Hammond’s Budget U-turn demonstrates an out of touch government
The Chancellor’s decision to scrap plans to increase taxes paid by the self-employed should be championed, yet simultaneously it shows how out of touch the government is.
Philip Hammond’s embarrassing U-turn comes seven days after the Budget, after his plans received harsh criticism for breaking a 2015 manifesto commitment letter, not to increase National Insurance, income tax or VAT.
The Chancellor said: “It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.
“In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”
Of course, whilst we embrace this decision, it proves how out of touch the government is in regard to Britain’s hard-working, already-squeezed and over-taxed entrepreneurs – who represent the lifeblood of the UK economy.
Increasing taxes on the self-employed, in essence, penalises ambition and undermines aspiration to move forward in life. Mike Cherry, the chairman of the Federation of Small Businesses said following the decision: ‘We are delighted for the nation’s self-employed that the Chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the Tory manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament. The army of self-employed make a massive contribution to the UK economy.”
However, this radical change in the Chancellor’s plans signifies a golden opportunity for the government to go one step further and offer more incentives for the self-employed. Of course, they are the ones who accept the responsibility, risks and burden of establishing companies and generating employment and wealth.
This is perhaps more important now than ever, as Britain prepares to initiate divorce proceedings from the European Union.
Moreover, if the UK is going to flourish outside the EU, then it should be focusing on maintaining, and appealing to, more entrepreneurs.