet working class communities are returning Tories.
The Daily Mail rules.
You may well be right
Wouldn’t it make sense to equalise the rate on incomes over £43k, instead of letting it drop from over 10% down to 2%?
Yes: in effect the NIC reduction counters the cut in income tax
It seems blindingly obvious that the long term aim of the right wing of the Tory party is to defund the state to the point that demands will be made to scrap all social provision to “save our economy”. It took them 60 years to smash the miners,after 1926.How long before they undermine the NHS, state education and social provision with the same strategy? The police are being “civilianised” in a similar way. Won’t be long before the UK hires overseas armies to do it’s dirty work too.Oh, hang on…