On 8 March 2017 Chancellor Phillip Hammond presented his first Spring budget, and ironically also his last as the date for the budget will change from 2018. As usual the statement contained a mix of politics, statistics and guesswork. I recall many years ago reading an interesting book “How To Lie With Statistics”, a fairly heavy read explaining how certain facts can be manipulated to prove almost anything. The most telling statistic for me was Hammond’s admission that the national debt now stands at £1.7 trillion, an average of £62,000.00 for every household in the UK.
I have written a number of times about employment status, including considering those who work in the gig economy. Amongst measures announced, Hammond has proposed an increase in National Insurance Contributions (NIC) for the self-employed in 2 consecutive years, and in doing so breached an express manifesto commitment from the forgotten Prime Minister David Cameron. It is for others to debate if the increase is justified and how the money will be spent, but viewing the Chief Secretary To The Treasury on Newsnight could only be described as embarrassing.
Self-employed are less favourably treated
My interest relates to an understanding of self-employment and why there are different tax and NIC regimes. In certain respects the self-employed can appear to benefit from favourable arrangements operated by HMRC, but the self-employed are less favourably treated in many respects. They have no ordinary employment rights (e.g. to claim unfair dismissal), they acquire no right to paid holidays (e.g. under the Working Time Regulations), and no sick pay (unless covered by private insurance). A self-employed worker will never receive notice of dismissal or a redundancy payment.
Hammond spoke about the employed and self-employed earning the same, and being covered by the same NIC provisions. In reality, those who work on a self-employed basis might have some often moderate tax/NI advantages, but the lack of rights and benefits flowing from self-employment is substantial.
Changes will penalise many who have never chosen to be self-employed
My personal view is that the changes will penalise many who have never chosen to be self-employed and who are far from earning high wages. I read earlier that the average self-employed wage is £11,000.00 each year, in effect the equivalent of the tax free allowance. The raising of taxes will always be a matter for Government, but in reality the employed and self-employed workforces occupy markedly different spaces, and to construe those places as a single level playing field really is a manipulation of the facts.