Budget 2017 National Insurance rise: Tackling the gig economy or anti aspiration, stopping the self-employed?

This was the first spring budget given by Philip Hammond. Picture: PA Images.

This was the first spring budget given by Philip Hammond. Picture: PA Images. - Credit: AP/Press Association Images

The chancellor’s reduction in tax breaks for self-employed people has been described as both tackling the “gig economy” and “anti aspiration” by Redbridge politicians.

Yesterday Philip Hammond announced that self-employed residents, earning more than £16,250 in a year, will have a two per cent National Insurance rise over the next two years.

Announcing the measures in the House of Commons, Mr Hammond said: “Historically, the differences in National Insurance contributions between those in employment and the self-employed reflected differences in state pensions and contributory welfare benefits.

“But with the introduction of the new state pension, these differences have been substantially reduced.”

However Ilford North MP Wes Streeting described Mr Hammond’s measures as “anti-aspiration”, and told the Recorder the chancellor was breaking a 2015 manifesto pledge.

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“The Conservatives promised there would be no increases in national insurance,” he said.

“Now if you’re earning £20,000 a year you will pay an extra £20 a month, and if you’re earning £35,000 a year an extra £45 a month.

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“I know from talking to self-employed people in Ilford North that these are not unimportant amounts of money. These are the people we should be rewarding.”

The Labour MP made the point that these people do not get paid annual leave or sick pay.

“It’s anti small business, anti aspiration and the last thing I expected from a Tory government,” he added.

Redbridge Conservative group leader Cllr Paul Canal said he understood why the policy had attracted headlines, but thought it was important in a changing economy.

“The reduction is a move towards the so called gig economy.

“There are some people who are doing the same jobs, but are classed as self-employed and saving a significant amount of tax.”

Cllr Canal highlighted nurses, and the difference between staff nurses and agency employees – where the contacted workers and their employers pay more National Insurance, while the agencies pay less.

“It’s making the playing field more level, but I understand that people would want more debate,” he added.

Former Conservative leader and Woodford Green Iain Duncan Smith said he wanted time to “reflect”.

He said: “I would like for this period think about how this lands and whether or not you want to look at adjustments.”

He highlighted whether £16,500 is the right cut off, which is below average earnings.

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