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Budget 2017

How the Budget Screwed the Self-Employed

If you're a freelancer or work in the gig-economy, this budget was not for you.

(Top photo: Jane Barlow/PA Wire/PA Images)

The manual on hack standup comedy advises to always open with a joke taking the piss out of yourself first, so that the hecklers have nothing on you.

Turns out Chancellor "Spreadsheet Phil" Hammond has been reading the hack standup manual. "This is the spreadsheet bit," he declared early on, "but bear with me because I have a reputation…"

It was a strange "Let's Do a Budget for Comic Relief" speech from a man so soused in reassuring boredom. Labour was "so far down a black hole even Stephen Hawking had disowned them". The party was "a driverless car". "They don't call it the last Labour government for nothing." He told an amusing anecdote about Norman Lamont, then went full panto when a Labour MP shouted out, "No, no you're not" in response to his schools investment pledge: "Oh yes we are…"


A lot of cheery warbling, then, much of which was a Cheshire Cat smile on top of telling the gig economy to eat shit.

The self-employed historically pay 9 percent National Insurance. Those with jobs on PAYE are taxed at 12 percent. This goes back decades. But the percentage of self-employed people has ballooned in recent years, which has meant a dip in the overall tax take. And the ranks of the self-employed are only due to swell in the next few years.

On this score, the self-professed "party of enterprise" has had the self-employed in their crosshairs for a while now. In 2015, their manifesto pledged "not to raise National Insurance". They enacted that into law after the election, but crucially left the door open – specifying that it didn't apply to the self-employed.

Today, the net was closed. Self-employed NI, Hammond announced, would rise to 11 percent – the clear implication being that he'll push it to parity in the next couple of years. Cannily, the Chancellor framed this as the avoidance of a loss, rather than the creation of a big fat money-pile: "The lower National Insurance paid by the self-employed is forecast to cost our public finances over £5 billion this year alone. That is not fair to the 85 percent of workers who are employees."

Fair? Not fair? That glib soundbite may be tested to destruction in the coming days. Immediately after the budget, White Van Man was straight on LBC to complain about how he doesn't get any sick pay working for himself, so what's fair in that?


It's an oddly-shaped but potentially deadly political hydra he's prodded. "Self-employed" can mean chippies, cabbies and sparkies. Or it can mean coders and hacks and shrinks. The whitest of white collars, with their control of the commanding heights of our culture; plus the bedrock of the upwardly-mobile working classes, with their infinite capacity to flood talk radio.

Ten years ago, Gordon Brown's final budget saw him savaged as he abolished the 10p rate of tax for the lowest earners. At the time he said he'd done it "in the interests of fairness". The initial reviews were good, but over the coming days the media began to dig in on the spin. He was forced into a humiliating retreat – the first big crack in the former "Iron Chancellor".

"In taxing self-employment, the government might want be careful what they wish for."

Now, what's "in the interests of fairness" is about to be turned into a parlour game in which we pit the employed against the self-employed. Personal jealousy, the vanity of small differences, the picket-fence envy of the petit bourgeoisie: this is a mighty force to awaken.

"If we keep the current system we will allow the current inequities to persist," as he put it: "That's another way of saying there are already many losers, and they include most of the workforce." That's right – the self-employed are robbing you, honest workers of Britain. You should rise up and smite them. And did you hear that, freelance economy? He just called you "losers".


So you've got a job? You lucky swine, with your four weeks paid vacation and your bloody sick pay and company pension and discounted cycle scheme, the redundancy pay, the security.

Self-employed? What are you moaning about? You only get out of bed at nine, you holiday when you like, you don't have to take a goopy load from The Man in the face every day and besides, you already get a tax discount – you told HMRC you spent £800 on "stationery" last year, right? The politics of envy are beautiful to watch because, from Shakespeare upwards, they're always so utterly effective.

In taxing self-employment, though, the government might want be careful what they wish for. The present wave of freelance has been a huge boon to Chancellors looking to diddle the figures. The under-employed still count as "employed" for the official tally. And if the work dries up, they're the last to register as "unemployed" – and often have to go through loads of degrading hassle to prove that they are indeed sitting around with their thumbs in their asses. This is in part why Britain's economic numbers have come so good lately without generating much "feelgood factor".

More flexible working makes for a more dynamic economy, yes, which is in part why Britain's growth has rocketed away from most of the G7. But that J-curve dynamism often achieves its effect by creating tragic non-jobs like Deliveroo rider, or "freelance journalist". Many of these "creatives" lauded by Chancellors for "disrupting" our economy have merely found themselves with the luxury of oodles of time to relax in a coffee shop observing their own pauperisation in the name of companies now deliciously freed from all labour legislation to make super-normal profits.


The profits have been privatised, but the costs of a lack of training and the chronic overcapacity inherent in piecemeal work will be continue to be borne by everyone else, in the form of Britain's eternal "productivity crisis" – the fact that while GDP keeps going up, GDP per capita has been flat for a decade.

Hammond's budget was short, and apart from his much-trumpeted bung to social care, light on new measures. It's only half-a-budget anyway. He's keeping his powder dry for the Autumn budget, where, post-Article-50, he may well be flushing emergency stimmy cash into the country.

What's obvious is that it's his game to shape as he pleases now. Afterwards, Jeremy Corbyn coughed up a few hairballs on the urgent need for even-more-money for the social care system, the futility of new grammar schools and inheritance tax giveaways for the better-off. The next three Prime Ministers sat indulgently on the opposite benches, grinning back at him.


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