Member Article

What does the Chancellor’s U-turn on National Insurance mean for the North East?

Chancellor Philip Hammond has abandoned his controversial plan to increase the amount of National Insurance paid by the self-employed, as announced in the Spring Budget last week.

Hammond had planned to increase the Class 4 National Insurance Contribution (NIC) rate for the self-employed from 9% to 11% by 2018, a measure which would directly affect 4.8 million people in the UK.

The measure was criticised by many in both the Conservative and Labour camps. Many Tories have since been outraged with Hammond breaking a prominent Conservative manifesto commitment, whilst Labour members branded the decision a ‘sole trader’s tax’ with serious potential to stifle British entrepreneurship.

Ted Salmon, FSB North East Regional Chairman, believes the U-turn to be a major win for the North East’s self-employed.

He explained: “We are delighted for our members and all the North East’s self-employed that the Chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the Tory manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament.

“The army of self-employed make a massive contribution to the North East economy. We’ve consistently argued, since this measure was announced last week, that a tax-grab on the genuine self-employed – the hairdresser, electricians and plumbers – makes absolutely no sense.

“We look forward to engaging with the summer review into the benefits that the self-employed need to be able raise families, pay the bills when sick, and prepare for retirement. We need to see what other measures are brought forward to make sure they support the UK’s small business and self-employed community.”

Gillian Marshall, Chief Executive of the Entrepreneurs’ Forum, also voiced approval in the Chancellor reversing his decision.

Gillian said: “Self-employed entrepreneurs are the lifeblood of the British economy and the Chancellor has applied some common sense to a situation that had some questioning the Government’s pro-business stance.

“It’s vital that entrepreneurs are seen as job and wealth generators for the economy and not just a tax target for the Treasury.

“Encouraging entrepreneurs to start businesses and subsequently scale them up to employ more people will bring greater benefits to the economy.”

What next for the government?

What are your thoughts on the U-turn? How credible is Hammond moving forward? Can The Opposition capitalise on poor Tory PR?

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