East Anglia’s business community welcomes Philip Hammond’s climb-down on tax rise for self-employed

Chancellor of the Exchequer, Philip Hammond Photo by Carl Court - WPA Pool/Getty Images

Chancellor of the Exchequer, Philip Hammond Photo by Carl Court - WPA Pool/Getty Images - Credit: PA

Business leaders in East Anglia have been reacting to the Government’s “astonishing” U-turn on National Insurance Contribution rises for the self-employed.

John Dugmore at the Suffolk Chamber offices in Ipswich.

John Dugmore at the Suffolk Chamber offices in Ipswich. - Credit: Lucy Taylor

Philip Hammond announced in a letter to MPs today that the planned 2% increase to class 4 NICs would not go ahead.

The original announcement – made in last week’s Budget – caused a backlash from the estimated 2.8m self-employed people facing NIC increases from the changes.

They also faced criticism from Conservative backbenchers who accused Mr Hammond of breaking a manifesto pledge not to raise the tax.

John Dugmore, chief executive of Suffolk Chamber of Commerce, said: “On the back of the Spring budget announcement the Suffolk Chamber said that the NI contribution rise was a body blow for the self-employed and entrepreneurs.


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“We are pleased that the Chancellor has listened to the voice of business, both through the Suffolk Chamber and the chamber of commerce network the length and breadth of the UK.

“We will now use this time to challenge the Chancellor to reflect and look at business and employment taxation in the round, to ensure that our tax system is competitive and equitable.”

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Nova Fairbank, public affairs manager for Norfolk Chamber of Commerce, said: “The NICs rise, together with the cut to dividend tax-free allowances, was not viewed favourably by Norfolk’s entrepreneurs and self-employed – so this move and pause for thought are welcome.

“It would be far better to look at business and employment taxation in the round, to ensure that our tax system is competitive and equitable.”

Clare Goodswen, a chartered tax accountant with M&A Partners in Norwich, called the u-turn “quite astonishing”.

“The move shows the extent of the pressure on the chancellor from his back bench colleagues who were so angry about the break of the 2015 manifesto pledge not to raise National Insurance rates,” she said.

“It’s a dismal end to this sorry saga from a chancellor delivering his first full Budget and, in my view, shows a level of naivety from him and Theresa May in how they approach the nation’s finances and where the burden for raising taxes should be borne.”

“The argument put forward by the chancellor that self-employed people do the same job as employed workers and so should be taxed the same showed a lack of understanding about the risks that self-employed people run at all times – no security of income, no sick pay, no holiday pay, lesser maternity leave, no right to other parental benefits amongst other state benefits that the self-employed do not have access to.”

She added: “The need to raise taxes is clear but it must be more thoroughly thought out next time around.”

The chancellor’s decision raises questions about how the gap in the public finances will be plugged – an issue which Mr Hammond said would be addressed in the Autumn Budget.

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