Contractor National Insurance Increase
Chancellor Hammond last night scrapped the contractor national insurance increase that he announced in his Spring Budget just last week.
Earlier, the Prime Minister announced that it would not be part of the Finance Bill but they would delay it till the autumn.
There would be further consultation by then.
Conservative Manifesto Promise on National Insurance
The trouble is that they said in their last Manifesto, prior to the last election, that they would not raise National Insurance.
Chancellor Hammond and Prime Minister May said that they meant that they would not raise Type 2 National Insurance and that this is Type 4 National Insurance.
However, it just said in the manifesto “We will not raise National Insurance”.
It would have been easy to say “We will not raise Type 2 National Insurance”.
There is all hell to pay for parties who bring in measures which they promise they won’t do in their manifesto.
Just ask Nick Clegg.
Scrapping Contractor National Insurance Increase
So, they scrapped the contractor national insurance increase they had planned.
There was pressure on them from both their own backbenchers and the Conservative backing press like the Daily Mail.
They told them that his would hit their own voters.
Was it because this would hurt contractors and freelancers?
No, it is because it will hit what they call ‘white van man’ – that army of plumbers, electricians and other tradesmen who are working class but vote Tory in droves.
I would advise contractors representatives, like IPSE, that when the Government attacks freelancers in the future, they should not cite the fact that it will affect IT Contractors earning a hundred grand a year, for whom the Government has constantly shown they have no sympathy, but that ‘white van man’ will be hit.
Chancellor’s Statement on National Insurance
The Chancellor stated “There will be no increases in NICs rates in this parliament. We will continue with the abolition of Class 2 NICs from April 2018. The cost of the changes I am announcing today will be funded by measures to be announced in the Autumn Budget.”
IPSE are claiming credit for this victory. They said modestly:-
“Our voice has been heard. IPSE was at the forefront of calls for the Government to reconsider these measures and we are delighted they have heeded our representations to scrap legislation that would have damaged you – the hard-working, dynamic, creative freelancers who are driving the UK economy and stimulating labour market strength”.
IPSE on Newsnight
I did see them once on Newsnight on BBC2. Perhaps they were lobbying behind the scenes.
They continued “IPSE will continue to engage with Government to ensure that potential policies are fair, progressive and support, rather than hinder, freelancers to provide you with the economic and social platforms from which to flourish.
“Today is justification of our combined efforts. Thank you to all the members who spoke up in the media. Together our voices can be heard and we can make a difference”.
Now, I wonder if ‘white van man’ would be hit by the Government rolling out their public sector IR35 changes in the private sector.
I suspect not – but I would expect it would be much easier to get the Tory Press to call on the Government to change its mind if they did.
Big Hole in Government Finances
This has now put a £2 billion dent in the Government’s Finances for the year.
How will they get this back?
The Chancellor said that he would claw it back in the Autumn Statement.
Where will he get it from?
We already know that he, and the Prime Minister, think that contractors and freelancers should pay the same tax as permanent employees on the same money.
That is a bit of a clue.
IR35 Public Sector Changes
If he rolled out the recent IR35 public sector changes in the private sector that would do it.
There are rumours that the Government are planning to do this next year anyway.
If they brought it forward 6 months, that would fill in the hole in the budget nicely.
It would also hit those that they are after with this tax – whilst leaving white van man alone.
It all fits nicely, doesn’t it?