VIDEO: Mersey business people welcome Chancellor’s u-turn on National Insurance rise

In his Budget last week Mr Hammond proposed to increase Class 4 NICs for the self-employed from 9% to 10% in April 2018, and to 11% in 2019, to bring it closer to the 12% currently paid by employees. Tony McDonough reports.

Peter Taaffe, managing partner of BWMacfarlane

Thousands of self-employed people across the Liverpool city region are breathing a sigh of relief after Chancellor Philip Hammond was forced into a humiliating u-turn on his plans to raise National Insurance contributions.

In his Budget last week Mr Hammond proposed to increase Class 4 NICs for the self-employed from 9% to 10% in April 2018, and to 11% in 2019, to bring it closer to the 12% currently paid by employees.

Click to watch Mersey business people offer their views prior to the u-turn

There was an immediate backlash in the hours that followed from entrepreneurs and business leaders across the country and a number of Conservative MPs.

Many said the Chancellor had reneged on the Tories’ 2015 manifesto pledge.

At the weekend Prime Minister Theresa May said the change would be delayed until the autumn but in the House of Commons on Wednesday afternoon, Mr Hammond scrapped the change saying he’d had a “change of heart”.

‘Naughty step’

The u-turn was welcomed by business people in Merseyside.

Peter Taaffe, managing partner of Liverpool accountancy firm, BWMacfarlane, said Mr Hammond had been “put on the naughty step” by Mrs May.

“This stirred a shocked reaction amongst political peers and the public alike – both as to the impact on the millions of self-employed, and the breaking of their manifesto promises,” added Mr Taaffe.

“Certainly it gave concern to a number of our clients and people we work with and I certainly can’t remember the last time a budget stirred quite so much emotion.

“Just this week, I met with a number of self-employed business people voicing their frustrations on what had become, frankly, a matter of principal.

“Self-employed people don’t have the same benefits, the same protections as employed people so how can it be fair to close the gap in contributions?

“The Government now propose a consultation over the summer on the differences between employed and self-employed. So now it’s a matter of watching this space.”

‘Sensible and obvious’

Richard Thomas, partner at North West law firm DTM Legal, said Mr Hammond’s reversal of the NIC proposal was a “sensible and obvious one”.

He added: “It was a breach of a manifesto pledge and would have come back to haunt the Chancellor and the Prime Minister many times in the future if left in place.

Richard Thomas, partner at North West law firm DTM Legal

“Whether it is genuinely a Government holding its hand up or pure political expediency doesn’t really matter.

“Looking forward, the Government needs to consider all the factors in this area when saying the tax imbalance needs to be redressed.

“The Chancellor will also need to demonstrate some pretty nifty footwork to evidence how he will now plug the gap that this will cause in his intended spending on schools etc in order to prevent further controversy.”

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