Budget 2017: £2bn for social care and tax rise for self-employed


Chancellor Philip Hammond has spread National Insurance bills for self-employed people in his first Budget – greatest to accusations he has broken a manifesto pledge not to raise taxes.

There was also £2bn for common care services in England, and help for firms hit by business rate stir ups.

On the economy he said growth was expected to be higher – and borrowing lower – than foresee in November.

Labour leader Jeremy Corbyn said it was “a Budget of utter complacency”.

Mr Hammond said there had been a “startling increase” in the number of people working as self-employed – and that the reason for doing so should not be “peculiarities in tax treatment”.

The disparity between the rates paid by the self-employed and employees “damages the fairness of our tax system”, he said.

Class 4 National Insurance contributions see fit go up to 10% from 9% and to 11% in April 2019, Mr Hammond instructed MPs.

On its own, the change announced in the Budget will leave 2.84 million people skin an average annual increase of £240.

But a separate category of National Insurance payments, Year 2, are already due to be abolished from 2018, and Mr Hammond said that enchanted together the two changes meant NI payments for self-employed person would be on typically 60p a week higher.

Mr Hammond said the different National Insurance paces had traditionally reflected a disparity in pension and benefit entitlement between self-employed people and those in vocation.

But he said these had now been “very substantially reduced”, and that the rule would also consult on addressing disparities in relation to parental profits.

The government immediately faced accusations of breaking a Conservative manifesto vow not to increase VAT, National Insurance contributions or income tax.

Ministers said this guaranty related to the class of National Insurance paid by employees, not the self-employed.

Some Conventional MPs also raised concerns. “I don’t think we should be going out of our way to tax work, crop and enterprise and success,” said former Tory minister John Redwood. Skim more – Reality check: Has manifesto pledge been broken?

Readies for social care

The government has been under pressure to offer profuse resources for social care budgets, with council leaders advice the entire system stands on the “brink of collapse” without an immediate hard cash injection and a commitment to a long-term solution.

Mr Hammond acknowledged the system was below pressure with an ageing population, and said the new £2bn for services in England upward of the next three years would allow councils to “act now to commission new worry packages”.

He also said the government would set out the options for long-term scratching of the social care system later in the year – although these longing not include a “death tax”. Read more – Will the extra money dam up plug gap?

Economy ‘confounding commentators’

Opening his statement, Mr Hammond conjectured the UK economy “continued to confound the commentators with robust growth”, and be in the carded his Budget would provide a “strong and stable platform” for the Brexit concordats to come.

As predicted, there were improved economic forecasts via the Service for Budget Responsibility (OBR).

The OBR has revised up its growth forecast from 1.4% to 2% for 2017, vaticinating it will slow to 1.6% in 2018 before returning to 2% in 2021.

Due to “a slues of one-off factors”, borrowing was predicted to be £16.8bn lower than beforehand forecast, the chancellor said.

However, as the UK prepares for Brexit, Mr Hammond said there was “no lodge for complacency”, and that the UK’s deficit was still high, and productivity “stubbornly low”. Comprehend more – Focus on revised UK economy forecasts.

Date for balancing the UK’s books hinder again…

According to the OBR’s analysis, the government “does not appear to be on track” to foregather one of its key fiscal targets.

Mr Hammond told MPs the deficit, the difference between what the direction spends and what it receives, was “down by over two thirds”.

In 2010 the Conservatives’ autochthonous target was to eliminate the deficit by 2015. That has since slipped year-by-year and in November’s Autumn Account Mr Hammond pledged to eliminate it “as early as possible in the next Parliament”.

But the OBR believed: “The deficit falls little in 2020-21 and 2021-22, while the ageing populace and cost pressures in health are likely to put upward pressure on the deficit in the next Parliament.”

Tobacco and juice changes

There were no unexpected rises in the Budget, with the chancellor remaining to the previously pencilled-in rises.

So a packet of 20 cigarettes will expense 35p more from 18:00, while it will be 44p more for a 30g pack of closely rolled tobacco.

A pint of beer will cost 2p more from Monday, from when charge on a bottle of Whisky will rise 36p, with gin up 34p, cider 1p and a bottle of until now wine 10p.

Business rates

Mr Hammond has been facing a backlash, comprehending from Conservative MPs, over businesses facing rates rises as a occur of the revaluation of premises that is about to come into force.

The chancellor secure the revaluation, although he said he said it “undoubtedly raised some burdensome cases”.

He announced a £300m “discretionary fund” to be used by councils to helpers companies that are badly hit, and a £50-per-month cap on increases for firms cladding the loss of small business relief.

In a further measure, he said 90% of boozers would be given a £1,000 business rates discount.

Read uncountable – help for pubs in rates revamp

Share dividend tax change – and other adverts

The biggest money raising measure was a reduction in the total amount of dividends flock directors and shareholders can receive from businesses without having to pay pressures, from £5,000 to £2,000.

Mr Hammond said the move was meant to “address the unfairness” approximately the dividend tax advantage, which he claimed was “an extremely generous tax break for investors with well-established share portfolios”.

Other measures included:

  • £100m for new triages in English sickbays and an extra £325m for NHS reform programmes
  • Funding of £5m to support people returning to go after a career break
  • Transport spending of £90m for the north of England and £23m for the Midlands to lecture “pinch points” on roads
  • £20m to support the campaign against violence against housekeepers and girls
  • £270m for maintenance of existing schools
  • Extending free transport to all set free school meals pupils who attend selective schools
  • No change to previously-planned upratings of charges on alcohol and tobacco
  • Additional funding of £350m for the Scottish government, £200m for the Welsh regulation and almost £120m for the Northern Ireland Executive

What the other upholders said

Responding to Mr Hammond, Labour leader Jeremy Corbyn spoke the Budget ignored the “crisis facing our public services and the reality of continuously life for millions of people in this country”.

He accused the government of “harsh living standards for the many and raising taxes for the few”, and calculated there disposition be a £70bn tax giveaway for “those who need it the least”.

As an example, he said that as an alternative of using £10m to set up a children’s funeral fund, the government was cutting sustain for bereaved families.

For the SNP, Stewart Hosie said Brexit had barely been mentioned, without thought the “momentous” challenge it posed.

The Liberal Democrats said the social solicitude announcement “gives sticking plasters a bad name”.

“It is a woefully inadequate rejoinder to the impossible pressure the NHS and care services are under,” Norman Lamb, the associate’s health spokesman, said.

UKIP MP Douglas Carswell criticised what he named an “attack” on self-employed people through National Insurance rates, and predicted the Budget was not “fundamentally sorting out the biggest problem we face”, the UK’s debt.

BBC rewrite men’ analysis

The chancellor repeatedly emphasised that it is a government that asseverates it is preoccupied by “fairness” with ministers oft-quoted promise of a “country that positions for everyone”. But does that stack up? The overall picture might be degree healthier in the government’s giant balance sheets but it is still extremely testing – hardly a land of milk and honey. And that slightly cheerier fettle in the predicts is very different to the public feeling any better off – Read political reviser Laura Kuenssberg’s full blog

Uber and Deliveroo – the Treasury is on your occasion. Philip Hammond regularly cites evidence that the growth of self-employment is draining the tax base – by between £3.5bn and £5bn a year by 2020 potentially. Those who are self-employed remind emphasize out that they are in a much more precarious employment and have over again decided to take a risk as entrepreneurs. And they do not receive pension contributions and entitlements such as festival pay, which are rights for those directly employed by companies – Read financial editor Kamal Ahmed’s full blog

Jokes from ‘Spreadsheet Phil’

It wasn’t all dry economics and tax proclamations – the chancellor, billed beforehand as “Spreadsheet Phil”, also sprinkled some travesties into his 55-minute speech.

He played up to his nickname (“this is the spreadsheet bit, but brook with me because I have a reputation to defend”) but also took aim at Jeremy Corbyn, hold a session across the despatch box.

The Labour leader, he said, was “so far down a black fix that even Stephen Hawking has disowned him”, in a reference to the scientist’s review earlier in the week.

He didn’t stop there, quipping later in the diction that “they don’t call it the last Labour government for nothing”.

He also faade some good-natured heckling from the PM, when he told MPs two of his planned proclamations had already been revealed by Theresa May.

“It’s international women’s day”, she reminded him.

What we already knew

Some spending announcements were made ahead of Mr Hammond’s Commons disclosure.

These included:

  • A £5m fund to mark the centenary of female suffrage next year
  • An added £500m for vocational and technical education in England
  • A one-off £320m for 140 new dogmas in England, which could include grammars
  • Measures to protect people who inadvertently end up subscribing for cares after signing up for free trials
  • Plans aimed at helping the North sea oil and gas hustle
  • £500m support for electric vehicles, robotics and artificial intelligence

Aside from the Budget, various previously-announced changes come into force in April, including an dilate in the personal tax allowance to £11,500, a new inheritance tax allowance, a rise in the annual ISA limit to £20,000 and the introduction of a levy to pelf apprenticeships.

How business reacted

The Federation of Small Businesses criticised the variations to National Insurance paid by self-employed people.

“This undermines the management’s own mission for the UK to be the best place to start and grow a business, and it drives up the fetch of doing business,” said its chairman, Mike Cherry.

Mark Littlewood, of the Organize of Economic Affairs, said the chancellor “defused one bomb” by providing release for business rate rises: “But he has definitely exploded another bomb with this upland in NICs [National Insurance Contributions] for the self-employed.”

For the CBI, the “limited” help on the other side of business rates “falls short”.

British Chambers of Commerce supervisor general Adam Marshall said: “Businesses had been advised to require minimal change, rather than a blockbuster Budget, and Philip Hammond did not thwart.”

Read more – Budget reaction in quotes

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