Spring Budget 2017: Creative sector reaction

March 9, 2017
By

Chancellor Philip Hammond has been accused of hitting entrepreneurs and freelancers in the pocket in the Spring Budget after he announced National Insurance increases for the self-employed.

The Chancellor announced he is raising National Insurance (NI) bills for self-employed workers by 1% to 10% from April 2018 and to 11% by 2019. 

Hargreaves Lansdown, the Bristol-based investment group, calculates that a self-employed worker earning £30,000 will pay £282 more National Insurance in 2019 than in 2016.

Mr Hammond was quickly under fire from business groups and opposition politicians and faced rumblings of discontent from some members of his own party as the controversial measure became the biggest talking point of an otherwise lacklustre Budget.

Critics pointed out that the Conservatives made a pledge in their 2015 General Election manifesto not to increase NI.

Lucy-Rose Walker, the CEO of Entrepreneurial Spark – the business start-up accelerator program with a centre in Bristol – said the move was counter intuitive and would hit entrepreneurs.

“Increasing National Insurance rates for the self-employed could be a further step by the government to penalise those who are taking risks and starting a business, often giving up their regular pay cheques to take a chance at creating something great,” she said.

“We believe there should be more, not less, support for entrepreneurs who are starting and scaling businesses. Removing the few remaining incentives of being self-employed is counter-intuitive and will lead to fewer enterprises and consequently fewer jobs.” 

Jon Lacey, pictured right, accounts director with Regulatory Accounting, the Swindon-based accountancy firm, said the self-employed were clearly in the Chancellor’s sights.

“The Chancellor has looked at the way in some places of work where there can be a self-employed person sitting next to a contractor, sitting next to an employee, all doing the same job, but all taxed in different ways and tried to remove what he sees as unfairness,” he said.

“But this doesn’t take into account the fact that most self-employed people are doing a unique roll, working on their own, and they don’t have many of the advantages of an employee, such as sick pay and security.”

Federation of Small Businesses West of England chairman Ken Simpson, pictured below, pointed out that nearly half of all growth in jobs over the past few years had come from people starting and running their own businesses.

It is vital for the economy as a whole that we incentivise more people to do this and not place additional financial burdens on them,” he said.

“There are so many costs for people who run their own business and to add an extra tax burden now will be seen as an unwelcome announcement by many of our members.”

Chris Bryce, the chief executive of IPSE, a group which represents contractors, independent professionals and freelancers, said hardworking self-employed people faced a significant increase in their tax bill.

“You might feel that the Chancellor has it in for you,” he said. “It’s entirely right for the Chancellor to look at taxation of the self-employed, but changes should only come after a thorough consultation with the business community, which has not taken place.”

In response, the Treasury said the Tax Lock Bill – which came after the 2015 election – specified the pledge did not cover self-employed workers.

The Treasury also pointed out a lot of higher-paid people, including QCs and GPs, were self-employed.

On a more positive note for the creative sector, the Chancellor announced more help for innovation and disruptive technology, including:

  • £300m for research talent, including 1,000 PhD places for STEM subjects
  • £270m for robots, driverless cars and biotech
  • £16m for a 5G mobile technology hub
  • £200m for fibre broadband

Accountancy group EY’s South West tax partner Karen Kirkwood, pictured below, said this strategy was “very welcome” at a time of rapid change both in the UK and across the globe.

“The extra funds earmarked to support research and development in artificial intelligence (AI), robotics and autonomous vehicles are vital to building the right infrastructure, skills and new technologies to ensure the country remains competitive on the world stage,” she said.

“However, it is imperative that this investment is also made regionally, helping to rebalance the economy while building centres of excellence across the UK. We’d also like to see increased focus on the ethics of using disruptive technologies particularly in the use of AI and data.”

 

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