Taking the free out of 'free enterprise'

Mr Hammond has come under fire from the left, right and centre for his decision to impose an extra two per cent National Insurance tax on people who work for themselves.

This is not some attempt to ‘tidy up’ a small anomaly in the system. It is the start of a calculated attempt to bring the self-employed to heel.

And, bizarrely for a Conservative Government which claims to support the enterprise economy, it’s being spearheaded by Tony Blair’s former adviser Matthew Taylor.

Mr Taylor, a West Bromwich Albion fan, was head of the Number 10 policy unit under Mr Blair and helped write Labour’s 2005 election manifesto.

The former Labour member of Warwickshire County Council is now chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) and was appointed by Theresa May to write a report on ‘Modern Employment Practises’.

After the row over the Budget, Mrs May said the National Insurance increase must be seen in the context of the Taylor Report, due out later this year.

The report is almost complete and its starting-point will be shocking for the 4.6 million people who work for themselves.

Mr Taylor said recently: ‘The idea that self-employment is good for the economy is wrong.’ He said this was the Treasury view and it was ‘unquestionably true’.

This is a disturbing as, since 2008, the number of self-employed ‘white van men’ has risen by 800,000.

About 2,000 people set up as sole traders, limited liability partnerships and owner managers of small companies every week. One in seven British workers is now self-employed.

This is the main reason the British economy has more people in work than at any time in our history.

Why do Mr Taylor and the Treasury believe self-employment is so bad? Because they think people who work for themselves aren’t paying enough tax and the Government will soon be missing out on £3.5 billion a year.

That’s why Mr Hammond said his National Insurance hike was all about ‘fairness’. The Treasury thinks it’s only fair someone who works for himself should pay the same level of tax as the average wage-slave.

This does not take into account that the self-employed run great risks just struggling to stay in business. They don’t get sick pay, paid holidays, maternity leave or any of the other benefits most employees take for granted.

Mr Taylor thinks self-employed people on low pay are being exploited by big businesses. His solution is to impose a whole new raft of regulations on them and on those who give them work.

He wants to target the ‘black economy’ to stop people being paid in cash to avoid tax.

But beneath it lies a clear, focused attack on self-employment in all its forms – even the expression ‘self-employed’ is one of his targets. He says it’s a ‘useless term’.

Mr Taylor says the self-employed do not create sustainable businesses and contribute to low productivity. He wants the Government to tax labour, not employment, to create a ‘level playing-field’ between the self-employed and those in regular jobs.

He thinks too many ‘clever people’ are using self-employment as a tax fiddle and employer groups – in the building trade or haulage businesses, for instance – should provide services to the self-employed online only.

That would force companies to give benefits to freelance staff and deduct taxes at the same time.

Mr Taylor thinks the self-employed would be forced to take payment through the internet, meaning transactions would be cashless and go a long way towards wiping out the black economy.

He wants more self-employed people to be taken onto company workforces while those in seasonal jobs, such as those selling ice cream or picking crops, should be paid more to take this into account. And everyone who is self-employed should get 1.2 times the minimum wage.

There’s also a suggestion of a tax crackdown on ‘sharing economy’ websites where money doesn’t actually change hands.

He even wants the Government to appoint a Quality of Work Minister because there are too many self-employed people in ‘shitty jobs’.

In his Budget speech, Chancellor Hammond declared: ‘My ambition is for the UK to be the best place in the world to start and grow a business.’

Clearly the Treasury and Matthew Taylor – the man taking the ‘free’ out of Free Enterprise – don’t think that’s going to be achieved by self-employment.

So where do tomorrow’s successful businesses come from if they aren’t set up by energetic entrepreneurs ready to take the huge risks involved in working for themselves?

Tony Blair’s former adviser doesn’t seem to know or care. Which makes you wonder why Mrs May should employ a left-wing policy wonk in the first place.