Lib Dems react to Budget

Liberal Democrats have been reacting to Philip Hammond’s budget which seems to do not much more than stoke the balance in favour of massive corporates as opposed to small business and give extra money to Tory hobby-horses like free schools,

In terms of the massive issues facing the country in health and social care and housing, there’s not much.

Liberal Democrats have been reacting to the budget. Susan Kramer highlighted how the Tories had broken their manifesto promise by raising national insurance for the self-employed:

This is a tax on builders, taxi drivers and window cleaners, some of Britain’s hardest working people. This hits the gig economy where people are already insecure and facing rising prices and job uncertainty. And on International Women’s Day it will hit over one and a half million women.

Companies will continue to save money by using workers without giving them the security and benefits of staff jobs. Meanwhile, these workers will have to pay more. This is patently as unfair as it is a tax on entrepreneurship and hard work.

Tim Farron also slammed the rise:

John Pugh, our education spokesperson, was pretty incensed about the “divisive” schools measures:

This is unbelievable. Two weeks ago the Free Schools Programme was shown to have overspent to the tune of billions of pounds, at the same time as existing schools struggle to pay for books, cut teachers and their buildings decay around them.

Hammond has now announced he is providing free school transport to only those children in selective schools, giving exclusive treatment to a select few, while denying the same support to children from disadvantaged backgrounds who attend comprehensive schools.

This is the Conservative Party pushing its divisive agenda on our children. The Liberal Democrats believe we need an education system which delivers opportunities for all young people.

The Tories absolutely have their priorities wrong on education, if they think this is the right way to spend money. Investing in free schools and grammars is only going to make the divides between local areas, and between richer and poorer children, worse.

Norman Lamb was equally unimpressed with the measures on social care and the NHS:

This announcement gives sticking plasters a bad name.

It is a woefully inadequate response to the impossible pressure the NHS and care services are under.

There will be a £2bn black hole in social care funding next year alone, yet the Government plans to stretch this amount across three years.

This will mean more elderly people going without the care they need and more pressure on our hospitals.

The Government has refused to give the NHS the extra funding it needs. The percentage of our national income spent on the NHS is still set to fall which makes no sense at all.

He was also concerned with the Chancellor’s failure to raise duty on white cider:

Willie Rennie gave the Scottish perspective:

Today the Chancellor presented a budget that showed the true cost of Brexit with his £60 billion war chest to battle Brexit. This is the emerging cost of the Conservatives’ hard Brexit.

The additional funds for Scotland means the SNP have no more excuses. They can now invest in mental health and education as we had recommended for the Scottish budget only a few weeks ago. By investing in people we will boost our economy. Let’s hope the Scottish Government don’t let this opportunity pass by again.

Welsh leader Mark Williams said:

This was a budget promising optimism and prosperity for Britain.

Yet what we’ve heard today is window dressing from a government that’s turned to managing the economic damage Brexit will cause.

It speaks for itself. Borrowing will be up by £100bn, our growth forecast is down, our debt forecast is up, and £60bn has been hidden away as war chest to battle Brexit.

From the Tories designating steel a low-priority industry, to the vulnerability of Bridgend Ford, and warnings that the price of food and fuel will rise, we are seeing what Brexit will mean for businesses, families and workers.

Under George Osborne we were used to a white rabbit being pulled out of the hat at the end, yet this budget produced no white rabbit.

This budget should have been about public services and ensuring the devolved administrations have the necessary resources to weather Brexit and provide quality public services. 

While the extra money for Wales is welcome, this is a little more than a sticking plaster.

Theresa May’s plan to take Wales and the UK out of the single market will do untold damage to our economy. What’s clear is that we can’t have a strong economy and a hard Brexit.

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This entry was posted in News.


  • Eddie Sammon 8th Mar '17 - 2:44pm

    I’m very pleased that Tim Farron and Susan Kramer have criticised the self-employed tax hikes. Philip Hammond is wrong for the following reasons and I challenge any tax expert to disagree with me:

    He compares Class 4 NI directly to Employee plus Employer Class 1. This suggests Class 4 for an average worker should actually be 25.8% (13.8% employer plus 12% employee). This would be in addition to income tax at 20% and is clearly a non-starter. Currently Class 4 is 9% and rising to 10%.

    On limited companies: dividends are taxed less because they are paid net of Corporation Tax. The marginal tax rates (corporation tax – dividend tax) are the following:

    Basic rate: 26%
    Higher ate: 46%
    Additional rate: 50.48%

    Yes, the 26% rate is lower than the employed direct equivalent of income tax plus Class 1 employee NI, but remember there is no personal tax free allowance with corporation tax.

  • Laurence Cox 8th Mar '17 - 3:21pm

    It is unfortunate that what we have from Susan and Tim is a knee-jerk reaction. While increasing Class 4 NI is technically breaking a manifesto promise, white van man and people in the gig economy are likely to be better off through the abolition of Class 2 NI. They are also now eligible for benefits:

    The people who will be hit are those self-employed who earn above average: like lawyers, consultants, professional speakers, even video bloggers.

  • Eddie Sammon 8th Mar '17 - 3:29pm

    Laurence Cox, the problem is not the small increase in Class 4 but the way the chancellor portrayed being self-employed as a way to save a lot of tax. It isn’t. The driver for self-employment is employer’s hiring people on a self-employed basis so they save 13.8% employer’s NI and have to give them next to no rights. The person having to go self-employed because of this is the victim, not the tax dodger.

  • Well, it’s a lot less punitive than anything Osborne would have had up his sleeve.

  • @Laurence Cox

    Have you tried claiming benefits, they may theoretically be entitled to them but actually getting them, well that’s a whole different ball game. This government is good at giving you rights actually claiming them well lets say you will not be so lucky.

  • Laurence Cox 8th Mar '17 - 8:00pm

    @Frankie, Yes!

    @Eddie Sammon, There are many out there who have been doing very well from being self-employed with all the perks they get from HMRC. I don’t see why they should not be paying their fair share in taxes, even if you do. The self-employed are not just Uber drivers and the like, as the examples i gave illustrated.

  • @Eddie Sammon – “the problem is … the way the chancellor portrayed being self-employed as a way to save a lot of tax. It isn’t. “

    I agree, this simplistic labelling of an entire group of enterprising people, by a leading Conservative is troubling. But at least he is being consistent! in that HMRC are also further “tightening” the IR35 rules that impact those who operate as Ltd’s – but as yet the rules still give a green light to the style of engagement practices exercised by Pimlico Plumbers.

    What I find strange is the scrapping of Class 2 contributions, firstly, it was collected monthly and not annually in arrears and secondly this was a useful tool in distinguishing between “hobby self-employment” and serious self-employment and thus benefit entitlement. I therefore wonder if a hidden aspect of this measure is to make it even harder for those on very low self-employment incomes to actually qualify for benefits… Also I wonder if the change will make it more tax efficient, particularly for those of “independent means” to become self-employed and thus expense some outgoings that would otherwise be paid out of net income…

  • Eddie Sammon 8th Mar '17 - 9:30pm

    Laurence, of direct taxes the only perks we are talking about is a 3% NI saving. The Chancellor made out that being self-employed was the life of Riley and for that the Conservatives will suffer a bit at the ballot box.

  • “There are many out there who have been doing very well from being self-employed with all the perks they get from HMRC.”

    Which are?

  • Peter Watson 9th Mar '17 - 12:08am

    @Hywel “Which are? [the perks they get from HMRC]”
    A few ways to reduce the tax bill that spring to mind include being able to pay themselves travel expenses for the first two years of a new contract, notionally employing spouses, juggling what is called dividend and what is called salary, flat-rate VAT, purchases and expenses being put through the business, etc.
    These things all seem very reasonable for genuine entrepreneurial small businesses, but for individuals set up as limited companies who work for larger businesses through agents as contractors and whose day-to-day role is indistinguishable from the so-called “permanent employees” who sit beside them, these look like ways that the tax man subsidises disguised employment in which “employees” swap employment rights for income and “employers” get a more flexible workforce.
    Perhaps this outcome, i.e. allowing an employee to choose to “sell” their rights, might not be a bad thing per se (a very different debate), but under the current system there is a lack of transparency and a lot of issues get muddled together. The apparent number of small one-person businesses is interpreted as evidence of a thriving small-business economy but many of these are no more entrepreneurial than any low-paid employee on a zero-hours contract, it is just that their income is large enough to justify an accountant’s bill to reduce the tax bill.
    IR35 was intended to address this sort of disguised employment but doesn’t appear to have changed much. This is a complicated area. Rules to tax disguised employment fairly should not penalise the many genuine freelancers, consultants and start-ups. Perhaps the trade-off between salary and employment rights could be made more explicit and be funded by the employer rather than incentivised through the tax system. This might make things simpler (by avoiding the need to appear self-employed), cheaper (by avoiding the need to pay accountants) and fairer (since it would not give an advantage to those on higher incomes), but it raises many other uncomfortable issues.

  • Eddie Sammon 9th Mar '17 - 12:33am

    Woah, Peter Watson, there’s a difference between the different types of fraudulent behaviour you mentioned above and the legal tax benefits of being self-employed. Tackle the fraud, but don’t try to over-compensate by punishing the law abiding self-employed.


  • Lester Holloway 9th Mar '17 - 6:54am

    The Chancellor said he’s investing in Britain’s future. We didn’t see much evidence of him investing in Britain’s increasingly diverse future. Ethnic minorities currently face serious barriers at work. Today those barriers got a little higher. The failure of successive governments to prevent the waste of BAME talent is a structural weakness as damaging as the decline in manufacturing or the impact of Brexit.

    Last week the government-commissioned report by Baroness Ruby McGregor-Smith showed that Britain is losing £24 billion every year, or 1.3% of GDP, because ethnic minorities are failing to progress in work. This is a scandal. Economic analysis by the Runnymede Trust has shown that tax and benefit changes since 2010 have disproportionally hit BAME people. The budget has done nothing to improve the lives of BAME families or Britain’s future competitiveness.

    Rewarding savers who deposit over £20,000 per year into an ISA will disadvantage BAME families who are less than half as likely to own an ISA and twice as likely to have no savings at all. The 2% rise in National Insurance contributions for the self-employed will hit those working on low wages with little security in the gig economy. These workers are more likely to be BAME. Enforcing existing employment rights will combat discrimination and pay inequality than any of the measures proposed in recent budgets.

    The Chancellor should publish an equality impact assessment for his latest budget; pledge to end child poverty, which disproportionately impacts on BAME children; ensure that tax and benefit changes reduce, not increase, BAME take-home income; encourage banks to boost financial inclusion and failure to promote fair interest rates for credit; and act to incentivise insurance firms to lower premiums for the low income.

  • Peter Watson 9th Mar '17 - 7:58am

    @Eddie Sammon “there’s a difference between the different types of fraudulent behaviour you mentioned above and the legal tax benefits of being self-employed”
    I don’t consider any of those examples to be fraudulent in themselves (though obviously they do all offer opportunities to be exploited fraudulently by those prepared to push), and for a freelance self-employed consultant who is based at home with many clients they all make sense and reflect the way that larger companies operate with multiple employees.
    My concern is that the same rules apply to those who operate as e.g. a limited company, but are engaged through an agent by a single customer (sometimes a previous employer) for a long period of time and whose work, hours, etc. are directed by that customer in a way that is indistinguishable from any employee in that company. The legitimate exploitation of these loopholes can give disguised employment a tax benefit not enjoyed by employees. The quid pro quo is less secure employment, so this is a very significant issue, but in those cases it feels like the taxpayer is picking up the bill for employers to have a more flexible workforce and is doing so in a very non-transparent way.

  • Neil Sandison 9th Mar '17 - 2:34pm

    What this budget proves is just how important the role of well resourced local government is .Ever increasing pressure to cut budgets year on year has led to the crisis in social care and its knock on effect for the NHS. The chancellors solution to raise NICs for the self employed was to inadequately fill a black hole in the spring budget to take pressure off the government regarding the NHS and social care and break the “trolling of patents” in our E and A departments .Norman Lamb has won the argument and we should press home the case for a new funding settlement before 2020.Meanwhile tax payers are seeing increases in NICs ,Council tax bills and charges at level thats going to hurt those just about managing.

  • Simon Freeman 10th Mar '17 - 9:57am

    You really need to attack the reductions in corporation tax. At 20% it’s already much lower than in similar countries. How much does it cost to reduce it to 19% and 17%? Money that could be spent on public services.
    Nothing much about tax avoidance and evasion in the budget either.
    it would have been nice to see Tim Farrons idea of a 1p in the pound tax or Ni rise to fund the NHS but I suppose that was never going to happen. Just how much would that raise?
    Must admit at first I thought it was fair enough to put self employed NI rates at the same level as the rest of us but I take the point if there are benefits they don’t get. Something that needs looking at and maybe the government is right to look at it and think again.

  • Neil Sandison 10th Mar '17 - 7:26pm

    Simon Freeman good point why should self employed people who become unfit for work not get statutory sick pay for a limited period or maternity pay ? These are contributory benefits and if they have paid in they should be able to draw out at times of financial hardship ,not just the state pension when they are over 65 .

  • Antony Watts 11th Mar '17 - 9:18am

    I admire everyone who has even the smallest understanding of these complicated issues.

    I am a strong believer in simplicity, and this means decide the panoply of social support we need to give, cost it correctly and openly, then charge this across the employed workforce, no matter how employed any one with income on which they live or prosper, equally.

    That is do bottom up planning not top down hiding under false arguments of “in principle”…

  • Richard Underhill 11th Mar '17 - 1:20pm

    Several Liberal or Liberal Democrat leaders have suffered simultaneous barracking from Tory and Labour MPs. At PMQs this week Tim Farron silenced them by asking, as the last questioner, about people who had not been allowed to attend a commemoration. The PM had extensive notes and read them out.
    David Cameron was interpreted by lip readers of telling off a cabinet minister, the defence secretary (Con, Sevenoaks) about the decision to break a manifesto promise on national insurance contributions. This was broadcast on BBC tv Daily Politics.

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