One of the things that interests me about our view of politicians is the suspicion we feel when they propose plans aimed at tackling long-standing problems they have identified as being in need of a solution but which we would rather they left well alone.
The best example of that is Chancellor Philip Hammond – or Spreadsheet Phil as he is now dubbed by the tabloid press. While patronising towards Hammond, the moniker also paints a picture of a man who is steady and reliable.
Someone who will not take unnecessary risks with your money; whose decisions are based on rational calculations rather than wild or extreme ideological views with no basis in reality.
The problem is that one’s own “reality” can often be at odds with everyone else’s. Take, for example, the explosion of anger from the Conservative press that greeted his Budget announcement of a hike in the Class 4 National Insurance contribution rate for the self-employed from 9 to 10 per cent in April 2018 and 11 per cent the year after. The anger was such that the Chancellor was forced into a U-turn on the move a week later.
Hammond claimed the change was aimed at reducing the gap in NIC rates paid by the employed (currently at 12 per cent) and the self-employed.
He justified this by arguing the self-employed have had access to a new, higher state pension since April last year.
For the so-called “red top” press, however, this approach does not spell fairness at all. As far
as they are concerned, this is a move that penalises hard work and thrift.
Unlike their employed counterparts, the self-employed do not automatically enjoy holidays. If they are ill they either battle through because they cannot afford to take time off or go unpaid until they recover.
My own view (as someone who will be paying several hundred pounds more a year, certainly after April 2019, and with the distinct possibility of NICs being equalised at 12 per cent for both classes of workers at some stage after that) is that I feel a twinge of sympathy for Hammond.
There is a cost to the services we all receive from the state and it is right that, wherever possible, that cost should be shared proportionately among both the employed and self-employed.
As for holidays and sick leave, these are ultimately an element of overall pay for employees. Going without paid holidays is part of the “bargain” we make with ourselves when we take on self-employed status.
My mate Nathan, a self-employed plumber, is a classic example of this. Nathan recently gave up a reasonably well-paid job with a local firm, where the benefits included 20 days paid holiday, a defined contribution pension and some sick leave (not that he has ever made use of it).
He wanted the opportunity to make more money than he would otherwise have earned, to set his own working hours and, most importantly, to be his own boss and to build a business that might be worth something in 20 years’ time when he is closer to retirement. I totally respect his ambitions – but I do not think it is the job of employees across the UK to help him realise them by paying extra taxes on his behalf.
My real gripe with the Chancellor is not so much over the measures he has introduced. For example, the reduction in the dividend tax allowance from £5,000 to £2,000 after April 2018 should be possible to mitigate through a better use of Isas. Besides, using dividends in place of salary has always been a bit of a tax scam.
Lobbing the equivalent of £650m a year over the next three years into social care does little to offset the funding gap that already existed between what councils need and what they have available to spend
No, the real problem with the Budget was its relative boredom. More accurately, the absence of measures that genuinely consider the needs of millions of hard-working savers and homeowners.
Saga pretty much hit the nail on the head when it described Hammond’s speech as a “Band-Aid Budget” that “kicks the can down the road with several welcome but short -term fixes”.
As Saga director Paul Green argued: “There are no long-term solutions to some of the biggest issues facing today’s over-50s, such as care funding, housing and saving for retirement.”
Lobbing the equivalent of £650m a year over the next three years into social care does little to offset the funding gap that already existed between what councils need and what they have available to spend.
According to research charity the Kings Fund, the publicly funded social care system faces a £1.9bn funding gap from April. The announcement of yet another green paper later this year on long-term funding options for care feels like the issue is being kicked into the long grass.
The even trickier issue of reforming the pensions tax system to ensure the poorest can save more for their retirement has also been completely unaddressed. Lifetime and annual saving limits make little sense and the use of tax incentives that disproportionately benefit the better off does not help.
So contrary to those who prefer a safe pair of hands to radical innovation, I would rather see less of Spreadsheet Phil and more of a Pioneering Phil. The problems we face demand genuine change, not more of the same.
Nic Cicutti can be contacted at email@example.com