Biggest loser from this Budget? The credibility of Tory tax promises

There is a very big winner from today’s budget. Not adults in social care, not schools, but Ukip. Philip Hammond has handed a huge political opportunity: to position itself as the party of the self-employed: the taxi driver, the brickie, the plumber, the small shop-owner. These used to be natural Tories. From today, with Hammond imposing a two per cent extra tax on their income, and breaking a manifesto commitment in the process, they will be looking for a new political home. No wonder Suzanne Evans was tweeting about the change within seconds of it being made.

The Treasury’s argument for raising National Insurance Contributions on the self-employed is that the current arrangements are unfair to the employed, who pay a higher rate of NIC. Moreover, employers also pay NICs on their employees, which they do not pay if they employ them on a freelance basis. The result is that companies have a large incentive to reclassify workers as self-employed, in order to avoid this NIC bill – as well as to avoid employment legislation, paying for paid holidays etc.