Budget: Chancellor hits self-employed workers in Edinburgh

Thousands of self-employed people in Edinburgh will be worse off following Chancellor Philip Hammond's decision to increase their National Insurance contributions.

Wednesday, 8th March 2017, 7:47 pm
Updated Friday, 24th March 2017, 10:09 am
Chancellor Philip Hammond leaves 11 Downing Street ahead of his budget speech in the House of Commons. Picture: Leon Neal/Getty Images

Mr Hammond announced he was raising their contributions by one per cent to 10 per cent from April next year and a further one per cent the following year to bring them into line with the rates for employed people.

But Gordon Henderson, of the Federation of Small Businesses, said: “Self-employed people don’t get sick pay or holiday pay like people who are employed.”

Labour accused the UK government of breaking a pledge in the 2015 Conservative manifesto that there would be “no increase in VAT, National Insurance contributions or income tax”.

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Chancellor Philip Hammond leaves 11 Downing Street ahead of his budget speech in the House of Commons. Picture: Leon Neal/Getty Images

There are an estimated 30,000 self-employed people in the Capital.

Lucy-Rose Walker, chief executive of Entrepreneurial Spark, said people starting a new business would be penalised under the changes. She added: “We believe there should be more, not less, support for entrepreneurs who are starting and scaling businesses. Removing the few remaining incentives of being self-employed is counter-intuitive and will lead to fewer enterprises and consequently fewer jobs.”

Scottish Greens co-leader Patrick Harvie said: “The UK government must recognise that self-employed workers do not enjoy equal working conditions, such as parental leave and sick leave. They must urgently set out how the increasing number of self-employed workers in our economy can be given these same protections.”

Scotland will receive an extra £350 million funding as a result of Budget announcements on increased spending in social care, health and education south of the Border.

Chancellor Philip Hammond leaves 11 Downing Street ahead of his budget speech in the House of Commons. Picture: Leon Neal/Getty Images

Mr Hammond told MPs the cash boost for Scotland was “demonstrating once again that we are stronger together in this great United Kingdom”.

Under the Barnett formula – used to calculate public expenditure allocated to the devolved nations – the Scottish Government’s resource budget will be boosted by £260m in the period to 2020 while the capital budget will increase by £90m to 2021.

Mr Hammond also announced measures to support the oil and gas industry, including an expert panel to look at how taxation can be used to help the sector. He said: “This Budget equips our economy and our people for the future – while dealing with the challenges we face as one nation.

“Benefiting from £350m of extra investment, the Scottish Government can take further steps to strengthen Scotland’s economy and make sure that Scottish people, of all background and no matter where they live, feel the benefits of economic growth.”

Scottish Secretary David Mundell said together with £800m announced in the Autumn Statement it meant in the past year the UK government had set out an extra £1 billion investment in Scotland.

“It is now up to Holyrood to use this money, along with their raft of newly-devolved powers, to make the right decisions to grow Scotland’s economy,” he said.

But the Scottish Government has said that any additional funding for Scotland should be viewed in the context of the “huge cuts” it is already facing.

And SNP economy spokesman Stewart Hosie said: “The Tories talk about helping working people, but inaction on rising inflation and slower wage growth means living standards will be squeezed. The Chancellor is tinkering around the edges, rather than addressing the very real concerns of households and businesses throughout the UK.

“Scotland’s budget faces a real terms cut of £2.9bn as a result of ten years of a Tory government that the people of Scotland did not vote for, and now we face being taken out of the European Union despite the majority of people voting in Scotland to remain. The Chancellor failed to set out how he will mitigate the Brexit bombshell we are facing.”

Scottish Labour leader and Lothian MSP Kezia Dugdale said: “The Chancellor could have brought an end to seven years of damaging Tory austerity, but instead he doubled down by imposing cuts to public services and welfare.

“Despite the £350m extra for the Scottish Government, the reality is that by the end of this decade up to £1bn will have been cut from Holyrood’s budget.”

Scottish Conservative leader and Edinburgh Central MSP Ruth Davidson said the additional £350m coming to Scotland was extra cash the SNP had not planned for in its budget.

She said: “With this extra money, the finance secretary’s claim that council cuts and tax rises are necessary has therefore been substantially eroded.

“I hope that the SNP will use this extra resource to support councils which require it, and give taxpayers and businesses a break.”

Lothian Conservative MSP Miles Briggs described Mr Hammond’s package as “a positive and pragmatic budget for Scotland and the UK and one that will benefit people across Lothian”.

“The freezing of vehicle excise duty rates and the HGV Road User Levey for hauliers is a boost for Lothian’s haulage sector,” he said.