National Insurance U-turn: May virtually digs own grave and buries herself during PMQs

Despite all the Tories did to prevent it, the knives were out for Theresa May at Prime Minister’s Questions today (March 15).

Philip Hammond, the Chancellor, released a statement that he was withdrawing his Budget policy that would have increased National Insurance contributions by the self-employed, late in the morning – possibly in an attempt to wrong-foot Labour leader Jeremy Corbyn and deprive him of the chance to work out decent questions to put to Theresa May.

As it turned out, though, Mr Corbyn did not have the first opportunity to stick a verbal knife into the prostrate prime minister – her own fellow Tory, Huw Merriman, did it instead. Welcoming the policy reversal (that, as he said abided by the letter and the spirit of the Tory manifesto), he asked if Mrs May agrees that we must have a fair and sustainable tax system.

Her response was this: “We made a commitment not to raise tax, and we put our commitment into the tax lock. The measures that we put forward in the Budget last week were consistent with those locks.”

The rest of her response was drowned out by the derision that seemed to be coming from both sides of the house.

After an intervention by Speaker John Bercow, she was able to say this:

The trend towards greater self-employment does create a structural issue in the tax base on which we will have to act. We want to ensure that we maintain, as they have said, fairness in the tax system. We will await the report from Matthew Taylor on the future of employment; consider the Government’s overall approach to employment status and rights to tax and entitlements; and bring forward further proposals, but we will not bring forward increases to national insurance contributions later in this Parliament.

The response was self-defeating on several levels:

The trend towards greater self-employment is something towards which the Conservatives have nudged working people with their policies.

More self-employed people are staying in work for longer, because Tory economics have forced them to do so due to diminishing profits.

More people have become self-employed because company employment opportunities have not been available to them.

More people have become self-employed because companies have made it a condition of their employment, in order to avoid paying sick pay, holiday pay, and other benefits to them.

And there has been an issue about people claiming to be self-employed in order to get tax credits – although This Writer cannot, for the moment, recall how that was resolved.

These are all conditions created by the Conservatives (along with the Liberal Democrats, during the 2010-15 Parliament).

It is therefore unfair of Mrs May to threaten the self-employed with higher tax demands when their employment status has been predicated by diminishing pay.

Mr Corbyn led by suggesting that the government was “in a bit of chaos here” – which is broadly correct. For the last week, all we’ve been hearing is that the Tories were splitting over whether the NI hike was a good move or a manifesto betrayal; Mr Hammond’s admission that it went against a commitment in the Tory manifesto came after Mrs May had defended the rise, for example.

So she had no choice but to offer a scripted line: “When it comes to lectures on chaos he would be the first person I turned to.”

Mr Corbyn pressed further:

This measure, if carried through, will create a black hole in the budget. What is she going to do to fill that black hole?

Nothing, if her answer was any guide. Again, only a scripted non-answer: “If the right hon. Gentleman is so concerned about balancing the books, why is it Labour party policy to borrow half a trillion pounds and bankrupt Britain?”

Mr Corbyn batted that one aside with the ease of one who has become well-practised at dealing with this particular claim:

Given that this Government propose to borrow more between now and 2020 than the entire borrowing of all Labour Governments put together, we do not need lectures from them on that.

He went on to express the hope that the Chancellor, in his statement later in the day, would address the injustice faced by people who are forced into bogus self-employment by unscrupulous companies, many of which force their workers to become self-employed and thereby avoid employer’s national insurance contributions. He said:

It is a grossly unfair system where those in self-employment pay some national insurance, but employers do not, and benefit from it. That is a gross injustice that must be addressed.

Not today, according to Mrs May. She merely referred to the review of the employment market and employment rights and status that she has commissioned Matthew Taylor of the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) to carry out – but on which he will not report until… when? I don’t know.

So Mr Corbyn drew the obvious conclusions:

We have a Government U-turn, no apology, and a Budget that falls most heavily on those with the least broad shoulders, with cuts to schools, cuts to social care and cuts to support for people with disabilities. That is the agenda of the right hon. Lady’s Government, and everybody knows it.

Mrs May chose not to answer the criticism but to quibble over whether he had asked her a question.

Of course, the usual suspects were quick to deliver their verdicts. On the BBC’s Daily Politics, Laura Kuenssberg was quick to try to spin it into a victory for Mrs May, saying she threw her head back and laughed – presumably with relief and mockery at Mr Corbyn after he had finished his questions.

I don’t have an image of that. I have this:

Meanwhile, less crazed commentators took a more rounded view:

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13 thoughts on “National Insurance U-turn: May virtually digs own grave and buries herself during PMQs

  1. nick

    a lot of nonsense for a small increase in national insurance for the self employed who on average where i live earn over £50.000 per year

    the sick and disabled have always fared much worse with no one giving much thought at all

    1. Mike Sivier Post author

      That’s the politics of division – Tory politics.
      Around 80 per cent of all self-employed people are in poverty, Nick.

      1. nick

        yes mike i was just talking about the tradesman locally ? there OK but with regret not very skilled despite the daily £200 per day rate

    2. Zippi

      Do they earn that, nick, or is that their turnover? What you are left with, after business expenditure is your profit and your earnings come out of that. However, your National Insurance contributions are based on what you take, not on what you are left with.
      Also, there is no parity. If the increase were because we were to pay the same class of National Insurance, (aye, I am deemed to be self-employed) there might be an argument for it but we were being asked to pay more for the same, less benefit. Where is the fairness? Read my comment, below, to see how people in my line of work are treated. Not all self-employment is the same.

  2. Dez

    They drove most of the unemployed into self employment to get their unemployment numbers down. Having done so then want to milk them dry instead of knocking on the doors of all their well heeled donators who seem to manage to move their earnings overseas out of the taxmans reach.

  3. Tim Sims

    This is a brave effort, Mike, but I’m no longer convinced. Too many of us have our heads in our hands while trying to stay loyal. If we allow for normal MSM exaggeration I think we can still conclude:
    1. This was a win for Paul Dacre not the Labour Party
    2. JC did not pick up on this NIC folly effectively after the Budget speech (tho everyone agrees following the Chancellor is horrible)
    3. JC did not focus PMQs on this issue today nor rub their noses in it (the SNP did for heavens sake)
    I want policies that are proper Labour policies rather than the sort of stuff that started the rot in health and education. But I want policies I recognise, that people know about. And I also want leadership that the Parliamentary party follows, and that holds this lot to account for their incompetence in Brexit and budgets and the evil viciousness towards the disabled that this Blog repeatedly highlights so tellingly. I don’t expect a PMQs star performer but I do want opposition. I want opposition to selling working people out through Brexit, opposition to the Brexit at any cost nutters who run this government of clowns, rather than betrayal of the 60+% Labour voters who voted Remain.
    I don’t see any of that. This lot are getting away, literally, with murder now and the betrayal of future generations. If rapid response is not his strength then what’s stopping JC from getting bright people sitting next to him to highlight what’s happening and give him lines of attack? Nor can we keep whinging about the MSM; the Mail remains as foul as it was when it started over 100 years ago. The Telegraph has always been nasty right, with or without the mad twins. Murdoch has been a fact of life for a long, long time.Now its a Porn baron running the Express, but once it was that bully Beaverbrook. My great grandparents, grandparents and parents fought for this Party. My grandchildren will need it. How do we recreate a Labour Party that gets through to people with or without the press, an opposition that nails the obscene violence done to people every day? Today’s news tells me that being loyal and hoping is no longer enough. Rebelling is pointless. Seamus ordering a reboot, refresh, reset or whatever after Christmas achieved nothing. I can no longer admire the Emperor’s new clothes. What can we Party members now do to enable effective opposition?

  4. Zippi

    We, in my business, used to have Class 1 National Insurance paid for us by our employers. The last stupid government changed that and decided to make us fully self-employed, which we are not so, you can add that to the list of reasons, as well. Furthermore, other changes to the tax system (Blair’s government, I believe) included having to pay tax on money that has not been earnt, might not be earnt and often is not yet, not only do we have to pay tax on that phantom money, if we pay late, or can’t pay it, because we haven’t earnt it and don’t have the funds with which to pay it, we have to pay interest! I have just received more than £1K back in overpaid tax, money that I actually needed to buy food and pay bills. Instead, I had to give it to the taxman and run up a credit card bill! Nonsense. Something else that this government doesn’t seem to understand is that not all self employment is the same, therefore there can be no one-size-fits-all tax system for National Insurance. The Tories seem determined to make life as difficult for self-employed persons as is possible. For those people who think that the rise was fair, remember that we also have to keep accounts, do admin etc. This is a job in itself, for which we are not paid. In short, we do more work for less and we get less. When we fall on hard times, forget state help, it’s not worth the stress and aggravation.
    As for the black hole; I thought that black holes couldn’t be filled, that’s why we call them black holes. These are merely hols, unless they really cannot be filled, in which case, we’re in serious bother. The Tories really are a bunch of anti-Robin Hoods. If they want a fair tax system, how about the justify why after you enter the 40% tax bracket, you have to earn more than £10K before you’ll pay a penny more in tax. How is it that you pay tax at 40% on earning in excess of £32K and still pay 40% at £150K? and surely, after £150, you can afford 50% yet, “people won’t pay it!” If we can pay tax on money that we haven’t even earnt, surely people who earn more than a flat every year can pay 50% on earnings in excess of £150K That’s fair.
    The U-Turn is welcome but I believe that it is merely because it appears to contradict a manifest pledge, not because it is unfair; don’t be fooled into thinking that this has gone away; I haven’t.

    1. Zippi

      Error: That should say, “If they want a fair tax system, how about the justify why after you enter the 40% tax bracket, you have to earn more than £100K before you’ll pay a penny more in tax.”

  5. gordon powrie

    Forgot to mention that self-employed workers very rarely get proper redundancy conditions; and they can be left adrift with no notice

  6. DeborahWales

    What about the poorest self employed earning under £6000 pa? (There are many). It was acceptable to pay £2.80 per week to protect any future state pension but now that Class 2 NI contributions are being scrapped, in order to have a state pension they’ll have to find £14.10 a week to protect rights. Talk about hitting those just about getting by (with no recourse to unemployment benefit for the weeks they can’t work, for example, the outdoor self employed in the winter months).

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