Budget 2017: MP finds hike in National Insurance for self-employed difficult to defend

By Grimsby Telegraph | Posted: 9 Mar 2017

The Chancellor used his Budget to hike-up taxes for self-employed workers in a move that North East Lincolnshire Tory MP were left struggling to defend.

The self-employed have benefited from paying less national insurance contributions due to not being able to access the same benefits and securities, such as a state pension and paid annual leave.

But Chancellor Philip Hammond said the "dramatic" growth in numbers of self-employed – and their right to access a state pension – meant the discrepancy was "not fair".

Under the current system, a self-employed worker earning a £32,000 salary pays nearly £4,000 less in national insurance than a company and its employee, said the Treasury chief.

Tax changes mean Class 4 national insurance contributions will rise by 2 per cent by 2019 – although the Chancellor said, along with other reforms, it would amount to a 60 pence rise in additional tax per week.

The Conservatives were accused of breaking their 2015 manifesto promise that there would be no increase in national insurance contributions, VAT or income tax on their watch.

Cleethorpes MP Martin Vickers said the Government had left itself with "limited scope" to raise taxes for under-pressure health services after the election policy commitment.

"I can't say I'm overjoyed at the action the Chancellor has taken because self-employed people are a great asset to the local and the national economy," said Tory MP.

"You have also got to consider that they sometimes don't qualify for other benefits. Clearly, the view of the Treasury is that there was an anomaly which needed to be rectified. But, as we all know, you resolve one anomaly and another often appears somewhere else."

Labour MP for Great Grimsby, Melanie Onn, called it "a bleak" Budget and attacked the changes affecting the self-employed.

She said: "Self-employed people in Great Grimsby will be feeling the pain of this budget by having to pay more tax.

"As entrepreneurs, start-ups and employers in their own right, they will be disappointed that they are bearing the brunt of the Conservative Government's failure to get £1.7 trillion of debt under control."

The Chancellor, in a preannounced move, confirmed he was investing £500 million into helping 16-19-year-olds access loans for technical education courses which will give them a greater chance of qualifying for highly paid jobs.

Chancellor Phillip Hammond.

He also stated his support for the creation of T-Levels, a technical education equivalent to the academic A-Levels.

Dong Energy, when contacted by the Grimsby Telegraph, declined to comment on whether the cash might help young people on the Humber's South Bank reach the top jobs in the offshore wind industry.

But Tory MP Mr Vickers said youngsters in Grimsby and Cleethorpes must benefit from the Government's backing for the renewables sector.

"We look to those very big international companies to provide employment for local people," he said.

"Without pointing the finger, the reality is that all too often they import many of the people for their better quality jobs. What we are hoping for is significant investment from the private sector as well.

"I very much welcome what they are already doing, which is helpful to the local community, but we are always looking for more."

Mr Vickers also praised the confirmation of 110 new free schools, with grammar schools likely to be able to set-up new satellite schools in different locations. He also welcomed the freeze on fuel duty.

Ms Onn said the technical education investment should be viewed against "a backdrop of having cut millions from post-16 education in the last 7 years".

"These young people could also find themselves starting out life with student debt as the Chancellor extends student finance to them," said the Labour backbencher.

"The reality is that this Chancellor gives with one hand and takes away with the other, meaning most people in Grimsby will not feel any better off after today's meagre budget."

The headline investment was a £1billion fund to plug the shortfall in council social care budgets for 2017/18. Another £1bn will be in the pipeline over the following two years.

North East Lincolnshire Council said it is hoping to find out how much it will receive "in the coming weeks".

The town's MP was critical of the final figure, with Ms Onn saying the new money would "not meet the immediate or future long term needs for our vulnerable and elderly". The Health Foundation had predicted a £2bn national shortfall for 2017/18 alone.

Councillor Ray Oxby, leader of North East Lincolnshire Council, said: "Whilst I welcome some of the announcements in terms of adult social care and support for business, this budget still fails to address the severe challenges facing the public sector, the acute housing crisis and the most vulnerable in our society.''"The devil will always be in the detail, and our finance officers will be looking at what it means for the council and the wider North East Lincolnshire area, but my real fear remains that Mr Hammond has done little but paper over some cracks and, as such, done very little to make a fair economy that works for everyone, not just the few.''

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